FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 19992000
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission file number 1-9610
CARNIVAL CORPORATION
(Exact name of registrant as specified in its charter)
Republic of Panama 59-1562976
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3655 N.W. 87th Avenue, Miami, Florida 33178-2428
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 599-2600
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of each class which registered
Common Stock New York Stock
($.01 par value) Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in any definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by non-affiliates of
the Registrant is approximately $11,919,000$10,054,000,000 based upon the closing market
price on February 14, 200020, 2001 of a share of Common Stock on the New York Stock
Exchange as reported by the Wall Street Journal.
At February 14, 2000,20, 2001, the Registrant had outstanding 617,254,814584,714,214 shares
of its Common Stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
The information described below and contained in the Registrant's 19992000
annual report to shareholders to be furnished to the Commission pursuant to
Rule 14a-3(b) of the Exchange Act is shown in Exhibit 13 and is incorporated
by reference into this Annual Report on Form 10-K.
Part and Item of the Form 10-K
Part II
Item 5(a) and (b). Market for the Registrant's Common Equity and Related
Stockholder Matters - Market Information and Holders
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk
Item 8. Financial Statements and Supplementary Data
The information described below and contained in the Registrant's 20002001
definitive Proxy Statement, to be filed with the Commission is incorporated
therein by reference into this Annual Report on Form 10-K.
Part and Item of the Form 10-K
Part III
Item 10. Directors and Executive Officers of the Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Item 13. Certain Relationships and Related Transactions
PART I
Item 1. Business
A. General
Carnival Corporation was incorporated under the laws of the Republic of
Panama in November 1974. Carnival Corporation, including its consolidated
subsidiaries (referred to collectively as the "Company"), is the world's
largest multiple-night cruise company based on the number of passengers
carried, revenues generated and available capacity. The Company offers a
broad range of cruise brands serving the contemporary cruise sector of the
vacation market through Carnival Cruise Lines ("Carnival"), and Costa, the
premium cruise sector through Holland America Line ("Holland America") and
the luxury cruise sector through Cunard Line ("Cunard"), Seabourn Cruise Line
("Seabourn") and Windstar Cruises ("Windstar") (collectively the "Wholly
Owned Cruise Operations"). The Company also owns a 25% equity interestsinterest in Costa Crociere S.p.A. ("Costa"), an Italian cruise
company, and
Airtours plc ("Airtours"), an integrated leisure travel group of companies
which also operates cruise ships (collectively the "Affiliated Cruise
Operations"). Costa and Airtours' Sun Cruiseswhich target the contemporary cruise sector.sector
under the brand name of Sun Cruises.
A summary of the cruise operations of the Company and its affiliatesAirtours is as
follows:
PERCENTAGE
OWNED BY PRIMARY
CRUISE CARNIVAL NUMBER PASSENGER GEOGRAPHIC
BRAND CORPORATION OF SHIPS CAPACITY(1) MARKET
Wholly Owned Cruise
Operations:
Carnival 100% 14 27,25415 30,020 North America
Holland America 100% 9 11,74210 13,348 North America
Costa (2) 7 9,200 Europe
Cunard (2) 100% 2 2,4442,458 Worldwide
Seabourn (2) 100% 6 1,614 North America
Windstar 100% 4 756 North America
35 43,810
Affiliated Cruise
Operations:
Costa 50%(3) 6 7,103 Europe
Airtours'44 57,396
Airtours:
Sun Cruises 26% 4 4,3224,352 Europe
10 11,425
45 55,23548 61,748
(1) In accordance with cruise industry practice, all passenger capacities
indicated within this Annual Report on Form 10-K are calculated based on two
passengers per cabin even though some cabins can accommodate three or four
passengers.
(2) In November 1999,Since June 1997, the Company acquiredhas owned 50% of Costa. On September 29,
2000, the 32% minorityCompany completed the acquisition of the remaining 50% interest of Cunard
Line Limited, which owns and operates the Cunard and Seabourn cruise brands, for
$203.5 million.in
Costa from Airtours. See Note 123 to the Company's Consolidated Financial
Statements in Exhibit 13 to this Annual Report on Form 10-K.
(3) The 50% equity interest of Costa not owned by the Company is owned by
Airtours. Including the Company's interest in Airtours, it beneficially owns 63%
of Costa.
The Company has signed agreements with twothree shipyards providing for
the construction of 16 additional cruise ships. A summary of new ship agreements for
the Company's
Wholly Owned Cruise Operationsships under contract for construction is as follows:
EXPECTED
SERVICE PASSENGER
VESSELSHIP DATE(1) CAPACITY
Carnival:
Carnival Victory 9/00 2,758
Carnival Spirit 4/01 2,1202,124
Carnival Pride 1/02 2,1202,124
Carnival Legend 8/9/02 2,1202,124
Carnival Conquest 12/02 2,7582,974
Carnival Glory 8/03 2,7582,974
Carnival Miracle 4/04 2,124
Carnival Valor 11/04 2,974
Total Carnival 14,63417,418
Holland America:
Zaandam 5/00 1,440
AmsterdamNewbuild 11/00 1,380
Newbuild 10/02 1,8201,848
Newbuild 8/03 1,8201,848
Newbuild 01/2/04 1,8201,848
Newbuild 09/10/04 1,8201,848
Newbuild 6/05 1,848
Total Holland America 10,1009,240
Costa:
Newbuild 7/03 2,112
Newbuild 1/04 2,720
Newbuild 12/04 2,720
Total (2) 24,734Costa 7,552
Cunard:
Queen Mary 2 12/03 2,620
Total Cunard 2,620
Total 36,830
(1) The expected service date is the date the vesselship is expected to begin
revenue generating activities.
(2) The Company also has one option for the construction of an additional
vessel with a passenger capacity of 1,820. No assurance can be given that
this option to construct the vessel will be exercised.
In addition to its cruise operations, the Company operatesoperated a tour
business, through Holland America Line-Westours Inc. ("Holland America
Westours"Tours"), which markets sightseeing tours both separately and as a part of Holland America
Westoursits
cruise/tour packages. Holland America Westours operatesTours operated 14 hotels in Alaska and
the Canadian Yukon, two luxury dayboats offering tours to the glaciers of
Alaska and the Yukon River, over 280300 motor coaches used for sightseeing and
charters in the states of Washington and Alaska and in the
Canadian Rockies and 13 private domed rail
cars which are run on the Alaska Railroad between Anchorage and Fairbanks.
B. Risk Factors
The Risk Factors noted below and elsewhere in this Annual Report on Form
10-K are important factors, among others, that could cause actual results to
differ from expected or historic results. It is not possible to predict or
identify all such factors. Consequently, the reader should not consider any
such list to be a complete statement of all potential risks or uncertainties.
See Part I, Item 4. - Special Note Regarding Forward - Looking Statements.
(1) A change of the Company's tax status under the Internal Revenue
Code, as amended (the "Code"), may have adverse effects on the Company's
income and its shareholders.
Carnival Corporation is a foreign corporation engaged in a trade or
business in the United States ("U.S."), and its ship-owning subsidiaries are
foreign corporations that, in many cases, depending upon the itineraries of
their ships, receive income from sources within the U.S. Management
believes, to the best of its knowledge, that, pursuant to Section 883 of the
Code, Carnival Corporation's income and the income of its ship-owning
subsidiaries, in each case derived from or incidental to the international
operation of a ship or ships, is currently exempt from U.S. income tax.
Management believes that substantially all of Carnival Corporation's income
and the income of its ship-owning subsidiaries (with the exception of the
U.S. source income from the transportation, hotel and tour business of
Holland America Tours) is derived from or incidental to the international
operation of a ship or ships within the meaning of Section 883 of the Code.
Management believes that Carnival Corporation and its ship-owning
subsidiaries currently qualify for the Section 883 exemption since it and
each of its subsidiaries are incorporated in a qualifying jurisdiction and
Carnival Corporation's Common Stock is primarily and regularly traded on an
established securities market in the U.S. To date, however, no final U.S.
Treasury regulations or other definitive interpretations of the relevant
portions of Section 883 have been promulgated, although regulations have been
proposed (see below for a discussion of the proposed regulations under
Section 883). Such regulations or official interpretations could differ
materially from management's interpretation of this Code provision and, even
in the absence of such regulations or official interpretations, the Internal
Revenue Service might successfully challenge such interpretation. In
addition, the provisions of Section 883 are subject to change at any time by
legislation. Moreover, changes could occur in the future with respect to the
identity, residence, or holdings of Carnival Corporation's direct or indirect
shareholders that could affect it and its subsidiaries' eligibility for the
Section 883 exemption. Accordingly, there can be no assurance that Carnival
Corporation and its subsidiaries are, and will in the future be, exempt from
U.S. income tax on U.S.-source shipping income. If Carnival Corporation and
its ship-owning subsidiaries were not entitled to the benefit of Section 883
of the Code, the Company would be subject to U.S. taxation on a portion of
its income.
(2) Failure to comply with the proposed tax regulations could have a
negative impact on the Company's net income and stock price.
On February 8, 2000, the U.S. Treasury Department issued proposed
Treasury Regulations to Section 883 of the Code relating to income derived by
foreign corporations from the international operation of ships or aircraft.
The proposed regulations provide, in general, that a foreign corporation
organized in a qualified foreign country and engaged in the international
operation of ships or aircraft shall exclude qualified income from gross
income for purposes of U.S. federal income taxation provided that the
corporation can satisfy certain ownership requirements, including, among
other things, that its stock is publicly traded. A publicly traded
corporation will satisfy this requirement if more than 50% of its stock is
owned by persons who each own less than 5% of the value of the outstanding
shares of the corporation's capital stock. Management believes to its best
knowledge, after due investigation, that Carnival Corporation currently
qualifies as a publicly traded corporation under these proposed regulations.
However, because various members of the Arison family and certain trusts
established for their benefit own approximately 47% of Carnival Corporation's
Common Stock, there is the potential that another shareholder could acquire
5% or more of its Common Stock which could jeopardize Carnival Corporation's
qualification as a publicly traded corporation. If, in the future, Carnival
Corporation were to fail to qualify as a publicly traded corporation, it
would be subject to U.S. income tax on its income associated with its cruise
operations in the U.S. In such event, Carnival Corporation's net income and
stock price would be negatively impacted.
As a precautionary matter, Carnival Corporation amended its Second
Amended and Restated Articles of Incorporation to ensure that it will
continue to qualify as a publicly traded corporation under the proposed
regulations. This amendment provides that no one person or group of related
persons (other than certain members of the Arison family and certain trusts
established for their benefit) may own (or be deemed to own by virtue of the
attribution provisions of the Code) more than 4.9% of Carnival Corporation's
Common Stock, whether measured by vote, value or number. Shares of Carnival
Corporation's Common Stock acquired in violation of this provision will be
transferred to a trust and, at the direction of its Board of Directors, sold
to a person whose shareholding does not violate such provision of its Second
Amended and Restated Articles of Incorporation. These transfer restrictions
may also have the effect of delaying or preventing a change in Carnival
Corporation's control or other transactions in which the shareholders might
receive a premium for their shares of Common Stock over the then prevailing
market price or which such shareholders might believe to be otherwise in
their best interest.
(3) A group of principal shareholders effectively controls the Company
and has the power to cause or prevent a change of control.
A group of shareholders, comprising certain members of the Arison
family, including Micky Arison, the Company's chairman and chief executive
officer, and trusts established for their benefit, beneficially own a total
of approximately 47% of Carnival Corporation's outstanding Common Stock. As
a result, this group of shareholders has the power to substantially influence
the election of directors and the Company's affairs and policies, without the
consent of its other shareholders. In addition, this group has the power to
prevent or cause a change in control.
(4) Carnival Corporation is not a U.S. corporation and its shareholders
may be subject to the uncertainties of a foreign legal system in
protecting their interests.
Carnival Corporation's corporate affairs are governed by its Second
Amended and Restated Articles of Incorporation and By-Laws and by the
corporate laws of Panama. Thus, Carnival Corporation's public shareholders
may have more difficulty in protecting their interests in the face of actions
by the management, directors or controlling shareholders than would
shareholders of a corporation incorporated in a U.S. jurisdiction.
(5) Incidents involving cruise ships could adversely affect the cruise
industry's and/or the Company's future sales and profitability.
The operation of cruise ships involves the risk of accidents and other
incidents which may bring into question passenger safety and adversely affect
future industry performance. While the Company makes passenger safety a high
priority in the design and operation of its ships, accidents and other
incidents involving cruise ships could adversely affect the Company's future
sales and profitability.
(6) Environmental and health and safety legislation could increase
operating costs.
Some environmental groups have lobbied for more stringent regulation of
cruise ships. Some groups also have generated negative publicity about the
cruise industry and its environmental impact. The U.S. Environmental
Protection Agency is considering new laws and rules to manage cruise ship
waste. Stricter environmental and health and safety regulations could
increase the cost of compliance and adversely affect the cruise industry.
In addition, the grant of permits to cruise lines to enter Glacier Bay
National Park in Alaska is the subject of litigation. See Part I, Item 1.
Business, C. Cruise Ship Segment-Wholly Owned Cruise Operations, Governmental
Regulations.
(7) Overcapacity within the cruise business could have a negative
impact on the Company's net revenue yields.
Cruising capacity has grown in recent years and management expects it to
continue to increase over the next five years as all of the major cruise
companies are expected to introduce new ships into service. In order to
utilize new capacity, the cruise industry must increase its share of the
overall vacation market. Any future imbalances between cruise industry
supply and demand could have a negative impact on the Company's net revenue
yields, which would also have a negative impact on net income.
(8) Demand for cruises and other vacation products may not keep pace
with supply and, as a result, the Company's net revenue yields may
be adversely affected.
Demand for cruises and other vacation products may be affected by a
number of factors. For example, the Company's sales are dependent on the
underlying economic strength of the countries in which it operates. Adverse
economic conditions can reduce the level of disposable income of consumers
available for vacations. In addition, armed conflicts or political
instability in areas where the Company's ships cruise can adversely affect
demand for its cruises to those areas. Finally, adverse incidents involving
cruise ships and adverse media publicity concerning the cruise industry in
general can impact demand. Any reduction in demand may have a negative
impact on the Company's net revenue yields, which would also have a negative
impact on net income.
(9) The Company faces significant competition from both cruise lines
and other vacation operators.
The Company operates in the vacation market. The Company competes for
consumer disposable leisure-time dollars with both other cruise operators and
a wide array of other vacation operators, including numerous land-based
resorts and hotels and sightseeing destinations located throughout the world.
