(in millions) Three Months Ended August 31, 2018
Unrealized gains on fuel derivatives, net $ 8
Realized losses on fuel derivatives, net (4 )
Gains on fuel derivatives, net $ 4

~~There were no unrealized or realized gains or losses on fuel derivatives for the three months ended August 31, 2019.~~

Explanations of Non-GAAP Financial Measures

Non-GAAP Financial Measures

We use net cruise revenues per ALBD (“net revenue yields”), net cruise costs excluding fuel per ALBD, adjusted net income and adjusted earnings per share as non-GAAP financial measures of our cruise segments’ and the company’s financial performance. These non-GAAP financial measures are provided along with U.S. GAAP gross cruise revenues per ALBD (“gross revenue yields”), gross cruise costs per ALBD and U.S. GAAP net income (loss) and U.S. GAAP diluted earnings per share.

Net revenue yields and net cruise costs excluding fuel per ALBD enable us to separate the impact of predictable capacity or ALBD changes from price and other changes that affect our business. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.

Under U.S. GAAP, the realized and unrealized gains and losses on fuel derivatives not qualifying as fuel hedges are recognized currently in earnings. We believe that unrealized gains and losses on fuel derivatives are not an indication of our earnings performance since they relate to future periods and may not ultimately be realized in our future earnings. Therefore, we believe it is more meaningful for the unrealized gains and losses on fuel derivatives to be excluded from our net income and earnings per share and, accordingly, we present adjusted net income and adjusted earnings per share excluding these unrealized gains and losses.

We believe that gains and losses on ship sales, impairment charges, restructuring costs and other gains and expenses are not part of our core operating business and are not an indication of our future earnings performance. Therefore, we believe it is more meaningful for ~~gains and losses on ship sales, impairment charges, and restructuring and other non-core gains and charges~~these items to be excluded from our net income (loss) and earnings per share and, accordingly, we present adjusted net income and adjusted earnings per share excluding these items.

The presentation of our non-GAAP financial information is not intended to be considered in isolation from, as substitute for, or superior to the financial information prepared in accordance with U.S. GAAP. It is possible that our non-GAAP financial measures may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these measures to compare us to other companies.

Net passenger ticket revenues reflect gross passenger ticket revenues, net of commissions, transportation and other costs.

Net onboard and other revenues reflect gross cruise onboard and other revenues, net of onboard and other costs.

Net revenue yields is a combination of net passenger ticket revenues and net onboard and other revenues divided by ALBDs. Net revenue yields are commonly used in the cruise industry to measure a company’s cruise segment revenue performance and for revenue management purposes. ~~We use “net cruise revenues” rather than “gross cruise revenues” to calculate net revenue yields.~~ We believe that net cruise revenues is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues earned net of our most significant variable ~~costs,~~cost, which are travel agent commissions, ~~cost~~costs of air and other transportation, certain other costs that are directly associated with onboard and other revenues and credit and debit card fees.

~~Net passenger ticket revenues~~ ~~reflect gross passenger ticket revenues, net of commissions, transportation and other costs.~~

~~Net onboard and other revenues~~ ~~reflect gross onboard and other revenues, net of onboard and other cruise costs.~~

Net cruise costs excluding fuel ~~per ALBD~~ ~~is the measure we use to monitor our ability to control our cruise segments’ costs rather than~~ reflect gross cruise ~~costs per ALBD. We exclude~~operating expenses as well as cruise selling and administrative expenses, and excludes fuel expenses as well as the same variable costs that are included in the calculation of net ~~cruise~~passenger ticket revenues ~~as well as fuel expense to calculate~~and net ~~cruise costs without fuel~~onboard and other revenues to avoid duplicating these variable costs in our non-GAAP financial measures. Substantially all of our net cruise costs excluding fuel are largely fixed, except for the impact of changing prices, once the number of ALBDs has been determined.

Net cruise costs excluding fuel per ALBD is the measure we use to monitor our ability to control our cruise segments’ costs and is calculated as net cruise cost excluding fuel divided by ALBDs.

Reconciliation of Forecasted Data

We have not provided a reconciliation of forecasted gross cruise revenues to forecasted net cruise revenues or forecasted gross cruise costs to forecasted net cruise costs without fuel or forecasted U.S. GAAP net income (loss) to forecasted adjusted net income (loss) or forecasted U.S. GAAP diluted earnings per share to forecasted adjusted earnings per share because preparation of meaningful U.S. GAAP forecasts of gross cruise revenues, gross cruise costs, net income (loss) and earnings per share would require unreasonable effort. We are unable to predict, without unreasonable effort, the future movement of foreign exchange rates and fuel prices. We are unable to determine the future impact of gains or losses on ships sales, restructuring expenses and other non-core gains and charges.

~~Constant Dollar and~~

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Constant Currency

Our operations primarily utilize the U.S. dollar, Australian dollar, euro and sterling as functional currencies to measure results and financial condition. Functional currencies other than the U.S. dollar subject us to foreign currency translational risk. Our operations also have revenues and expenses that are in currencies other than their functional currency, which subject us to foreign currency transactional risk.

•Translational Risk: The translation of our operations with functional currencies other than U.S. dollar to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies.

•Transactional Risk: Our operations have revenue and expense transactions in currencies other than their functional currency. If their functional currency strengthens against these other currencies, it reduces the functional currency revenues and expenses. If the functional currency weakens against these other currencies, it increases the functional currency revenues and expenses.

Constant currency reporting removes the impact of changes in exchange rates on the translation of our operations plus the transactional impact of changes in exchange rates from revenues and expenses that are denominated in a currency other than the functional currency.

We report net revenue yields, net passenger revenue yields, net onboard and other revenue yields and net cruise costs excluding fuel per ALBD on a “constant ~~dollar” and “constant~~ currency” basis assuming the ~~2019~~2020 periods’ currency exchange rates have remained constant with the ~~2018~~2019 periods’ rates. ~~These metrics facilitate~~This metric facilitates a comparative view for the changes in our business in an environment with fluctuating exchange rates.

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~~Constant dollarreporting removes only the impact of changes in exchange rates on the translation of our operations.~~

~~Constant currency~~reporting removes the impact of changes in exchange rates on the translation of our operations (as in constant dollar) plus the transactional impact of changes in exchange rates from revenues and expenses that are denominated in a currency other than the functional currency.

~~Examples:~~


•	The translation of our operations with functional currencies other than U.S. dollar to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies.


•	Our operations have revenue and expense transactions in currencies other than their functional currency. If their functional currency strengthens against these other currencies, it reduces the functional currency revenues and expenses. If the functional currency weakens against these other currencies, it increases the functional currency revenues and expenses.

Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues by ALBDs as follows:


	Three Months Ended August 31,										Three Months Ended February 29/28,
(dollars in millions, except yields)	2019			2019 Constant Dollar			2018			(dollars in millions, except yields)	2020			2020 Constant Currency			2019
Passenger ticket revenues	$	4,477		$	4,549		$	4,353		Passenger ticket revenues	$	3,234					$	3,199
Onboard and other revenues	1,855			1,875			1,316			Onboard and other revenues	1,556						1,474
Less: Tour and other revenues										Less: Tour and other revenues	(52)						(29)
Gross cruise revenues	6,333			6,424			5,669			Gross cruise revenues	4,737						4,645
Less cruise costs										Less cruise costs
Commissions, transportation and other	(803		)	(814		)	(760		)	Commissions, transportation and other	(766)						(709)
Onboard and other	(668		)	(674		)	(207		)	Onboard and other	(471)						(467)
	(1,471		)	(1,488		)	(967		)		(1,238)						(1,177)
Net cruise revenues										Net cruise revenues	$	3,499		$	3,537		$	3,468

Net passenger ticket revenues	3,674			3,734			3,593			Net passenger ticket revenues	$	2,467		$	2,497		$	2,490
Net onboard and other revenues	1,187			1,201			1,109			Net onboard and other revenues	$	1,032		$	1,039		$	978
Net cruise revenues	$	4,862		$	4,936		$	4,702

ALBDs	22,727,296			22,727,296			21,475,014			ALBDs	21,977,115			21,977,115			21,299,196

Gross revenue yields	$	278.64		$	282.66		$	263.98		Gross revenue yields	$	215.53					$	218.06
% increase (decrease)	5.6		%	7.1		%				% increase (decrease)	(1.2)		%
Net revenue yields	$	213.91		$	217.17		$	218.96		Net revenue yields	$	159.22		$	160.93		$	162.82
% increase (decrease)	(2.3		)%	(0.8		)%				% increase (decrease)	(2.2)		%	(1.2)		%
Net passenger ticket revenue yields	$	161.66		$	164.32		$	167.31		Net passenger ticket revenue yields	$	112.26		$	113.64		$	116.90
% increase (decrease)	(3.4		)%	(1.8		)%				% increase (decrease)	(4.0)		%	(2.8)		%
Net onboard and other revenue yields	$	52.25		$	52.85		$	51.65		Net onboard and other revenue yields	$	46.96		$	47.30		$	45.92
% increase (decrease)	1.2		%	2.3		%				% increase (decrease)	2.3		%	3.0		%

Three Months Ended August 31,
(dollars in millions, except yields) 2019 2019
Constant
Currency 2018
Net passenger ticket revenues $ 3,674
$ 3,754
$ 3,593
Net onboard and other revenues 1,187
1,199
1,109
Net cruise revenues $ 4,862
$ 4,953
$ 4,702
ALBDs 22,727,296
22,727,296
21,475,014

Net revenue yields $ 213.91
$ 217.95
$ 218.96
% increase (decrease) (2.3 )% (0.5 )%
Net passenger ticket revenue yields $ 161.66
$ 165.18
$ 167.31
% increase (decrease) (3.4 )% (1.3 )%
Net onboard and other revenue yields $ 52.25
$ 52.77
$ 51.65
% increase (decrease) 1.2 % 2.2 %

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Consolidated gross and net cruise costs and net cruise costs excluding fuel per ALBD were computed by dividing the gross and net cruise costs and net cruise costs excluding fuel by ALBDs as follows:


	Three Months Ended February 29/28,
(dollars in millions, except costs per ALBD)	2020			2020 Constant Currency			2019
Operating expenses	$	3,523					$	3,142
Selling and administrative expenses	678						629
Less tour and other expenses	(26)						(34)
Gross cruise costs	4,175						3,736
Less cruise costs
Commissions, transportation and other	(766)						(709)
Onboard and other	(471)						(467)
Gains (losses) on ship sales and impairments	(221)						(2)
Restructuring expenses	—						—
Other	—						—
Net cruise costs	2,716						2,558
Less fuel	(396)						(381)
Net cruise costs excluding fuel	$	2,320		$	2,340		$	2,177

ALBDs	21,977,115			21,977,115			21,299,196

Gross cruise costs per ALBD	$	189.96					$	175.40
% increase (decrease)	8.3		%
Net cruise costs excluding fuel per ALBD	$	105.57		$	106.46		$	102.21
% increase (decrease)	3.3		%	4.2		%

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Three Months Ended August 31,
(dollars in millions, except costs per ALBD) 2019 2019
Constant
Dollar 2018
Cruise operating expenses $ 3,423
$ 3,466
$ 2,867
Cruise selling and administrative expenses 554
562
569
Gross cruise costs 3,978
4,028
3,436
Less cruise costs included above
Commissions, transportation and other (803 ) (814 ) (760 )
     Onboard and other (668 ) (674 ) (207 )
     Gains (losses) on ship sales and impairments (3 ) (3 ) 27
     Restructuring expenses —
—
—
     Other (23 ) (23 ) —
Net cruise costs 2,480
2,513
2,496
Less fuel (401 ) (401 ) (434 )
Net cruise costs excluding fuel $ 2,079
$ 2,112
$ 2,062
ALBDs 22,727,296
22,727,296
21,475,014

