UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended ~~February 29,~~August 31, 2020


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

For the transition period from to

Commission file number: 001-9610 Commission file number: 001-15136

Carnival Corporation

Carnival plc

(Exact name of registrant as
specified in its charter)

Republic of Panama

England and Wales

(State or other jurisdiction of
incorporation or organization)

59-1562976

98-0357772

(I.R.S. Employer Identification No.)

3655 N.W. 87th Avenue

Carnival House, 100 Harbour Parade

Miami,

Florida

33178-2428

Southampton

SO15 1ST

United Kingdom

(Address of principal
executive offices)
(Zip Code)


(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)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	CCL	New York Stock Exchange, Inc.
Ordinary Shares each represented by American Depository 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	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

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filers

☑

Accelerated filers

☐

Non-accelerated filers

☐

Smaller reporting companies

☐

Emerging growth companies

☐

If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑


At ~~March 25,~~October 2, 2020, Carnival Corporation had outstanding ~~527,817,680~~720,568,437 shares of Common Stock, $0.01 par value.						At ~~March 25,~~October 2, 2020, Carnival plc had outstanding ~~182,536,832~~182,672,360 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and ~~527,817,680~~720,568,437 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.

Table of Contents

CARNIVAL CORPORATION & PLC

TABLE OF CONTENTS

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(UNAUDITED)

(in millions, except per share data)


		Three Months Ended February 29/28,							Three Months Ended August 31,						Nine Months Ended August 31,
		2020		2019			2020		2019		2020		2019
Revenues	Revenues					Revenues
Passenger ticket	Passenger ticket	$	3,234	$	3,199	Passenger ticket	$	0	$	4,477	$	3,680	$	10,934
Onboard and other	Onboard and other	1,556		1,474		Onboard and other	31		2,056		1,881		5,110
		4,789		4,673			31		6,533		5,561		16,043
Operating Costs and Expenses	Operating Costs and Expenses					Operating Costs and Expenses
Commissions, transportation and other	Commissions, transportation and other	766		709		Commissions, transportation and other	34		803		1,098		2,125
Onboard and other	Onboard and other	471		467		Onboard and other	9		668		593		1,620
Payroll and related	Payroll and related	610		557		Payroll and related	248		548		1,563		1,671
Fuel	Fuel	396		381		Fuel	121		401		718		1,204
Food	Food	277		268		Food	19		284		404		821
Ship and other impairments						Ship and other impairments	910		23		1,829		24
Other operating	Other operating	1,001		759		Other operating	208		805		1,349		2,367
		3,523		3,142			1,549		3,532		7,556		9,833
Selling and administrative	Selling and administrative	678		629		Selling and administrative	265		563		1,435		1,813
Depreciation and amortization	Depreciation and amortization	570		516		Depreciation and amortization	551		548		1,698		1,607
Goodwill impairment	Goodwill impairment	731		—		Goodwill impairment	0		0		2,096		0
		5,502		4,287			2,364		4,643		12,784		13,252
Operating Income (Loss)	Operating Income (Loss)	(713)		386		Operating Income (Loss)	(2,333)		1,890		(7,223)		2,791
Nonoperating Income (Expense)	Nonoperating Income (Expense)					Nonoperating Income (Expense)
Interest income	Interest income	5		4		Interest income	3		8		15		16
Interest expense, net of capitalized interest	Interest expense, net of capitalized interest	(55)		(51)		Interest expense, net of capitalized interest	(310)		(52)		(547)		(157)

Other income (expense), net	Other income (expense), net	(7)		(2)		Other income (expense), net	(221)		(19)		(260)		(27)
		(57)		(49)			(528)		(63)		(793)		(168)
Income (Loss) Before Income Taxes	Income (Loss) Before Income Taxes	(770)		338		Income (Loss) Before Income Taxes	(2,861)		1,827		(8,016)		2,624
Income Tax Expense, Net		(11)		(2)
Income Tax Benefit (Expense), Net						Income Tax Benefit (Expense), Net	2		(47)		2		(56)
Net Income (Loss)	Net Income (Loss)	$	(781)	$	336	Net Income (Loss)	$	(2,858)	$	1,780	$	(8,014)	$	2,567
Earnings Per Share	Earnings Per Share					Earnings Per Share
Basic	Basic	$	(1.14)	$	0.48	Basic	$	(3.69)	$	2.58	$	(11.03)	$	3.72
Diluted	Diluted	$	(1.14)	$	0.48	Diluted	$	(3.69)	$	2.58	$	(11.03)	$	3.71

The accompanying notes are an integral part of these consolidated financial statements.

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CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(in millions)


		Three Months Ended February 29/28,							Three Months Ended August 31,						Nine Months Ended August 31,
		2020		2019			2020		2019		2020		2019
Net Income (Loss)	Net Income (Loss)	$	(781)	$	336	Net Income (Loss)	$	(2,858)	$	1,780	$	(8,014)	$	2,567
Items Included in Other Comprehensive Income (Loss)	Items Included in Other Comprehensive Income (Loss)					Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment	Change in foreign currency translation adjustment	25		79		Change in foreign currency translation adjustment	519		(101)		567		(215)
Other	Other	13		—		Other	4		(6)		60		(19)
Other Comprehensive Income (Loss)	Other Comprehensive Income (Loss)	38		79		Other Comprehensive Income (Loss)	524		(107)		627		(234)
Total Comprehensive Income (Loss)	Total Comprehensive Income (Loss)	$	(743)	$	415	Total Comprehensive Income (Loss)	$	(2,335)	$	1,674	$	(7,387)	$	2,333

The accompanying notes are an integral part of these consolidated financial statements.

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CARNIVAL CORPORATION & PLC

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(in millions, except par values)


		February 29, 2020		November 30, 2019			August 31, 2020		November 30, 2019
ASSETS	ASSETS					ASSETS
Current Assets	Current Assets					Current Assets
Cash and cash equivalents	Cash and cash equivalents	$	1,354	$	518	Cash and cash equivalents	$	8,176	$	518
Trade and other receivables, net	Trade and other receivables, net	405		444		Trade and other receivables, net	376		444
Inventories	Inventories	440		427		Inventories	349		427
Prepaid expenses and other	Prepaid expenses and other	687		671		Prepaid expenses and other	367		671
Total current assets	Total current assets	2,885		2,059		Total current assets	9,268		2,059
Property and Equipment, Net	Property and Equipment, Net	38,023		38,131		Property and Equipment, Net	36,926		38,131
Operating Lease Right-of-Use Assets (a)	Operating Lease Right-of-Use Assets (a)	1,469		—		Operating Lease Right-of-Use Assets (a)	1,379		—
Goodwill	Goodwill	2,176		2,912		Goodwill	807		2,912
Other Intangibles	Other Intangibles	1,173		1,174		Other Intangibles	1,186		1,174
Other Assets	Other Assets	1,216		783		Other Assets	1,252		783
		$	46,943	$	45,058		$	50,818	$	45,058
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities	Current Liabilities					Current Liabilities
Short-term borrowings	Short-term borrowings	$	1,004	$	231	Short-term borrowings	$	3,374	$	231
Current portion of long-term debt	Current portion of long-term debt	2,196		1,596		Current portion of long-term debt	2,621		1,596
Current portion of operating lease liabilities (a)	Current portion of operating lease liabilities (a)	168		—		Current portion of operating lease liabilities (a)	150		—
Accounts payable	Accounts payable	904		756		Accounts payable	691		756
Accrued liabilities and other	Accrued liabilities and other	1,754		1,809		Accrued liabilities and other	1,199		1,809
Customer deposits	Customer deposits	4,690		4,735		Customer deposits	2,150		4,735
Total current liabilities	Total current liabilities	10,716		9,127		Total current liabilities	10,184		9,127
Long-Term Debt	Long-Term Debt	9,738		9,675		Long-Term Debt	18,916		9,675
Long-Term Operating Lease Liabilities (a)	Long-Term Operating Lease Liabilities (a)	1,312		—		Long-Term Operating Lease Liabilities (a)	1,281		—
Other Long-Term Liabilities	Other Long-Term Liabilities	887		890		Other Long-Term Liabilities	934		890
Contingencies
Contingencies and Commitments						Contingencies and Commitments
Shareholders’ Equity	Shareholders’ Equity					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
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 830 shares at 2020 and 657 shares at 2019 issued						Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 830 shares at 2020 and 657 shares at 2019 issued	8		7
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2020 and 2019 issued	Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2020 and 2019 issued	359		358		Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2020 and 2019 issued	361		358
Additional paid-in capital	Additional paid-in capital	8,829		8,807		Additional paid-in capital	10,680		8,807
Retained earnings	Retained earnings	25,527		26,653		Retained earnings	18,297		26,653
Accumulated other comprehensive income (loss) (“AOCI”)	Accumulated other comprehensive income (loss) (“AOCI”)	(2,028)		(2,066)		Accumulated other comprehensive income (loss) (“AOCI”)	(1,439)		(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	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)		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	Total shareholders’ equity	24,290		25,365		Total shareholders’ equity	19,503		25,365
		$	46,943	$	45,058		$	50,818	$	45,058

(a)We adopted the provisions of Leases on December 1, 2019.

The accompanying notes are an integral part of these consolidated financial statements.