The primary methods of competition among these operators are on the basis of
pricing, product (i.e. the nature of the overall vacation experience), and
itineraries/locations. The Company's principal cruise competitors include
Royal Caribbean Cruise Ltd., which owns Royal Caribbean International and
Celebrity Cruises, P&O Princess Cruises plc, which owns Princess Cruises, P&O
Cruises and Aida Cruises, and Norwegian Cruise Line and Orient Lines, which
are both owned by Star Cruises plc. In the event that the Company does not
compete effectively with other cruise companies and other vacation operators,
its market share could decrease and its net revenue yields could be adversely
affected.
(10) Higher fuel prices could raise the Company's costs.
The cost of fuel is subject to many economic and political factors which
are beyond the Company's control. An increase in fuel prices could
adversely affect the Company's financial statements because the Company may
not be able to increase the prices on its cruise vacations to recover any
increased costs.
(11) Conducting business internationally may result in increased costs.
The Company operates its business internationally and plans to continue
to develop its international presence, especially in Europe. Operating
internationally exposes the Company to a number of risks. Examples include
currency fluctuations, interest rate movements, increases in duties and
taxes, political uncertainty, and changes in laws and policies affecting
cruising, vacation or maritime businesses or the governing operations of
foreign-based companies. If the Company is unable to address these risks
adequately, its financial statements could be adversely affected.
(12) Delays or faults in ship construction could reduce the Company's
future profitability.
Cruise ships are large and complicated vessels and building them
involves risks similar to those encountered in similar sophisticated
construction projects, including delays in delivery and faulty construction.
Delays or faults in ship construction may result in delays or cancellations
of scheduled cruises, necessitate unscheduled repairs to and drydocking of
the ship and increase the Company's shipbuilding costs and/or expenses.
Industrial action, insolvency of shipyards or other events could also delay
or indefinitely postpone the delivery of new ships. These events, in turn,
could, to the extent they are not covered by contractual provisions or
insurance, adversely affect the Company's financial results.
(13) Inability of qualified shipyards to build the Company's ships
could reduce the Company's future profitability.
Management believes that there are a limited number of shipyards in the
world capable of the quality construction of large passenger cruise ships.
The Company currently has contracts, with three of these shipyards for the
construction of 16 ships to enter service over the next five years (see Part
I, Item 1. Business, C. Cruise Ship Segment - Wholly Owned Cruise Operations
- - Cruise Ship Construction). The Company's primary competitors also have
contracts to construct new cruise ships (see Part I, Item 1. Business, C.
Cruise Ship Segment - Wholly Owned Cruise Operations - Competition). If the
Company elects to build additional ships in the future, which it expects to
do, there is no assurance that any of these shipyards will have the available
capacity to build additional new ships for the Company at the times desired
by the Company or that the shipyards will agree to build additional ships at
a cost acceptable to the Company. Additionally, there is no assurance that
ships under contract for construction will be delivered. These events, in
turn could adversely affect the Company's financial statements.
C. Cruise Ship Segment - Wholly Owned Cruise Operations
The multiple-night cruise industry, which is a small part of the overall
vacation market, is a global business. Management estimates that the global
cruise industry carried in excess of nine million passengers in 2000. The
principal cruise sectors in the world, categorized by source of passengers,
are North America, Europe, Asia/Pacific and South America. The Company
sources its passengers principally from North America and, to a lesser
extent, from Europe. A small percentage of the Company's passengers are
sourced from Asia/Pacific and South America. See Note 10, "Segment
Information," to the Company's Consolidated Financial Statements in Exhibit
13 to this Annual Report on Form 10-K for additional information regarding
the Company's U.S. and foreign assets and revenues.
As previously mentioned, from June 1997 to September 29, 2000, Carnival
Corporation owned a 50% direct interest in Costa and, accordingly, Costa was
classified by Carnival Corporation as an affiliated cruise operation.
Costa's results of operation from June 1997 to September 2000 were included
in affiliated operations in the Company's statements of operations. On
September 29, 2000, the remaining 50% of Costa was purchased and, therefore,
the Company now owns 100% of Costa. At November 30, 2000, Costa's balance
sheet has been consolidated with Carnival Corporation and its other wholly
owned subsidiaries. Commencing in fiscal 2001, Costa's results of operations
will be fully consolidated in the same manner as Carnival Corporation's other
wholly owned subsidiaries. Accordingly, reference to the "Company" in this
Annual Report on Form 10-K include Carnival Corporation and its consolidated
subsidiaries, including Costa, unless Costa is specifically excluded.
North American Cruise Industry
The passenger cruise industry as it exists today began in approximately
1970. Over time, the industry has evolved from a trans-ocean carrier service
into a vacation alternative to land-based resorts and hotels and sightseeing
destinations. According to Cruise Lines International Association ("CLIA"),
an industry trade group, in 1970 approximately 500,000 North American sourced
passengers took cruises of threetwo consecutive nights or more. CLIA estimates
that this number reached 5.96.66 million passengers in 1999,2000, an average compound
annual growth rate of 8.9%9.0% since 1970. Also, according to CLIA, by the end of
19992000 the number of ships in service totaled 145164 with an aggregate capacity of
approximately 148,000165,000 lower berths. CLIA estimates that the number of
passengers carried insourced from North America increased from 5.4 million in 1998 to 5.95.89 million in 1999 to
6.66 million in 2000 or 8.6%13.1%.
CLIA estimates that the number of North American sourced cruise
passengers will grow to approximately 6.37.4 million in 2000.2001. CLIA projections
indicate that by the end of 2000, 2001, 2002, 2003 and 2003,2004, North America will be
served by 156, 168,176181, 191, 199 and 181206 vessels, respectively, having an aggregate
capacity of approximately 164,000,
181,000, 198,000187,000, 207,000, 226,000 and 209,000241,000 lower berths,
respectively. CLIA's estimates of new ship introductions are based on
scheduled ship deliveries and could change. The lead timelead-time for design,
construction and delivery of a typical large cruise ship is approximately two
to three years. Additionally, CLIA's estimates of capacity do not include
assumptions related to unannounced ship withdrawals due to age or changes in
itineraries and, accordingly, could indicate a higher percentage growth in
capacity than will actually occur. Nonetheless, management believes net
capacity serving North American sourced cruise passengers will increase over
the next several years.
CLIA's estimate of North American sourced cruise passengers and
passenger berths is as follows:
NORTH AMERICAN NORTH AMERICAN
CRUISE PASSENGER
YEAR PASSENGERS(1) BERTHS(2)
2000 6,660,000(est.) 165,000
1999 5,900,000(est) 148,0005,890,000 149,000
1998 5,432,000 138,000
1997 5,051,000 118,000
1996 4,659,000 110,000
1995 4,378,000 105,000
(1) Source: CLIA estimates based on passengers carried for at least threetwo
consecutive nights for the calendar year.
(2) Information presented is as of the end of the year.
In spite of the cruise industry's growth since 1970, management believes
cruises only represent approximately 2% of the applicable North American
vacation market, defined as persons who travel for leisure purposes on trips
of three nights or longer involving at least three night'san overnight stay in a hotel. Only an
estimated 11%CLIA
estimates that only 12% of the North American population has ever taken a
cruise.cruise for at least two consecutive nights.
European Cruise Industry
The cruise industry in Europe is much smaller than the North American
industry. Industry-wide European sourced cruise passengers carried in 2000
are estimated to be approximately two million as compared to approximately
6.7 million passengers sourced from North America. From 1990 to 2000, the
number of cruise passengers sourced from the European market has been growing
faster than its North American counterpart and, based on management's
estimates, less than 1% of European travelers took a cruise in 2000. The
number of cruise ships being marketed to European customers has increased in
2000 compared to 1999 and, management believes that several additional new or
existing ships will be introduced into the European marketplace over the next
few years.
Demographics for the European cruise market appear favorable, as Europe
has a population larger than that of North America, there is a low level of
market penetration by the cruise industry and European consumers tend to take
longer vacations. The rate at which European vacationers take a cruise has
been growing at a 15% compounded annual growth rate for the period from 1994
through 1999.
Passengers and Berths
The Company's Wholly Owned Cruise Operations, excluding Costa, had
worldwide cruise passengers and passenger berths as follows:
CRUISE PASSENGER
YEAR PASSENGERS BERTHS(1)
2000 2,669,000 48,196
1999 2,366,000 43,810
1998 2,045,000 39,466
1997 1,945,000 31,078
1996 1,764,000 30,837
1995 1,543,000 26,035
(1) Information presented is as of the end of the Company's fiscal year.year and
excludes Costa.
The Company's passenger capacity has grown from 26,03530,837 at November 30,
19951996 to 43,81048,196 at November 30, 1999.2000, excluding Costa. During 1996, gross capacity increased by 5,960
berths due to delivery of the Inspiration, the Veendam and the Carnival Destiny
which was partially offset by the 1,146 berth decrease due to the sale of the
Festivale, for a total net increase of 4,802. In 1997 gross
capacity increased 1,316 berths due to the delivery of the Rotterdam VI which
was offset by the 1,075 berth decrease due to the sale of the Rotterdam V for
a total net increase of 241. During 1998, with the delivery of the Elation
and the Paradise, the purchase of the Wind Surf, the acquisition of Cunard
and the consolidation of Seabourn, capacity increased by 8,388 berths. In
1999 capacity increased by 4,344 berths primarily due to the delivery of the
Carnival Triumph and the Volendam. During 2000 gross capacity increased by
4,386 berths, excluding the acquisition of Costa, primarily due to the
delivery of the Carnival Victory, the Zaandam and the Amsterdam partially
offset by the 1,214 berth decrease due to the sale of the Nieuw Amsterdam. At
November 30, 2000, the acquisition of Costa added 9,200 passenger berths to
the Company's Wholly Owned Cruise Operations.
Cruise Ships and Itineraries
Under the Carnival name, the Companyprimarily serves the contemporary sector of the North American
vacation market with 1415 ships (the "Carnival Ships"). All of the Carnival
Ships were designed by and built for Carnival, including twothree of the world's
largest, the Carnival DestinyVictory, the Carnival Triumph and the Carnival Triumph. TenDestiny.
Twelve of the Carnival Ships operate in the Caribbean during all or a portion
of the year and two Carnival Ships call on ports on the Mexican Riviera year
round. Carnival Ships also offer cruises to Alaska, Canada, New England, the
Hawaiian Islands, the Bahamas and the Panama Canal.
Through its wholly owned subsidiary, HAL Antillen, N.V. ("HAL"), the
Company operates nineten ships primarily serving the premium sector of the North
American vacation market under the Holland America name (the "Holland America
Ships"). HAL also operates four sailing ships in a niche of the luxury cruise
sector under the Windstar name (the "Windstar Ships").
The Holland America Ships offer premium cruises of various lengths in
Alaska, the Caribbean, Panama Canal, Europe, Hawaii,the Hawaiian Islands, South
America and other worldwide itineraries. Cruise lengths vary from seven to 9899
days, with a large proportion of cruises being seven or ten days in length.
Periodically, the Holland America Ships make longer cruises or operate on
special itineraries. For
example, in 1999, the Rotterdam made a 98-day world cruise and the Nieuw
Amsterdam made a series of 14-day South China Sea Explorer cruises. Holland
America will continue to offer these special or longer itineraries in order to increase travel opportunities for its
customers and strengthen its cruise offeringsofferings. For example, in view of the fleet expansion.2001, Holland
America offered a 99-day world cruise. The majority of the Holland America
Ships operate in the Caribbean during fall to spring and in Alaska and Europe
during spring to fall. In order to offer a unique destination, , to compete
more effectively with land based vacation alternatives, and to compete with
other cruise lines more effectively while operating in the Caribbean, in
December 1997 Holland America introduced into certain of its Caribbean
itineraries a private island destination known as Half Moon Cay. Half Moon
Cay is a 2400-acre2,400-acre island acquiredowned by Holland America in
December 1996.America. Facilities were
constructed on the island on 45 acres along a crescent-shaped white sand
beach. The remainder of the island remains undeveloped. The facilities on
Half Moon Cay include bars, shops, restrooms, a post office, a chapel and an
ice cream shop, as well as a food pavilion with open-air dining shelters and
a bandstand.
The four Windstar Ships currently operate in the Caribbean, Europe and
Central America and offer a casual, yet luxurious, cruise experience on board
these modern sail ships. These ships primarily serve a niche segment of the
luxury sector of the North America vacation market.
Passengers can enjoy their voyage by "Cruising Italian Style" on board
any of the seven Costa ships (the "Costa Ships"), which primarily operate in
Europe during the spring to fall months and the Caribbean and South America
during the fall to spring. Costa is the number one cruise line in Europe
based on passengers carried and capacity and its ships primarily serve the
contemporary sector of the European vacation market. The Costa Ships call on
73 European ports with 34 different itineraries and to various other ports in
the Caribbean and South America. During 2000, Costa introduced the 2,112
passenger capacity Costa Atlantica which has garnered rave reviews in Europe.
Under the Cunard brand, the Company operates two ships (the "Cunard
Ships") which offer classic "Old World" cruising and recreate the golden age
of ocean liner travel with a British style and essence primarily serving the
luxury sector of the worldwide vacation market. Cunard's flagship, the Queen
Elizabeth 2 ("QE2"), offers the only remaining scheduled transatlantic ocean
liner service between the U.S. and Great Britain. Both of Cunard's ships
offer cruises to worldwide destinations, with many of the cruises ranging
between 10six and 2118 days in length. Periodically, theThe Cunard ships also offer extended
cruises, such as a 104-day world cruise or Cape Town Line Voyages between
Southampton, England and Cape Town, South Africa.cruise.
The six Seabourn Shipsships (the "Seabourn Ships") offer a choice of three
distinct styles of luxury cruises aboard intimately sized ships. Seabourn
is marketed asships primarily serve the "world's
most celebrated cruise line" becauseluxury sector of itsthe North American vacation market
and offer an intense focus on personalized service and extraordinaryquality cuisine. These
ships concentrate their operations in the Caribbean Mediterranean, Baltic and Western Europe with cruises
in the seven to 14 day rangerange. Periodically, the Seabourn Ships make longer
cruises or operate on special itineraries and also make extended cruises to
various other worldwide destinations, including South America, Australia, the
South Pacific and Southeast Asia.
Summary information concerning the Company's ships is as follows (primary areas of operation reflect 1999 itineraries and
are subject to change in future years).follows.