Gross cruise costs per ALBD $ 175.01
$ 177.23
$ 160.02
% increase (decrease) 9.4 % 10.8 %
Net cruise costs excluding fuel per ALBD $ 91.49
$ 92.94
$ 96.03
% increase (decrease) (4.7 )% (3.2 )%

Three Months Ended August 31,
(dollars in millions, except costs per ALBD) 2019 2019
Constant
Currency 2018
Net cruise costs excluding fuel $ 2,079
$ 2,113
$ 2,062
ALBDs 22,727,296
22,727,296
21,475,014

Net cruise costs excluding fuel per ALBD $ 91.49
$ 92.98
$ 96.03
% increase (decrease) (4.7 )% (3.2 )%

Adjusted ~~fully diluted~~ earnings per share was computed as follows:


	Three Months Ended
	February 29/28,
(in millions, except per share data)	2020		2019
Net income (loss)
U.S. GAAP net income (loss)	$	(781)	$	336
(Gains) losses on ship sales and impairments	928		2
Restructuring expenses	—		—
Other	3		—
Adjusted net income	$	150	$	338
Weighted-average shares outstanding	684		695

Earnings per share
U.S. GAAP diluted earnings per share	$	(1.14)	$	0.48
(Gains) losses on ship sales and impairments	1.36		—
Restructuring expenses	—		—
Other	0.01		—
Adjusted earnings per share	$	0.22	$	0.49

Three Months Ended
August 31,
(in millions, except per share data) 2019 2018
Net income
     U.S. GAAP net income $ 1,780
$ 1,707
     Unrealized (gains) losses on fuel derivatives, net —
(8 )
     (Gains) losses on ship sales and impairments 14
(27 )
     Restructuring expenses —
—
     Other 25
—
     Adjusted net income $ 1,819
$ 1,673
Weighted-average shares outstanding 691
707

Earnings per share
     U.S. GAAP earnings per share $ 2.58
$ 2.41
     Unrealized (gains) losses on fuel derivatives, net —
(0.01 )
     (Gains) losses on ship sales and impairments 0.02
(0.04 )
     Restructuring expenses —
—
     Other 0.04
—
     Adjusted earnings per share $ 2.63
$ 2.36

Net cruise revenues increased by ~~$159~~$31 million, or ~~3.4%~~0.9%, to ~~$4.9~~$3.5 billion in ~~2019 from $4.7~~2020 compared to $3.5 billion in ~~2018.~~2019.

The increase was caused by a ~~5.8%~~3.2% capacity increase in ALBDs of ~~$274 million.~~$110 million, net of 2.8% of ALBDs as a result of cancelled voyages and other voyage disruptions directly related to COVD-19

This increase was partially offset by:

•$9241 million - 1.2% decrease in constant currency net revenue yields, including impacts of COVID-19 as a result of cancelled voyages and other voyage disruptions

•$38 million - net unfavorable foreign currency impacts (including both the foreign currency translational and transactional impacts)

~~$23 million - 0.5%~~The 1.2% decrease in constant currency net revenue yields

~~The 0.5% decrease in net revenue yields on a constant currency basis~~ was due to a ~~1.3%~~2.8% decrease in constant currency net passenger ticket revenue yields, partially offset by a ~~2.2%~~3.0% increase in constant currency net onboard and other revenue yields.

This ~~1.3%~~2.8% decrease in net passenger ticket revenue yields was driven by sourcing in Continental Europe. This 2.8% decrease in net passenger ticket revenue was comprised of a ~~0.8% increase from our NAA segment, driven by price improvements in the Caribbean program, offset by a 3.5%~~5.8% decrease from our EA segment, ~~primarily driven~~offset by ~~sourcing in Continental Europe.~~a 0.3% increase from our NAA segment.

The ~~2.2%~~3.0% increase in net onboard and other revenue yields was comprised of a ~~2.0%~~1.5% increase from our NAA segment, ~~and~~ a ~~3.0%~~0.6% increase from our EA ~~segment.~~segment and an increase to Cruise Support segment revenue.

Net cruise costs excluding fuel increased by ~~$17~~$143 million, or ~~0.8%~~6.6%, to ~~$2.1~~$2.3 billion in ~~2019 compared to $2.1~~2020 from $2.2 billion in ~~2018.~~2019.

The increase was caused ~~by a 5.8% capacity increase in ALBDs of $120 million.~~

~~This increase was partially offset~~ by:

•$6993 million - ~~3.2% decrease~~4.2% increase in constant currency net cruise costs excluding fuel, including incremental impacts of COVID-19 as a result of cancelled voyages and other voyage disruptions

•$3469 million - 3.2% capacity increase in ALBDs, net of 2.8% of ALBDs as a result of cancelled voyages and other voyage disruptions directly related to COVID-19

These increases were partially offset by:

•$20 million - net favorable foreign currency impacts (including both the foreign currency translational and transactional impacts)

Fuel costs ~~decreased~~increased by ~~$34~~$16 million, or ~~7.7%~~4.2%, to ~~$401~~$396 million in ~~2019~~2020 from ~~$434~~$381 million in ~~2018.~~

~~This decrease was caused by:~~

~~$36 million - lower fuel prices~~

~~$23 million - lower fuel consumption per ALBD~~

~~These decreases were partially offset by a 5.8% capacity increase in ALBDs of $25 million.~~

~~Nine Months Ended August 31, 2019 (“2019”) Compared to Nine Months Ended August 31, 2018 (“2018”)~~

~~Revenues~~

~~Consolidated~~

~~Cruise passenger ticket revenues made up 68% of our 2019 total revenues. Cruise passenger ticket revenues increased by $239 million, or 2.2%, to $10.9 billion in 2019 from $10.7 billion in 2018.~~

2019.

This increase was caused by:

•$~~530~~45 million - ~~4.9%~~changes in fuel mix

•$12 million - 3.2% capacity increase in ALBDs

~~$92 million - increase in air transportation revenues~~

These increases were partially offset by:

•$~~256 million - net unfavorable foreign currency translational impact~~

$127 million - decrease in cruise ticket revenues, primarily driven by sourcing in Continental Europe and net unfavorable foreign currency transactional impact, partially offset by price improvements in the Caribbean program

~~Onboard and other cruise revenues made up 30% of 2019 total revenues. Onboard and other cruise revenues increased by $1.3 billion, or 37%, to $4.8 billion in 2019 from $3.5 billion in 2018.~~

~~This increase was caused by:~~

~~$1.1 billion - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance~~

~~$172 million - 4.9% capacity increase in ALBDs~~

~~$82 million - higher onboard spending by our guests~~

~~These increases were partially offset by net unfavorable foreign currency translation impact of $74 million.~~

~~Tour and other revenues made up 1.9% of our 2019 total revenues. Tour and other revenues increased by $77 million, or 35%, to $299 million in 2019 from $222 million in 2018.~~

~~Concession revenues, which are included in onboard and other revenues, increased by $20 million, or 2.3%, to $888 million in 2019 from $868 million in 2018.~~

~~NAA Segment~~

Cruise passenger ticket revenues made up 66% of our NAA segment’s 2019 total revenues. Cruise passenger ticket revenues increased by $203 million, or 3.0%, to $7.0 billion in 2019 from $6.8 billion in 2018.

~~This increase was caused by:~~

~~$155 million - 2.4% capacity increase in ALBDs~~


•	~~$50 million -~~ ~~increase~~ ~~in air transportation revenues~~


•	~~$20 million -~~ ~~increase~~ ~~in cruise ticket revenues, driven primarily by price improvements in the Caribbean program, partially offset by net unfavorable foreign currency transactional impact~~

The remaining 34% of our NAA segment’s 2019 total revenues were comprised of onboard and other cruise revenues, which increased by $967 million, or 38%, to $3.5 billion in 2019 from $2.6 billion in 2018.

~~This increase was driven by:~~

~~$882 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance~~

~~$59 million - 2.4% capacity increase in ALBDs~~

~~Concession revenues, which are included in onboard and other revenues, increased by $13 million, or 2.1%, to $628 million in 2019 from $615 million in 2018.~~

~~EA Segment~~

Cruise passenger ticket revenues made up 79% of our EA segment’s 2019 total revenues. Cruise passenger ticket revenues increased by $69 million, or 1.7%, to $4.0 billion in 2019 compared to $4.0 billion in 2018.

~~This increase was caused by:~~

~~$371 million - 9.2% capacity increase in ALBDs~~

~~$39 million - increase in air transportation revenues~~

~~These increases were partially offset by:~~

~~$240 million - net unfavorable foreign currency translational impact~~

~~$107 million - decrease in cruise ticket revenues, primarily driven by sourcing in Continental Europe~~

The remaining 21% of our EA segment’s 2019 total revenues were comprised of onboard and other cruise revenues, which increased by $269 million, or 32%, to $1.1 billion in 2019 from $0.8 billion in 2018.

~~This increase was caused by:~~

~~$212 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance~~

~~$77 million - 9.2% capacity increase in ALBDs~~


•	~~$44 million -~~ ~~higher~~ ~~onboard spending by our guests~~

~~These increases were partially offset by net unfavorable foreign currency translational impact of $66 million.~~

~~Concession revenues, which are included in onboard and other revenues, increased by $7 million, or 2.8%, to $259 million in 2019 from $252 million in 2018.~~

~~Costs and Expenses~~

~~Consolidated~~

~~Operating costs and expenses increased by $1.5 billion, or 18%, to $9.8 billion in 2019 from $8.3 billion in 2018.~~

~~This increase was caused by:~~

~~$1.1 billion - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance~~

~~$400 million - 4.9% capacity increase in ALBDs~~

~~$84 million - higher commissions, transportation and other expense~~

~~$58 million - increase in tour and other costs~~

~~$55 million - increase in various other ship operating costs~~

~~$35 million - gains on ship sales in 2018, net of gains on ship sales in 2019~~

~~$26 million - higher fuel prices~~

~~These increases were partially offset by:~~

~~$186 million - net favorable foreign currency translational impact~~

~~$68~~30 million - lower ~~dry-dock expenses and repair and maintenance expenses~~fuel prices

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•$4411 million - lower fuel consumption per ALBD

~~Selling and administrative expenses increased by $19 million, or 1.0%, to $1.8 billion in 2019 compared to $1.8 billion in 2018.~~

~~Depreciation and amortization expenses increased by $96 million, or 6.4%, to $1.6 billion in 2019 from $1.5 billion in 2018.~~

~~NAA Segment~~

~~Operating costs and expenses increased by $984 million, or 18%, to $6.4 billion in 2019 from $5.4 billion in 2018.~~

~~This increase was caused by:~~

~~$882 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance~~

~~$126 million - 2.4% capacity increase in ALBDs~~

~~$61 million - higher commissions, transportation and other expenses~~

~~These increases were partially offset by:~~

~~$42 million - lower dry-dock expenses and repair and maintenance expenses~~

~~$37 million - lower cruise payroll and related expenses~~

~~Selling and administrative expenses decreased by $4 million, or 0.4%, to $1.0 billion in 2019 compared to $1.0 billion in 2018.~~

~~Depreciation and amortization expenses increased by $72 million, or 7.6%, to $1.0 billion in 2019 from $0.9 billion in 2018.~~

~~EA Segment~~

~~Operating costs and expenses increased by $383 million, or 14%, to $3.2 billion in 2019 from $2.8 billion in 2018.~~

~~This increase was caused by:~~

~~$246 million - 9.2% capacity increase in ALBDs~~

~~$212 million - related to the gross presentation of shore excursions and other onboard revenues as a result of the adoption of new revenue accounting guidance~~

~~$46 million - gains on ship sales in 2018, net of costs on ship sales in 2019~~

~~$31 million - higher commissions, transportation and other expenses~~

~~$32 million - various other ship operating costs~~

~~These increases were partially offset by:~~

~~$171 million - net favorable foreign currency translational impact~~

~~$29 million - lower fuel consumption per ALBD~~

~~$25 million - lower dry-dock expenses and repair and maintenance expenses~~

~~Selling and administrative expenses decreased by $10 million, or 1.9% to $540 million in 2019 from $551 million in 2018.~~

~~Depreciation and amortization expenses increased by $17 million, or 3.7%, to $483 million in 2019 from $466 million in 2018.~~

~~Operating Income~~

Our consolidated operating income increased by $19 million, or 0.7%, to $2.8 billion in 2019 compared to $2.8 billion in 2018. Our NAA segment’s operating income increased by $119 million, or 6.1%, to $2.1 billion in 2019 from $2.0 billion in 2018, and our EA segment’s operating income decreased by $50 million, or 5.1%, to $933 million in 2019 from $984 million in 2018. These changes were primarily due to the reasons discussed above.