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CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in millions)


		Three Months Ended February 29/28,							Nine Months Ended August 31,
		2020		2019			2020		2019
OPERATING ACTIVITIES	OPERATING ACTIVITIES					OPERATING ACTIVITIES
Net income (loss)	Net income (loss)	$	(781)	$	336	Net income (loss)	$	(8,014)	$	2,567
Adjustments to reconcile net income (loss) to net cash provided by operating activities	Adjustments to reconcile net income (loss) to net cash provided by operating activities					Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	570		516		Depreciation and amortization	1,698		1,607
Impairments	Impairments	1,062		—		Impairments	3,925		26
Loss on repurchase of Convertible Notes						Loss on repurchase of Convertible Notes	224		0
Share-based compensation	Share-based compensation	20		20		Share-based compensation	52		38
Other, net		(73)		12
(Gain) loss on ship sales and other, net						(Gain) loss on ship sales and other, net	164		29
		798		884			(1,951)		4,266
Changes in operating assets and liabilities	Changes in operating assets and liabilities					Changes in operating assets and liabilities
Receivables	Receivables	21		(50)		Receivables	25		(101)
Inventories	Inventories	(15)		7		Inventories	71		22
Prepaid expenses and other	Prepaid expenses and other	(120)		(154)		Prepaid expenses and other	9		(220)
Accounts payable	Accounts payable	148		65		Accounts payable	(97)		(25)
Accrued liabilities and other	Accrued liabilities and other	120		5		Accrued liabilities and other	(169)		63
Customer deposits	Customer deposits	(36)		358		Customer deposits	(2,539)		409
Net cash provided by operating activities		916		1,116
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	(4,649)		4,414
INVESTING ACTIVITIES	INVESTING ACTIVITIES					INVESTING ACTIVITIES
Purchases of property and equipment	Purchases of property and equipment	(1,326)		(2,129)		Purchases of property and equipment	(1,899)		(3,448)
Proceeds from sales of ships	Proceeds from sales of ships	226		—		Proceeds from sales of ships	271		15
Payments of fuel derivative settlements		—		(6)
Other, net		(61)		76
Purchase of minority interest						Purchase of minority interest	(81)		0
Derivative settlements and other, net						Derivative settlements and other, net	257		116
Net cash provided by (used in) investing activities	Net cash provided by (used in) investing activities	(1,161)		(2,059)		Net cash provided by (used in) investing activities	(1,452)		(3,317)
FINANCING ACTIVITIES	FINANCING ACTIVITIES					FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings, net	Proceeds from (repayments of) short-term borrowings, net	779		(81)		Proceeds from (repayments of) short-term borrowings, net	3,141		(600)
Principal repayments of long-term debt	Principal repayments of long-term debt	(132)		(95)		Principal repayments of long-term debt	(896)		(472)
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	823		1,439		Proceeds from issuance of long-term debt	11,468		1,722
Dividends paid	Dividends paid	(344)		(348)		Dividends paid	(689)		(1,041)
Purchases of treasury stock	Purchases of treasury stock	(12)		(274)		Purchases of treasury stock	(12)		(472)

Issuance of common stock, net						Issuance of common stock, net	778		4
Other, net	Other, net	(24)		(29)		Other, net	(91)		(53)
Net cash provided by (used in) financing activities	Net cash provided by (used in) financing activities	1,089		612		Net cash provided by (used in) financing activities	13,699		(912)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(7)		1		Effect of exchange rate changes on cash, cash equivalents and restricted cash	63		(11)
Net increase (decrease) in cash, cash equivalents and restricted cash	Net increase (decrease) in cash, cash equivalents and restricted cash	838		(331)		Net increase (decrease) in cash, cash equivalents and restricted cash	7,661		174
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	530		996		Cash, cash equivalents and restricted cash at beginning of period	530		996
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	1,368	$	665	Cash, cash equivalents and restricted cash at end of period	$	8,191	$	1,170

The accompanying notes are an integral part of these consolidated financial statements.

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CARNIVAL CORPORATION & PLC

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in millions)


		Common stock		Ordinary shares		Additional paid-in capital		Retained earnings		AOCI		Treasury stock		Total shareholders’ equity			Three Months Ended
At November 30, 2018		$	7	$	358	$	8,756	$	25,066	$	(1,949)	$	(7,795)	$	24,443
Changes in accounting principles (a)		—		—		—		(24)		—		—		(24)
																	Common stock		Ordinary shares		Additional paid-in capital		Retained earnings		AOCI		Treasury stock		Total shareholders’ equity
At May 31, 2019																At May 31, 2019	$	7	$	358	$	8,785	$	25,138	$	(2,076)	$	(8,104)	$	24,108
Net income (loss)	Net income (loss)	—		—		—		336		—		—		336		Net income (loss)	—		—		—		1,780		—		—		1,780
Other comprehensive income (loss)	Other comprehensive income (loss)	—		—		—		—		79		—		79		Other comprehensive income (loss)	—		—		—		—		(107)		—		(107)
Cash dividends declared ($0.50 per share)	Cash dividends declared ($0.50 per share)	—		—		—		(345)		—		—		(345)		Cash dividends declared ($0.50 per share)	—		—		—		(342)		—		—		(342)
Purchases of treasury stock under the Repurchase Program and other	Purchases of treasury stock under the Repurchase Program and other	—		—		20		—		—		(268)		(248)		Purchases of treasury stock under the Repurchase Program and other	—		—		13		—		—		(157)		(144)
At February 28, 2019		$	7	$	358	$	8,776	$	25,033	$	(1,869)	$	(8,063)	$	24,241
At August 31, 2019																At August 31, 2019	$	7	$	358	$	8,798	$	26,576	$	(2,183)	$	(8,261)	$	25,295

At November 30, 2019		$	7	$	358	$	8,807	$	26,653	$	(2,066)	$	(8,394)	$	25,365
At May 31, 2020																At May 31, 2020	$	7	$	360	$	9,683	$	21,155	$	(1,962)	$	(8,404)	$	20,840
Net income (loss)	Net income (loss)	—		—		—		(781)		—		—		(781)		Net income (loss)	—		—		—		(2,858)		—		—		(2,858)
Other comprehensive income (loss)	Other comprehensive income (loss)	—		—		—		—		38		—		38		Other comprehensive income (loss)	—		—		—		—		524		—		524
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
Issuance of common stock related to the repurchase of Convertible Notes																Issuance of common stock related to the repurchase of Convertible Notes	—		—		222		—		—		—		222
Repurchase of Convertible Notes																Repurchase of Convertible Notes	1		—		765		—		—		—		766
Other																Other	—		—		9		—		—		—		9
At August 31, 2020																At August 31, 2020	$	8	$	361	$	10,680	$	18,297	$	(1,439)	$	(8,404)	$	19,503

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	Nine Months Ended
	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)	—		—		—		2,567		—		—		2,567
Other comprehensive income (loss)	—		—		—		—		(234)		—		(234)
Cash dividends declared ($1.50 per share)	—		—		—		(1,034)		—		—		(1,034)
Purchases of treasury stock under the Repurchase Program and other	—		—		42		—		—		(467)		(424)
At August 31, 2019	$	7	$	358	$	8,798	$	26,576	$	(2,183)	$	(8,261)	$	25,295

At November 30, 2019	$	7	$	358	$	8,807	$	26,653	$	(2,066)	$	(8,394)	$	25,365
Net income (loss)	—		—		—		(8,014)		—		—		(8,014)
Other comprehensive income (loss)	—		—		—		—		627		—		627
Cash dividends declared ($0.50 per share)	—		—		—		(342)		—		—		(342)
Issuance of common stock	1		—		777		—		—		—		778
Issuance and repurchase of Convertible Notes	1		—		1,051		—		—		—		1,052
Purchases of treasury stock under the Repurchase Program and other	—		2		44		—		—		(10)		36
At August 31, 2020	$	8	$	361	$	10,680	$	18,297	$	(1,439)	$	(8,404)	$	19,503

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

The accompanying notes are an integral part of these consolidated financial statements.

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CARNIVAL CORPORATION & PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 – General

The consolidated financial statements include the accounts of Carnival Corporation and Carnival plc and their respective subsidiaries. Together with their consolidated subsidiaries, they are referred to collectively in these consolidated financial statements and elsewhere in this joint Quarterly Report on Form 10-Q as “Carnival Corporation & plc,” “our,” “us” and “we.”

Liquidity and Management’s Plans

Due to the spread of COVID-19, ~~and~~we paused our global cruise operations in mid-March 2020. In September 2020 we began the ~~effects~~resumption of ~~growing port restrictions around the world, we previously announced a voluntary pause~~limited guest operations as part of our ~~global fleet cruise operations.~~anticipated phased-in return to service. Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of time the event influences travel decisions. We believe that the ongoing effects of COVID-19 on our operations and global bookings ~~have had, and~~ will continue to have a material negative impact on our financial results and liquidity, and such negative impact may continue well beyond the containment of such outbreak.

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~~guest cruise operations, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude, duration and speed of the global pandemic isare uncertain. As a consequence, we cannot estimate the impact on our business, financial condition or near- or longer-term financial or operational results with reasonable certainty, but we continue to expect a net loss on both a U.S. GAAP and adjusted basis for the ~~fiscal~~quarter and year ending November 30, 2020. ~~On March 13, 2020, we fully drew down our $3.0 billion multi-currency revolving credit facility (the “Existing Multicurrency Facility”).~~ We ~~are taking further~~have taken and continue to take actions to improve our liquidity, including capital expenditure and operating expense reductions, accelerating the removal of certain ships from our fleet, 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.~~ various capital market transactions.

Based on these actions and assumptions regarding the impact of COVID-19, we have concluded that we will be able to generate sufficient liquidity to satisfy our obligations ~~and remain in compliance with our existing debt covenants~~ for at least 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 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 facilities, 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 waivers would have a material adverse effect on us.

On April 1, 2020, we announced the pricing of the private offerings of $4.0 billion first-priority senior secured notes due 2023 (“Secured Notes”) and $1.75 billion senior convertible notes due 2023 ($2.0125 billion if the initial purchasers exercise their option to purchase additional notes) (“Convertible Notes”), and a public offering of $500 million of common stock ($575 million if the underwriters exercise their option to purchase additional shares in full) of Carnival Corporation (“Public Equity Offering”), collectively referred to within this document as the “April 1 financing transactions”. The closings of these offerings are subject to customary conditions and are expected to occur in early April. 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.months.

Basis of Presentation

The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss), ~~the Consolidated Statements of Cash Flows~~ and the Consolidated Statements of Shareholders’ Equity for the three and nine months ended ~~February 29/28,~~August 31, 2020 and 2019, Consolidated Statement of Cash Flows for the nine months ended August 31, 2020 and 2019, and the Consolidated Balance Sheet at ~~February 29,~~August 31, 2020 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement. Our interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Carnival Corporation & plc 2019 joint Annual Report on Form 10-K and Form 10-K/A (“Form 10-K”) filed with the U.S. Securities and Exchange Commission on January 28, ~~2020. Our operations are seasonal~~2020 and ~~results for interim periods are not necessarily indicative of the results for the entire year.~~

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March 31, 2020, respectively.

For the three and nine months ended ~~February 28,~~August 31, 2019, we reclassified ~~$29~~$200 million and $299 million from tour and other revenues to onboard and other revenues as well as ~~$29~~$109 million and $198 million from tour and other costs and expenses to other operating cost and expenses in order to conform to the current year presentation.

COVID-19 Use of Estimates and Risks and Uncertainty

The preparation of our interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported and disclosed. The full extent to which the effects of COVID-19 will directly or indirectly impact our business, operations, results of operations and financial condition, including our valuation of goodwill and trademarks, impairment of ships, collectability of trade and notes receivables as well as provisions for pending litigation, will depend on future developments that are highly uncertain. We believe that we have made reasonable estimates and judgments of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods.