APPROXIMATE
GROSS
PRIMARY
YEAR PAX REGISTERED
AREAS OF
NAMESHIP REGISTRY BUILT CAP TONS
OPERATION
Carnival:
Carnival Victory Panama 2000 2,758 102,000
Carnival Triumph PanamaBahamas 1999 2,758 102,000 Caribbean,
Eastern Canada
Paradise Panama 1998 2,052 70,000
Caribbean
Elation Panama 1998 2,052 70,000
Mexican Riviera
Carnival Destiny PanamaBahamas 1996 2,642 101,000
Caribbean
Inspiration PanamaBahamas 1996 2,052 70,000
Caribbean
Imagination PanamaBahamas 1995 2,052 70,000
Caribbean
Fascination PanamaBahamas 1994 2,052 70,000
Caribbean
Sensation PanamaBahamas 1993 2,052 70,000
Caribbean
Ecstasy LiberiaPanama 1991 2,052 70,000
Caribbean
Fantasy LiberiaPanama 1990 2,056 70,000
Bahamas
Celebration LiberiaPanama 1987 1,486 47,000
Caribbean
Jubilee PanamaBahamas 1986 1,486 47,000
Alaska, Hawaii,
Mexican Riviera,
Panama Canal
Holiday PanamaBahamas 1985 1,448 46,000
Mexican Riviera
Tropicale Liberia(1) Panama 1982 1,0141,022 37,000 Caribbean
Total Carnival Ships Capacity..... 27,254Capacity......... 30,020
Holland America:
Zaandam Netherlands 2000 1,440 63,000
Amsterdam Netherlands 2000 1,380 62,000
Volendam Netherlands 1999 1,440 63,000
Caribbean (1)
Rotterdam Netherlands 1997 1,316 62,000
Europe,
Worldwide
Veendam Bahamas 1996 1,266 55,000
Alaska,
Caribbean
Ryndam Netherlands 1994 1,266 55,000
Alaska, Caribbean
Maasdam Netherlands 1993 1,266 55,000
Eastern Canada,
Europe,
Panama Canal
Statendam Netherlands 1993 1,266 55,000
Alaska, Hawaii,
Caribbean, Mexico
Westerdam Netherlands 1986 1,494 54,000
Alaska, Caribbean
Noordam Netherlands 1984 1,214 34,000
Alaska, Caribbean,
South America
Nieuw Amsterdam (2) Netherlands 1983 1,214 34,000 Alaska, Caribbean,
Asia/Pacific
Total Holland America
Ships Capacity................... 11,742Capacity....................... 13,348
Costa (1):
Costa Atlantica Italy 2000 2,112 86,000
Costa Victoria Italy 1996 1,928 76,000
Costa Romantica Italy 1993 1,344 53,000
Costa Allegra Italy 1992 806 30,000
Costa Classica Italy 1991 1,302 53,000
Costa Marina Italy 1990 762 25,500
Costa Riviera Italy 1963 946 30,400
Total Costa Ships Capacity.............. 9,200
Cunard:
Caronia England 1973 668 24,500
QE 2 England 1969 1,790 70,000
Total Cunard Ships Capacity............ 2,458
Seabourn:
Seabourn Legend Norway 1992 208 10,000
Seabourn Spirit Norway 1989 208 10,000
Seabourn Pride Norway 1988 208 10,000
Seabourn Sun Bahamas 1988 758 38,000
Seabourn Goddess II Bahamas 1985 116 4,250
Seabourn Goddess I Bahamas 1984 116 4,250
Total Seabourn Ships Capacity.......... 1,614
Windstar Cruises:
Wind Surf Bahamas 1990 312 14,750
Caribbean, Europe
Wind Spirit Bahamas 1988 148 5,700
Caribbean, Europe
Wind Song Bahamas 1987 148 5,700
Central America,
Europe
Wind Star Bahamas 1986 148 5,700
Caribbean,
Central America
Total Windstar Ships Capacity.....Capacity.......... 756
APPROXIMATE
GROSS PRIMARY
YEAR PAX REGISTERED AREAS OF
NAME REGISTRY BUILT CAP TONS OPERATION
Cunard:
Caronia England 1973 666 24,500 Caribbean, Europe,
Pacific
Queen Elizabeth 2 England 1969 1,778 70,000 Transatlantic,
Worldwide
Total Cunard Ships Capacity....... 2,444
Seabourn:
Seabourn Legend Norway 1992 208 10,000 Caribbean, Europe
Seabourn Spirit Norway 1989 208 10,000 Asia, Europe
Seabourn Pride Norway 1988 208 10,000 South America,
Europe, Caribbean
Seabourn Sun Bahamas 1988 758 38,000 Caribbean, Europe,
Pacific
Seabourn Goddess II Bahamas 1985 116 4,250 Asia, Caribbean,
Europe
Seabourn Goddess I Bahamas 1984 116 4,250 Caribbean, Europe
Total Seabourn Ships Capacity..... 1,614
Total Capacity....................... 43,810Capacity........................... 57,396
(1) The VolendamIn February, 2001 the Tropicale was transferred from Carnival to Costa
and is scheduled to begin operating in service for only 18 daysthe European market during fiscal
1999. During fiscal 2000, the primary areassummer
of operations are
expected to be Alaska and the Caribbean.
(2) In late 2000, this ship is contracted to be sold to2001, after it undergoes a third
party.major refit.
__________________________
Cruise Ship Construction
The Company has signed agreements with twothree shipyards providing for the
construction of 16 additional cruise ships. A summary of new ship agreements for
the Company's Wholly Owned Cruise Operationsships
under contract for construction is as follows:
APPROXIMATE
APPROXIMATE
EXPECTED GROSS ESTIMATED
SERVICE PAX REGISTERED TOTAL
VESSELSHIP DATE(1) SHIPYARD CAP TONS COST(2)
(In millions)
Carnival
Carnival Victory 9/00 Fincantieri 2,758 101,000 450
Carnival Spirit 4/01 Masa-Yards 2,120 84,0002,124 88,500 $ 375
Carnival Pride 1/02 Masa-Yards (3) 2,120 84,0002,124 88,500 375
Carnival Legend 8/9/02 Masa-Yards (3) 2,120 84,0002,124 88,500 375
Carnival Conquest 12/02 Fincantieri 2,758 101,000 4502,974 110,000 500
Carnival Glory 8/03 Fincantieri 2,758 101,000 4502,974 110,000 500
Carnival Miracle 4/04 Masa-Yards (3) 2,124 88,500 375
Carnival Valor 11/04 Fincantieri(3) 2,974 110,000 500
Total Carnival Ships 14,634 2,47517,418 3,000
Holland America
Zaandam 5/00 Fincantieri(4) 1,440 63,000 300
AmsterdamNewbuild 11/00 Fincantieri 1,380 62,000 300
Newbuild 10/02 Fincantieri(4) 1,820Fincantieri(3) 1,848 84,000 400410
Newbuild 8/03 Fincantieri(4) 1,820Fincantieri(3) 1,848 84,000 400410
Newbuild 1/2/04 Fincantieri(4) 1,820Fincantieri(3) 1,848 84,000 400410
Newbuild 9/10/04 Fincantieri(4) 1,820Fincantieri(3) 1,848 84,000 400410
Newbuild 6/05 Fincantieri(3) 1,848 84,000 410
Total Holland America Ships 10,100 2,2009,240 2,050
Costa
Newbuild 7/03 Masa-Yards (4) 2,112 86,000 330
Newbuild 1/04 Fincantieri(5) 2,720 101,000 380
Newbuild 12/04 Fincantieri(5) 2,720 101,000 380
Total (5) 24,734 $4,675Costa Ships 7,552 1,090
Cunard
Queen Mary 2 12/03 Chantiers de
l'Atlantique (3) 2,620 150,000 780
Total Cunard 2,620 780
Total 36,830 $6,920
(1) No assurance can be made that the vessels under construction will be
introduced into service by the expected service date.
(2) Estimated total cost of the completed vesselship includes the contract price
with the shipyard, design and engineering fees, capitalized interest, various
owner supplied items and construction oversight costs.
(3) These construction contracts are denominated in either German Deutsche Marksmarks,
Italian lira or euros and have been fixed into U.S. dollars through the
utilization of forward foreign currency contracts.
(4) This construction contract is denominated in German marks which has a
fixed exchange rate with Costa's functional currency, which is the Italian
lira. The estimated total cost has been translated into U.S. dollars using
the November 30, 2000 exchange rate.
(5) These construction contracts are denominated in Italian Liralira and the
estimated total costs have been fixedtranslated into U.S. dollars throughusing the
utilization of forward foreign currency
contracts.
(5) The Company has one option for the construction of an additional 84,000
gross registered ton vessel for Holland America, with a passenger capacity of
1,820 to be delivered in 2005. The estimated total vessel cost of approximately
$400 million is denominated in Italian Lira. No assurance can be given that the
option to construct the vessel will be exercised.November 30, 2000 exchange rate.
Cruise Pricing
Each of the Company's cruise brands publishes brochures with prices for
the upcoming seasons. Brochure prices vary by cruise line, by category of
cabin, by ship, by season and by itinerary. Brochure prices are regularly
discounted through the Company's early booking discount programprograms and other
promotions. The cruise ticket price includes allaccommodations, meals and most
onboard entertainment, on board andsuch as the use of, or admission to, a wide variety of
activities and facilities, such asincluding a fully equipped casino, nightclubs,
theatrical shows, movies, parties, a discotheque, a health club and swimming
pools, on each ship.
Onboard and Other Revenues
The Company derives revenues from certain onboard activities and
services including casino gaming, bar sales, gift shop sales, entertainment
arcades, shore tours, art auctions, photography,photo sales, spa services and promotional
advertising by merchants located in ports of call.
The casinos, which contain slot machines and gaming tables including
blackjack, and in most cases craps, roulette and stud poker, are generally
open only when the ships are at sea in international waters. The Company also
earns revenue from the sale of alcoholic and other beverages. Onboard
activities are either performed directly by the Company or by independent
concessionaires, from which the Company collects a percentage of revenues.
The Company receives additional revenue from the sale to its passengers
of shore excursionstours at each ship's ports of call. They include, among other
things, bus and taxi sightseeing and adventure excursions, local boat and
beach parties, and nightclub and casino visits. On the Carnival, Costa,
Windstar, Cunard and Seabourn Ships, such shore excursions are primarily
operated by independent tour operators. On the Holland America Ships, shore
excursions are operated by Holland America WestoursTours and independent parties.
In conjunction with its cruise vacations on its ships, all of the
Company's cruise brands sell pre-cruise and post-cruise land packages.
Carnival packages generally include one, two or three-night vacations at
nearby attractions, such as Universal Studios and Walt Disney World in
Orlando, Florida, or in proximity to other vacation destinations in Central
and South Florida, Galveston, Texas, New Orleans, Louisiana, Los Angeles,
California and San Juan, Puerto Rico. Holland America packages outside of
Alaska generally include one, two or three-night vacations, including stays
in unique European port cities or near attractions in Central and South
Florida. Costa's packages generally include one or two-night vacations in
well-known European cities or at vacation destinations in central or south
Florida. Cunard and Seabourn packages include numerous luxury and/or exotic
pre and post-cruise land programs, such as world class golf programs, wine tastingsLondon
and Paris luxury holidays and tours of the Galapagos Islands and the
Hidden KingdomsTreasures of Nepal.Bangkok.
In conjunction with its Alaskan cruise vacations on its Holland America
and Carnival Ships, the Company sells pre and post-cruise land packages which
are more fully described in Part I, Item 1. Business, C.D. Tour Segment.
Passengers and Occupancy
The aggregate number of passengers carried and occupancy percentage for
the Company's ships, excluding Costa, is as follows:
YEARS ENDED NOVEMBER 30,
2000 1999 1998 1997
Passengers carried 2,669,000 2,366,000 2,045,000 1,945,000
Occupancy percentage (1)(2) 105.4% 104.3% 106.3% 108.3%
(1) In accordance with cruise industry practice, occupancy percentage is
calculated based on two passengers per cabin even though some cabins can
accommodate three or four passengers. The percentages in excess of 100%
indicate that more than two passengers occupied some cabins.
(2) The Company acquired a majority interest in Cunard Line Limited on
May 28, 1998. Since that date Cunard Line Limited's occupancy percentages
have been included in the Company's total occupancy. Cunard Line Limited's
ships generally sail with lower occupancy percentages than the Company's
other brands.
The actual occupancy percentage for all cruises on the Company's ships,
excluding Costa, during each quarter of fiscal 19981999 and 19992000 was as follows:
OCCUPANCY
QUARTERS ENDED PERCENTAGE
February 28, 1998 105.9
May 31, 1998 105.4
August 31, 1998 111.5
November 30, 1998 102.1
February 28, 1999 100.9
May 31, 1999 99.9
August 31, 1999 112.3
November 30, 1999 103.6
February 29, 2000 103.4
May 31, 2000 102.3
August 31, 2000 112.4
November 30, 2000 103.4
Sales and Marketing
The Company's brands are positioned to appeal to each of the three major
sectors of the vacation market (contemporary, premium and luxury). The
contemporary sector is served typically by cruises that are seven days or
shorter in length, are priced at per diems of $200 or less, and feature a
casual ambiance. The Company believes that the success and growth of the
Carnival brand is attributable in large part to its early recognition of
these sectors of the vacation market and its efforts to reach and promote the
expansion of the contemporary sector. The premium sector typically is served
by cruises that last for seven to 14 days or more at per diems of $250 or
higher, and appeal principally to more affluent customers. The luxury sector,
which is not as large as the other sectors, is served by cruises with per
diems of $300 or higher.
During 1998, the Company created a marketing association called the
"World's Leading Cruise LinesSM" for its family of six cruise brands including
Costa, in order
to both educate the consumer about the overall breadth of the Company's
cruise brands, as well as to increase the effectiveness and efficiency of
marketing the brands. This initiative is meantDuring 2000, the Company launched "VIP", or Vacation
Interchange Privileges, a loyalty program that provides special
considerations to supplementrepeat guests aboard any of these six brands. In addition,
the existing
marketing programsCompany partnered with Starwood Preferred guests, the world's leading
hotel loyalty program, adding cruising from any of each individual brand.the Company's six brands
to the list of award options available to their customers.
The Company's various cruise lines employ over 350750 personnel, excluding
reservation agents, in the sales and sales support area who, among other
things, focus on motivating, training and supporting the retail travel agent
community which sells substantially all of the Company's cruises. Travel
agents generally receive a standard commission of 10% plus the potential of
additional commissions based on sales volume. Commission rates on cruise
vacations are usually higher than commission rates earned by travel agents on
sales of airline tickets and hotel rooms. Moreover, since cruise vacations
are substantially all-inclusive, sales of the Company's cruise vacations
generally yield higher commissions to travel agents than commissions earned
on selling airline tickets and hotel rooms. During fiscal 1999,2000, no controlled
group of travel agencies accounted for more than 10% of the Company's consolidated
revenues.