~~Nonoperating Income (Expense)~~

Nine Months Ended August 31,
(in millions) 2018
Unrealized gains on fuel derivatives, net $ 90
Realized losses on fuel derivatives, net (29 )
Gains on fuel derivatives, net $ 61

~~There were no unrealized or realized gains or losses on fuel derivatives for the nine months ended August 31, 2019.~~

~~Key Performance Non-GAAP Financial Indicators~~

~~Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues by ALBDs as follows:~~

Nine Months Ended August 31,
(dollars in millions, except yields) 2019 2019
Constant
Dollar 2018
Passenger ticket revenues $ 10,934
$ 11,190
$ 10,694
Onboard and other revenues 4,811
4,885
3,509
Gross cruise revenues 15,744
16,075
14,203
Less cruise costs
Commissions, transportation and other (2,125 ) (2,182 ) (2,000 )
Onboard and other (1,620 ) (1,642 ) (485 )
(3,746 ) (3,825 ) (2,485 )
Net passenger ticket revenues 8,808
9,008
8,694
Net onboard and other revenues 3,190
3,243
3,024
Net cruise revenues $ 11,999
$ 12,250
$ 11,718
ALBDs 65,671,215
65,671,215
62,626,499

Gross revenue yields $ 239.74
$ 244.78
$ 226.78
% increase (decrease) 5.7 % 7.9 %
Net revenue yields $ 182.71
$ 186.54
$ 187.10
% increase (decrease) (2.3 )% (0.3 )%
Net passenger ticket revenue yields $ 134.13
$ 137.16
$ 138.82
% increase (decrease) (3.4 )% (1.2 )%
Net onboard and other revenue yields $ 48.58
$ 49.38
$ 48.28
% increase (decrease) 0.6 % 2.3 %

Nine Months Ended August 31,
(dollars in millions, except yields) 2019 2019
Constant
Currency 2018
Net passenger ticket revenues $ 8,808
$ 9,071
$ 8,694
Net onboard and other revenues 3,190
3,244
3,024
Net cruise revenues $ 11,999
$ 12,315
$ 11,718
ALBDs 65,671,215
65,671,215
62,626,499

Net revenue yields $ 182.71
$ 187.52
$ 187.10
% increase (decrease) (2.3 )% 0.2 %
Net passenger ticket revenue yields $ 134.13
$ 138.13
$ 138.82
% increase (decrease) (3.4 )% (0.5 )%
Net onboard and other revenue yields $ 48.58
$ 49.39
$ 48.28
% increase (decrease) 0.6 % 2.3 %

~~Consolidated gross and net cruise costs and net cruise costs excluding fuel per ALBD were computed by dividing the gross and net cruise costs and net cruise costs excluding fuel by ALBDs as follows:~~

Nine Months Ended August 31,
(dollars in millions, except costs per ALBD) 2019 2019
Constant
Dollar 2018
Cruise operating expenses $ 9,634
$ 9,820
$ 8,208
Cruise selling and administrative expenses 1,792
1,828
1,772
Gross cruise costs 11,426
11,649
9,980
Less cruise costs included above
     Commissions, transportation and other (2,125 ) (2,182 ) (2,000 )
     Onboard and other (1,620 ) (1,642 ) (485 )
    Gains (losses) on ship sales and impairments 11
12
39
     Restructuring expenses —
—
—
     Other (43 ) (43 ) (1 )
Net cruise costs 7,648
7,793
7,532
Less fuel (1,204 ) (1,204 ) (1,166 )
Net cruise costs excluding fuel $ 6,444
$ 6,588
$ 6,367
ALBDs 65,671,215
65,671,215
62,626,499

Gross cruise costs per ALBD $ 173.98
$ 177.38
$ 159.36
% increase (decrease) 9.2 % 11.3 %
Net cruise costs excluding fuel per ALBD $ 98.12
$ 100.32
$ 101.66
% increase (decrease) (3.5 )% (1.3 )%

Nine Months Ended August 31,
(dollars in millions, except costs per ALBD) 2019 2019
Constant
Currency 2018
Net cruise costs excluding fuel $ 6,444
$ 6,596
$ 6,367
ALBDs 65,671,215
65,671,215
62,626,499

Net cruise costs excluding fuel per ALBD $ 98.12
$ 100.44
$ 101.66
% increase (decrease) (3.5 )% (1.2 )%

~~Adjusted fully diluted earnings per share was computed as follows:~~

Nine Months Ended
August 31,
(in millions, except per share data) 2019 2018
Net income
     U.S. GAAP net income $ 2,567
$ 2,659
     Unrealized (gains) losses on fuel derivatives, net —
(90 )
     (Gains) losses on ship sales and impairments —
(39 )
     Restructuring expenses —
—
     Other 47
7
     Adjusted net income $ 2,614
$ 2,537
Weighted-average shares outstanding 693
714

Earnings per share

     U.S. GAAP earnings per share $ 3.71
$ 3.72
     Unrealized (gains) losses on fuel derivatives, net —
(0.13 )
     (Gains) losses on ship sales and impairments —
(0.05 )
     Restructuring expenses —
—
     Other 0.07
0.01
     Adjusted earnings per share $ 3.77
$ 3.55

~~Net cruise revenues increased by $281 million, or 2.4%, to $12.0 billion in 2019 from $11.7 billion in 2018.~~

~~The increase was caused by a 4.9% capacity increase in ALBDs of $580 million.~~

~~This increase was partially offset by net unfavorable foreign currency impacts (including both the foreign currency translational and transactional impacts) of $316 million.~~

The 0.2% increase in net revenue yields on a constant currency basis was due to a 2.3% increase in net onboard and other revenue yields partially offset by a 0.5% decrease in net passenger ticket revenue yields.

The 0.5% decrease in net passenger ticket revenue yields was primarily driven by sourcing in Continental Europe and net unfavorable foreign currency impact (including both the foreign currency translational and transactional impacts) partially offset by price improvements in the Caribbean program. This 0.5% decrease in net passenger ticket revenue yields was comprised of a 1.1% increase from our NAA segment and a 2.3% decrease from our EA segment.

~~The 2.3% increase in net onboard and other revenue yields was comprised of a 1.7% increase from our NAA segment and a 3.2% increase from our EA segment.~~

Net cruise costs excluding fuel increased by $77 million, or 1.2%, to $6.4 billion in 2019 from $6.4 billion in 2018. This increase was caused by a 4.9% capacity increase in ALBDs, which accounted for $308 million.

~~This increase was partially offset by net favorable foreign currency impacts (including both the foreign currency translational and transactional impacts) of $152 million.~~

~~Fuel costs increased by $39 million, or 3.3%, to $1.2 billion in 2019 compared to $1.2 billion in 2018.~~

~~This increase was caused by:~~

~~$57 million - 4.9% capacity increase in ALBDs~~

~~$26 million - higher fuel prices~~

~~These increases were partially offset by lower fuel consumption by ALBD by $44 million.~~

Liquidity, Financial Condition and Capital Resources

~~Our primary financial goals are~~Due to ~~profitably grow~~the spread of COVID-19 and the effects of growing port restrictions around the world, we previously announced a voluntary pause of our global fleet cruise ~~business and grow ROIC over time, while maintaining a strong balance sheet and strong investment grade credit ratings. (We define ROIC as~~operations. Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with the ~~twelve-month adjusted earnings before interest divided~~full extent of the impact generally determined by the ~~monthly average~~length of ~~debt plus equity minus construction-in-progress.) Our ability~~time the event influences travel decisions. We believe the ongoing effects of COVID-19 on our operations and global bookings have had, and will continue to ~~generate significant operating cash flow allows us to internally fund~~have a material negative impact on our ~~capital improvements, debt maturities~~financial results and ~~dividend payments. We have $10.7~~liquidity, and such negative impact may continue well beyond the containment of such outbreak.

As of February 29, 2020, we had $3.0 billion of ~~committed export credit facilities available to fund the vast majority~~immediate liquidity, which consisted of ~~our new ship growth capital. Other objectives of our capital structure policy are to maintain a sufficient level of liquidity through our~~ available cash and cash equivalents and available borrowings under our Existing Multicurrency Facility. In addition, we had $2.8 billion from four committed ~~financings~~export credit facilities that are available to fund the originally planned ship deliveries for ~~immediate~~the remainder of this year and ~~future liquidity needs~~$5.9 billion from committed export credit facilities that are available to fund ship deliveries originally planned in 2021 and beyond. On March 13, 2020, we fully drew down our $3.0 billion Existing Multicurrency Facility, which amounts are currently due in September 2020. We borrowed under the Existing Multicurrency Facility in order to ~~maintain a reasonable debt maturity profile.~~increase our cash position and preserve financial flexibility in light of the impact of the COVID-19 outbreak on our results of operations and liquidity.

We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our cruising operations, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude, duration and speed of the global pandemic is uncertain. As a consequence, we cannot estimate the impact on our business, financial condition or near- or longer-term financial or operational results with certainty, but we expect a net loss on both a U.S. GAAP and adjusted basis for the fiscal year ending November 30, 2020.

We are taking further actions to improve our liquidity, including capital expenditure and operating expense reductions, suspending dividend payments on, and the repurchase of, the common stock of Carnival Corporation and the ordinary shares of Carnival plc and pursuing additional financing. Based on ~~our historical results, projections~~these actions and ~~financial condition,~~assumptions regarding the impact of COVID-19, we ~~believe~~have concluded that ~~our future operating cash flows and liquidity~~we will be able to generate sufficient liquidity to ~~fund~~satisfy our obligations and remain in compliance with our existing debt covenants for the next twelve months prior to giving effect to any additional financing that may occur.