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Accounting Pronouncements

On December 1, 2019, we adopted the FASB issued guidance, Leases, using the modified retrospective approach, which allows entities to either apply the new lease standard to the beginning of the earliest period presented or only to the consolidated financial statements in the period of adoption without restating prior periods. We have elected to apply the new guidance at the date of adoption without restating prior periods.

We have implemented changes to our internal controls to address the collection, recording, and accounting for leases in accordance with the new guidance. Upon adoption of the new guidance, the most significant impact was the recognition of $1.4 billion of right-of-use assets and lease liabilities relating to operating leases, reported within operating lease right-of-use assets and long-term operating lease liabilities, with the current portion of the liability reported within current portion of operating lease liabilities, in our Consolidated Balance Sheet as of December 1, 2019. There was no cumulative effect of applying the new standard and accordingly there was no adjustment to our retained earnings upon adoption. This guidance had an immaterial impact on our Consolidated Statements of Income (Loss), Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Cash Flows and the compliance with ~~debt-covenants~~debt covenants under our current agreements.

The FASB issued amended guidance, Intangibles - Goodwill and Other - Internal-Use Software, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance to determine which implementation costs to capitalize as assets or expense as incurred. The expense related to deferred implementation costs is required to be presented in the same net income (loss) line item as the related hosting fees. Additionally, the payments for deferred implementation costs are required to be presented in the same line item in the Consolidated Statements of Cash Flows as payments for the related hosting fees. This guidance is required to be adopted by us in the first quarter of 2021 and ~~must be applied~~we have elected to apply the guidance using ~~either~~ a prospective ~~or a retrospective~~ approach. ~~Early~~We do not expect the adoption ~~is permitted. We are currently evaluating the impact~~of this guidance ~~will~~to have a significant impact on our consolidated financial statements.

The FASB issued amended guidance, Financial Instruments - Credit Losses, which requires an entity to present the net amount expected to be collected for certain financial assets, including trade receivables. On initial recognition and at each reporting period, this guidance will require an entity to recognize an allowance that reflects the entity's current estimate of credit losses expected to be incurred over the life of the financial instrument. This guidance is required to be adopted by us in the first quarter of 2021 and will be applied prospectively with a cumulative-effect adjustment to retained earnings. ~~Early adoption~~We are currently evaluating the impact this guidance will have on our consolidated financial statements.

The FASB issued guidance, Debt - Debt with Conversion and Other Options and Derivative and Hedging - Contracts in Entity's Own Equity, which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is ~~permitted.~~required to be adopted by us in the first quarter of 2023 and must be applied using either a modified or full retrospective approach. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

NOTE 2 – Revenue and Expense Recognition

Guest cruise deposits ~~represent unearned revenues and~~ are initially included in customer deposit liabilities when received. Customer deposits are subsequently recognized as cruise revenues, together with revenues from onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata basis for voyages in excess of ten nights. The impact of recognizing these shorter duration cruise revenues and costs and expenses on a completed voyage basis versus on a pro rata basis is not significant. Certain of our product offerings are bundled and we allocate the value of the bundled services and goods between passenger ticket revenues ~~onboard~~ and ~~other revenues and tour~~onboard and other revenues based upon the estimated standalone selling prices of those goods and services.

~~Future travel discount vouchers are included as a reduction of cruise passenger ticket revenues when such vouchers are utilized.~~ Guest cancellation fees, when applicable, are recognized in ~~cruise~~ passenger ticket revenues at the time of cancellation.

Our ~~sale~~sales to guests of air and other transportation to and from airports near the home ports of our ships are included in passenger ticket revenues, and the related ~~cost~~costs of purchasing these services are included in transportation costs. The proceeds that we collect from the sales of third-party shore excursions are included in onboard and other revenues and the related costs are included in onboard and other costs. The amounts collected on behalf of our onboard concessionaires, net of the amounts

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remitted to them, are included in onboard and other revenues as concession revenues. All of these amounts are recognized on a completed voyage or pro rata basis as discussed above.

Passenger ticket revenues include fees, taxes and charges collected by us from our guests. A portion of these fees, taxes and charges vary with guest head counts and are directly imposed on a revenue-producing arrangement. This portion of the fees,

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taxes and charges is expensed in commissions, transportation and other costs when the corresponding revenues are recognized. For the three and nine months ended ~~February 29/28,~~August 31, fees, taxes, and charges included in commissions, transportation and other costs were ~~$174~~not significant and $213 million in 2020 and ~~$163~~$186 million and $503 million in 2019. The remaining portion of fees, taxes and charges are expensed in other operating expenses when the corresponding revenues are recognized.

Revenues and expenses from our hotel and transportation operations, which are included in our Tour and Other segment, are recognized at the time the services are performed. Revenues from the long-term leasing of ships, which are also included in our Tour and Other segment, are recognized ratably over the term of the agreement.

Customer Deposits

Our payment terms generally require an initial deposit to confirm a reservation, with the balance due prior to the voyage. Cash received from guests in advance of the cruise is recorded in customer deposits and in other long-term liabilities on our Consolidated Balance Sheets. These amounts include refundable deposits. We are providing flexibility to guests with bookings on sailings cancelled due to the pause in cruise operations by allowing guests to receive enhanced future cruise credits ("FCC") or elect to receive refunds in cash. We have paid and expect to continue to pay cash refunds of customer deposits with respect to a portion of these cancelled cruises. The amount of cash refunds to be paid may depend on the level of guest acceptance of FCCs and future cruise cancellations. We record a liability for FCCs to the extent we have received cash from guests with bookings on cancelled sailings. We had customer deposits of $2.4 billion as of August 31, 2020 and $4.9 billion as of ~~February 29, 2020 and~~ November 30, 2019. The current portion of our customer deposits was $2.1 billion as of August 31, 2020, the majority of which are FCCs. These amounts include deposits related to cancelled cruises prior to the election of a cash refund by guests. Refunds payable to guests who have elected cash refunds are recorded in accounts payable. Due to the uncertainty associated with the duration and extent of COVID-19, we are unable to estimate the amount of the August 31, 2020 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel. During the ~~three~~nine months ended ~~February 28/29,~~August 31, 2020 and 2019, we recognized revenues of ~~$3.0~~$3.3 billion and $4.1 billion related to our customer deposits as of November 30, 2019 and December 1, 2018. ~~Our~~Historically, our customer deposits balance changes due to the seasonal nature of cash collections, the recognition of revenue, refund of customer deposits and foreign currency translation.

Contract Receivables

Although we generally require full payment from our customers prior to or concurrently with their cruise, we grant credit terms to a relatively small portion of our revenue source. We also have receivables from credit card merchants for cruise ticket purchases and onboard revenue. These receivables are included within trade and other receivables, net.

Contract Assets

Contract assets are amounts paid prior to the start of a voyage, which we record as an asset within prepaid expenses and other and which are subsequently recognized as commissions, transportation and other at the time of revenue ~~recognition.~~recognition or at the time of voyage cancellation. We have contract assets of ~~$134~~$17 million and $154 million as of ~~February 29,~~August 31, 2020 and ~~December 1,~~November 30, 2019.

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NOTE 3 – ~~Unsecured~~ Debt

Short-Term Borrowings

At ~~February 29,~~August 31, 2020, our short-term borrowings consisted primarily of $3.0 billion borrowing under our multicurrency revolving credit facility (the “Revolving Facility”), $314 million of commercial paper, $20 million of euro-denominated commercial paper and $33 million of ~~$1.0 billion.~~sterling-denominated commercial paper. For the ~~three~~nine months ended ~~February 29/28,~~August 31, 2020, we had borrowings of $525 million and repayments of $192 million of commercial paper with original maturities greater than three months. For the nine months ended August 31, 2019, there were 0no borrowings or repayments of commercial paper with original maturities greater than three months.

Export Credit Facility Borrowings

In December 2019, we borrowed $823 million under an export credit facility due in semi-annual installments through 2032.

In September 2020, we borrowed $610 million under an export credit facility due in semi-annual installments through 2032.

2023 Secured Notes

In April 2020, we issued $4.0 billion aggregate principal amount of 11.5% first-priority senior secured notes due in 2023 (the “2023 Secured Notes”). The 2023 Secured Notes mature on April 1, 2023 unless earlier redeemed or repurchased. They are guaranteed by Carnival plc and certain of our subsidiaries that own or operate our vessels and material intellectual property, and are secured by collateral, which includes vessels and material intellectual property with a net book value of $27.9 billion as of August 31, 2020 and certain other assets. Upon the occurrence of certain change of control events, we are required to offer to repurchase the 2023 Secured Notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest to the purchase date.

The indenture governing the 2023 Secured Notes contains covenants that limit our ability to, among other things: (i) incur additional indebtedness or issue certain preferred shares; (ii) make dividend payments on or make other distributions in respect of our capital stock or make other restricted payments; (iii) make certain investments; (iv) sell certain assets; (v) create liens on assets; (vi) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and (vii) enter into certain transactions with our affiliates. These covenants are subject to a number of important limitations and exceptions.

Convertible Notes

In April 2020, we issued $2.0 billion aggregate principal amount of 5.75% convertible senior notes due 2023 (the “Convertible Notes”). The Convertible Notes mature on April 1, 2023, unless earlier repurchased or redeemed by us or earlier converted in accordance with their terms prior to the maturity date. The Convertible Notes are guaranteed on a senior unsecured basis by Carnival plc, Carnival Finance, LLC and our subsidiaries that guarantee the 2023 Secured Notes.

The Convertible Notes are convertible by holders, subject to the conditions described below, into cash, shares of Carnival Corporation common stock, or a combination thereof, at our election. The Convertible Notes have an initial conversion rate of 100 shares of Carnival Corporation common stock per $1,000 principal amount of the Convertible Notes, equivalent to an initial conversion price of $10 per share of common stock. The initial conversion price is subject to certain anti-dilutive adjustments and may also increase if the Convertible Notes are converted in connection with a tax redemption or certain corporate events.

The Convertible Notes are convertible at any time prior to the close of business on the business day immediately preceding January 1, 2023, only under the following circumstances:

•during any fiscal ~~year 2032.~~quarter, (and only during such fiscal quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

•during the 5 business day period after any 5 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of common stock and the conversion rate on each such trading day;

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•prior to the close of business on the second scheduled trading day immediately preceding any tax redemption date; or

•upon the occurrence of specified corporate events.

On or after January 1, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any time.