Historically, the Company's cruise brands have been marketed primarily
in North America. The Company began to globalize its cruise business by
expanding into Europe through the acquisition of its interest in Airtours in
April 1996, Costa in June 1997 and Cunard in May 1998. In 2000, management
positioned the Company to better take advantage of this expanding market
segment by acquiring the balance of Costa. This strategic acquisition
solidified the Company's ownership of a cruise line that management believes
is as recognizable in Southern Europe and South America as Carnival is in
North America. The Company intends to leverage Costa's European leadership
position by furthering the Company's ship development commitment to the Costa
brand. In this way, the Company will expand Europe's largest multiple-night
cruise sectorsship fleet, which should continue to position the Company to gain a
greater foothold in Europe are
much smaller than the North American sectors. Industry widegrowing European cruise passengers carried in 1999 are estimated to be approximately 1.4 million
compared to approximately 5.9 million from North America. See Note 9, "Segment
Information," to the Company's Consolidated Financial Statements in Exhibit 13
to this Annual Report on Form 10-K for additional information regarding the
Company's foreign revenues.business.
Carnival
Carnival believes that its success is due in large part to its unique
brand positioning within the vacation industry. Carnival markets the Carnival
Ship cruises not only as alternatives to competitors' cruises, but as
vacation alternatives to land-based resorts and sightseeing destinations.
Carnival seeks to attract passengers from the broad vacation market,
including those who have never been on a cruise ship before and who might not
otherwise consider a cruise as a vacation alternative. Carnival's strategy
has been to emphasize the cruise experience itself rather than particular
destinations, as well as the advantages of a prepaid, all-inclusive vacation
package. Carnival markets the Carnival Ship cruises as the "Fun Shipsr"
experience, which includes a wide variety of shipboard activities and
entertainment, such as full-scale casinos and nightclubs, an atmosphere of
pampered service and high quality food.
As mentioned above, the Company markets the Carnival Ships as the "Fun
Shipsr" and uses, among others, the themes "Carnival's Got the Funr" and "The
Most Popular Cruise Line in the World!r". Carnival advertises nationally
directly to consumers on network and cable television and through extensive
print and radio media. Carnival believes its advertising generates interest
in cruise vacations generally and results in a higher degree of consumer
awareness of the "Fun Shipsr" concept and the "Carnivalr" name in particular.
During 2000, Carnival re-launched www.carnival.com, Carnival's consumer web
site which primarily serves as a marketing and research tool for its current
and potential customers.
Substantially all of Carnival's cruise bookings are made through travel
agents. In fiscal 1999,2000, Carnival took reservations from about 29,000 of
approximately 49,000 travel agency locations known to the Company in the
United States and Canada. Travel agents generally receive a standard
commission of 10% plus the potential of additional commissions based on sales
volume. In addition, Carnival markets and sells its cruises to tour operators
and through travel agents located in numerous other countries, including the
United Kingdom, Argentina, Germany, Mexico and Venezuela.
Carnival engages in substantial promotional efforts designed to motivate
and educate retail travel agents about its "Fun Shipsr" cruise vacations.
Carnival employs approximately 120230 business development managers and 50 in-housein-
house service representatives to motivate independent travel agents and to
promote its cruises as an alternative to land-based vacations or other cruise
lines. Carnival believes it has one of the largest sales forces in the
industry.
During 2000, Carnival forged new marketing alliances and initiatives
that are meant to expand its reach to first-time and existing cruise guests.
Carnival partnered with Fairfield Communities, one of the nation's leading
vacation ownership operators, to introduce cruising to their customers. In
addition, Carnival opened three Carnival Vacation Stores whose primary
purpose is to provide Carnival cruise information to potential customers.
These Carnival owned and operated stores are kiosks located in major
metropolitan shopping centers in Texas.
To facilitate access and to simplify the reservation process, Carnival
employs approximately 750900 reservation agents primarily to take bookings from
independent travel agents. Carnival's fully automated reservation system
allows its reservation agents to respond quickly to book staterooms on its
ships. Additionally, through Leisure Shopper, Cruise Director or Carnival's
internet booking engine, travel agents and consumers have the ability to make
reservations through their own computer terminals directly into Carnival's
computerized reservations system.
A significant portion of Carnival's cruises are generally booked several
months in advance of the sailing date. This lead-time allows Carnival to
adjust its prices, if necessary, in relation to demand for available cabins,
as indicated by the level of advance bookings. Carnival's SuperSaver fares
are designed to encourage potential passengers to book cruise reservations
earlier, which helps the Company to more effectively manage overall net revenue yields
(net revenue per available berth). Carnival's payment terms require that a
passenger pay approximately 20%a deposit of between $100 to $300, depending on the cruise
price within seven days ofduration, to confirm their reservation with the reservation date and the balance due not later than 45
days before the sailing date for three, four and five day cruises and 70 or
75 days before the sailing date for seven-day and longer cruises.
Holland America and Windstar
The Holland America and Windstar Ships cater to the premium and luxury
sectors, respectively. The CompanyManagement believes that the hallmarks of the Holland
America experience are beautiful ships and gracious, attentive service.
Holland America communicates this difference as "A Tradition of Excellencer",
a reference to its long-standing reputation for "world class" service and
cruise itineraries.
Substantially all of Holland America's bookings are made through travel
agents. In fiscal 1999,2000, Holland America took reservations from about 20,00023,000
of approximately 49,000 travel agency locations known to the Company in the
United States and Canada. In addition, Holland America and Windstar markets
and sells its cruises to tour operators and through travel agents located in
numerous countries including the United Kingdom and Australia. Travel agents
generally receive a standard commission of 10% plus the potential of
additional commissions based on sales volume.
Holland America has focused much of its sales effort at creating an
excellent relationship with the travel agency community. This is related to
its marketing philosophy that travel agents have a large impact on the
consumer vacation selection process and will recommend Holland America more
often because of its excellent reputation for service to both consumers and
independent travel agents. Holland America solicits continuous feedback from
consumers and the independent travel agents making bookings with Holland
America to ensure they are receiving excellent service. In 2000, Holland
America and Windstar enhanced their web sites at www.hollandamerica.com and
www.windstarcruises.com, thus enriching the consumers web-based research
experience.
Holland America's marketing communication strategy is primarily composed
of newspaper and magazine advertising, large scale brochure distribution,
direct mail solicitations to past passengers (referred to as "alumni"),and others, network and cable
television and radio spots. Holland America engages in substantial
promotional efforts designed to motivate and educate retail travel agents
about its products. Holland America employs approximately 54 field sales
representatives, 2326 inside sales representatives and 18 sales and service
representatives to support the field sales force. To facilitate access to
Holland America and to simplify the reservation process for the Holland
America Ships, Holland America employs approximately 260290 reservation agents
primarily to take bookings from travel agents. Additionally, through Leisure
Shopper and Cruise Director, travel agents have the ability to make
reservations directly into Holland America's reservations system. Holland
America's cruises generally are booked several months in advance of the
sailing date.
Windstar has its own marketing and reservations staff. Field sales
representatives for both Holland America and Carnival also act as field sales
representatives for Windstar. Marketing efforts are devoted primarily to i)
travel agent support and awareness, ii) direct mail solicitation of past
passengers and iii) distribution of brochures. The marketing features the
distinctive nature of the graceful, modern sail ships and the distinctive
"casually elegant" experience on "intimate itineraries" (apart from the
normal cruise experience). Windstar's cruise sector positioning is embodied
in the phrase "180 degrees from ordinaryr".
Costa
Since June 1997, the Company has owned 50% of Costa. On September 29,
2000, the Company completed the acquisition of the remaining 50% interest in
Costa from Airtours. See Note 3 "Acquisition," to the Company's Consolidated
Financial Statements in Exhibit 13 of this Annual Report on Form 10-K.
Costa is headquartered in Genoa, Italy and is Europe's largest cruise
line based on number of passengers carried and available capacity. Costa is
primarily targeted to the contemporary sector with a majority of its cruises
sold in Europe, primarily in Italy, France, Germany and Spain. Approximately
86% of Costa's revenues are generated by non-U.S. tour operators and travel
agents. Costa has sales offices in Argentina, Brazil, England, France,
Germany, Italy, Spain, Switzerland and the United States, and employs over
300 personnel in the sales and sales support area, excluding reservation
agents. Costa sales offices focus much of their effort at motivating and
educating travel agents. These efforts include, among other things,
newspaper, television, radio and magazine advertising, direct mail
solicitation and brochure distribution. In addition, through the use of the
internet, at web sites specifically designed for the country and guest that
Costa is targeting, the consumers are educated about cruising and Costa
(www.costacruises.com). To facilitate access to Costa and to simplify the
reservation process for the Costa Ships, Costa employs approximately 120
reservation agents primarily to take bookings from travel agents.
Management believes that Costa distinguishes itself from other brands
by offering a distinctly Italian style of cruising. Costa believes its
advertising generates interest in cruise vacations generally and results in a
higher degree of awareness to "Cruising Italian Style SM". In addition, Costa
is very experienced at providing cruises to guests with different
nationalities and languages besides Italian, thereby enabling it to
effectively market and sell its cruises throughout Europe, South America and
the U.S.
Cunard and Seabourn
During the period from December 1995 through May 1998, theThe Company owned a
50% equity interest in Seabourn Cruise Line Limited. Simultaneously with the
Company's acquisitionowns 100% of the assets of Cunard in May 1998, Cunard and Seabourn
were combined to form Cunard Line Limited, in which the Company owned a 68%
equity interest. In November 1999 the Company acquired the remaining 32%
minority interest ofowns Cunard Line Limited. Cunard Line Limited currently
operatesand
Seabourn. Currently eight ships in its Cunard and Seabournare operated under these two brands.
The Cunard brand currently operates two ships in the luxury cruise
sector. Cunard's most visible asset is the QE2. The QE2 is the only active
passenger ship of its size built specifically for navigating ocean waters and
currently offering transatlantic cruises, and thus enjoys a unique standing
among modern passenger ships. Since being acquired by the Company, Cunard has
redefined itself as the brand that offers classic "Old World" cruising with a
British essence.
The Seabourn brand currently operates six ships, offering ultra-luxury
cruising with an intense focus on service and cuisine. It is the
exceptionally high level of service which management believes enables
Seabourn to be marketed
as the "Bestone of the Best"most celebrated cruise lines in luxury worldwide cruising.the world.
Seabourn and Cunard currently market and sell their products through
one
combined sales and marketing organization. This combined organization hastheir sales offices in Miami, England, Germany and Australia. Approximately
40%44% of Cunard Line Limited's revenues are generated from outside the U.S.by non-U.S. tour
operators and travel agents. Marketing efforts are devoted primarily to i)
travel agent support and awareness, ii) direct mail solicitation of past
passengers, and iii) targeted print media campaigns and brochure distribution.distribution
and iv) the education of consumers at the Cunard Line Limited has consolidated and streamlined its
entire organization, including its salesSeabourn web sites
located at www.cunardline.com and marketing activities and
implemented a group sales reservation desk to support its emphasis on developing
its base of group business.www.seabourn.com.
Substantially all of Seabourn's and Cunard's bookings are made through
travel agents. In fiscal 1999,2000, Seabourn and Cunard took reservations from
about 7,00011,000 of approximately 49,000 travel agency locations known to the
Company in the United States and Canada. Travel agents generally receive a
standard commission of 10% plus the potential of additional commissions based
on sales volume.
Cunard and Seabourn employ approximately 41 field sales representatives,
1816 inside sales representatives and 4128 sales and service representatives to
support its field sales force. They also employ approximately 9380 Cruise Sales
Consultants primarily to take bookings, substantially all of which come from
travel agents.
During late 1999, Cunard refurbished the Royal Viking Sun and transferred
it along with the Sea Goddess I and II ships to the Seabourn brand. The ships
were renamed the Seabourn Sun, Seabourn Goddess I and Seabourn Goddess II,
respectively. Management believes these ships more appropriately fit within the
Seabourn brand. Additionally, after a major refurbishment in late 1999,
Cunard's Vistafjord was renamed the "Caronia", the name once used by two of
Cunard's former "Old World" ships. The QE2 has also undergone a major
refurbishment in late 1999. Management has revised cruising itineraries and
schedules for the year 2000 in order to more appropriately coordinate individual
ship itineraries with their new branding strategies.
Seasonality
The Company's revenue from the sale of passenger tickets is moderately
seasonal.seasonally. Historically, demand for cruises has been greatest during the
summer months. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - General," in Exhibit 13 of this Annual
Report on Form 10-K.
Competition
In addition to competing with each other, cruise lines compete for consumer
disposable leisure time dollarsThe Company competes both with other vacation alternatives such as
land-based resort hotels and sightseeing destinations, and consumer demand for
such activities is typically influenced by general economic conditions.
As described under Part I, Item 1. Business, B. Cruise Ship Segment, North
American Cruise Industry, the North American cruise industry had an aggregate of
145 ships and 148,000 lower berths at the end of 1999. From the end of 1999
through the end of 2003, CLIA currently estimates that 36 new ships will be
introduced into the North American industry with a capacity of approximately
61,000 lower berths. These estimates of new ship introductions are based on
scheduled ship deliveries and the actual number of ships could change. The lead
time for design, construction and delivery of a typical large cruise ship is
approximately two to three years. Additionally, these estimates of capacity do
not include assumptions related to unannounced ship withdrawals due to age or
changes in itineraries and, accordingly, could indicate a higher percentage
growth in capacity than will actually occur. Nonetheless, management believes
net capacity serving North American cruise passengers will increase over the
next several years, and thus may increase the levels of competition within the
industry.
The Company is the largest cruise company in the world based on passengers
carried, revenues generated and available capacity. The primary methods of
competition among cruise lines and with a wide array
of other land-based vacation alternatives arefor the consumers' disposable
leisure time dollars. The Company's cruise lines also compete, in some
cases, against each other.
The Company's primary competitors in the areas ofcontemporary and/or premium
cruise pricing, cruise product (i.e. the nature of the
overall vacation experience) and cruise itineraries. Each of the Company's
cruise brands and its primary cruise competition is discussed below.
The Carnival Ships compete with cruise ships operated by five different
cruise lines which operate year round from Florida, California or Puerto Rico
with similar itineraries and with nine other cruise lines operating seasonally
from ports in Florida, California, Puerto Rico or New York, including cruise
ships operated by Holland America and Costa. Competitionsectors for cruiseNorth American sourced passengers is substantial. Ships operated by Royal Caribbean International and Norwegian
Cruise Line sail regularly from Miami and ships operated by Celebrity Cruises,
owned byare Royal Caribbean
Cruises Ltd., and Princess Cruises sail regularly from
Ft. Lauderdale on itineraries similar to those of the Carnival Ships. Carnival
competes year round with ships operated by Royal Caribbean International
embarking from Los Angeles to the West Coast of Mexico. Cruise lines such as
Norwegian Cruise Line, Royal Caribbean International and Princess Cruises offer
voyages competing with Carnival from San Juan to the Caribbean. The Walt Disney
Co. entered the cruise market with the introduction of a new cruise ship in both
1998 and 1999. The Disney ships compete primarily with Carnival in the Caribbean
and Bahamian marketplaces.