At February 29, 2020, we were in compliance with all of our debt covenants. After considering the effect of COVID-19 on our consolidated EBITDA, the actions we have taken and the other options available to us, we expect to remain in compliance with our current minimum debt service coverage ratio in certain of our debt instruments that requires a minimum of 3:1 ratio of EBITDA to Consolidated Net Interest Charges. If we expected ~~capital improvements, new ship growth capital,~~to be out of compliance, we would seek waivers from the lenders prior to any covenant violation. Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable. There can be no assurance that we would be able to obtain waivers in a timely manner, or on acceptable terms at all. If we were not able to obtain waivers or repay the debt ~~maturities~~facilities, this would lead to an event of default and ~~dividend payments. We believe that~~potential acceleration of amounts due under all of our ~~ability~~outstanding debt and derivative contract payables. As a result, the failure to ~~generate significant operating cash flows~~obtain waivers would have a material adverse effect on us. Refer to "Risk Factors - As a result of the COVID-19 outbreak, we have paused our global fleet cruise operations, and if we unable to re-commence normal operations in the near-term, we may be out compliance with a maintenance covenant in certain of our ~~strong balance sheet, as evidenced~~debt facilities.”

In March and April 2020, Moody’s and S&P Global downgraded our long-term issuer and senior unsecured debt ratings. In addition, our long-term ratings were placed on review for further downgrade by ~~our strong investment grade~~both rating agencies. Our short-term commercial paper credit ratings ~~provide us~~were downgraded and also placed on review for further downgrade.

On April 1, 2020, we announced the pricing terms of offerings of $4.0 billion of the Secured Notes, $1.75 billion of Convertible Notes and a public offering of $500 million of common stock in the Public Equity Offering. In connection with the ~~ability,~~Convertible Notes offering, we granted the initial purchasers of the Convertible Notes an option to purchase on or before April 18, 2020, up to an additional $262.5 million aggregate principal amount of Convertible Notes. In connection with the Public Equity Offering, we granted the underwriters an option to purchase up to 9,375,000 of additional shares of common stock, which option must be exercised on or before May 1, 2020.

The Secured Notes will pay interest semi-annually on April 1 and October 1 of each year, beginning on October 1, 2020, at a rate of 11.5% per year. The Secured Notes will mature on April 1, 2023. The Convertible Notes will pay interest semi-annually on April 1 and October 1 of each year, beginning on October 1, 2020, at a rate of 5.75% per year. The Convertible Notes will mature on April 1, 2023, unless earlier converted, redeemed or repurchased. The initial conversion rate per $1,000 principal

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amount of Convertible Notes is equivalent to 100 shares of common stock of the Corporation, which is equivalent to a conversion price of approximately $10 per share, subject to adjustment in ~~most financial credit market environments,~~certain circumstances.

The Public Equity Offering consists of 62,500,000 shares of common stock, par value $0.01 per share, of Carnival Corporation, at a price of $8 per share.

The Public Equity Offering, the Convertible Notes offering and the Secured Notes offering are expected to ~~obtain debt financing.~~be completed

in early April, subject to customary closing conditions. The net proceeds from the offering of Secured Notes will be deposited

in to a segregated escrow account, pending the releases in accordance with certain collateral perfection thresholds. None of the closings of the Public Equity Offering and the offerings of the Secured Notes or the Convertible Notes is conditioned upon the closing of any of the other offerings or vice versa.

We had a working capital deficit of ~~$6.2~~$7.8 billion as of ~~August 31, 2019~~February 29, 2020 compared to a working capital deficit of ~~$7.0~~$7.1 billion as of November 30, ~~2018.~~2019. The ~~decrease~~increase in working capital deficit was caused by an increase in ~~cash~~short-term debt and ~~cash equivalents and a decrease~~an increase in ~~short-term~~the current portion of long-term debt partially offset by an increase in ~~customer deposits.~~cash and cash equivalents. We operate with a substantial working capital deficit. This deficit is mainly attributable to the fact that, under our business model, substantially all of our passenger ticket receipts are collected in advance of the applicable sailing date. These advance passenger receipts remain a current liability until the sailing date. The cash generated from these advance receipts is used interchangeably with cash on hand from other sources, such as our borrowings and other cash from operations. The cash received as advanced receipts can be used to fund operating expenses, pay down our debt, make long-term investments or any other use of cash. Included within our working capital deficit are $4.7 billion ~~and $4.4 billion~~ of customer deposits as of ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018, respectively.~~2019. In addition, we have a relatively low-level of accounts receivable and limited investment in inventories. We generate substantial cash flows from operations and our business model has historically allowed us to maintain this working capital deficit and still meet our operating, investing and financing needs. We expect that we will continue to have working capital deficits in the future.

Sources and Uses of Cash

Operating Activities

Our business provided ~~$4.4 billion~~$916 million of net cash from operations during the ~~nine~~three months ended ~~August 31, 2019,~~February 29, 2020, a decrease of ~~$22~~$199 million, or ~~0.5%~~18%, compared to ~~$4.4~~$1.1 billion for the same period in ~~2018.~~2019.

Investing Activities

During the ~~nine~~three months ended ~~August 31, 2019,~~February 29, 2020, net cash used in investing activities was ~~$3.3~~$1.2 billion. This was ~~caused by~~substantially due to the following:

•Capital expenditures of ~~$2.2 billion~~$861 million for our ongoing new shipbuilding program

•Capital expenditures of ~~$1.2 billion~~$399 million for ship improvements and replacements, information technology and buildings and improvements

•Proceeds from ~~sale~~sales of ships of ~~$15~~$226 million

•Purchase of minority interest of $83 million

During the ~~nine~~three months ended ~~August 31, 2018,~~February 28, 2019, net cash used in investing activities was ~~$2.6~~$2.1 billion. This was ~~substantially due to~~caused by the following:

•Capital expenditures of ~~$1.4~~$1.7 billion for our ongoing new shipbuilding program

•Capital expenditures of ~~$1.3 billion~~$428 million for ship improvements and replacements, information technology and buildings and improvements

~~Proceeds from sale of ships of $282 million~~

~~Payments of $37 million for fuel derivative settlements~~

Financing Activities

During the ~~nine~~three months ended ~~August 31, 2019,~~February 29, 2020, net cash ~~used in~~provided by financing activities of ~~$912 million~~$1.1 billion was caused by the following:

•Net ~~repayments of~~proceeds from short-term borrowings of ~~$600~~$779 million in connection with our availability of, and needs for, cash at various times throughout the period

•Repayments of ~~$472~~$132 million of long-term debt

•Issuances of ~~$1.7 billion~~$823 million of long-term debt

•Payments of cash dividends of ~~$1.0 billion~~$344 million

•Purchases of ~~$472~~$12 million of Carnival plc ordinary shares in open market transactions under our Repurchase Program

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During the three months ended February 28, 2019, net cash provided by financing activities of $612 million was caused by the following:

•Net repayments of short-term borrowings of $81 million in connection with our availability of, and needs for, cash at various times throughout the period

•Repayments of $95 million of long-term debt

•Issuances of $1.4 billion of long-term debt

•Payments of cash dividends of $348 million

•Purchases of $274 million of Carnival Corporation common stock and Carnival plc ordinary shares in open market transactions under our Repurchase Program

~~During the nine months ended August 31, 2018, net cash used in financing activities of $1.7 billion was substantially due to the following:~~

~~Net proceeds of short-term borrowings of $182 million in connection with our availability of, and needs for, cash at various times throughout the period~~


•	~~Repayments of~~ ~~$1.3 billion~~ ~~of long-term debt~~

~~Issuances of $1.6 billion of long-term debt~~

~~Payments of cash dividends of $1.0 billion~~

~~Purchases of $1.2 billion of Carnival Corporation common stock and Carnival plc ordinary shares in open market transactions under our Repurchase Program~~

Capital Expenditure and Capacity Forecast

Our annual capital expenditure forecast consists of contracted new ship growth capital, estimated payments for planned new ship growth capital and capital improvements.


(in billions)	2020		2021		2022
Annual capital expenditure forecast (a)	$	7.0	$	5.8	$	5.2

(in billions) 2019 2020 2021 2022
Annual capital expenditure forecast $ 6.6
$ 5.8
$ 5.9
$ 5.4
(a)As of February 29, 2020.The annual capital expenditure forecast does not reflect any changes as a result of capital expenditures reductions discussed in Note 1 - “General - Liquidity and Management's Plans.”

Our annual capacity forecast consists of contracted new ships and announced dispositions.


	2020		2021		2022
Annual capacity increase (a)	4.3	%	7.3	%	5.1	%

2019 2020 2021 2022
Annual capacity increase 4.2 % 7.0 % 5.3 % 5.3 %
(a)As of February 29, 2020.The capacity forecast does not reflect any changes in capacity resulting from our voluntary pause in operations.

Funding Sources

~~At August 31, 2019,~~As of February 29, 2020, we had $3.0 billion of immediate liquidity, ~~of $14.5 billion. Our liquidity~~which consisted of ~~$750 million of~~available cash and cash equivalents ~~which excludes $403 million of cash used for current operations, $3.1 billion~~and available ~~for borrowing~~borrowings under our ~~revolving~~Existing Multicurrency Facility, which is scheduled to mature in 2024. In addition, we had $2.8 billion from four committed export credit facilities ~~net~~that are available to fund the originally planned ship deliveries for the remainder of ~~our outstanding commercial paper borrowings,~~this year and ~~$10.7~~$5.9 billion ~~under our~~from committed ~~future financings, which are comprised of ship~~ export credit ~~facilities.~~facilities that are available to fund ship deliveries originally planned in 2021 and beyond. These commitments are from numerous large and well-established banks and export credit agencies, which we believe will honor their contractual agreements with us.


(in billions)	2020		2021		2022		2023
Availability of committed future financing at February 29, 2020	$	2.8	$	2.7	$	2.3	$	0.9

(in billions) 2019 2020 2021 2022 2023
Availability of committed future financing at August 31, 2019 $ 2.0
$ 2.8
$ 2.8
$ 2.3
$ 0.9

~~At August 31, 2019, all of our revolving credit facilities are scheduled to mature in 2024, except for $300 million that matures in September 2020.~~

Substantially all of our debt agreements contain financial covenants as described in Note 5 - “Unsecured Debt” in the annual consolidated financial statements, which are included within our Form 10-K. At ~~August 31, 2019,~~February 29, 2020, we were in compliance with our debt covenants. In addition, based on, among other things, our forecasted operating results, financial condition and cash flows, we expect to be in compliance with our debt covenants for the foreseeable future. Generally, if an event of default under any debt agreement occurs, then pursuant to cross default acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, including guarantee contracts, retained or contingent interests, certain derivative instruments and variable interest entities that either have, or are reasonably likely to have, a current or future material effect on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

For a discussion of our hedging strategies and market risks, see the discussion below and Note 10 - “Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks” in our consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Form 10-K.

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Fuel Price Risks

As of February 29, 2020, based on a 10% change in each of the fuel prices versus the spot price we estimate that our adjusted earnings per share would change by the following:

Heavy Fuel Oil (“HFO”) impact:

•$0.04 per share for the remaining three quarters of 2020

•$0.01 per share for the second quarter of 2020

Marine Gasoil (“MGO”) impact:

•$0.06 per share for the remaining three quarters of 2020

•$0.03 per share for the second quarter of 2020

Operational Currency Risks

Our operations primarily utilize the U.S. dollar, Australian dollar, euro or sterling as their functional currencies. Our operations also have revenue and expenses denominated in non-functional currencies. Movements in foreign currency exchange rates will affect our financial statements.