If we undergo certain corporate events (each, a “fundamental change”), subject to certain conditions, holders may require us to

repurchase for cash all or any portion of their Convertible Notes at a price equal to 100% of the principal amount of the

Convertible Notes to be repurchased, plus accrued and unpaid interest to the fundamental change repurchase date.

We may redeem the Convertible Notes, in whole but not in part, at any time on or prior to December 31, 2022 at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, if we or any guarantor would have to pay any additional amounts on the Convertible Notes due to a change in tax laws, regulations or rulings or a change in the official application, administration or interpretation thereof.

As of August 31, 2020, a condition allowing holders of the Convertible Notes to convert has been met and therefore the notes are convertible. The holders are entitled to convert all or any portion of their Convertible Notes at any time during the three months starting on September 1, 2020 and ending on November 30, 2020, at the conversion rate of 100 shares of Carnival Corporation common stock per $1,000 principal amount of Convertible Notes.

In August 2020, we completed a registered direct offering of 99.2 million shares of Carnival Corporation common stock at a price of $14.02 per share to a limited number of holders of the Convertible Notes. We used the proceeds of the stock offering to repurchase from such holders $886 million aggregate principal amount of the Convertible Notes in privately negotiated transactions, (such registered direct offering and the use of proceeds to repurchase the Convertible Notes, the “Convertible Notes Repurchase Transaction”). We recognized a $224 million extinguishment loss as a result of these transactions in other income (expense), net.

We account for the Convertible Notes as separate liability and equity components. We determined the carrying amount of the liability component as the present value of its cash flows.

The carrying amount of the equity component representing the conversion option was $286 million on the date of issuance and was calculated by deducting the carrying value of the liability component from the initial proceeds from the Convertible Notes. The excess of the principal amount of the Convertible Notes over the carrying amount of the liability component represents a debt discount that is amortized to interest expense over the term of the Convertible Notes under the effective interest rate method using an effective interest rate of 12.9%. The carrying amount of the equity component was reduced to $0 in conjunction with the partial repurchase of Convertible Notes in August 2020 because at the time of repurchase, the fair value of the equity component for the portion of the Convertible Notes that was repurchased, exceeded the total amount of the equity component recorded at the time the Convertible Notes were issued.

The net carrying value of the liability component of the Convertible Notes was as follows:


(in millions)	August 31, 2020
Principal	$	1,127
Less: Unamortized debt discount and transaction costs	(173)
	$	954

The interest expense recognized related to the Convertible Notes was as follows:


(in millions)	Three Months Ended August 31, 2020		Nine Months Ended August 31, 2020
Contractual interest expense	$	26	$	43
Amortization of debt discount and transaction costs	22		37
	$	47	$	80

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We had no Convertible Notes in 2019.

2025 Secured Term Loan

In June 2020, we borrowed an aggregate principal amount of $2.8 billion in 2 tranches ($1.9 billion and €800 million), under a first-priority senior secured term loan facility that matures on June 30, 2025 (the “2025 Secured Term Loan”). The U.S. dollar tranche bears interest at a rate per annum equal to adjusted LIBOR (with a 1% floor) plus 7.5%. The euro tranche bears interest at a rate per annum equal to EURIBOR (with a 0% floor) plus 7.5%. The 2025 Secured Term Loan is guaranteed by Carnival plc and the same subsidiaries that currently guarantee, and are secured on a first-priority basis by substantially the same collateral that currently secures, the 2023 Secured Notes, the 2026 Secured Notes and the 2027 Secured Notes. The 2025 Secured Term Loan contains covenants that are substantially similar to the covenants in the indenture governing the 2023 Secured Notes. These covenants are subject to a number of important limitations and exceptions.

2026 Secured Notes

In July 2020, we issued an aggregate principal amount of $1.3 billion in 2 tranches ($775 million and €425 million), under second-priority senior secured notes that mature on February 1, 2026 (the “2026 Secured Notes”). The U.S. dollar tranche bears interest at a rate of 10.5% per year. The euro tranche bears interest at a rate of 10.1% per year. The 2026 Secured Notes are guaranteed by Carnival plc and the same subsidiaries that currently guarantee, and are secured on a second-priority basis by substantially the same collateral that currently secures, the 2023 Secured Notes, the 2025 Secured Term Loan and the 2027 Secured Notes. The indenture governing the 2026 Secured Notes contains covenants that are substantially similar to the covenants in the indenture governing the 2023 Secured Notes and the 2027 Secured Notes. These covenants are subject to a number of important limitations and exceptions.

2027 Secured Notes

In August 2020, we issued an aggregate principal amount of $900 million of second-priority senior secured notes that mature on August 1, 2027 (the “2027 Secured Notes”). The 2027 Secured Notes bear interest at a rate of 9.9% per year. The 2027 Secured Notes are guaranteed by Carnival plc and the same subsidiaries that currently guarantee, and are secured on a second-priority basis by substantially the same collateral that currently secures, the 2023 Secured Notes, the 2025 Secured Term Loan and the 2026 Secured Notes. The indenture governing the 2027 Secured Notes contains covenants that are substantially similar to the covenants in the indenture governing the 2023 Secured Notes and the 2026 Secured Notes. These covenants are subject to a number of important limitations and exceptions.

Modifications and Other

In February 2020, we extended a $452 million sterling-denominated floating rate bank loan, originally maturing in 2022, to 2025 with an option to extend to 2026.

~~Refer~~In April 2020, we amended and extended a $166 million euro-denominated fixed rate bank loan, originally maturing in September 2020, to ~~Note 11 - "Subsequent Events" for~~ a ~~discussion of events that occurred subsequent to February 29, 2020~~.floating rate loan maturing in March 2021.

In July 2020, we extended a $337 million euro-denominated floating rate bank loan originally maturing in 2021 to 2022.

As of August 31, 2020, we repurchased in the open market $86 million aggregate principal amount of our $700 million 4.0% notes due in 2020 and $123 million aggregate principal amount of our $555 million 1.6% euro notes due in 2021. We recognized a related gain on early extinguishment of debt of $5 million. This gain is included in other income (expense), net in the accompanying Consolidated Statements of Income (Loss).

Certain export credit agencies have offered 12-month debt amortization and a financial covenant holiday (the “Debt Holiday”). We have entered into supplemental agreements or side letters for the Debt Holiday amendments to defer certain principal repayments otherwise due through March 31, 2021 through the creation of separate tranches of loans with repayments made over the following four years.

As of August 31, 2020, the scheduled annual maturities of our outstanding debt were as follows:

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(in millions) Year	Principal Payments (a)
Remainder of 2020	$	1,048
2021 (b)	1,702
2022	2,539
2023	6,686
2024	1,174
Thereafter	9,382
	$	22,532

(a)Excluding the Revolving Facility. As of August 31, 2020, borrowings under the Revolving Facility were $3.0 billion, which were drawn in March 2020 for an initial term of six months. The maturities for these borrowings were extended in September 2020 for an additional six months through March 2021. We may re-borrow such amounts subject to satisfaction of the conditions in the Revolving Facility Agreement.

(b)We have a principal balance of $0.5 billion and $0.8 billion of debt outstanding as of August 31, 2020, otherwise due through 2032, for which covenant waivers expire during the second quarter 2021 and fourth quarter 2021, respectively. We are working on extending these covenant waivers. If the covenant waiver extensions are not received, we would be required to prepay the outstanding principal balance.

Debt Covenant Compliance

Many of our debt agreements contain one or more financial covenants that require us to:

•Maintain minimum debt service coverage

•Maintain minimum shareholders' equity

•Limit our debt to capital ratio

•Limit the amounts of our secured and other indebtedness

Under the terms of certain of our debt facilities, we are required to maintain minimum debt service coverage (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 (the “Financial Covenant”). As of August 31, 2020, we have entered into supplemental agreements or side letters to amend our agreements with respect to this Financial Covenant to:

•Waive compliance for all of our funded export credit facilities through March 31, 2021, August 31, 2021 or December 31, 2021, as applicable.

•Waive compliance through November 30, 2021 for certain of our bank loans. We will be required to comply beginning with the next testing date of February 28, 2022.

•Waive compliance for the remaining applicable bank loans through their respective maturity dates.

At August 31, 2020, we were in compliance with the applicable debt covenants.

Subsequent to August 31, 2020, we extended the Financial Covenant waivers for our funded export credit facilities through at least November 30, 2021 (with the next testing date of February 28, 2022) except that for 3 of our funded export credit facilities with Financial Covenant waivers through March 31, 2021 (with the next testing date of May 31, 2021) or August 31, 2021 (with the next testing date of November 30, 2021), with total aggregate indebtedness of $1.3 billion as of August 31, 2020, we are currently engaged in discussions to extend the waivers for these facilities through November 30, 2021 (with the next testing date of February 28, 2022).

Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other available lenderprotections that would be applicable. There can be no assurance that we would be able to obtain additional waivers in a timely manner, or on acceptable terms at all. If we were not able to obtain additional waivers or repay the debt facilities, 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 additional waivers would have a material adverse effect on us.

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Credit Ratings Update

Since March 2020, Moody’s and S&P Global have downgraded our credit ratings to be below investment grade. Our current short-term commercial paper credit rating prevents us from issuing additional commercial paper.

NOTE 4 – Contingencies and Commitments

Litigation

~~Litigation~~

OnWe are routinely involved in legal proceedings, claims, disputes, regulatory matters and governmental inspections or investigations arising in the ordinary course of or incidental to our business, including those noted below. Additionally, as a result of the impact of COVID-19, litigation claims, enforcement actions, regulatory actions and investigations, including, but not limited to, those arising from personal injury and loss of life, have been and may, in the future, be asserted against us. Many of the existing assertions are in their initial stages. We expect many of these claims and actions, or any settlement of these claims and actions, to be covered by insurance and historically the maximum amount of our liability, net of any insurance recoverables, has been limited to our self-insurance retention levels.

We record provisions in the consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.

Legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial monetary damages. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies. An unfavorable outcome might result in a material adverse impact on our business, results of operations, financial position or liquidity.