In Alaska, Holland America and Carnival compete directly with cruise ships
operated by six different cruise lines with the largest competitors being
Princess Cruises,which owns Royal Caribbean International and Celebrity Cruises. Over the
past several years, there has been a steady increase in the available capacity
among cruise lines operating in Alaska. In the Caribbean, Holland America
competes with cruise ships operated by 14 different cruise lines, its primary
competitors beingCruises,
Princess Cruises, Royal Caribbean International, Celebrityowned by P&O Princess Cruises andplc ("P&O"), Norwegian Cruise
Line as well as Carnival and Costa.
In Europe, Holland America competes directly withOrient Lines, both largeowned by Star Cruises plc, and small
cruise lines with itsDisney Cruise
Line.
The Company's primary competitors being Celebrity Cruises, Costa,
Norwegianfor European sourced passengers are
Royal Olympic Cruise Line Orient Lines, Princessand its parent, Louis Cruise Line, Festival
Cruises, Mediterranean Shipping Cruises and Royal Caribbean
International.P&O Cruises and Aida Cruises,
both owned by P&O.
The Cunard, Seabourn and Windstar ships' compete for passengers
primarily from North America and/or Europe and the primary unaffiliated
competitors within the luxury cruise sector include Crystal Cruises, Radisson
Seven Seas Cruise Line, Renaissance Cruises and Silversea Cruises, as well as
the higher priced cabins on certain of the cruise lines which serve the
premium sector.
As mentioned above, the Company also competes with land-based vacation
alternatives throughout the world including, among others, resorts and hotels
located in Las Vegas, Nevada, Orlando, Florida, various Caribbean, Bahamian
and Hawaiian Island destination resorts and numerous sightseeing destinations
throughout Europe.
See "Risk Factors" for an additional discussion of the Company's
competition.
Governmental Regulations
The Company's ships are registered in the Bahamas, England, Liberia,Italy,
Netherlands, Norway or Panama, as more fully described under Part I, Item 1.
Business, B.C. Cruise Ships and Itineraries and, accordingly, are regulated by
these jurisdictions. The Company's ships that call on United States ports are
subject to inspection by the United States Coast Guard for compliance with the
Convention for the Safety of Life at Seajurisdictions and by the United States Public Health
Service for sanitary standards. The Company is also regulated byInternational Conventions that these
jurisdictions have ratified or adhere to. In addition, the Federal
Maritime Commission ("FMC") which, among other things, certifiesdirectives and
regulations of the Company on
the basis of its ability to meet obligations to passengers for refunds in case
of nonperformance. The Company believes it is in compliance with all material
regulationsEuropean Union are applicable to its ships and has allsome aspects of the
necessary licenses to
conduct its business.Company's ship operations.
In connection with a significant portion of its Alaska
cruise operations, Holland America relies on concession permits fromaddition, the
National Park Service, which are periodically renewed, to operate its cruise
ships in Glacier Bay National Park. There can be no assurance that these permits
will continue to be renewed or that regulations relating to the renewal of such
permits, including preference rights, will remain unchanged in the future.
The International Maritime Organization (the "IMO"), which
operates under the United Nations, has adopted safety standards as part of
the "Safety of Life at Sea" ("SOLAS") Convention, generally applicable to all
passenger ships carrying 36 or more passengers. Generally, SOLAS establishes
vessel design, structural features, materials, construction and life saving
equipment requirements to improve passenger safety. The current SOLAS
requirements are being phased in through 2010.
In 1993, SOLAS was amended to adopt the "International Safety Management
Code" (the "ISM Code"). The ISM Code provides an international standard for
the safe management and operation of ships and for pollution prevention. The
ISM Code became mandatory for passenger vessel operators, such as the
Company, on July 1, 1998. All of the Company's Wholly Owned Cruise Operationscruise operations and
Affiliated
Cruise OperationsAirtours' Sun Cruises have obtained the required certificates demonstrating
compliance with the ISM Code.Code and are regularly inspected and controlled by
the national authorities, as well as the international authorities acting
under the provisions of the international agreements related to Port State
Control (i.e. the process by which a nation exercises authority over foreign
ships when the ships are in the waters subject to its jurisdiction).
The Company's ships that call on United States ports are subject to
inspection by the United States Coast Guard for compliance with the SOLAS
Convention and by the United States Public Health Service for sanitary
standards. The Company's ships are also subject to similar inspections
pursuant to the laws and regulations of various other countries its ships
call on.
In addition to other regulations, the Company's ships that call on U.S.
ports are regulated by the Federal Maritime Commission ("FMC"). Public Law
89-777 which is administered by the FMC requires most cruise line operators
to establish financial responsibility for nonperformance of transportation.
The FMC's regulations require that a cruise line demonstrate its financial
responsibility through a guaranty, escrow arrangement, surety bond, insurance
or self-insurance. Currently, the amount required must equal 110% of the
cruise line's highest amount of customer deposits over a two-year period up
to a maximum coverage level of $15 million. On February 8, 2000,In addition, other jurisdictions,
including the United States Treasury Department issued proposed
Treasury Regulations to Section 883Kingdom and Germany, require the establishment of
the Internal Revenue Code ("Section 883")
relating to income derived by foreign corporationsfinancial responsibility for passengers from their jurisdictions.
In connection with a significant portion of its Alaska cruise
operations, Holland America relies on concession permits from the international
operation ofNational
Park Service, which are periodically renewed, to operate its cruise ships or aircraft. The proposed regulations provide, in
general,Glacier Bay National Park. There can be no assurance that a foreign corporation organized in a qualified foreign country and engaged
in the international operation of ships or aircraft shall exclude qualified
income from gross income for purposes of federal income taxation provided that
the corporation can satisfy certain ownership requirements, including, among
other things, that its stock is publicly traded. A corporation's stock that is
publicly tradedthese permits will satisfy this requirement if more than 50% of its stock is
owned by persons who each own less than 5% of the corporation's stock.
To the best of the Company's knowledge it currently qualifies as a publicly
traded corporation under these proposed rules and, if the proposed rules were in
force, substantially all of the Company's income (with the exception of the
United States source income from the transportation, hotel and tour business of
Holland America Westours) would
continue to be exempt from United States federal
income taxes.
In orderrenewed or that regulations relating to ensurethe renewal of such
permits, including preference rights, will remain unchanged in the future.
On February 23, 2001, a three judge panel of the Ninth U.S. Circuit
Court of Appeals overturned a decision of the U.S. District Court for the
District of Alaska and ordered the District Court to enjoin a 1996 decision
by the National Park Service ("NPS") that had authorized additional cruise
ship entry permits for Glacier Bay National Park. The Court of Appeals held
that the NPS should have prepared an environmental impact statement prior to
increasing the number of permits. As a consequence of the 1996 NPS decision,
Holland America had been able to obtain additional entry permits for the
2000-2004 period. Other cruise lines had also received additional entry
permits. At this time it is not clear whether the court injunction will
affect the 2001 Alaska cruise season since the District Court was given
discretion as to whether or not to defer issuing the injunction until after
the 2001 season. In addition, the decision can still be appealed by the NPS
to the full Ninth Circuit Court of Appeals and/or the U.S. Supreme Court.
Holland America will also be clarifying with the NPS as to exactly how many
permits may be impacted. However, most Holland America permits will not be
withdrawn as a result of this decision since they were in effect prior to the
1996 NPS decision. In addition, attractive alternative destinations in
Alaska can be substituted for Glacier Bay. Accordingly, management believes
that if any permits are withdrawn, the impact on the Company's financial
statements will not be material.
The Company continues to be publicly traded under
the proposed Section 883believes it is in compliance with all material regulations
the Company will recommendapplicable to its shareholders atships and has all the necessary licenses to conduct its
annual meeting that the Company's articles of incorporation
be amended to prohibit any person, other than an existing 5% shareholder, from
acquiring shares that would give such person in the aggregate more than 4.9% of
the value of the shares of the Company.business. From time to time, various other regulatory and legislative changes
have been or may be proposed that could have an affect on the cruise industry
in general. See "Risk Factors" for a discussion of other regulations which
impact the Company.
Financial Information
For financial information about the Company'sCompany cruise ship segmentand affiliated
operations segments with respect to each of the three years in the period
ended November 30, 1999,2000, see Note 9,10, "Segment Information," to the Company's
Consolidated Financial Statements in Exhibit 13 of this Annual Report on Form
10-K.
C.D. Tour Segment
In addition to its cruise business, the Company markets sightseeing
tours both separately and as a part of cruise/tour packages under the Holland
America Westours and Gray Line names.Tours name. Tour operations are based in Alaska and Washington State and western Canada.State.
Since a substantial portion of Holland America Westours'Tours' business is derived
from the sale of tour packages in Alaska during the summer tour season, tour
operations are highly seasonal.
Holland America WestoursTours
Holland America WestoursTours is an indirect wholly owned subsidiary of HAL, a
wholly owned subsidiary of the Company.HAL.
The group of companies which together comprise the tour operations perform
three independent yet interrelated functions. During 1999,2000, as part of an
integrated travel program to destinations in Alaska, the tour service group
offered 39 different tour programs varying in length from 8 to 21 days. The
transportation group and hotel group supports the tour service group by
supplying facilities needed to conduct tours. Facilities include dayboats,
motor coaches, rail cars and hotels.
Two luxury dayboats perform an important role in the integrated Alaska
travel program offering tours to the glaciers of Alaska and the Yukon River.
The Yukon Queen II cruises the Yukon River between Dawson City, Yukon
Territory and Eagle, Alaska and the Ptarmigan operates on Portage Lake in
Alaska. The two dayboats have a combined capacity of 304 passengers.
A fleet of over 280300 motor coaches using the trade name Gray Line operatesoperate in Alaska Washington and western Canada.Washington.
These motor coaches are used for extended trips, city sightseeing tours and
charter hire. Holland America
Westours conducts its tours both as part of a cruise/tour package and as
individual sightseeing products sold under the Gray Line name. Additionally, Holland America WestoursTours operates express Gray Line motor
coach service between downtown Seattle and the Seattle-Tacoma International
Airport.
Thirteen private domed rail cars, which are called "McKinley Explorers",
run on the Alaska Railroad between Anchorage and Fairbanks, stopping at
Denali National Park.
In connection with its tour operations, Holland America WestoursTours owns or
leases motor coach maintenance shops in Seattle, Washington, and in Juneau,
Fairbanks, Anchorage, Skagway and Ketchikan, Alaska. Holland America WestoursTours
also owns or leases service offices at Anchorage, Denali Park, Fairbanks,
Juneau, Ketchikan and Skagway in Alaska, at Whitehorse in the Yukon
Territory, in Seattle, Washington, Vancouver, British Columbia and Victoria,
British Columbia.
Certain real property facilities on federal land are used in Holland
America Westours' tour operations pursuant to permits from the applicable
federal agencies.
Westmark Hotels
Holland America WestoursTours owns and/or operatesoperated 14 hotels in Alaska and the
Canadian Yukon under the name Westmark Hotels. Four of the hotels are located
in Canada's Yukon Territory and offer a combined total of 585 rooms. The
remaining 10 hotels, located throughout Alaska, provide a total of 1,455
rooms, bringing the total number of hotel rooms to 2,040.
The hotels play an important role in Holland America WestoursTours tour programs
during the summer months when they provide accommodations to the tour
passengers. The hotels located in the larger metropolitan areas remain open
during the entire year, acting during the winter season as centers for local
community activities while continuing to accommodate the traveling public.
Most of the Westmark hotels include dining, lounge and conference or meeting
room facilities. Certain hotels have gift shops and other tourist services on
the premises.
Twelve of the hotels are wholly owned by Holland America WestoursTours
subsidiaries and Westmark operates two under management agreements.
For the seven hotels that operate year-round, the occupancy percentage
for fiscal 19992000 was 55.4% (57.4%56.9% (55.4% for fiscal 1998)1999), and for the seven hotels
that operate only during the summer months, the occupancy percentage for
fiscal 19992000 was 71.4% (71.6%70.9% (71.4% for fiscal 1998)1999).
Sales and Marketing
Holland America WestoursTours has its own marketing staff devoted to i) travel
agent support and awareness, ii) direct mail solicitation of past customers,
iii) use of consumer magazine and newspaper advertising to develop prospects
and enhance awareness and iv) distribution of brochures. Additionally,
television and radio spots are used to market its tour and cruise packages.
The WestoursHolland America Tours marketing message leverages the company's 5354 years
of Alaska tourism leadership and its extensive array of hotel and
transportation assets to create a brand preference for Holland America Westours.Tours.
To the prospective vacationer the company endeavors to convince them that
"Westours"Holland America Tours is Alaska".
Holland America Westours toursTours are marketed both separately and as part of
cruise/tour packages. Although most Holland America WestoursTours cruise/tours
include a Holland America cruise as the cruise segment, other cruise lines
also market Holland America Westours toursTours as a part of their cruise/tour packages and
sightseeing excursions. Tours sold separately are marketed through
independent travel agents and also directly by Holland America Westours,Tours,
utilizing sales desks in major hotels. General marketing for the hotels is
done through various media in Alaska, Canada and the contiguous United States.U.S. Travel
agents, particularly in Alaska, are solicited, and displays are used in
airports in Seattle, Washington, Portland, Oregon and various Alaskan cities.
Room rates at Westmark Hotels are on the upper end of the scale for hotels in
Alaska and the Canadian Yukon.
Concessions
Certain tours in Alaska are conducted on federal property requiring
concession permits from the applicable federal agencies, such as the National
Park Service and the United States Forest Service.
Seasonality
Holland America WestoursTours tour revenues are highly seasonal with a large
majority generated during the late spring and summer months in connection
with the Alaska cruise season. Holland America Westours toursTours are conducted in
Washington State western Canada and Alaska. The Alaska tours coincide to a great extent with
the Alaska cruise season, May through September. Washington tours are
conducted year-round although demand is greatest during the summer months.
During periods in which tour demand is low Holland America WestoursTours seeks to
maximize its motor coach charter activity, such as operating charter tours to
ski resorts in Washington and western Canada.Washington.
Competition
Holland America WestoursTours competes with independent tour operators and motor
coach charter operators in Washington Alaska and the Canadian Rockies.Alaska. The primary competitors in
Alaska and the Canadian Rockies are Princess Tours (with approximately 160 motor coaches and three
hotels) and Alaska Sightseeing/Trav-Alaska (with approximately 13 motor
coaches). and, commencing in 2001, Royal Caribbean Tours. The primary
competitor in Washington is Gazelle (with approximately 15 motor coaches).
Westmark Hotels compete with various hotels throughout Alaska, many of
which charge prices below those charged by Westmark Hotels. Dining facilities
in the hotels also compete with the many restaurants in the same geographic
areas.