~~Based~~As of February 29, 2020, based on a 10% change in all currency exchange rates, ~~that were used in our September 26, 2019 guidance,~~ we estimate ~~a less than $0.01 change to~~that our adjusted ~~diluted~~ earnings per share ~~guidance~~would change by the following:

•$0.02 per share for the ~~fourth quarter.~~remaining three quarters of 2020

•$(0.07) per share for the second quarter of 2020

Interest Rate Risks

The composition of our debt, including the effect of foreign currency swaps and interest rate swaps, was as follows:



	~~August 31, 2019~~February 29, 2020
Fixed rate	2621	%
EUR fixed rate	37	%
Floating rate	510	%
EUR floating rate	2425	%
GBP floating rate	7	%

~~Fuel Price Risks~~

Based on a 10% change in fuel prices versus the current spot price that was used to calculate fuel expense in our September 26, 2019 guidance, we estimate that our adjusted diluted earnings per share guidance would change by the following:

~~$0.05 per share for the fourth quarter of 2019~~

Item 4. Controls and Procedures.

A. Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported, within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

Our President and Chief Executive Officer and our Chief Financial Officer and Chief Accounting Officer have evaluated our disclosure controls and procedures and have concluded, as of ~~August 31, 2019,~~February 29, 2020, that they are effective at a reasonable level of assurance, as described above.

B. Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting during the quarter ended ~~August 31, 2019~~February 29, 2020 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

As previously disclosed, on October 23, 2019, a complaint was filed by a purported shareholder of Carnival plc in the New York Supreme Court, New York County, purporting to allege derivative claims on Carnival plc’s behalf for breach of fiduciary duty and corporate waste against the members of the Carnival plc Board of Directors (the “Board”). On February 10, 2020, Carnival plc and the Board filed a joint motion to dismiss this complaint.

As previously disclosed, on May 19, 2017, Holland America Line and Princess Cruises notified the National Oceanic and Atmospheric Administration (“NOAA”) regarding discharges made by certain vessels in the recently expanded area of the National Marine Sanctuary in the Farallones Island. On February 7, 2020, Carnival Corporation received an assessment for a civil penalty of $1.4 million for discharges. We believe the ultimate outcome of any penalty will not have a material impact on our consolidated financial statements.

In June and August of 2018, Holland America Line received four Notices of Violation from the Alaska Department of Environmental Conservation, alleging that four ships violated the Alaska state visible emissions standards while docked in Skagway, Haines and Ketchikan. On October 17, 2018, Holland America Line received an offer to settle the Notices of Violation and on February 13, 2020 it received a revised offer to settle. We deny the allegations under all four Notices of Violation and we believe we have meritorious defenses to the claims, and that any liability which may arise as a result of this action will not have a material impact on our consolidated financial statements.

Refer to our consolidated financial statements for further information on Legal Proceedings.

Item 1A. Risk Factors.

•COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund resulting reductions in cash from operations. The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlooks, plans, goals, growth, reputation, cash flows, liquidity, and stock price.

The spread of COVID-19 and the recent developments surrounding the global pandemic are having material negative impacts on all aspects of our business. We have implemented a voluntary pause of our global fleet cruise operations across all brands and such pause may be prolonged. As of March 31, 2020, substantially all our ships are at port and all are expected to dock by the end of April. In addition, we have been, and will continue to be further, negatively impacted by related developments, including heightened governmental regulations and travel advisories, recommendations by the U.S. Department of State and the Centers for Disease Control and Prevention, and travel bans and restrictions, each of which has impacted, and is expected to continue to significantly impact, global guest sourcing and our access to various ports of call.

To date we have incurred, and expect to continue to incur, significant costs as we bring currently ongoing cruises to a conclusion, provide air transportation to return our passengers to their home destinations and assist some of our crew that is, or will be upon docking, unable to return home, with food and housing. We will continue to incur COVID-19 related costs as we sanitize our ships and implement additional hygiene-related protocol to our ships. In addition, the industry may be subject to enhanced health and hygiene requirements in attempts to counteract future outbreaks, which requirements may be costly and take a significant amount of time to implement across our global fleet cruise operations.

Due to the outbreak of COVID-19 on some of our ships, and the resulting illness and loss of life in certain instances, we have been the subject of negative publicity which could have a long term impact on the appeal of our brands, which would diminish demand for vacations on our vessels. We cannot predict how long the negative impact of recent media attention on our brands will last, or the level of investment that will be required to address the concerns of potential travelers through marketing and pricing actions.

We have received, and expect to continue to receive, lawsuits from passengers aboard the Grand Princess voyage in February 2020. We may receive additional lawsuits stemming from COVID-19. We cannot predict the quantum or outcome of any such proceedings and the impact that they will have on our financial results, but any such impact may be material. We also remain subject to extensive, complex, and closely monitored obligations under the court-ordered environmental compliance plan supervised by the U.S. District Court for the Southern District of Florida, as a result of the previously disclosed settlement agreement relating to the violation of probation conditions for a plea agreement entered into by Princess Cruises and the U.S.

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Department of Justice in 2016. We remain fully committed to satisfying those obligations. However, COVID-19 presents enormous challenges for the Company, which could result in material adverse impacts.

We have insurance coverage for certain liabilities, costs and expenses related to COVID-19 through our participation in Protection and Indemnity (“P&I”) clubs, including coverage for direct and incremental costs including, but not limited to, certain quarantine expenses and for certain liabilities to passengers and crew. P&I clubs are mutual indemnity associations owned by members. There is a $10 million deductible per occurrence (meaning per outbreak on a particular ship). We cannot assure you that we will receive insurance proceeds that will compensate us fully for our liabilities, costs and expenses under these policies. We have no insurance coverage for loss of revenues or earnings from our ships or other operations.

We have a total of 16 cruise ships scheduled to be delivered through 2025, including four during the remainder of fiscal 2020. We believe the effects of COVID-19 on the shipyards where our ships are under construction will result in a delay in ship deliveries, which we cannot predict and may be prolonged.

We cannot predict when any of our ships will begin to sail again and ports will reopen to our ships. Moreover, even once travel advisories and restrictions are lifted, demand for cruises may remain weak for a significant length of time and we cannot predict if and when each brand will return to pre-outbreak demand or fare pricing. In particular, our bookings may be negatively impacted by the adverse changes in the perceived or actual economic climate, including higher unemployment rates, declines in income levels and loss of personal wealth resulting from the impact of COVID-19. In addition, we cannot predict the impact COVID-19 will have on our partners, such as travel agencies, suppliers and other vendors. We may be adversely impacted as a result of the adverse impact our partners suffer.

We have never previously experienced a complete cessation of our cruising operations, and as a consequence, our ability to be predictive regarding the impact of such a cessation on our brands and future prospects is uncertain. In particular, we cannot predict the impact on our financial performance and our cash flows required for cash refunds of deposits as a result of the pause in our global fleet cruise operations, which may be prolonged, and the public’s concern regarding the health and safety of travel, especially by cruise ship, and related decreases in demand for travel and cruising. Moreover, our ability to attract and retain guests and crew depends, in part, upon the perception and reputation of our company and our brands and the public’s concerns regarding the health and safety of travel generally, as well as regarding the cruising industry and our ships specifically. As a result, we expect a net loss on both a U.S. GAAP and adjusted basis for the fiscal year ending November 30, 2020, and our ability to forecast our cash inflows and additional capital needs is hampered.

As a result of all of the foregoing, we may be required to raise additional capital and our access to and cost of financing will depend on, among other things, global economic conditions, conditions in the global financing markets, the availability of sufficient amounts of financing, our prospects and our credit ratings. As a result of COVID-19, in March and April 2020, Moody's and S&P Global downgraded our long-term issuer and senior unsecured debt ratings. In addition, our long-term ratings were placed on review for further downgrade by both rating agencies. Our short-term commercial paper credit ratings were downgraded and also placed on review for further downgrade. If our credit ratings were to be further downgraded, or general market conditions were to ascribe higher risk to our rating levels, our industry, or us, our access to capital and the cost of any debt financing will be further negatively impacted. In addition, the terms of future debt agreements could include more restrictive covenants, or require incremental collateral, which may further restrict our business operations or be unavailable due to our covenant restrictions then in effect. There is no guarantee that debt financings will be available in the future to fund our obligations, or that they will be available on terms consistent with our expectations. Additionally, the impact of COVID-19 on the financial markets is expected to adversely impact our ability to raise funds through equity financings.

In addition, the COVID-19 outbreak has significantly increased economic and demand uncertainty. The current outbreak and continued spread of COVID-19 could cause a global recession, which would have a further adverse impact on our financial condition and operations. In past recessions, demand for our cruise vacations has been significantly negatively impacted which has resulted in lower occupancy rates and adverse pricing, with a corresponding increase in the use of credits and other means to attract travelers. Current economic forecasts for significant increases in unemployment in the U.S. and other regions due to the adoption of social distancing and other policies to slow the spread of the virus is likely to have a negative impact on booking demand for our global fleet cruise operations once our operations resume, and these impacts could exist for an extensive period of time.

The extent of the effects of the outbreak on our business and the cruising industry at large is highly uncertain and will ultimately depend on future developments, including, but not limited to, the duration and severity of the outbreak, the length of time it takes for demand and pricing to return and normal economic and operating conditions to resume. To the extent COVID-19 adversely affects our business, operations, financial condition and operating results, it may also have the effect of heightening many of the other risks described in Item 1A. “Risk Factors” included in our Form 10-K.

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•Any potential government disaster relief assistance could impose significant limitations on our corporate activities and may not be on terms favorable to us.

If any government agrees to provide disaster relief assistance, it may impose certain requirements on the recipients of the aid including restrictions on executive officer compensation, share buybacks, dividends, prepayment of debt and other similar restrictions until the aid is repaid or redeemed in full. We cannot assure you that any such government disaster relief assistance, if passed, will not significantly limit our corporate activities or be on terms that are favorable to us or at all. Such restrictions and terms could adversely impact our business and operations.

•Any failure to protect our intellectual property rights could impair our brands, negatively impact our business or both.

Our success and ability to compete depend in part on protecting our brands and other intellectual property, including our ability to use trademarks in order to capitalize on name-recognition and increase awareness of our brands. We rely on a combination of trademark, patent, copyright, trade secrets and other rights, as well as confidentiality procedures and contractual provisions to protect our intellectual property and proprietary technology. The steps we take to protect our intellectual property rights, however, may not be adequate. For example, not all of the trademarks that are used in our business have been registered in all countries in which we do business or may do business in the future, and some of the trademarks may never be registered in all of these countries. Rights in trademarks are generally national in character, and are obtained on a country-by-country basis by the first person to obtain protection through use or registration in that country in connection with specified products and services. Some countries’ laws do not protect unregistered trademarks at all, or make them more difficult to enforce, and third parties may have filed for trademarks that are the same or similar to our brands in countries where we have not registered our brands as trademarks. Accordingly, we may not be able to adequately protect our brands everywhere we do business and use of our brands may result in liability for trademark infringement, trademark dilution or unfair competition. In addition, the laws of some foreign countries do not protect intellectual property to the same extent as the laws of the United States, and we may not receive registrations for all of our pending trademark, patent or copyright applications, and existing or future registrations may not provide sufficient protection or competitive advantages for our products and services. In the event that we are not able to obtain grants or registrations in respect of such intellectual property applications, we may not be able to obtain statutory protections available under the relevant intellectual property laws, which could limit our ability to protect our intellectual property and impede our marketing efforts. In addition, we cannot be certain that our products and technology do not and will not infringe the intellectual property rights of others, and third parties may seek to challenge, invalidate or circumvent our trademark, patent, copyright, trade secrets and other rights or applications for any of the foregoing. Furthermore, it is difficult for us to monitor unauthorized uses of our intellectual property, and if we become aware of a third party’s unauthorized use or misappropriation of our intellectual property, it may not be practicable, effective or cost-efficient for us to enforce our intellectual property and contractual rights fully. In order to protect or enforce our intellectual property rights, we may be required to spend significant resources. Regardless of the merits of any such claim as a plaintiff or defendant, litigation could be costly, time consuming, distracting and we may not prevail, which could result in the impairment or loss of intellectual property rights. To the extent claims against us are successful, we may have to pay substantial monetary damages (including treble damages), or discontinue or modify certain products or services that are found to be in violation of another party’s rights. We may have to seek a license to continue offering our products or technology, which may not be available on reasonable terms, or at all. Our failure to secure, protect and enforce our intellectual property rights could materially adversely affect our business.