As previously disclosed, on May 2, 2019, 2 lawsuits were filed against Carnival Corporation in the U.S. District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act. ~~The complaint filed by Havana Docks Corporation alleges it holds an interest~~On July 9, 2020, the court granted our motion for judgment on the pleadings in the ~~Havana Cruise Port Terminal and the complaint~~action filed by Javier ~~Garcia-Bengochea alleges that he holds an interest in the Port~~Garcia Bengochea, and dismissed plaintiff’s action with prejudice. On August 6, 2020, Bengochea filed a notice of Santiago, Cuba, both of which were expropriated by the Cuban Government. The complaints further allege that Carnival Cruise Line “trafficked” in those properties by embarking and disembarking passengers at these facilities. The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs. The court denied our motion to dismiss the complaint filed by Javier Garcia-Bengochea, on August 26, 2019. While on August 28, 2019,appeal. On September 14, 2020, the court denied our motion to dismiss the ~~complaint~~amended action filed by Havana Docks ~~Corporation, later on January 6, 2020, it dismissed virtually identical cases brought by Havana Docks Corporation against other cruise lines, on the grounds raised in our motion~~Corporation. We continue to dismiss. In doing so, the court explicitly reversed its position on the issue and acknowledged the conflict with our case. Therefore, on January 6, 2020, we asked the court to formally dismiss the Havana Docks Corporation complaint.

We believe we have a meritorious ~~defenses~~defense to ~~the claims~~these actions and we ~~intend to vigorously defend against them. We do not~~ believe that ~~it is likely that the outcome~~any liability which may arise as a result of these matters will be material, but litigation is inherently unpredictable and there can be no assurances that the final outcome of the case might not be material to our operating results or financial condition.

Additionally, in the normal course of our business, various claims and lawsuits have been filed or are pending against us. Most of these claims and lawsuits, or any settlement of claims and lawsuits, are covered by insurance and the maximum amount of our liability, net of any insurance recoverables, is typically limited to our self-insurance retention levels. We believe the ultimate outcome of these claims, lawsuits and settlements, as applicable, each and in the aggregate,actions will not have a material impact on our consolidated financial statements.

Contingent Obligations – Indemnifications

Some of the debt contracts we enter into include indemnification provisions obligating us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes or changes in laws which increase ~~our~~the lender’s costs. There are no stated or notional amounts included in the indemnification clauses, and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses.

Other Contingencies

We have agreements with a number of credit card processors that transact customer deposits related to our cruise vacations. Certain of these agreements allow the credit card processors to request under certain circumstances that we provide a reserve fund in cash. Although the agreements vary, these requirements may generally be satisfied either through a withheld percentage of customer payments or providing cash funds directly to the card processor. As of August 31, 2020, we have been requested to provide reserve funds of $27 million and have had $200 million of customer deposits withheld to satisfy these requirements. These reserve funds are included within other assets. We expect the funds withheld under these agreements will be approximately $65 million per month up to a maximum of $600 million. In September 2020, we placed $136 million of cash collateral to be held in escrow.

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COVID-19 Actions

We have been named in a number of actions related to COVID-19. The following purported class actions have been brought by former guests from Ruby Princess, Diamond Princess, Grand Princess, Coral Princess, Costa Luminosa, Carnival Ecstasy orZaandam. Both the previously disclosed and newly filed actions seek compensation based on a variety of tort claims, including, but not limited to, negligence and failure to warn, physical injuries and severe emotional distress associated with being exposed and/or contracting COVID-19 onboard. Below are material updates to the previously disclosed class actions, individual actions and governmental inquiries and investigations, and a description of newly filed COVID-19 actions.

Previously Disclosed Class Actions

As previously disclosed, on April 7, 2020, Paul Turner, a former guest from Costa Luminosa, filed a purported class action against Costa Crociere, S.p.A. (“Costa”) and Costa Cruise Line, Inc. in the U.S. District Court of the Southern District of Florida. On September 10, 2020, the court granted Costa’s motion to dismiss based upon forum non conveniens, and directed that the action be filed in Italy. The plaintiff has appealed the order.

As previously disclosed, on April 8, 2020, numerous former guests from Grand Princess filed a purported class action against Carnival Corporation and Carnival plc and two of our subsidiaries, Princess Cruise Lines, Ltd. (“Princess Cruises”) and Fairline Shipping International Corporation, Ltd. On September 22, 2020, the court granted our motions to dismiss plaintiffs’ second amended complaint in part. The court granted our motion to dismiss plaintiffs’ negligence-based claims without prejudice and with leave to amend and granted our motion to dismiss plaintiffs’ request for injunctive relief without prejudice. The court denied our motion to dismiss plaintiffs’ claims for intentional infliction of emotional distress. On October 2, 2020, plaintiffs filed a third amended complaint.

As previously disclosed, on May 27, 2020, Service Lamp Corporation Profit Sharing Plan filed a purported class action against Carnival Corporation, Arnold W. Donald and David Bernstein on behalf of all purchasers of Carnival Corporation securities between January 28 and May 1, 2020. As previously disclosed, on June 3, 2020, John P. Elmensdorp filed a purported class action against the same defendants, and included Micky Arison as a defendant. This action is on behalf of all purchasers of Carnival Corporation securities between September 26, 2019 and April 30, 2020. These actions allege that the defendants violated Sections 10(b) and 20(a) of the U.S. Securities and Exchange Act of 1934 by making misrepresentations and omissions related to Carnival Corporation’s COVID-19 knowledge and response, and seek to recover unspecified damages and equitable relief for the alleged misstatements and omissions. On July 21, 2020, Abraham Atachbarian filed a purported class action against the same defendants as Elmensdorp action. The Atachbarian action is on behalf of all purchasers of Carnival Corporation options between January 27 and May 1, 2020 and allege the same set of factual theories presented in the class actions described above.

As previously disclosed, on June 4, 2020, Gregory Eicher, a former guest from Grand Princess filed a purported class action against Princess Cruises. On September 10, 2020, this action was voluntarily dismissed.

As previously disclosed, on June 4, 2020, numerous former guests from Ruby Princess filed a purported class action against Princess Cruises. Princess Cruises filed a motion to dismiss, in response to which the plaintiffs amended their action to remove their class action allegations and seek recovery on behalf of 2 guests who allege that they contracted COVID-19 while on Ruby Princess.

As previously disclosed, on June 24, 2020, Leonard C. Lindsay and Carl E.W. Zehner, former guests from Zaandam, filed a purported class action against Carnival Corporation, Carnival plc, Holland America Line, Inc. and Holland America Line – U.S.A., Inc. On September 11, 2020, the plaintiffsfiled an amended class action on behalf of all persons in the U.S. who were guests from Zaandam who embarked on March 8, 2020.

Newly Filed Class Actions

As discussed above, these newly filed actions also seek compensation based on economic losses, alleged personal injury and emotional distress for guests who either contracted or feared contracting COVID-19 and assert claims for negligence and intentional infliction of emotional distress.

On July 13, 2020, Kathleen O’Neill, a former guest from Coral Princess filed a purported class action in the U.S. District Court for the Central District of California against Princess Cruises, Carnival Corporation, and Carnival plc. We have filed a motion to dismiss.

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On July 13, 2020, another group of former guests from Grand Princess filed a purported class action in the U.S. District Court for the Central District of California against Princess Cruises, Carnival Corporation and Carnival plc. We have filed a motion to dismiss plaintiff’s amended action.

On July 23, 2020, Susan Karpik, a former guest from Ruby Princess filed a purported class action against Carnival plc and Princess Cruises in the Federal Court of Australia.

We believe that the claims asserted in these actions are without merit and are taking proper actions to defend against them.

Individual Actions

Since March 9, 2020, more than 100 former U.S. guests who sailed onboard various vessels, including, but not limited to, Diamond Princess, Grand Princess, Ruby Princess, or Coral Princess, filed individual actions against Princess Cruises and, in some actions, also against Carnival Corporation and/or Carnival plc, including actions previously disclosed. Both the previously disclosed and newly filed actions include tort claims based on a variety of theories, including negligence and failure to warn. The plaintiffs in these actions allege a variety of injuries: some plaintiffs allege only emotional distress, while others allege injuries arising from testing positive for COVID-19. A smaller number of actions include wrongful death claims.

Previously Disclosed Individual Actions

Motions to dismiss were filed on June 2, 2020 in the individual actions brought against Princess Cruises prior to such date and that allege only emotional distress associated with exposure to COVID-19 while onboard. All courts that considered those motions to date have granted them. Princess Cruises has filed motions to dismiss in all other matters in which a responsive pleading has been due. Several courts have granted the various motions to dismiss, with leave for the plaintiffs to amend.

As previously disclosed, between April 7 and July 7, 2020, former U.S. guests from Costa Luminosa filed individual actions against Costa in the U.S. District Court for the Southern District of Florida or the Circuit Court in and for the 11^th Judicial Circuit in and for Miami-Dade County. These actions have been voluntarily dismissed with and without prejudice, respectively. The action brought in the U.S. District Court for the Southern District of Florida may be pursued in Italy.

As previously disclosed, on June 16, 2020, Patricia Vickers, on behalf of the Estate of Jessie Vickers, a former guest from Carnival Ecstasy, filed an action against Carnival Corporation. The case was dismissed by the court without prejudice.

As previously disclosed, on June 30, 2020, Kenneth and Nora Hook, former guests from Zaandam, filed an action against Holland America Line N.V. A motion to dismiss is pending and on September 3, 2020, the court denied plaintiff’s motion for an expedited trial date.

Newly Filed Individual Actions

On July 16, 2020, Toyling Maa, individually and as personal representative of the estate of Wilson Maa, a former guest from Coral Princess, and the estate of Wilson Maa, filed an action in the U.S. District Court for the Central District of California against Carnival Corporation, Carnival plc and Princess Cruises seeking compensation for damages for Ms. Maa allegedly contracting COVID-19 and alleging wrongful death as a result of Mr. Maa contracting COVID-19. The action asserts claims for negligence. On September 21, 2020, the court denied plaintiffs’ motion to remand and granted defendants’ motion to dismiss without prejudice and with leave to amend.

On July 23, 2020, an action was filed on behalf of the estate of Carl Weidner, a former guest from Grand Princess, in the U.S. District Court for the Northern District of California against Carnival Corporation, Carnival plc and Princess Cruises seeking compensation based on a claim alleging wrongful death as a result of contracting COVID-19. The action asserts claims for negligence. The action also alleges that the forum selection clause in the guest’s ticket contract that specifies venue in the Central District of California is unenforceable.

These individual actions seek monetary and punitive damages but do not specify exact amounts. We are taking proper actions to defend against them.

Governmental Inquiries and Investigations

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Federal and non-U.S. governmental agencies and officials are investigating or otherwise seeking information, testimony and/or documents, regarding COVID-19 incidents and related matters, including, but not limited to, those noted below. We are investigating these matters internally and are cooperating with all requests. The investigations could result in the imposition of civil and criminal penalties in the future.