Government Regulations
Holland America WestoursTours motor coach operations are subject to regulation
both at the federal and state levels, including primarily the U.S. Department
of Transportation, the Washington Utilities and Transportation Commission,
the British Columbia Motor Carrier Commission and the Alaska Department of
Transportation. Certain activities of Holland America Westours toursTours involve federal
properties and may require concession permits and are subject to regulation
by various federal agencies, such as the National Park Service and the U.S.
Forest Service.
In connection with the operation of its beverage facilities in the
Westmark Hotels, Holland America WestoursTours is required to comply with state,
county and/or city ordinances regulating the sale and consumption of
alcoholic beverages. Violations of these ordinances could result in fines,
suspensions or revocation of such licenses and preclude the sale of any
alcoholic beverages by the hotel involved.
In the operation of its hotels, Holland America WestoursTours is required to
comply with applicable building and fire codes. Changes in these codes have
in the past and may in the future require expenditures to ensure continuing
compliance, such as the installation of sprinkler systems.
From time to time, various other regulatory and legislative changes have
been or may be proposed that could have an effect on the tour industry in
general.
Financial Information
For financial information about the Company's tour segment with respect
to each of the three years in the period ended November 30, 1999,2000, see Note
9,10, "Segment Information," to the Company's Consolidated Financial Statements
in Exhibit 13 of this Annual Report on Form 10-K.
D.E. Employees
The Company's operations have approximately 4,3005,200 full-time and 2,100 part-
time/2,300
part-time/seasonal employees engaged in shoreside operations. The Company
also employs approximately 1,2001,900 officers and 18,00024,000 crew and staff on its 44
ships. Due to the seasonality of its Alaska and Canadian operations, HAL and
its subsidiaries increase their work force during the summer months,
employing additional full-time and part-time personnel which have been
included above. The Company has entered into agreements with unions covering
certain employees in its hotel, motorcoach and ship operations. The Company
considers its employee and union relations generally to be good.
E.F. Suppliers
The Company's largest purchases are for airfare, advertising, fuel, food
and beverages and hotel and restaurant supplies and products.products and for ship
construction. Although the Company chooses to use a limited number of
suppliers for most of its food and beverages, and hotel and restaurant
supplies and products, most of these purchases are available from numerous
sources at competitive prices. The use of a limited number of suppliers
enables the Company to, among other things, obtain volume discounts. Management believes that there are currently eight shipyardsThe
Company purchases fuel from a limited number of sources located at certain of
its ports of call (See Management's Discussion and Analysis of Financial
Condition and Results of Operations - Exposure to Bunker Fuel Prices in
the world
capableExhibit 13 to this Annual Report on Form 10-K.). See Part I., Item 1.,
Business, B. Risk Factors - for a discussion of the quality constructionlimited number of
large passenger cruise ships. The Company
currently has contracts, with two of thesequalified shipyards for the construction of
twelve ships to enter service over the next five years (see Part I, Item 1.
Business, B. Cruise Ship Segment - Wholly Owned Cruise Operations - Cruise Ship
Construction). The Company's primary competitors also have contracts to
construct new cruise ships (see Part I, Item 1. Business, B. Cruise Ship Segment
- - Wholly Owned Cruise Operations - Competition). If the Company electsavailable to build additional ships in the Company's future which it expects to do, there is no assurance
that any of these shipyards will have the available capacity to build additional
new ships for the Company at the times desired by the Company or that the
shipyards will agree to build additional ships at a cost acceptable to the
Company. Additionally, there is no assurance that ships under contract for
construction will be delivered.
F.ships.
G. Insurance
The Company maintains insurance covering legal liabilities related to
crew, passengers and other third parties on its ships in operation through
The Standard Steamship Owners Protection & Indemnity Association Limited (the
"SSOPIA") and Steamship Mutual Underwriting Association Ltd. (the "SMUAL")
and the United Kingdom Mutual Steamship Assurance Association (Bermuda)
Limited (the "UKMSAA"). The amount and terms of this insurance is governed by
the rules of the foregoing protection and indemnity associations.
The Company maintains insurance on the hull and machinery of each vesselship
in amounts equal to the approximate market value of each vessel.ship. The Company
maintains war risk insurance on each vesselship which includes legal liability to
crew and passengers, including terrorist risks for which coverage would be
excluded under SSOPIA, SMUAL and SMUAL.UKMSAA. The coverage for hull and machinery
and war risks is provided by international markets, including underwriters at
Lloyds. The Company, as currently required by the FMC, maintains at all times
threefour $15 million performance bonds for all of the Company's ships which
embark passengers in U.S. ports, to cover passenger ticket liabilities in the
event of a canceled or interrupted cruise. The Company also maintains other
performance bonds as required by various foreign authorities who regulate
certain of the Company's operations in their jurisdictions.
The Company maintains certain levels of self-insurance for the above
mentioned risks through the use of substantial deductibles. The Company does
not typically carry coverage related to loss of earnings or revenues for its
cruise or tour operations.
The Company also maintains various other insurance policies to protect
the assets and earnings arising from the operations of Holland America WestoursTours and other activities.
G. InvestmentsH. Investment in AffiliatesAffiliate
Airtours plc
In April 1996, theThe Company acquiredhas a 28%25% interest in Airtours for
approximately $307 million. In 1998, the Company's interest in Airtours was
reduced to approximately 26% as a result of the conversion of Airtours
preference shares into Airtours common stock and the issuance of Airtours common
stock in conjunction with two of its acquisitions.Airtours. Airtours is one of the
largest air inclusive tour operatorair-inclusive integrated leisure travel companies in the world and
its common stock is publicly traded on the London Stock Exchange. Airtours
primarily provides air inclusive packaged holidays to the United Kingdom,
Austrian, Belgian, Holland, French, German, Polish,
Scandinavian, Swiss andIreland, North American and Scandinavian markets. Airtours provided
holidays to approximately ten15 million people in fiscal 19992000 and owns or
operates over 1,000
retail2,600 travel shops 46and 48 telesales centers, 93 hotel and resort
properties, four cruise ships 42 aircraft and develops and markets vacation ownership resorts in the Canary Islands and
Orlando, Florida.52 aircraft. The four cruise ships are
operated under the Sun Cruises brand
and an additional 962 passenger capacity ship is chartered, for summer cruises
only, under the Direct Cruises brand. In 1997, Airtours acquired a 50%
interest in Costa as discussed below.which it sold to the Company in fiscal 2000. During 1999,2000,
Airtours oracquired the remaining 64% of its 36% owned German tour operator, FTi, made several acquisitions, including a 40% interest in Berge &
Meer, a German tour operatorFTI, which
packages and distributes air-inclusive tours
directly to the public through call centers, the internet and the mail, and a
100% interest in the Travel World Group of United Kingdom retail outlets.
Airtours also acquired additional tour operations based in Holland and
Scandinavia.it did not already own. In December 1998 and November 1999, Airtours successfully completed
an approximate $500 million convertible debenture offering and a $335 million
non-equity preference share offering, respectively, which are providing Airtours
with additional capital to fund its operations and/or future acquisitions, as
required. If this convertible debt is converted into Airtours common stock, the
Company's interest in Airtours would be reduced to approximately 23%.
On February 21,addition, during 2000, Airtours andacquired Travel
Services International ("TSI")
entered into an agreement whereby Airtours would commence a $26 per share
recommended cash tender offer for all of TSI's outstanding common stock. Such
offer would value TSI at approximately $385 million.. TSI is a major distributor of leisure travel
products in the U.S. market with leading positions in the distribution of
cruise, auto rental, alumni holidays and hotel bookings.
Costa Crociere S.p.A.
In June 1997, the Company and Airtours completed a joint offer to acquire
the equity securities of Costa, an Italian cruise company. The Company and
Airtours each own 50% of Il Ponte, S.p.A. ("Il Ponte"), a holding company, which
was purchased from the Costa family. As a result of the acquisition, Il Ponte
owns approximately 100% of Costa. The cost of the Company's acquisition of its
50% direct interest was approximately $141 million, of which approximately $103
million was paid by Il Ponte and the balance was paid by the Company. The $103
million paid by Il Ponte was funded through Il Ponte debt, which was guaranteed
by the Company.
Costa is headquartered in Genoa, Italy and is Europe's largest cruise line
based on number of passengers carried and available capacity. Costa is primarily
targeted to the contemporary sector and has sales offices in Argentina, Brazil,
England, Florida, France, Germany, Italy, Spain and Switzerland, and employs
over 200 personnel in the sales and sales support area, excluding reservation
agents. Costa's ships' primary itineraries include Europe, the Caribbean and
South America. The major market for Costa cruises is Southern Europe with the
majority of Costa's cruises being sold in Italy, Spain and France.
The itineraries of Costa's ships during the summer months consist primarily
of various locations in Europe. During the winter months, the vessels operate
primarily in the Caribbean and South America. See Part I, Item 1. Business, B.
Cruise Ship Segment for a discussion of competition and certain government
regulations, which affect Costa.
Costa operates six ships, which are currently registered in Liberia, which
have an aggregate passenger capacity of 7,103 passengers. In January 1998, Costa
signed an agreement to construct a seventh ship, the Costa Atlantica, which is
expected to enter service in July 2000, with a passenger capacity of 2,112 at a
cost of approximately 700 billion Lira. In 2001, the Costa Classica will be
lengthened to increase its passenger capacity to 2000 from 1,302, and it is
expected that the Costa Romantica will be lengthened in 2002 to increase its
passenger capacity to 2000 from 1,350. No assurance can be given that a contract
will be entered into to lengthen the Costa Romantica.
Seasonality
The Company's equity in the earnings of Airtours and Il Ponte areis recorded on a two-monthtwo-
month lag basis using the equity method of accounting. Airtours' revenues are
very seasonal due primarily to the nature of the European leisure travel
industry. Costa's revenues are moderately seasonal. Typically, Airtours' and
Costa's quarters ending June 30 and September 30
experience higher revenues, with revenues in the quarter ending September 30
being their highest.
H.I. Trademarks
The Company owns numerous trademarks, which it believes are widely
recognized throughout the world and have considerable value.
I. Recent Development
In late February 2000, the Company and Fairfield Communities, Inc.
announced their decision to end a previously announced strategic merger of the
two companies. See Note 14 to the Company's Consolidated Financial Statements
in Exhibit 13 to this Annual Report on Form 10-K.
Item 2. Properties
The Company's cruise ships and private island, Half Moon Cay, are
described in Section BC of Item 1 under the heading Cruise Ship Segment -
Cruise Ships and Itineraries. The properties associated with Holland America
WestoursTours tour operations are described in Section CD of Item 1 under the heading
Tour Segment.
Carnival's principal shoreside operations and the Company's corporate
headquarters are located at 3655 N.W. 87th Avenue, Miami, Florida. These
Company-owned facilities include approximately 456,000 square feet of office
space. HALHAL's principal shoreside operations and its headquarters are located
at 300 Elliott Avenue West in Seattle, Washington in approximately 128,000
square feet of leased office space. Costa's principal shoreside operations
and its headquarters are located in Genoa, Italy in approximately 125,000
square feet of owned and leased space. Cunard Line LimitedLimited's principal
shoreside operations and its headquarters are located at 6100 Blue Lagoon
Drive in Miami, Florida in approximately 51,000 square feet of leased office
space.
The Company's cruise ships, tour properties, and shoreside operations and
headquarter facilities are well maintained and in good condition.
Item 3. Legal Proceedings
Several actions (collectively the "Passenger Complaints"), as previously
reported, have been were filed
against Carnival, and one action has been filed against Holland America WestoursTours and
one action has been filed against Costa on behalf of purported classes of
persons who paid port charges to Carnival, or Holland America or Costa, alleging
that statements made in advertising and promotional materials concerning port
charges were false and misleading. The Passenger Complaints allege
violations of the various state consumer protection acts and claims of fraud,
conversion, breach of fiduciary duties and unjust enrichment. Plaintiffs
seek compensatory damages, or alternatively, refunds of portions of port
charges paid, attorneys' fees, costs, prejudgment interest, punitive damages
and injunctive and declaratory relief. The status of each pending Passenger
Complaint is as follows:
In 1996, four Passenger Complaints were filed against Carnival in the
Circuit Court for the Eleventh Judicial Circuit in DadeMiami-Dade County,
Florida, by Michelle Hackbarth, Larry Katz, Michelle A. Sutton, Pedro Rene
Mier, and others, respectively, on behalf of purported nationwide classes.
In May 1998, the court consolidated all four actions. On March 8, 1999,December 21, 2000,
Carnival entered into a settlement agreement for the Passenger Complaints
filed against it. The settlement has been preliminarily approved by the
trial court denied
plaintiff's motion forcourt. Under the settlement agreement, Carnival would issue travel
vouchers with a face value of $25-$55 to certain of its passengers who sailed
between April 19, 1992 and June 4, 1997. The vouchers will also provide
class certification, and plaintiffs have appealed the
trial court's decision. On February 2, 2000, the Third District Courtmembers with a cash redemption option of Appeal
of Florida reversed the trial court's denial of class certification and remanded
the case for further proceedings. The Company has filed a motion for rehearing
and for clarificationup to 20% of the Third District Court of Appeal's decision. In
addition, plaintiff's filed a motionface value.
Pursuant to enforce a purported oralthe settlement, agreement they alleged was reached with Carnival. In January 2000, the trial
court deniedCarnival will pay the plaintiffs' motionlegal fees, as
awarded by the court, up to enforcea specified amount. The notices to class members
were mailed by Carnival on February 16, 2001. Class members have until April
10, 2001 to elect out of the purported oralclass. A final settlement agreement. The plaintiff's have appealedhearing is currently
scheduled for May 2001 when it is anticipated that the trial court's decision.
In April 1997, a Passenger Complaint was filed against Carnival incourt will issue final
approval of the Court of Common Pleas, Montgomery County, Ohio, by Cathy J. Miller and others,
on behalf of a purported statewide class. Carnival's motion to dismiss on
inconvenient forum groundssettlement. Thereafter, assuming the settlement is under consideration.
In March 1998, a Passenger Complaint was filed against Carnival inapproved,
the Circuit Court for the 20th Judicial Circuit in St. Clair County, Illinois, by
John R. Birdsell and others on behalf of a purported nationwide class. The
complaint also names, as co-defendants, Norwegian Cruise Line, Royal Caribbean
Cruise Lines and Princess Cruise Lines. The court overruled Carnival's objection
to the court's exercise of personal jurisdiction and denied its motion to
dismiss on grounds of improper forum. Carnival has appealed the decision denying
its motion to dismiss on grounds of improper forum, and its appeal has been
fully briefed and argued and is now pending with the state appellate court.
Proceedings in the trial court, including plaintiffs' motion to certify a class,
have been stayed pending the resolution of Carnival's appeal.vouchers will be mailed.