•We are subject to casualty risks that could materially adversely affect our business.

We use a combination of insurance and self-insurance to cover a number of risks associated with owning and operating our vessels and other non-ship related risks. There are, however, certain losses, including losses resulting from terrorist acts and certain environmental disasters, that may be either uninsurable or not economically insurable, in whole or in part. As a result, we cannot assure you that the insurance proceeds will compensate us fully for our losses. If we suffer a total or partial loss, we cannot assure you that any insurance proceeds received by us will be sufficient to satisfy all of our obligations. Moreover, we do not carry coverage related to loss of earnings or revenues from our ships or other operations. In the event of a total or partial loss to any of our vessels, such vessels and certain items of equipment inventory may not be easily replaced. Accordingly, even though there may be insurance coverage, the extended period needed to replace such vessels or items could cause significant losses.

•Our substantial debt could adversely affect our financial health and operating flexibility.

We have a substantial amount of debt and significant debt service obligations. As of February 29, 2020, on an as-adjusted basis after giving effect to the draw on our Existing Multicurrency Facility and the Secured Notes and Convertible Notes offerings, we would have had total gross debt of $21,841 million.

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Our substantial debt could:

◦require us to dedicate a large portion of our cash flow from operations to service debt and fund repayments

on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures

and other general corporate purposes;

◦increase our vulnerability to adverse general economic or industry conditions;

◦limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate;

◦place us at a competitive disadvantage compared to our competitors that have less debt;

◦make us more vulnerable to downturns in our business, the economy or the industry in which we operate;

◦limit our ability to raise additional debt or equity capital in the future to satisfy our requirements relating to

working capital, capital expenditures, development projects, strategic initiatives or other purposes;

◦restrict us from making strategic acquisitions, introducing new technologies or exploiting business

opportunities;

◦make it difficult for us to satisfy our obligations with respect to our debt; and

◦expose us to the risk of increased interest rates as certain of our borrowings are (and may be in the future) at

a variable rate of interest.

•Despite our leverage, we may incur more debt, which could adversely affect our business and prevent us from

fulfilling our obligations with respect to our debt.

We may be able to incur substantial additional debt in the future. Although the instruments governing our existing indebtedness contain restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of debt that could be incurred in compliance with these restrictions could be substantial and a portion of such debt could be secured. If new debt is added to our existing debt levels, our business could be adversely affected which may prevent us from fulfilling our obligations with respect to our debt.

•We are subject to restrictive debt covenants that may limit our ability to finance future operations and capital needs and to pursue business opportunities and activities. In addition, if we fail to comply with any of these restrictions, it could have a material adverse effect on the Company.

Our Existing Multicurrency Facility, the indenture governing the Secured Notes and certain of our other debt instruments limit our flexibility in operating our business. For example, the indenture governing the Secured Notes will restrict or limit the ability of Carnival Corporation, Carnival plc and certain of their respective subsidiaries to, among other things:

◦incur or guarantee additional indebtedness;

◦pay dividends or distributions on, or redeem or repurchase capital stock and make other restricted payments;

◦make investments;

◦consummate certain asset sales;

◦engage in certain transactions with affiliates;

◦grant or assume certain liens; and

◦consolidate, merge or transfer all or substantially all of our assets.

All of these limitations will be subject to significant exceptions and qualifications. Despite these exceptions and qualifications, we cannot assure you that the operating and financial restrictions and covenants in our Existing Multicurrency Facility, the indenture governing the Secured Notes and certain of our other debt instruments will not adversely affect our ability to finance our future operations or capital needs or engage in other business activities that may be in our interest. Any future indebtedness may include similar or other restrictive terms. In addition, our ability to comply with these covenants, including financial covenants relating to our consolidated net interest, and restrictions may be affected by events beyond our control. These include prevailing economic, financial and industry conditions. If we breach any of these covenants or restrictions, we could be in default under the terms of our Existing Multicurrency Facility and certain of our other debt facilities and the relevant lenders could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable and proceed against any collateral securing that debt. Such a breach could also result in an event of default under the indenture governing the Secured Notes. If the debt under the Existing Multicurrency Facility, the guarantees or certain of our other debt instruments that we enter into were to be accelerated, our assets may be insufficient to repay in full our debt. Borrowings under other debt instruments that contain cross-default provisions also may be accelerated or become payable on demand. In these circumstances, our assets may not be sufficient to repay in full our indebtedness then outstanding.

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•We will require a significant amount of cash to service our debt and sustain our operations. Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate cash required to service our debt.

Our ability to meet our other debt service obligations or refinance our debt depends on our future operating and financial performance and ability to generate cash. This will be affected by our ability to successfully implement our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control, such as the disruption caused by the COVID-19 pandemic. If we cannot generate sufficient cash to meet our debt service obligations or fund our other business needs, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing, delay planned capital expenditures or sell assets. We cannot assure you that we will be able to generate sufficient cash through any of

the foregoing. If we are not able to refinance any of our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our obligations with respect to our debt. See “Recent Developments”, “Management’s discussion and analysis of financial condition and results of operations—Liquidity and capital resources” in our Annual Report and “Update on Liquidity and Management’s Plans” in our current report on Form 8-K as filed on March 31, 2020.

•Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Borrowings under the Existing Multicurrency Facility and certain of our other facilities are at variable rates of interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on certain of our variable rate indebtedness will increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. In addition, in July 2017, the U.K. Financial Conduct Authority announced that it intends to stop collecting LIBOR rates from banks after 2021. The announcement indicates that LIBOR will not continue to exist on the current basis. We are unable to predict the effect of any changes to LIBOR, the establishment and success of any alternative reference rates, or any other reforms to LIBOR or any replacement of LIBOR that may be enacted in the United Kingdom or elsewhere. Such changes, reforms or replacements relating to LIBOR could have an adverse impact on the market for or value of any LIBOR-linked securities, loans, derivatives or other financial instruments or extensions of credit held by us. As such, LIBOR-related changes could affect our overall results of operations and financial condition.

We have entered into, and in the future we will continue to enter into, interest rate swaps that involve the exchange of floating for fixed-rate interest payments to reduce interest rate volatility. However, we may not maintain interest rate swaps with respect to all of our variable rate indebtedness, and any such swaps may not fully mitigate our interest rate risk, may prove disadvantageous, or may create additional risks. Each 0.125% change in interest rates would result in approximately $9 million change in annual interest expense on our variable interest debt instruments that were outstanding as of November 30, 2019, including the impact of our interest rate swaps, and the Existing Multicurrency Facility.

•As a result of the COVID-19 outbreak, we have paused our global fleet cruise operations, and if we are unable to re-commence normal operations in the near-term, we may be out of compliance with a maintenance covenant in certain of our debt facilities

Under the terms of certain of our debt facilities with an aggregate outstanding principal amount of $8.4 billion of indebtedness as of February 29, 2020, we are required to maintain an interest coverage ratio (EBITDA to consolidated net interest charges for the most recently ended four fiscal quarters) of not less than 3.0 to 1.0 at the end of each fiscal quarter. As a result of the COVID-19 outbreak, we have paused our global fleet cruise operations and if we are unable to re-commence normal operations in the near-term, we may be out of compliance with our interest coverage ratio covenant as of the end of our third fiscal quarter or in future periods. If we expected to be out of compliance, we expect to seek waivers from the lenders under these numerous facilities prior to any covenant violation.

Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable to us under these debt facilities, and such increased costs, restrictions and modifications may vary among debt facilities. Our ability to provide additional lender protections under these facilities, including the granting of security interests in collateral, will be limited by the restrictions in our indebtedness. There can be no assurance that we would be able to obtain waivers in a timely manner, on acceptable terms or at all. If we were not able to obtain a covenant waiver under any one or more of these debt facilities, we would be in default of such agreements, which could result in cross defaults to our other debt agreements. As a consequence, we would need to refinance or repay the applicable debt facility or facilities, and would be required to raise additional debt or equity capital, or divest assets, to refinance or repay such facility or facilities. If we were to be unable to obtain a covenant waiver under any one or more of these debt

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facilities, there can be no assurance that we would be able to raise sufficient debt or equity capital, or divest assets, to refinance or repay such facility or facilities.

With respect to each of these debt facilities, if we were not to obtain a waiver or refinance or repay such debt facilities, it would lead to an event of default under such facilities, which could lead to an acceleration of the indebtedness under such debt facilities. In turn, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contract payables. As a result, the failure to obtain the covenant waivers described above would have a material adverse effect.

Additional risk factors that affect our business and financial results are discussed in “Item 1A. Risk Factors,” included in the Form ~~10-K, and there has been no material change to these risk factors since the Form 10-K filing.~~10-K. We wish to caution the reader that the risk factors discussed in “Item 1A. Risk Factors,” included in the Form 10-K, and those described elsewhere in this report or other Securities and Exchange Commission filings, could cause future results to differ materially from those stated in any forward-looking statements. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

A. Repurchase Program

Under a share repurchase program effective 2004, we are authorized to repurchase Carnival Corporation common stock and Carnival plc ordinary shares (the “Repurchase Program”). Effective August 2018, the company approved a modification of the general authorization under the Repurchase Program, which replenished the remaining authorized repurchases at the time of the approval to $1.0 billion. The Repurchase Program does not have an expiration date and may be discontinued by our Boards of Directors at any time. Subsequent to quarter end, to enhance our liquidity as well as comply with restrictions anticipated in future financing transactions, we have suspended share repurchases.

During the three months ended ~~August 31, 2019,~~February 29, 2020, no shares of Carnival Corporation common stock were repurchased pursuant to the Repurchase Program.

During the three months ended ~~August 31, 2019,~~February 29, 2020, repurchases of Carnival plc ordinary shares pursuant to the Repurchase Program were as follows:

Period Total Number of Shares of Carnival plc Purchased (in millions) Average Price Paid per Share of Carnival plc Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program
(in millions)
June 1, 2019 through June 30, 2019 0.4
$ 43.70
$ 401
July 1, 2019 through July 31, 2019 1.4
$ 44.21
$ 341
August 1, 2019 through August 31, 2019 1.9
$ 43.08
$ 260
Total 3.7
$ 43.57


Period	Total Number of Shares of Carnival plc Purchased (in millions)	Average Price Paid per Share of Carnival plc		Maximum Dollar Value of Shares That May Yet Be Purchased Under the Repurchase Program (in millions)
December 1, 2019 through December 31, 2019	0.2	$	41.29	$	122
January 1, 2020 through January 31, 2020	—	$	—	$	122
February 1, 2020 through February 29, 2020	—	$	—	$	122
Total	0.2	$	41.29

No shares of Carnival Corporation common stock and Carnival plc ordinary shares were purchased outside of publicly announced plans or programs.