As previously disclosed, in March and April, 2020, there were several inquiries or investigations initiated by foreign governmental authorities related to Ruby Princess, including authorities in Australia and New Zealand. The New South Wales Commission of Inquiry Report dated August 14, 2020, concluded that no recommendations were directed towards Princess Cruises or Carnival Australia.

At this time, we continue to believe we have a meritorious defense to the aforementioned claims and while we are unable to estimate a potential range of damages, we do not believe that the ultimate outcome of these proceedings will have any material impact on our consolidated financial statements.

Ship Commitments

As of August 31, 2020, we expect the timing of our new ship growth capital commitments to be as follows:


(in millions) Year
Remainder of 2020	$	1,776
2021	3,122
2022	4,609
2023	3,226
2024	780
Thereafter	1,061
	$	14,574

NOTE 5 – Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks

Fair Value Measurements

Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured using inputs in one of the following three categories:

•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.

Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, certain estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized in a current or future market exchange.

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Financial Instruments that are not Measured at Fair Value on a Recurring Basis


		February 29, 2020																		November 30, 2019																									August 31, 2020											November 30, 2019
		Carrying Value		Fair Value														Carrying Value		Fair Value																	Carrying Value				Fair Value													Carrying Value	Fair Value
(in millions)	(in millions)					Level 1			Level 2			Level 3					Level 1					Level 2			Level 3		(in millions)	Carrying Value					Level 1						Level 3								Level 1		Carrying Value				Level 2
Assets	Assets																					Assets
Long-term other assets (a)	Long-term other assets (a)	$	177	$	—		$	30		$	145		$	181	$	—		$	31	$	149	Long-term other assets (a)	$	46		$	0				$	24			$	14			$	181			$	0			$	31			$	149
Total	Total	$	177	$	—		$	30		$	145		$	181	$	—		$	31	$	149	Total	$	46		$	0		$	24			$	14			$	181			$	0			$	31			$	149
Liabilities	Liabilities																					Liabilities
Fixed rate debt (b)	Fixed rate debt (b)	$	7,351	$	—		$	7,548		$	—		$	7,438	$	—		$	7,782	$	—	Fixed rate debt (b)	$	14,250		$	0		$	13,789			$	0			$	7,438			$	0			$	7,782			$	0
Floating rate debt (b)	Floating rate debt (b)	5,740		—			5,656			—			4,195		—			4,248		—		Floating rate debt (b)	11,287			0			10,291				0				4,195				0				4,248				0
Total	Total	$	13,091	$	—		$	13,204		$	—		$	11,634	$	—		$	12,030	$	—	Total	$	25,537		$	0		$	24,080			$	0			$	11,634			$	0			$	12,030			$	0

(a)Long-term other assets are comprised of notes ~~receivables,~~receivable, which ~~include~~at November 30, 2019, included loans on ship sales. The fair values of our Level 2 notes ~~receivables~~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.

(b)The debt amounts above do not include the impact of interest rate swaps or debt issuance costs. The fair values of our publicly-traded notes were based on their unadjusted quoted market prices in markets that are not sufficiently active to be Level 1 and, accordingly, are considered Level 2. The fair values of our other debt were estimated based on current market interest rates being applied to this debt.

Financial Instruments that are Measured at Fair Value on a Recurring Basis


		February 29, 2020										November 30, 2019											August 31, 2020				November 30, 2019
(in millions)	(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													Assets
Cash and cash equivalents	Cash and cash equivalents	$	1,354	$	—	$	—	$	518	$	—	$	—	Cash and cash equivalents	$	8,176	$	—	$	—	$	518	$	—	$	—
Restricted cash	Restricted cash	15		—		—		13		—		—		Restricted cash	15		—		—		13		—		—

Derivative financial instruments	Derivative financial instruments	—		102		—		—		58		—		Derivative financial instruments	—		1		—		—		58		—
Total	Total	$	1,368	$	102	$	—	$	530	$	58	$	—	Total	$	8,191	$	1	$	—	$	530	$	58	$	—
Liabilities	Liabilities													Liabilities
Derivative financial instruments	Derivative financial instruments	$	—	$	17	$	—	$	—	$	25	$	—	Derivative financial instruments	$	—	$	11	$	—	$	—	$	25	$	—
Total	Total	$	—	$	17	$	—	$	—	$	25	$	—	Total	$	—	$	11	$	—	$	—	$	25	$	—

Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring Basis

Valuation of Goodwill and Trademarks

As a result of the effect of COVID-19 on our expected future operating cash flows, we performed interim discounted cash flow analyses for certain reporting units with goodwill as of February 29, 2020 and for all reporting units with goodwill as of May 31, 2020. Consequently, prior to our annual test date of July 31, 2020, we determined that the estimated fair values of a2 of our North America & Australia (“NAA”) segment reporting ~~unit,~~units and a2 of our Europe & Asia (“EA”) segment reporting ~~unit,~~units no longer exceeded their carrying values. We recognized goodwill impairment charges of $731 million and $1.3 billion for ~~these~~those reporting units during the first ~~quarter~~and second quarters of ~~2020.~~2020, respectively, and have no remaining goodwill for those reporting units. As of July 31, 2020, we performed our annual goodwill and trademark impairment reviews, which covered updates since the last test date of May 31, 2020, and we determined there was no impairment for goodwill or trademarks at our annual test date.

The determination of our reporting units' goodwill and trademark fair values includes numerous assumptions that are subject to various risks and uncertainties. The principal assumptions, all of which are considered Level 3 inputs, used in our cash flow analyses consisted of:

•Changes in market conditions, port or other restrictions, or strategy, including ~~decision~~decisions about the allocation of new ships amongst brands and the transfer of ships between brands

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•Forecasted future operating results, including net revenue yields and fuel expenses

•Weighted-average cost of capital of market participants, adjusted for the risk attributable to the geographic regions in

which these cruise brands operate

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We believe that we have made reasonable estimates and judgments. A change in the conditions, circumstances or strategy (including decisions about the allocation of new ships amongst brands and the transfer of ships between brands), which influence determinations of fair value, may result in a need to recognize an additional impairment charge. Refer to Note 111 - ~~"Subsequent Events"~~“General, COVID-19 Use of Estimates and Risks and Uncertainty” for ~~a discussion of events that occurred subsequent to February 29, 2020~~.additional discussion.


		Goodwill											Goodwill
(in millions)	(in millions)	NAA Segment		EA Segment		Total		(in millions)	NAA Segment		EA Segment		Total
At November 30, 2019	At November 30, 2019	$	1,898	$	1,014	$	2,912	At November 30, 2019	$	1,898	$	1,014	$	2,912
Impairment charges	Impairment charges	(300)		(431)		(731)		Impairment charges	(1,319)		(777)		(2,096)
Foreign currency translation adjustment	Foreign currency translation adjustment	—		(5)		(5)		Foreign currency translation adjustment	0		(10)		(10)
At February 29, 2020		$	1,598	$	578	$	2,176
At August 31, 2020								At August 31, 2020	$	579	$	228	$	807


		Trademarks											Trademarks
(in millions)	(in millions)	NAA Segment		EA Segment		Total		(in millions)	NAA Segment		EA Segment		Total
At November 30, 2019	At November 30, 2019	$	927	$	240	$	1,167	At November 30, 2019	$	927	$	240	$	1,167
Foreign currency translation adjustment	Foreign currency translation adjustment	—		—		—		Foreign currency translation adjustment	0		12		13
At February 29, 2020		$	927	$	240	$	1,167
At August 31, 2020								At August 31, 2020	$	927	$	253	$	1,180

Impairment of Ships

We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment. As a result of the effect of COVID-19 on our expected future operating cash flows and our decisions to dispose of certain ships, we determined certain impairment triggers had occurred. Accordingly, we performed undiscounted cash flow analyses on ~~certain~~some ships in our fleet as of February 29, 2020, May 31, 2020 and during the quarter ended and as of August 31, 2020. Based on these undiscounted cash flow analyses, we determined that certain ships had net carrying values that exceeded their estimated undiscounted future cash flows. We estimated the ~~February 29, 2020~~ fair values of these ships based on their discounted cash ~~flows.~~flows or estimated selling value. We then compared these estimated fair values to the net carrying values and, as a result, we recognized ~~$172~~the following:

•$836 million and ~~$158~~$2 million of ship impairment charges in the NAA and EA segments, respectively, ~~included in other operating expenses of our Consolidated Statements of Income (Loss)~~ for the ~~first quarter~~three months ended August 31, 2020.

•$1.4 billion and $311 million of ship impairment charges in the NAA and EA segments, respectively, for the nine months ended August 31, 2020.

The principal assumptions used in our analyses consisted of changes in strategy (including decisions about the sale of ships, estimated sale proceeds and timing, as well as the transfer of ships between brands), return to service, forecasted future operating results, including net revenue yields and fuel expenses. All principal assumptions are considered Level 3 inputs. Refer to Note 1 - “General, COVID-19 Use of Estimates and Risks and Uncertainty” for additional discussion.

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Derivative Instruments and Hedging Activities


(in millions)	(in millions)	Balance Sheet Location	February 29, 2020		November 30, 2019		(in millions)	Balance Sheet Location	August 31, 2020		November 30, 2019
Derivative assets	Derivative assets						Derivative assets
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments						Derivatives designated as hedging instruments
Cross currency swaps (a)	Cross currency swaps (a)	Prepaid expenses and other	$	39	$	32	Cross currency swaps (a)	Prepaid expenses and other	$	0	$	32
		Other assets	49		25			Other assets	0		25
Foreign currency forwards (b)		Prepaid expenses and other	14		—
Foreign currency zero cost collars (b)							Foreign currency zero cost collars (b)	Prepaid expenses and other	1		0
Total derivative assets	Total derivative assets		$	102	$	58	Total derivative assets		$	1	$	58
Derivative liabilities	Derivative liabilities						Derivative liabilities
Derivatives designated as hedging instruments	Derivatives designated as hedging instruments						Derivatives designated as hedging instruments

Cross currency swaps (a)	Cross currency swaps (a)	Accrued liabilities and other	$	—	$	1	Cross currency swaps (a)	Accrued liabilities and other	$	0	$	1
		Other long-term liabilities	—		9			Other long-term liabilities	—		9
Foreign currency zero cost collars (b)	Foreign currency zero cost collars (b)	Accrued liabilities and other	2		1		Foreign currency zero cost collars (b)	Accrued liabilities and other	0		1
Interest rate swaps (c)	Interest rate swaps (c)	Accrued liabilities and other	6		6		Interest rate swaps (c)	Accrued liabilities and other	5		6
		Other long-term liabilities	9		9			Other long-term liabilities	6		9
Total derivative liabilities	Total derivative liabilities		$	17	$	25	Total derivative liabilities		$	11	$	25

(a)At ~~February 29,~~August 31, 2020, ~~and~~we had no cross currency swaps. At November 30, 2019, we had cross currency swaps totaling $1.9 billion ~~respectively,~~ that ~~are~~were designated as hedges of our net investment in foreign operations with a euro-denominated functional currency. ~~At February 29, 2020, these cross currency swaps settle through 2031.~~

(b)At ~~February 29,~~August 31, 2020 and November 30, 2019, we had foreign currency derivatives consisting of foreign currency zero cost collars ~~and foreign currency forwards 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.