In April 1996, a Passenger Complaint was filed against Holland America
WestoursTours in the Superior Courtcourt in King County, Washington, by Francine Pickett
and others on behalf of a purported nationwide class. The court denied bothIn April 1998 Holland
America Westours' motion to dismiss and the plaintiffs' motion for class
certification. Thereafter Holland America WestoursTours entered into a settlement agreement for this action, the only Passenger Complaint filed against it. The
settlement agreementwhich was approved by the
court on September 28, 1998, howevercourt. However, one member of the settlement class has appealed the agreement.
The appeal has
been briefed and argued beforeIn August, 2000, the Washington Courtcourt of Appeals.appeals refused to approve the
settlement that had been reached by Holland America Tours in its Passenger
Complaint and instead remanded the case to the trial court. The decision is
expected shortly. A further appealcourt of
appeals ruled that the trial court had erred in refusing to certify a class.
The court of appeals then reasoned that had the trial court certified a
class, the terms of the settlement would likely have been different. The
court of appeals also made other rulings that could be takenadverse to Holland
America Tours on remand. Holland America Tours has filed a petition for
discretionary review by either party to the Washington Supreme Court, the ultimate outcome of
which could resultcannot currently be determined.
In September 1996, a Passenger Complaint was filed against Costa in the
Circuit Court for the Eleventh Judicial Circuit in Miami-Dade County,
Florida, by Mr. & Mrs. Latman on behalf of a purported nationwide class.
These proceedings, including Costa's appeal to the Florida Supreme Court of
the Third District Court of Appeals's order to the trial court to certify the
class, have been stayed pending the outcome of ongoing settlement
being delayed fornegotiations
In August 1996, Nelsons Travel Associates filed an additional year. Unless the appeal is successful,action against
Carnival and Holland America will issue
travel vouchers with a face value of $10-$50 depending on specified criteria, to
certain of its passengers who are U.S. residents and who sailed between April
1992 and April 1996, and will pay a portion of the plaintiffs' legal fees. The
amount and timing of the travel vouchers to be redeemed and the effects of the
travel voucher redemption on revenues is not reasonably determinable. In 1998,
the Company established a liability for the estimated distribution costs of the
settlement notices and plaintiffs' legal costs.
Several complaints have been filed against Carnival and/or Holland America
Westours (collectively the "Travel Agent Complaints")Tours on behalf of purported classes of travel
agencies who had booked a cruise with Carnival or Holland America, claiming
that advertising practices regarding port charges resulted in an improper
commission bypass. These actions allegeThis action alleged violations of state consumer
protection laws, claims of breach of contract, negligent misrepresentation,
unjust enrichment, unlawful business practices and common law fraud, and they
seek unspecified compensatory damages (or alternatively, the payment of usual
and customary commissions on port charges paid by passengers in excess of
certain charges levied by government authorities), an accounting, attorneys'
fees and costs, punitive damages and injunctive relief. On December 5, 2000,
at the plaintiff's request, the court dismissed this action.
Several actions (collectively the "ADA Complaints") have been filed
against Carnival, Holland America Tours, Cunard and Costa alleging that they
violated the Americans with Disabilities Act of 1990 by failing to make
certain of its cruise ships accessible to individuals with disabilities. The
plaintiffs seek injunctive relief to require modifications to certain vessels
to increase accessibility to disabled passengers and fees and costs. The
California case also seek statutory damages under California state law, which
include punitive damages, attorneys' fees and costs. The status of each
pending Travel AgentADA Complaint is as follows:
In August 1997, a Travel AgentOn December 17, 1998, an ADA Complaint was filed against Carnival by
Access Now, Inc. and Edward S. Resnick in the CircuitU.S. District Court for the
Eleventh Judicial CircuitSouthern District of Florida. In January 2001, Carnival reached an agreement
in Dade County, Florida, by
N.G.L. Travel Associates, on behalf of a purported nationwide class of travel
agencies who booked cruises with Carnival. The court dismissed the action with
prejudice in January 1999, and plaintiff has appealed. The appeal has been
fully briefed and argued, and is now pendingprinciple with the state appellate court.
In September 1997, a Travel Agent Complaint was filed against Holland
America Westours in the Superior Court of the State of Washington for King
County by N.G.L. Travel Associates on behalf of a purported nationwide class of
travel agencies who booked cruises with Holland America. Holland America
Westours filed summary judgment motions asplaintiffs to all of the claims. The motions
were granted as to every claim except for one alleging a breach of contract
under the Sales Agreement between Holland America Westours and GEM, the travel
agent consortium of which N.G.L. Travel Associates was a member. The court has
also certified a class of travel agents that includes all agencies that were
members in 1996 of the GEM group. Consequently, ifsettle this matter proceeds to
trial, it will be limitedaction. Pursuant to the
issue of whether Holland America Westours is
obligatedagreement, Carnival will make certain modifications to pay commissions asits existing 15 ships
with an option to 1996 bookings by these GEM agencies. The
trial is presently scheduled for March 2000.
In August 1996, a Travel Agentinclude future ships into the settlement agreement.
On July 27, 1998, an ADA Complaint was filed against Carnival by Bernard
Walker and Christina Adams in the U.S. District Court for the Northern
District of California. This proceeding concerns only one Carnival ship, the
Holiday. The proceedings relating to the California ADA Complaint were
consolidated for settlement purposes with the ADA Complaint described in the
preceding paragraph. As a result of mediation, Carnival has entered into a
settlement agreement with the plaintiffs. Carnival has agreed to certain
modifications to the ship, payment of damages to the individual plaintiffs
and attorneys' fees. The settlement is subject to certification of the case
by the trial court as a class action proceeding and approval by the U.S.
Departments of Justice and Transportation. Management believes the estimated
total cost of the settlement, including modifications, will not be material
to the Company's financial statements.
On August 29, 2000, an ADA Complaint was filed against Cunard by Access
Now, Inc. and Edward S. Resnick in the U.S. District Court for the Southern
District of Florida. Cunard filed an answer to the complaint on November 10,
2000. Given the settlement reached in the case against Carnival, the
plaintiff has agreed to dismiss the ADA Complaint against Cunard without
prejudice.
On August 28, 2000, Access Now, Inc. and Edward S. Resnick also filed
complaints in the U.S. District Court for the Southern District of Florida
against Holland America Westours inTours and Costa. These complaints seek modifications
to their vessels to increase accessibility to disabled passengers. These
cases have been transferred before the Superior Court in Los Angeles, County,
California, by Nelsons Travel Associates, on behalf of purported nationwide
classes of travel agencies who booked cruises with Carnival and Holland America.
Upon Carnival's andsame judge. Holland America Westours'Tours and
Costa have filed motions to dismiss or stay the actionaction. The court has asked the
parties for additional briefs on the groundsissue of inconvenient forum,whether the court stayedDepartment of
Justice and Department of Transportation should also brief the action,
pending resolution ofissues raised
in the Florida and Washington actions.
It is not now possiblemotions to determine the ultimate outcome of the pending
Passenger and Travel Agent Complaints if such claims should proceed to trial.
Management believes it has meritorious defenses to the claims. Management
understands that purported classdismiss.
Several actions similar to the Passenger and Travel
Agent Complaintsas previously reported, have been filed against several other cruise lines.Carnival
and four of its officers by a purported class of persons who purchased the
Company's Common Stock between February 25, 1999 and February 16, 2000
alleging that statements made the Company in public fillings relating to
compliance with applicable safety regulations were in violation of Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The
complaints also allege violations by the individual defendants as controlling
persons under Section 20(a) of the Securities Exchange Act of 1934. In
November, 2000, the plaintiffs filed a consolidated amended complaint (the
"Stock Purchaser Complaint"). The complaint seeks certification of a class
action, an award or unspecified compensatory damages, attorneys' fees and
costs and expert fees. On February 5, 2001, Carnival filed a motion to
dismiss the Stock Purchaser Complaint.
On August 22, 2000, the Company received a subpoena from a grand jury
sitting in the U.S. District Court for the Southern District of Florida. The
subpoena requests that the Company produce documents and records concerning
environmental matters. The Company continues to respond to the subpoena.
On November 22, 2000, Costa instituted arbitration proceedings in Italy
to confirm the validity of its decision not to deliver its ship, the Costa
Classica, to the shipyard of Cammell Laird Holdings PLC ("Cammell Laird")
under an approximate $75 million contract for the conversion and lengthening
of the ship. Cammell Laird joined the arbitration proceeding on January 9,
2001 to present its counter demands. On January 9, 2001, Costa gave Cammell
Laird notice of termination of the contract and Cammell Laird replied with
its notice of termination of the contract on February 2, 2001. It is
expected that the award of the arbitration tribunal's decision will be made
within two years.
On February 23, 2001, Holland America Line, Inc. ("HAL, Inc."), a
subsidiary of HAL, received a subpoena from a grand jury sitting in the U.S.
District Court for the District of Alaska. The subpoena requests that HAL,
Inc. produce documents and records relating to the air emissions from Holland
America ships in Alaska. HAL, Inc. intends to respond to the subpoena.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Executive Officers of the Registrant
Pursuant to General Instruction G(3), the information regarding
executive officers of the Company called for by Item 401(b) of Regulation S-K
is hereby included in Part I of this Annual Report on Form 10-K.
The following table sets forth the name, age and title of each executive
officer. Titles listed relate to positions within the Company unless
otherwise noted.
NAME AGE POSITION
Micky Arison 5051 Chairman of the Board of Directors
and Chief Executive Officer
Gerald R. Cahill 4849 Senior Vice President-Finance and Chief
Financial Officer
Robert H. Dickinson 5758 President and Chief Operating Officer
of Carnival and Director
Kenneth D. Dubbin 4647 Vice President-Corporate Development
Howard S. Frank 5859 Vice Chairman of the Board of Directors
and Chief Operating Officer
Ian J. Gaunt 4849 Senior Vice President - International
A. Kirk Lanterman 6869 Chairman of the Board of Directors,
President, and Chief Executive Officer of
Holland America Line-Westours Inc.
and Director
Lowell Zemnick 5657 Vice President and Treasurer
Meshulam Zonis 66 Senior Vice President-Operations of
Carnival and Director
Business Experience of Officers
Micky Arison has been Chief Executive Officer since 1979 and Chairman of
the Board of Directors since 1990. He was President from 1979 to May 1993 and
has also been a director since June 1987. Prior to 1979, he served Carnival
for successive two-year periods as sales agent, reservations manager and as
Vice President in charge of passenger traffic.
He is the son of Ted Arison, Carnival
Corporation's founder.
Gerald R. Cahill is a Certified Public Accountant and has been Senior Vice President-Finance, Chief Financial
Officer and Chief Accounting Officer since January 1998. From September 1994
to January 1998 he was Vice President-Finance. He was the Chief Financial
Officer from 1988 to 1992 and the Chief Operating Officer from 1992 to 1994
of Safecard Services, Inc. From 1979 to 1988 he held financial positions at
Resorts International Inc. and, prior to that, spent six years with
PricewaterhouseCoopers LLP.
Robert H. Dickinson has been President and Chief Operating Officer of
Carnival since May 1993. From 1979 to May 1993, he was Senior Vice President-
Sales and Marketing of Carnival. He has also been a director since June 1987.
Kenneth D. Dubbin has been Vice President-Corporate Development since
May 1999. From 1988 to April 1999 he was Vice President and Treasurer of
Royal Caribbean Cruises Ltd.
Howard S. Frank has been Vice Chairman of the Board of Directors since
October 1993, Chief Operating Officer since January 1998 and a director since
1992. From July 1989 to January 1998 he was Chief Financial Officer and Chief
Accounting Officer and from July 1989 to October 1993 he was Senior Vice
President-Finance. From July 1975 through June 1989 he was a partner with
PricewaterhouseCoopers LLP.
Ian J. Gaunt is an English Solicitor and has been Senior Vice President-
International since May 1999. He was a partner of the London based
international law firm of Sinclair, Roche and Temperley from 1982 through
April 1999 where he represented the Company as special external legal counsel
since 1981.
A. Kirk Lanterman is a Certified Public Accountant and has been a
director since April 1992. He has been Chairman of the Board of Directors,
President and Chief Executive Officer of Holland America Line-Westours Inc.
("HALW") since August 1999. From March 1997 to August 1999, he was Chairman
of the Board of Directors and Chief Executive Officer of HALW. From December
1989 to March 1997, he was President and Chief Executive Officer of HALW.
From 1983 to 1989 he was President and Chief Operating Officer of HALW. From
1979 to 1983, he was President of Westours, Inc. which merged with Holland
America Line in 1983.
Lowell Zemnick is a Certified Public Accountant and has been a Vice
President since 1980 and Treasurer since September 1990. He was the Chief
Financial Officer of Carnival from 1980 to September 1990 and was the Chief
Financial Officer of Carnival Corporation from May 1987 through June 1989.
Meshulam Zonis has been Senior Vice President-Operations of Carnival since
1979. He has also been a director since June 1987. From 1974 through 1979 he was
Vice President-Operations of Carnival.
Special Note Regarding Forward-Looking Statements
Certain statements under the headings "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business" and
elsewhere in this Annual Report on Form 10-K, in the Company's press
releases, and in oral statements and presentations made by or with the
approval of an authorized executive officer of the Company constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors, which may cause the
actual results, performances or achievements of the Company to be materially
different from any future results, performances or achievements expressed or
implied by such forward-looking statements. Such factors include, among
others, the following: general economic and business conditions which may
impact levels of disposable income of consumers and pricing
and passenger revenue yields for
the Company's cruise products; consumer demand for cruises, including the
effects on consumer demand of armed conflicts, political instability or
adverse media publicity; increases in cruise industry capacity; cruise and
other vacation industry competition; changes in tax laws and regulations; the
ability of the Company to implement its shipbuilding program and to continue
to expand its business outside the North American market where it has less experience;market; changes in foreign
currency exchange rates, food and fuel commodity prices;prices and interest rates;
delivery of new vessels on schedule and at the contracted price; weather
patterns; unscheduled ship repairs and drydocking; incidents involving cruise
vessels at sea; changes in foreign currency prices which mayships; impact of pending or threatened litigation; the income
or loss from certain affiliated operations and certain cruise related revenues
and expenses;ability of
unconsolidated affiliates to successfully implement their business strategies
and changes in laws and regulations applicable to the Company.
The Company does not assume the obligation to update any forward-looking
statements. One should carefully evaluate such statements in light of
factors described in the Company's filings with the Securities and Exchange
Commission, especially on Forms 10-K, 10-Q and 8-K, if any. In Item 1. of
the Company's Annual Report on Form 10-K for the year ended November 30, 2000
and above, the Company discusses various important factors, among others,
that could cause actual results to differ from expected or historic results.