B. Carnival plc Shareholder Approvals

Carnival plc ordinary share repurchases under the Repurchase Program require annual shareholder approval. The existing shareholder approval is limited to a maximum of 19.2 million ordinary shares and is valid until the earlier of the conclusion of the Carnival plc 2020 annual general meeting or July 15, 2020. Subsequent to quarter end, to enhance our liquidity as well as comply with restrictions anticipated in future financing transactions, we have suspended share repurchases.

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Item 6. Exhibits.

INDEX TO EXHIBITS

Incorporated by Reference

Filed/
Furnished
Herewith

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing
Date

Articles of incorporation and by-laws

3.1

Third Amended and Restated Articles of Incorporation of Carnival Corporation

8-K

3.1

4/17/2003

3.2

Third Amended and Restated By-Laws of Carnival Corporation

8-K

3.1

4/20/2009

3.3

Articles of Association of Carnival plc

8-K

3.3

4/20/2009

Material Contracts

10.1

Form of Management Incentive Tied Restricted Stock Unit Agreement for the Carnival Corporation 2011 Stock Plan

10.2

Form of Management Incentive Tied Restricted Share Unit Agreement for the Carnival plc 2014 Employee Share Plan

10.3

Form of Shareholder Equity Alignment Restricted Stock Unit Agreement for the Carnival Corporation 2011 Stock Plan

Rule 13a-14(a)/15d-14(a) certifications

31.1

Certification of President and Chief Executive Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer and Chief Accounting Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.3

Certification of President and Chief Executive Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.4

Certification of Chief Financial Officer and Chief Accounting Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Section 1350 certifications

32.1*

Certification of President and Chief Executive Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of Chief Financial Officer and Chief Accounting Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.3*

Certification of President and Chief Executive Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.4*

Certification of Chief Financial Officer and Chief Accounting Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

INDEX TO EXHIBITS

Incorporated by Reference
Filed/
Furnished
Herewith
Exhibit
Number
Exhibit Description Form Exhibit
Filing
Date

Articles of incorporation and by-laws

3.1
Third Amended and Restated Articles of Incorporation of Carnival Corporation
   8-K 3.1 4/17/2003
3.2
Third Amended and Restated By-Laws of Carnival Corporation
   8-K 3.1 4/20/2009
3.3
Articles of Association of Carnival plc
   8-K 3.3 4/20/2009

Material contracts
10.1
Amendment and Restatement Agreement dated August 6, 2019 in respect of the Multicurrency Revolving Facilities Agreement dated May 18, 2011, among Carnival Corporation, Carnival plc and certain of Carnival Corporation and Carnival plc subsidiaries, Bank of America Merrill Lynch International Designated Activity Company as facilities agent and a syndicate of financial institutions**
X

Rule 13a-14(a)/15d-14(a) certifications

31.1
Certification of President and Chief Executive Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2
Certification of Chief Financial Officer and Chief Accounting Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.3
Certification of President and Chief Executive Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.4
Certification of Chief Financial Officer and Chief Accounting Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X

Section 1350 certifications

32.1*
Certification of President and Chief Executive Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
32.2*
Certification of Chief Financial Officer and Chief Accounting Officer of Carnival Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
32.3*
Certification of President and Chief Executive Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X
32.4*
Certification of Chief Financial Officer and Chief Accounting Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X

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INDEX TO EXHIBITS

Incorporated by Reference

Filed/

Furnished

Herewith

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing

Date

Interactive Data File

101

The consolidated financial statements from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended ~~August 31, 2019,~~February 29, 2020, as filed with the Securities and Exchange Commission on ~~September 26, 2019,~~April 3, 2020, formatted in Inline XBRL, are as follows:

(i) the Consolidated Statements of Income (Loss) for the three ~~and nine~~ months ended ~~August 31, 2019~~February 29/28, 2020 and ~~2018;~~2019;

(ii) the Consolidated Statements of Comprehensive Income (Loss) for the three ~~and nine~~ months ended ~~August 31, 2019~~February 29/28, 2020 and ~~2018;~~2019;

(iii) the Consolidated Balance Sheets at ~~August 31, 2019~~February 29, 2020 and November 30, ~~2018;~~2019;

(iv) the Consolidated Statements of Cash Flows for the three ~~and nine~~ months ended ~~August 31, 2019~~February 29/28, 2020 and ~~2018;~~2019;

(v) the Consolidated Statements of Shareholders’ Equity for the three ~~and nine~~ months ended ~~August 31, 2019~~February 29/28, 2020 and ~~2018;~~2019;

(vi) the notes to the consolidated financial statements, tagged in summary and detail.

104

The cover page from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended ~~August 31, 2019,~~February 29, 2020, as filed with the Securities and Exchange Commission on ~~September 26, 2019,~~April 3, 2020, formatted in Inline XBRL (included as Exhibit 101)



*
*	These items are furnished and not filed.
**		Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, each of the registrants has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CARNIVAL CORPORATION

CARNIVAL PLC

By:

~~CARNIVAL CORPORATION~~

~~CARNIVAL PLC~~

~~By:~~

/s/ Arnold W. Donald

By:

/s/ Arnold W. Donald

Arnold W. Donald

President and Chief Executive Officer

By:

/s/ David Bernstein

By:

/s/ David Bernstein

David Bernstein

Chief Financial Officer and Chief Accounting Officer

Date: ~~September 26, 2019~~April 3, 2020


(305)	599-2600	011	44 23 8065 5000
(Registrant’s telephone number, including area code)			(Registrant’s telephone number, including area code)

None			None
(Former name, former address and former fiscal year, if changed since last report)			(Former name, former address and former fiscal year, if changed since last report)



Title of each class		Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($ ($0.01 par value)			Ordinary Shares each represented by American Depositary Shares ($1.66 par value), Special Voting Share, GBP 1.00 par value and Trust Shares of beneficial interest in the P&O Princess Special Voting Trust
~~(Title of each class)~~	~~(Title of each class)~~

CCL	~~CUK~~
~~(Trading Symbol)~~	~~(Trading Symbol)~~

~~New York Stock Exchange, Inc.~~	New York Stock Exchange, Inc.
~~(Name~~Ordinary Shares each represented by American Depository Shares ($1.66 par value), Special Voting Share, GBP 1.00 par value and Trust Shares of ~~each exchange on which registered)~~beneficial interest in the P&O Princess Special Voting Trust		~~(Name of each exchange on which registered)~~CUK	New York Stock Exchange, Inc.
1.625% Senior Notes due 2021		CCL21	New York Stock Exchange LLC
1.875% Senior Notes due 2022		CUK22	New York Stock Exchange LLC
1.000% Senior Notes due 2029		CUK29	New York Stock Exchange LLC


	Three Months Ended February 29/28,
	2020		2019
Revenues
Passenger ticket	$	3,234	$	3,199
Onboard and other	1,556		1,474
	4,789		4,673
Operating Costs and Expenses
Commissions, transportation and other	766		709
Onboard and other	471		467
Payroll and related	610		557
Fuel	396		381
Food	277		268
Other operating	1,001		759
	3,523		3,142
Selling and administrative	678		629
Depreciation and amortization	570		516
Goodwill impairment	731		—
	5,502		4,287
Operating Income (Loss)	(713)		386
Nonoperating Income (Expense)
Interest income	5		4
Interest expense, net of capitalized interest	(55)		(51)

Other income (expense), net	(7)		(2)
	(57)		(49)
Income (Loss) Before Income Taxes	(770)		338
Income Tax Expense, Net	(11)		(2)
Net Income (Loss)	$	(781)	$	336
Earnings Per Share
Basic	$	(1.14)	$	0.48
Diluted	$	(1.14)	$	0.48


	February 29, 2020		November 30, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	1,354	$	518
Trade and other receivables, net	405		444
Inventories	440		427
Prepaid expenses and other	687		671
Total current assets	2,885		2,059
Property and Equipment, Net	38,023		38,131
Operating Lease Right-of-Use Assets (a)	1,469		—
Goodwill	2,176		2,912
Other Intangibles	1,173		1,174
Other Assets	1,216		783
	$	46,943	$	45,058
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$	1,004	$	231
Current portion of long-term debt	2,196		1,596
Current portion of operating lease liabilities (a)	168		—
Accounts payable	904		756
Accrued liabilities and other	1,754		1,809
Customer deposits	4,690		4,735
Total current liabilities	10,716		9,127
Long-Term Debt	9,738		9,675
Long-Term Operating Lease Liabilities (a)	1,312		—
Other Long-Term Liabilities	887		890
Contingencies
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 658 shares at 2020 and 657 shares at 2019 issued	7		7
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2020 and 2019 issued	359		358
Additional paid-in capital	8,829		8,807
Retained earnings	25,527		26,653
Accumulated other comprehensive income (loss) (“AOCI”)	(2,028)		(2,066)
Treasury stock, 130 shares at 2020 and 2019 of Carnival Corporation and 60 shares at 2020 and 2019 of Carnival plc, at cost	(8,404)		(8,394)
Total shareholders’ equity	24,290		25,365
	$	46,943	$	45,058



	August 31, 2019			November 30, 2018
ASSETS
Current Assets
Cash and cash equivalents	$	1,153		$	982
Trade and other receivables, net	441			358
Inventories	482			450
Prepaid expenses and other	635			436
Total current assets	2,712			2,225
Property and Equipment, Net	36,466			35,336
Goodwill	2,886			2,925
Other Intangibles	1,166			1,176
Other Assets	771			738
	$	44,001		$	42,401
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$	238		$	848
Current portion of long-term debt	1,607			1,578
Accounts payable	695			730
Accrued liabilities and other	1,718			1,654
Customer deposits	4,674			4,395
Total current liabilities	8,932			9,204
Long-Term Debt	8,893			7,897
Other Long-Term Liabilities	882			856
Contingencies
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 657 shares at 2019 and 656 shares at 2018 issued	7			7
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2019 and 2018 issued	358			358
Additional paid-in capital	8,798			8,756
Retained earnings	26,576			25,066
Accumulated other comprehensive income (loss) (“AOCI”)	(2,183		)	(1,949		)
Treasury stock, 130 shares at 2019 and 129 shares at 2018 of Carnival Corporation and 57 shares at 2019 and 48 shares at 2018 of Carnival plc, at cost	(8,261		)	(7,795		)
Total shareholders’ equity	25,295			24,443
	$	44,001		$	42,401



☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


At March 25, 2020, Carnival Corporation had outstanding 527,817,680 shares of Common Stock, $0.01 par value.						At March 25, 2020, Carnival plc had outstanding 182,536,832 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 527,817,680 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.