(c)We have interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments. These interest rate swap agreements effectively changed ~~$288~~$273 million at ~~February 29,~~August 31, 2020 and $300 million at November 30, 2019 of EURIBOR-based floating rate euro debt to fixed rate euro debt. At ~~February 29,~~August 31, 2020, these interest rate swaps settle through 2025.

Our derivative contracts include rights of offset with our counterparties. We have elected to net certain of our derivative assets and liabilities within counterparties.


		February 29, 2020																			August 31, 2020
(in millions)	(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		(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	Assets	$	102	$	—	$	102	$	(5)	$	97	Assets	$	2	$	(1)	$	1	$	0	$	1
Liabilities	Liabilities	$	18	$	—	$	17	$	(5)	$	12	Liabilities	$	12	$	(1)	$	11	$	0	$	11

		November 30, 2019																			November 30, 2019
(in millions)	(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		(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	Assets	$	58	$	—	$	58	$	(4)	$	54	Assets	$	58	$	0	$	58	$	(4)	$	54
Liabilities	Liabilities	$	25	$	—	$	25	$	(4)	$	21	Liabilities	$	25	$	0	$	25	$	(4)	$	21

1422

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The effect of our derivatives qualifying and designated as hedging instruments recognized in other comprehensive income (loss) and in net income (loss) was as follows:


		Three Months Ended February 29/28,							Three Months Ended August 31,						Nine Months Ended August 31,
(in millions)	(in millions)	2020		2019		(in millions)	2020		2019		2020		2019
Gains (losses) recognized in AOCI:	Gains (losses) recognized in AOCI:					Gains (losses) recognized in AOCI:
Cross currency swaps - net investment hedges - included component	Cross currency swaps - net investment hedges - included component	$	(2)	$	2	Cross currency swaps - net investment hedges - included component	$	0	$	16	$	131	$	36
Cross currency swaps - net investment hedges - excluded component	Cross currency swaps - net investment hedges - excluded component	$	42	$	(12)	Cross currency swaps - net investment hedges - excluded component	$	0	$	3	$	(1)	$	2
Foreign currency zero cost collars - cash flow hedges	Foreign currency zero cost collars - cash flow hedges	$	(1)	$	—	Foreign currency zero cost collars - cash flow hedges	$	3	$	(4)	$	2	$	(5)
Foreign currency forwards - cash flow hedges	Foreign currency forwards - cash flow hedges	$	14	$	—	Foreign currency forwards - cash flow hedges	$	0	$	0	$	53	$	0
Interest rate swaps - cash flow hedges	Interest rate swaps - cash flow hedges	$	1	$	1	Interest rate swaps - cash flow hedges	$	1	$	(1)	$	5	$	(1)
Gains (losses) reclassified from AOCI - cash flow hedges:	Gains (losses) reclassified from AOCI - cash flow hedges:					Gains (losses) reclassified from AOCI - cash flow hedges:
Interest rate swaps - Interest expense, net of capitalized interest	Interest rate swaps - Interest expense, net of capitalized interest	$	(2)	$	(2)	Interest rate swaps - Interest expense, net of capitalized interest	$	(1)	$	(2)	$	(4)	$	(6)
Foreign currency zero cost collars - Depreciation and amortization						Foreign currency zero cost collars - Depreciation and amortization	$	0	$	0	$	0	$	1
Gains (losses) recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges)	Gains (losses) recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges)					Gains (losses) recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges)
Cross currency swaps - Interest expense, net of capitalized interest	Cross currency swaps - Interest expense, net of capitalized interest	$	10	$	4	Cross currency swaps - Interest expense, net of capitalized interest	$	0	$	6	$	12	$	16

The amount of estimated cash flow hedges’ unrealized gains and losses that are expected to be reclassified to earnings in the next twelve months is not significant.

~~Refer to Note 11 - "Subsequent Events" for a discussion of derivative transactions that occurred subsequent to February 29, 2020~~.

Financial Risks

Fuel Price Risks

We manage our exposure to fuel price risk by managing our consumption of fuel. Substantially all of our exposure to market risk for changes in fuel prices relates to the consumption of fuel on our ships. We manage fuel consumption through ship maintenance practices, modifying our itineraries and implementing innovative technologies. ~~We are also adding new, more fuel efficient ships to our fleet and are strategically disposing of smaller, less fuel efficient ships.~~

Foreign Currency Exchange Rate Risks

Overall Strategy

We manage our exposure to fluctuations in foreign currency exchange rates through our normal operating and financing activities, including netting certain exposures to take advantage of any natural offsets and, when considered appropriate, through the use of derivative and non-derivative financial instruments. Our primary focus is to monitor our exposure to, and manage, the economic foreign currency exchange risks faced by our operations and realized if we exchange one currency for another. We currently only hedge certain of our ship commitments and net investments in foreign operations. The financial impacts of the hedging instruments we do employ generally offset the changes in the underlying exposures being hedged.

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.

Investment Currency Risks

We consider our investments in foreign operations to be denominated in stable currencies and ~~are~~ of a long-term nature. We partially mitigate the currency exposure of our investments in foreign operations by designating a portion of our foreign currency debt and derivatives as hedges of these investments. As of ~~February 29,~~August 31, 2020, we have designated ~~$852~~$883 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign ~~operations and for~~operations. For the three and nine months ended ~~February 29,~~August 31, 2020, we recognized $2$66 million and $29 million of ~~gains~~loss on these non-derivative net investment hedges in the cumulative translation adjustment section of other comprehensive income (loss). We also have ~~$8.2~~$7.0 billion of euro-denominated debt,

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~~including the effect of cross currency swaps,~~ which provides an economic offset for our operations with euro functional currency.

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Newbuild Currency Risks

Our shipbuilding contracts are typically denominated in euros. Our decision to hedge a non-functional currency ship commitment for our cruise brands is made on a case-by-case basis, considering the amount and duration of the exposure, market volatility, economic trends, our overall expected net cash flows by currency and other offsetting risks. We use foreign currency derivative contracts to manage foreign currency exchange rate risk for some of our ship construction payments. At ~~February 29,~~August 31, 2020, for the following ~~newbuilds,~~newbuild, we had foreign currency contracts for a portion of our euro-denominated shipyard payments. These contracts are designated as cash flow hedges.

Entered Into Matures In Weighted-Average Floor Rate Weighted- Average Ceiling Rate Weighted-Average Forward Rate
Foreign currency zero cost collars
Enchanted Princess 2019 June 2020 $ 1.04 $ 1.28
Mardi Gras 2019 October 2020 $ 1.05 $ 1.28
Foreign currency forwards
Iona 2020 May 2020 £ 0.85


	Entered Into	Matures In	Weighted-Average Floor Rate		Weighted- Average Ceiling Rate
Foreign currency zero cost collars
Mardi Gras	2020	December 2020	$	1.12	$	1.28

If the spot rate is between the ceiling and floor rates on the date of maturity, then we would not owe or receive any payments under the zero cost collars.

At ~~February 29,~~August 31, 2020, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild contract payments to non-euro functional currency brands, which represent a total unhedged commitment of ~~$6.4~~$8.4 billion for newbuilds scheduled to be delivered from 2020 through 2025.

The cost of shipbuilding orders that we may place in the future that is denominated in a different currency than our cruise brands’ will be affected by foreign currency exchange rate fluctuations. These foreign currency exchange rate fluctuations may affect our decision to order new cruise ships.

Interest Rate Risks

We manage our exposure to fluctuations in interest rates through our debt portfolio management and investment strategies. We evaluate our debt portfolio to determine whether to make periodic adjustments to the mix of fixed and floating rate debt through the use of interest rate swaps, issuance of new debt, amendment of existing debt or early retirement of existing debt.

Concentrations of Credit Risk

As part of our ongoing control procedures, we monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. We seek to ~~minimize~~manage these credit risk exposures, including counterparty nonperformance primarily associated with our cash equivalents, investments, notes receivables, ~~committed~~future financing facilities, contingent obligations, derivative instruments, insurance contracts, long-term ship charters and new ship progress payment guarantees, by:

•Conducting business with well-established financial institutions, insurance companies and export credit agencies

•Diversifying our counterparties

•Having guidelines regarding credit ratings and investment maturities that we follow to help safeguard liquidity and minimize risk

•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

At ~~February 29,~~August 31, 2020, our exposures under derivative instruments were not material. We also monitor the creditworthiness of travel agencies and tour operators in Asia, Australia and Europe, which includes charter-hire agreements in Asia and credit and debit card providers to which we extend credit in the normal course of our business. Our credit exposure also includes contingent obligations related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales in Australia and most of Europe where we are obligated to honor our guests’ cruise payments made by them to

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~~their travel agents and tour operators regardless of whether we have received these payments.~~ Concentrations of credit risk associated with trade receivables and other receivables, charter-hire agreements and contingent obligations are not considered to be material, principally due to the large number of unrelated accounts, the nature of these contingent obligations and their short maturities. WeNormally, we have not historically experienced significant credit losses on our trade receivables, notes receivables, charter-hire agreements and contingent obligations. Because of the impact the COVID-19 outbreak is having on economies, we could experience an increase in future credit losses. We have not normally required collateral or other security to support normal credit sales. Historically, we have not experienced significant credit losses, including counterparty nonperformance. Because of the impact COVID-19 is having on economies, we have experienced, and expect to continue to experience, an increase in credit losses.

Our credit exposure also includes contingent obligations related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales in Australia and most of Europe where we are obligated to honor our

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guests’ cruise payments made by them to their travel agents and tour operators regardless of whether we have received these payments.

NOTE 6 – Leases

Substantially all of our leases for which we are the lessee are operating leases of port facilities and real estate and are included within operating lease right-of-use assets, long-term operating lease liabilities and current portion of operating lease liabilities in our Consolidated Balance Sheet as of ~~February 29,~~August 31, 2020.