The Company notes these factors for investors as permitted by the Private
Securities Litigation Reform Act of 1995. One should understand that it is
not possible to predict or identify all such factors. Consequently, the
reader should not consider any such list to be a complete statement of all
potential risks or uncertainties.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
A. Market Information
The information required by Item 201(a) of Regulation S-K, Market
Information, is shown in Exhibit 13 and is incorporated by reference into
this Annual Report on Form 10-K.
B. Holders
The information required by Item 201(b) of Regulation S-K, Holders of
Common Stock, is shown in Exhibit 13 and is incorporated by reference into
this Annual Report on Form 10-K.
C. Dividends
The CompanyCarnival Corporation declared cash dividends on all of its Common Stock
in the amount of $.075$.09 per share in each of the first three quarters of fiscal 1998,
$.09 in the fourth quarter of fiscal 1998, $.09 in each of the first three quarters of fiscal
1999 and $.105 infor each subsequent quarter through and including the fourth quarter of fiscal 1999 and first
quarter of fiscal 2000.2001. Payment of future dividends on the Common Stock will
depend upon, among other factors, the Company's earnings, financial condition
and capital requirements. The CompanyCarnival Corporation may also declare special
dividends to all stockholders in the event that members of the Arison family
and certain related entities are required to pay additional income taxes by
reason of their ownership of the Common Stock because of an income tax audit
of the Company.
While no tax treaty currently exists between theThe Republic of Panama and the
United States, underdoes not currently have tax treaties with any
other country. Under current law the Companymanagement believes that distributions to
itsCarnival Corporation's U.S. shareholders are not subject to taxation under
the laws of the Republic of Panama. Dividends paid by the CompanyCarnival Corporation
will be taxable as ordinary income for United StatesU.S. federal income tax purposes to
the extent of the Company'sCarnival Corporation's current or accumulated earnings and
profits, but generally will not qualify for any dividends-received deduction.
The payment and amount of any dividend is within the discretion of the
Board of Directors, and it is possible that the amount of any dividend may
vary from the levels discussed above.
Item 6. Selected Financial Data
The information required by Item 6, Selected Financial Data, is shown in
Exhibit 13 and is incorporated by reference into this Annual Report on Form
10-
K.10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required by Item 7, Management's Discussion and Analysis
of Financial Condition and Results of Operations, is shown in Exhibit 13 and
is incorporated by reference into this Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by Item 7A, Quantitative and Qualitative
Disclosures About Market Risk, is shown in Exhibit 13 and is incorporated by
reference into this Annual Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data
The financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated January 24, 2000, is26, 2001 and the Selected Quarterly
Financial Data (Unaudited), are shown in Exhibit 13 and is incorporated by
reference into this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Items 10, 11, 12 and 13. Directors and Executive Officers of the
Registrant, Executive Compensation, Security Ownership of Certain
Beneficial Owners and Management, and Certain Relationships and
Related Transactions
The information required by Items 10, 11, 12 and 13 is incorporated
herein by reference to the Registrant's definitive Proxy Statement to be
filed with the Commission not later than 120 days after the close of the
fiscal year except that the information concerning the Registrant's executive
officers called for by Item 401(b) of Regulation S-K has beenis included in Part I of
this Annual Report on Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1)(2) Financial Statements and Schedules:
The financial statements shown in Exhibit 13 are hereby incorporated
herein by reference.
(3) Exhibits:
The exhibits listed on the accompanying Exhibit Index are filed or
incorporated by reference as part of this Annual Report on Form 10-K and such
Exhibit Index is hereby incorporated herein by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended November
30, 1999.2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Miami, and the State of Florida on this 2326th day of February, 2000.2001.
CARNIVAL CORPORATION
By /s/ Micky Arison
Micky Arison
Chairman of the Board of
Directors and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Micky Arison Chairman of the Board of February 23, 200026, 2001
Micky Arison Directors and Chief Executive
Officer
/s/ Howard S. Frank Vice Chairman of the Board of February 23, 200026, 2001
Howard S. Frank Directors and Chief Operating
Officer
/s/ Gerald R. Cahill Senior Vice President-Finance February 23, 200026, 2001
Gerald R. Cahill and Chief Financial and
Accounting Officer
/s/ Shari Arison Director February 23, 200026, 2001
Shari Arison
/s/ Maks L. Birnbach Director February 23, 200026, 2001
Maks L. Birnbach
/s/ Atle Brynestad Director February 23, 2000
Atle Brynestad
/s/ Richard G. Capen, Jr.Director February 23, 200026, 2001
Richard G. Capen, Jr.
/s/ David Crossland Director February 23, 2000
David Crossland
/s/ Robert H. Dickinson Director February 23, 200026, 2001
Robert H. Dickinson
/s/ Arnold W. Donald Director February 26, 2001
Arnold Donald
/s/ James M. Dubin Director February 23, 200026, 2001
James M. Dubin
/s/ A. Kirk Lanterman Director February 23, 200026, 2001
A. Kirk Lanterman
/s/ Modesto A. Maidique Director February 23, 200026, 2001
Modesto A. Maidique
/s/ William S. Ruben Director February 23, 2000
William S. Ruben
/s/ Stuart Subotnick Director February 23, 200026, 2001
Stuart Subotnick
/s/ Sherwood M. Weiser Director February 23, 200026, 2001
Sherwood M. Weiser
/s/ Meshulam Zonis Director February 23, 200026, 2001
Meshulam Zonis
/s/ Uzi Zucker Director February 23, 200026, 2001
Uzi Zucker
INDEX TO EXHIBITS
Page No. in
Sequential
Numbering
System
Exhibits
3.1-Second Amended and Restated Articles of Incorporation of the Company.
(1)
3.2-Amendment to Second Amended and Restated Articles of Incorporation of
the Company. (2)
3.2-Form3.3-Certificate of Amendment of Articles of Incorporation of the Company.
(2a)
3.4-Form of By-laws of the Company.(3)
4.1-Agreement of the Company dated February 23, 200026, 2001 to furnish certain
debt instruments to the Securities and Exchange Commission.
4.2-Revolving Credit Agreement dated as of July 1, 1993, Amended and
Restated as of December 17, 1996, by and among Carnival Corporation,
Citibank, N.A. and various other lenders.(4)
4.3-Form of Indenture, dated March 1, 1993, between Carnival Cruise Lines,
Inc. and First Trust National Association, as Trustee, relating to the Debt
Securities, including form of Debt Security.(5)
10.1-Retirement and Consulting Agreement dated November 26, 199920, 2000 between
Alton Kirk Lanterman, Carnival Corporation and Holland America Line-Westours
Inc.
10.2-Executive Long-term Compensation Agreement dated January 16, 1998
between Robert H. Dickinson and Carnival Corporation. (6)
10.3-1994 Carnival Cruise Lines Key Management Incentive Plan as amended on
April 12, 1999.July 17, 2000. (7)
10.4-Amended and Restated Carnival Corporation 1992 Stock Option Plan. (8)
10.5-Carnival Cruise Lines, Inc. 1993 Restricted Stock Plan adopted on
January 15, 1993 and as amended January 5, 1998 and December 21, 1998. (9)
10.6-Carnival Corporation "Fun Ship" Nonqualified Savings Plan. (10)
10.7 -Amendments to The Carnival Corporation Nonqualified Retirement Plan
for Highly Compensated. (11)
10.8-Carnival Cruise Lines, Inc. Non-Qualified Retirement Plan.(12)
10.9-1993 Outside Directors' Stock Option Plan as amended on April 6, 1998.
(13)
10.10-Form of Deferred Compensation Agreement between the Company and
Meshulam Zonis.(14)
10.11-Consulting Agreement/Registration Rights Agreement dated June 14,
1991, between the Company and Ted Arison.(15)
10.12-First Amendment to Consulting Agreement/Registration Rights
Agreement.(16)
10.13-Atle Brynestad Indemnification Agreement. (17)
10.14-Shareholders'10.13-Arnold W. Donald Director's Agreement
dated February 21, 1996 between Carnival
Corporation and David Crossland.(18)10.14-Meshulam Zonis Director's Agreement
10.15-Maks L. Birnbach Director's Agreement.(19)
10.16-William S. Ruben Director's Agreement.(20)
10.17-Stuart(17)
10.16-Stuart Subotnick Director's Agreement.(21)
10.18-Sherwood(18)
10.17-Sherwood M. Weiser Director's Agreement.(22)
10.19-Uzi(19)
10.18-Uzi Zucker Director's Agreement. (23)
10.20-David Crossland Director's Agreement.(24)
10.21-James(20)
10.19-James M. Dubin Director's Agreement.(25)
10.22-Modesto(21)
10.20-Modesto M. Maidique Director's Agreement.(26)
10.23-Richard(22)
10.21-Richard G. Capen Director's Agreement.(27)
10.24-Shari(23)
10.22-Shari Arison Dorsman Director's Agreement.(28)
10.25-Executive(24)
10.23-Executive Long-term Compensation Agreement dated January 11, 1999,
between the Company and Micky Arison. (29)
10.26-Executive(25)
10.24-Executive Long-term Compensation Agreement dated January 11, 1999,
between the Company and Howard S. Frank. (30)
10.27-HAL(26)
10.25-HAL Antillen N.V. and subsidiaries Key Management Incentive Plan. (31)
10.28-1994(27)
10.26-1994 Transaction-Extension Agreement, dated January 18, 2000, between
Carnival Corporation, Sherwood Weiser and others. 10.29-Amended(28)
10.27-Amended and Restated 1994 Security and Pledge Agreement, dated January
18, 2000, between Carnival Corporation and Sherwood Weiser. 10.30-Security(29)
10.28-Security and Pledge Agreement, dated January 18, 2000, between
Carnival Corporation and Sherwood Weiser. 10.31-Stock(30)
10.29-Stock Purchase Agreement, dated January 18, 2000, between Carnival
Corporation, Sherwood Weiser and others. 10.32-Carnival(31)
10.30-Carnival Corporation Supplemental Executive Retirement Plan. 10.33-(32)
10.31 Amendment to the Carnival Corporation Supplemental Executive
Retirement Plan.
10.32- Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan. (33)
10.33- Amendment to the Carnival Corporation Nonqualified Retirement Plan
for Highly Compensated Employees.
10.34- Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan.
10.35- Retirement Agreement between the Company and Meshulam Zonis.
12.0-Ratio of Earnings to Fixed Charges.
13.0-Portions of 19992000 Annual Report incorporated by reference into 19992000
Annual Report on Form 10-K.
21-Subsidiaries of the Company.
23.0-Consent of PricewaterhouseCoopers LLP.
27.0-Financial Data Schedule (for SEC use only).
Sequential
Numbering
System
Exhibits
(1)Incorporated by reference to Exhibit No. 3 to the registrant's
registration statement on Form S-3 (File No. 333-68999), filed with the
Securities and Exchange Commission.
(2) Incorporated by reference to Exhibit 3.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1999 (Commission File No.
1-9610), filed with the Securities and Exchange Commission.
(2a) Incorporated by reference to Exhibit 3.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended May 31, 2000 (Commission File No.
1-9610), filed with the Securities and Exchange Commission.
(3)Incorporated by reference to Exhibit No. 3.2 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(4)Incorporated by reference to Exhibit No. 4.1 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1996 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(5)Incorporated by reference to Exhibit No. 4 to the registrant's
registration statement on Form S-3 (File No. 33-53136), filed with the
Securities and Exchange Commission.
(6)Incorporated by reference to Exhibit No. 10.2 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1997 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(7) Incorporated by reference to Exhibit 10.210.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended MayAugust 31, 19992000 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(8)Incorporated by reference to Exhibit No. 10.4 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1997 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(9)Incorporated by reference to Exhibit No. 10.5 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1998 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(10)Incorporated by reference to Exhibit No. 10.6 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1997 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(11)Incorporated by reference to Exhibit No. 10.7 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1997 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(12)Incorporated by reference to Exhibit No. 10.4 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1990 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(13)Incorporated by reference to Exhibit 10.5 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1999 (Commission File No.
1-9610), filed with the Securities and Exchange Commission.
(14)Incorporated by reference to Exhibit No. 10.17 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(15)Incorporated by reference to Exhibit No. 4.3 to post-effective amendment
no. 1 on Form S-3 to the registrant's registration statement on Form S-1
(File No. 33-24747), filed with the Securities and Exchange Commission.
(16)Incorporated by reference to Exhibit No. 10.40 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1992
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(17)Incorporated by reference to Exhibit 10.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended May 31, 1999 (Commission File No.
1-9610), filed with the Securities and Exchange Commission.
(18)Incorporated by reference to Exhibit 10.4 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1996 (Commission File No.
1-9610), filed with the Securities and Exchange Commission.
(19)Incorporated by reference to Exhibit No. 28.1 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1990 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(18)Incorporated by reference to Exhibit No. 28.3 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(19)Incorporated by reference to Exhibit No. 28.4 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(20)Incorporated by reference to Exhibit No. 28.228.5 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(21)Incorporated by reference to Exhibit No. 28.310.5 to the registrant's registration statementAnnual
Report on Form S-1 (File10-K for the fiscal year ended November 30, 1996 (Commission
File No. 33-14844)1-9610), filed with the Securities and Exchange Commission.
(22)Incorporated by reference to Exhibit No. 28.410.6 to the registrant's registration statementAnnual
Report on Form S-1 (File10-K for the fiscal year ended November 30, 1996 (Commission
File No. 33-14844)1-9610), filed with the Securities and Exchange Commission.
(23)Incorporated by reference to Exhibit No. 28.510.7 to the registrant's registration statementAnnual
Report on Form S-1 (File10-K for the fiscal year ended November 30, 1996 (Commission
File No. 33-14844)1-9610), filed with the Securities and Exchange Commission.
(24)Incorporated by reference to Exhibit No. 10.410.8 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1996 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(25)Incorporated by reference to Exhibit No. 10.5 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1996 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(26)Incorporated by reference to Exhibit No. 10.6 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1996 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(27)Incorporated by reference to Exhibit No. 10.7 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1996 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(28)Incorporated by reference to Exhibit No. 10.8 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1996 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(29)Incorporated by reference to Exhibit No. 10.36 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1998
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(30)(26)Incorporated by reference to Exhibit No. 10.37 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1998
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(31)(27)Incorporated by reference to Exhibit 10.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1999 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(28)Incorporated by reference to Exhibit No. 10.28 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1999
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(29) Incorporated by reference to Exhibit No. 10.29 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1999
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(30) Incorporated by reference to Exhibit No. 10.30 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1999
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(31) Incorporated by reference to Exhibit No. 10.31 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1999
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(32) Incorporated by reference to Exhibit No. 10.32 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1999
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(33) Incorporated by reference to Exhibit No. 10.33 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1999
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.