	Three Months Ended August 31,						Nine Months Ended August 31,
	2019			2018			2019			2018
Revenues
Cruise
Passenger ticket	$	4,477		$	4,353		$	10,934		$	10,694
Onboard and other	1,855			1,316			4,811			3,509
Tour and other	200			167			299			222
	6,533			5,836			16,043			14,425
Operating Costs and Expenses
Cruise
Commissions, transportation and other	803			760			2,125			2,000
Onboard and other	668			207			1,620			485
Payroll and related	548			537			1,671			1,638
Fuel	401			434			1,204			1,166
Food	284			275			821			804
Other ship operating	719			655			2,192			2,115
Tour and other	109			90			198			140
	3,532			2,958			9,833			8,348
Selling and administrative	563			573			1,813			1,794
Depreciation and amortization	548			511			1,607			1,510
	4,643			4,042			13,252			11,653
Operating Income	1,890			1,794			2,791			2,772
Nonoperating Income (Expense)
Interest income	8			5			16			10
Interest expense, net of capitalized interest	(52		)	(49		)	(157		)	(147		)
Gains on fuel derivatives, net	—			4			—			61
Other income (expense), net	(19		)	(9		)	(27		)	2
	(63		)	(50		)	(168		)	(74		)
Income Before Income Taxes	1,827			1,744			2,624			2,699
Income Tax Expense, Net	(47		)	(37		)	(56		)	(40		)
Net Income	$	1,780		$	1,707		$	2,567		$	2,659
Earnings Per Share
Basic	$	2.58		$	2.42		$	3.72		$	3.73
Diluted	$	2.58		$	2.41		$	3.71		$	3.72


	Common stock		Ordinary shares		Additional paid-in capital		Retained earnings		AOCI		Treasury stock		Total shareholders’ equity
At November 30, 2018	$	7	$	358	$	8,756	$	25,066	$	(1,949)	$	(7,795)	$	24,443
Changes in accounting principles (a)	—		—		—		(24)		—		—		(24)
Net income (loss)	—		—		—		336		—		—		336
Other comprehensive income (loss)	—		—		—		—		79		—		79
Cash dividends declared ($0.50 per share)	—		—		—		(345)		—		—		(345)
Purchases of treasury stock under the Repurchase Program and other	—		—		20		—		—		(268)		(248)
At February 28, 2019	$	7	$	358	$	8,776	$	25,033	$	(1,869)	$	(8,063)	$	24,241

At November 30, 2019	$	7	$	358	$	8,807	$	26,653	$	(2,066)	$	(8,394)	$	25,365
Net income (loss)	—		—		—		(781)		—		—		(781)
Other comprehensive income (loss)	—		—		—		—		38		—		38
Cash dividends declared ($0.50 per share)	—		—		—		(344)		—		—		(344)
Purchases of treasury stock under the Repurchase Program and other	—		—		22		—		—		(10)		12
At February 29, 2020	$	7	$	359	$	8,829	$	25,527	$	(2,028)	$	(8,404)	$	24,290


~~(a)~~	(a)We adopted the provisions of Revenue from Contracts with Customers and Derivatives and Hedging on December 1, 2018.



	Three Months Ended August 31, 2019
(in millions)	Prior to adoption of ASC 606			Adjustments			As Reported
Consolidated Statement of Income
Onboard and other (Revenues)	$	1,407		$	449		$	1,855
Revenues (Total)	$	6,084		$	449		$	6,533
Onboard and other (Operating Costs and Expenses)	$	219		$	449		$	668
Operating Costs and Expenses (Total)	$	4,194		$	449		$	4,643
Operating Income	$	1,890		$	—		$	1,890
Net Income	$	1,780		$	—		$	1,780

	Nine Months Ended August 31, 2019
(in millions)	Prior to adoption of ASC 606			Adjustments			As Reported
Consolidated Statement of Income
Onboard and other (Revenues)	$	3,696		$	1,115		$	4,811
Revenues (Total)	$	14,929		$	1,115		$	16,043
Onboard and other (Operating Costs and Expenses)	$	506		$	1,115		$	1,620
Operating Costs and Expenses (Total)	$	12,137		$	1,115		$	13,252
Operating Income	$	2,791		$	—		$	2,791
Net Income	$	2,567		$	—		$	2,567

	At August 31, 2019
(in millions)	Prior to adoption of ASC 606			Adjustments			As Reported
Consolidated Balance Sheet
Prepaid expenses and other	$	488		$	147		$	635
Total current assets	$	2,565		$	147		$	2,712
Customer deposits	$	4,527		$	147		$	4,674
Total current liabilities	$	8,784		$	147		$	8,932

	Nine Months Ended August 31, 2019
(in millions)	Prior to adoption of ASC 606			Adjustments			As Reported
Consolidated Statement of Cash Flows
Prepaid expenses and other	$	(73	)	$	(147	)	$	(220	)
Customer deposits	$	262		$	147		$	409
Net cash provided by operating activities	$	4,414		$	—		$	4,414


•	Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.


•	Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.


•	~~Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.~~


	August 31, 2019								November 30, 2018									February 29, 2020																		November 30, 2019
	Carrying Value		Fair Value						Carrying Value		Fair Value							Carrying Value		Fair Value														Carrying Value		Fair Value
(in millions)			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3		(in millions)					Level 1			Level 2			Level 3					Level 1					Level 2	Level 3
Assets																	Assets
Long-term other assets (a)	$	186	$	—	$	31	$	154	$	127	$	—	$	30	$	95	Long-term other assets (a)	$	177	$	—		$	30		$	145		$	181	$	—		$	31	$	149
Total	$	186	$	—	$	31	$	154	$	127	$	—	$	30	$	95	Total	$	177	$	—		$	30		$	145		$	181	$	—		$	31	$	149
Liabilities																	Liabilities
Fixed rate debt (b)	$	6,560	$	—	$	6,947	$	—	$	5,699	$	—	$	5,799	$	—	Fixed rate debt (b)	$	7,351	$	—		$	7,548		$	—		$	7,438	$	—		$	7,782	$	—
Floating rate debt (b)	4,278		—		4,338		—		4,695		—		4,727		—		Floating rate debt (b)	5,740		—			5,656			—			4,195		—			4,248		—
Total	$	10,839	$	—	$	11,285	$	—	$	10,394	$	—	$	10,526	$	—	Total	$	13,091	$	—		$	13,204		$	—		$	11,634	$	—		$	12,030	$	—


~~(a)~~	Long-term other assets are comprised of notes receivables, which include loans on ship sales. The fair values of our Level 2 notes receivable were based on estimated future cash flows discounted at appropriate market interest rates. The fair values of our Level 3 notes receivable were estimated using risk-adjusted discount rates.



	Goodwill
(in millions)	NAA (a) Segment		EA (b) Segment			Total
At November 30, 2018	$	1,898	$	1,027		$	2,925
Foreign currency translation adjustment	—		(39		)	(39		)
At August 31, 2019	$	1,898	$	988		$	2,886



	Trademarks
(in millions)	NAA Segment		EA Segment			Total
At November 30, 2018	$	927	$	242		$	1,169
Foreign currency translation adjustment	—		(10		)	(10		)
At August 31, 2019	$	927	$	232		$	1,159



(in millions)	Balance Sheet Location	August 31, 2019		November 30, 2018		(in millions)	Balance Sheet Location	February 29, 2020		November 30, 2019
Derivative assets						Derivative assets
Derivatives designated as hedging instruments						Derivatives designated as hedging instruments
Cross currency swaps (a)	Prepaid expenses and other	$	20	$	—	Cross currency swaps (a)	Prepaid expenses and other	$	39	$	32
	Other assets	18		—			Other assets	49		25
Foreign currency forwards (b)						Foreign currency forwards (b)	Prepaid expenses and other	14		—
Total derivative assets		$	37	$	—	Total derivative assets		$	102	$	58
Derivative liabilities						Derivative liabilities
Derivatives designated as hedging instruments						Derivatives designated as hedging instruments

Cross currency swaps (a)	Accrued liabilities and other	$	—	$	5	Cross currency swaps (a)	Accrued liabilities and other	$	—	$	1
							Other long-term liabilities	—		9
Foreign currency zero cost collars (b)	Accrued liabilities and other	5		—		Foreign currency zero cost collars (b)	Accrued liabilities and other	2		1
Interest rate swaps (c)	Accrued liabilities and other	7		8		Interest rate swaps (c)	Accrued liabilities and other	6		6
	Other long-term liabilities	12		11			Other long-term liabilities	9		9
		25		23
Derivatives not designated as hedging instruments
Fuel	Accrued liabilities and other	—		6
Total derivative liabilities		$	25	$	29	Total derivative liabilities		$	17	$	25


~~(a)~~	At August 31, 2019 and November 30, 2018, we had cross currency swaps totaling $943 million and $156 million, respectively, that are designated as hedges of our net investment in foreign operations with a euro-denominated functional currency. At August 31, 2019, these cross currency swaps settle through December 2030.


~~(b)~~	At August 31, 2019, we had foreign currency derivatives consisting of foreign currency zero cost collars that are designated as foreign currency cash flow hedges for a portion of our euro-denominated shipbuilding payments. See “Newbuild Currency Risks” below for additional information regarding these derivatives.


	February 29, 2020
(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet		Net Amounts
Assets	$	102	$	—	$	102	$	(5)	$	97
Liabilities	$	18	$	—	$	17	$	(5)	$	12

	November 30, 2019
(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet		Net Amounts
Assets	$	58	$	—	$	58	$	(4)	$	54
Liabilities	$	25	$	—	$	25	$	(4)	$	21



	Entered Into	Matures in	Weighted-Average Floor Rate		Weighted- Average Ceiling Rate
Carnival Panorama	2019	October 2019	$	1.05	$	1.28
Enchanted Princess	2019	June 2020	$	1.04	$	1.28
Mardi Gras	2019	August 2020	$	1.04	$	1.28


•Diversifying our counterparties •	~~Conducting business with large, well-established financial institutions, insurance companies and export credit agencies~~


•	~~Generally requiring collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship charters and new ship progress payments to shipyards~~


	February 29, 2020
Weighted average remaining lease term - operating leases (in years)	13
Weighted average discount rate - operating leases	3.1	%


(in millions) Year	Total Operating Leases
Remainder of 2020	$	158
2021	188
2022	156
2023	148
2024	142
Thereafter	1,039
Total lease payments	1,832
Less: Present value discount	(352)
Present value of lease liabilities	$	1,480


	Three Months Ended February 29/28
(in millions)	2020		2019
North America	$	2,647	$	2,520
Europe	1,367		1,399
Australia and Asia	615		584
Other	161		170
	$	4,789	$	4,673



•Net revenue yields		• ~~Net cruise costs, excluding fuel per available lower berth day~~
• ~~Booking levels~~	•Estimates of ship depreciable lives and residual values
• ~~Pricing and occupancy~~Booking levels		•Goodwill, ship and trademark fair values
•Pricing and occupancy		•Liquidity
•Interest, tax and fuel expenses		• ~~Liquidity~~Adjusted earnings per share
•Currency exchange rates		• ~~Adjusted earnings~~Impact of the COVID-19 coronavirus global pandemic on our financial condition and results of operations
•Net cruise costs, excluding fuel per ~~share~~available lower berth day


•	~~Adverse world events impacting the ability or desire of people to travel may lead to a decline in demand for cruises~~


•	Incidents concerning our ships, guests or the cruise vacation industry as well as adverse weather conditions and other natural disasters may impact the satisfaction of our guests and crew and lead to reputational damage


•	Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions, trade protection and tax may lead to litigation, enforcement actions, fines, penalties and reputational damage


•	Breaches in data security and lapses in data privacy as well as disruptions and other damages to our principal offices, information technology operations and system networks and failure to keep pace with developments in technology may adversely impact our business operations, the satisfaction of our guests and crew and lead to reputational damage


•	~~Ability to recruit, develop and retain qualified shipboard personnel who live away from home for extended periods of time may adversely impact our business operations, guest services and satisfaction~~