We have port facilities and real estate lease agreements with lease and non-lease components, and in such cases, we account for the components as a single lease component.

We do not recognize lease assets and lease liabilities for any leases with an original term of less than one year. For some of our port facilities and real estate lease agreements, we have the option to extend our current lease term by 1 to 10 years. Generally, we do not include renewal options as a component of our present value calculation as we are not reasonably certain that we will exercise the options.

As most of our leases do not have a readily determinable implicit rate, we estimate the incremental borrowing rate ("IBR") to determine the present value of lease payments. We apply judgment in estimating the IBR including considering the term of the lease, the currency in which the lease is denominated, and the impact of collateral and our credit risk on the rate. For leases that were in place upon adoption of Leases, we used the remaining lease term as of December 1, 2019 in determining the IBR. For the initial measurement of the lease liabilities for leases commencing after ~~December 1, 2019,~~the adoption, the IBR at the lease commencement date was applied.

We amortize our lease assets on a straight-line basis over the lease term. ~~During~~The components of expense were as follows:


(in millions)	Three months ended August 31, 2020		Nine months ended August 31, 2020
Operating lease expense	$	51	$	153
Variable lease expense (a) (b)	$	(36)	$	(26)

(a)Variable lease expense represents costs associated with our multi-year preferential berthing agreements, which vary based on the ~~quarter ended February 29, 2020, we recognized $17 million~~number of ~~operating lease~~passengers. These costs ~~including lease amortization~~are recorded within commission, transportation and ~~imputed interest, related to all~~other in our Consolidated Statements of ~~our leases other than the port facilities, as operating lease expense.~~Income (Loss). Variable and short-term lease costs related to operating leases, other than the port facilities, were not material to our consolidated financial statements.

(b)

~~We have multi-year~~Several of our preferential berthing agreements ~~which are operating leases. During~~have force majeure provisions. We have treated the ~~quarter ended February 29, 2020,~~concessions granted under such provision as variable payment adjustments. If our interpretation of the force majeure provisions is disputed, we ~~had $30 million of lease asset amortization expense~~could be required to record and imputed interest expense and $31 million of variable port costs, which vary based on the number of passengers, recorded within commission, transportation and other in our Consolidated Statements of Income (Loss).make additional guarantee payments.

We have multiple agreements, with a total undiscounted minimum commitment of approximately ~~$454~~$440 million, that have been executed but the lease term has not commenced as of ~~February 29,~~August 31, 2020. These are substantially all related to our rights to use certain port facilities. The leases are expected to commence between 2020 and 2022.

During the ~~quarter~~nine months ended ~~February 29,~~August 31, 2020, we obtained ~~$107~~$126 million of right-of-use assets in exchange for new operating lease liabilities. The cash outflow for leases was materially consistent with the lease expense recognized during the three and nine months ended August 31, 2020.

Weighted average of the remaining lease terms and weighted average discount rates are as follows:


	~~February 29,~~August 31, 2020
Weighted average remaining lease term - operating leases (in years)	13
Weighted average discount rate - operating leases	~~3.1~~3.2	%

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As of ~~February 29,~~August 31, 2020, maturities of operating lease liabilities were as follows:


(in millions) Year	(in millions) Year	Total Operating Leases		(in millions) Year
Remainder of 2020	Remainder of 2020	$	158	Remainder of 2020	$	36
2021	2021	188		2021	197
2022	2022	156		2022	162
2023	2023	148		2023	156
2024	2024	142		2024	147
Thereafter	Thereafter	1,039		Thereafter	1,074
Total lease payments	Total lease payments	1,832		Total lease payments	1,773
Less: Present value discount	Less: Present value discount	(352)		Less: Present value discount	(342)
Present value of lease liabilities	Present value of lease liabilities	$	1,480	Present value of lease liabilities	$	1,431

Under ASC 840, Leases, future minimum lease payments under non-cancelable operating leases of port facilities and other assets as of November 30, 2019 were as follows:


(in millions) Year	(in millions) Year	Total Operating Leases		(in millions) Year
2020	2020	$	219	2020	$	219
2021	2021	196		2021	196
2022	2022	161		2022	161
2023	2023	173		2023	173
2024	2024	167		2024	167
Thereafter	Thereafter	1,408		Thereafter	1,408
		$	2,324		$	2,324

For time charter arrangements where we are the lessor and for transactions with cruise guests related to the use of cabins, we do not separate lease and non-lease components. As the non-lease components are the predominant components in the agreements, we account for these transactions under the Revenue Recognition guidance.

~~We have sales-type leases of ships for which we are the lessor. As of February 29, 2020, the net investment related to these leases was $127 million.~~

NOTE 7 – Segment Information

Our operating segments are reported on the same basis as the internally reported information that is provided to our chief operating decision maker (“CODM”), who is the President and Chief Executive Officer of Carnival Corporation and Carnival plc. The CODM assesses performance and makes decisions to allocate resources for Carnival Corporation & plc based upon review of the results across all of our segments. Our 4 reportable segments are comprised of (1) NAA cruise operations, (2) EA cruise operations, (3) Cruise Support and (4) Tour and Other.

The operating segments within each of our NAA and EA reportable segments have been aggregated based on the similarity of their economic and other characteristics, including geographic guest sourcing. Our Cruise Support segment includes our portfolio of leading port destinations and other services, all of which are operated for the benefit of our cruise brands. Our Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and other operations.

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		Three Months Ended February 29/28,																				Three Months Ended August 31,
(in millions)	(in millions)	Revenues		Operating costs and expenses		Selling and administrative		Depreciation and amortization		Operating income (loss)			(in millions)	Revenues		Operating costs and expenses		Selling and administrative		Depreciation and amortization		Operating income (loss)
2020	2020												2020
NAA	NAA	$	3,140	$	2,274	$	400	$	364	$	(197)	(a)	NAA	$	15	$	1,292	$	144	$	348	$	(1,770)
EA	EA	1,552		1,317		207		166		(569)		(b)	EA	(4)		225		71		165		(465)
Cruise Support	Cruise Support	44		(87)		65		32		35			Cruise Support	1		12		44		32		(86)
Tour and Other	Tour and Other	52		19		7		8		18			Tour and Other	20		20		5		6		(11)
		$	4,789	$	3,523	$	678	$	570	$	(713)			$	31	$	1,549	$	265	$	551	$	(2,333)
2019	2019												2019
NAA	NAA	$	3,077	$	2,010	$	353	$	328	$	386		NAA	$	4,256	$	2,327	$	339	$	345	$	1,246
EA	EA	1,526		1,075		205		152		93			EA	2,035		1,058		150		165		662
Cruise Support	Cruise Support	42		27		65		28		(78)			Cruise Support	42		39		65		29		(92)
Tour and Other	Tour and Other	29		29		6		9		(15)			Tour and Other	200		109		9		9		74
		$	4,673	$	3,142	$	629	$	516	$	386			$	6,533	$	3,532	$	563	$	548	$	1,890

														Nine Months Ended August 31,
(in millions)													(in millions)	Revenues		Operating costs and expenses		Selling and administrative		Depreciation and amortization		Operating income (loss)
2020													2020
NAA													NAA	$	3,612	$	5,197	$	841	$	1,081	$	(4,827)	(a)
EA													EA	1,785		2,314		404		499		(2,208)		(b)
Cruise Support													Cruise Support	67		(22)		170		96		(177)
Tour and Other													Tour and Other	96		67		19		22		(12)
														$	5,561	$	7,556	$	1,435	$	1,698	$	(7,223)
2019													2019
NAA													NAA	$	10,495	$	6,370	$	1,034	$	1,012	$	2,079
EA													EA	5,122		3,166		540		483		933
Cruise Support													Cruise Support	128		99		217		84		(272)
Tour and Other													Tour and Other	299		198		21		28		52
														$	16,043	$	9,833	$	1,813	$	1,607	$	2,791

(a) Includes ~~$300 million~~$1.3 billion of goodwill impairment charges.

(b) Includes ~~$431~~$777 million of goodwill impairment charges.

Revenue by geographic areas, which are based on where our guests are sourced, were as follows:


		Three Months Ended February 29/28							Three Months Ended August 31,						Nine Months Ended August 31,
(in millions)	(in millions)	2020		2019		(in millions)	2020		2019		2020		2019
North America	North America	$	2,647	$	2,520	North America	$	14	$	3,751	$	3,065	$	8,910
Europe	Europe	1,367		1,399		Europe	5		1,738		1,622		4,486
Australia and Asia	Australia and Asia	615		584		Australia and Asia	1		937		681		2,261
Other	Other	161		170		Other	10		107		192		385
		$	4,789	$	4,673		$	31	$	6,533	$	5,561	$	16,043

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NOTE 8 – Earnings Per Share


		Three Months Ended February 29/28,							Three Months Ended August 31,						Nine Months Ended August 31,
(in millions, except per share data)	(in millions, except per share data)	2020		2019		(in millions, except per share data)	2020		2019		2020		2019
Net income (loss) for basic and diluted earnings per share	Net income (loss) for basic and diluted earnings per share	$	(781)	$	336	Net income (loss) for basic and diluted earnings per share	$	(2,858)	$	1,780	$	(8,014)	$	2,567
Weighted-average shares outstanding	Weighted-average shares outstanding	684		693		Weighted-average shares outstanding	775		689		727		691
Dilutive effect of equity plans	Dilutive effect of equity plans	—		2		Dilutive effect of equity plans	0		2		0		2
Diluted weighted-average shares outstanding	Diluted weighted-average shares outstanding	684		695		Diluted weighted-average shares outstanding	775		691		727		693
Basic earnings per share	Basic earnings per share	$	(1.14)	$	0.48	Basic earnings per share	$	(3.69)	$	2.58	$	(11.03)	$	3.72
Diluted earnings per share	Diluted earnings per share	$	(1.14)	$	0.48	Diluted earnings per share	$	(3.69)	$	2.58	$	(11.03)	$	3.71
Antidilutive equity awards excluded from diluted earnings per share computations		1		—

Antidilutive shares excluded from diluted earnings per share computations were as follows:


(in millions)	Three Months Ended August 31, 2020	Nine Months Ended August 31, 2020
Equity awards	0	1
Convertible Notes	186	102
Total antidilutive securities	186	103

There were no antidilutive shares excluded from our 2019 diluted earnings per share computations.

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NOTE 9 – Supplemental Cash Flow Information


(in millions)	(in millions)	February 29, 2020		November 30, 2019		(in millions)	August 31, 2020		November 30, 2019
Cash and cash equivalents (Consolidated Balance Sheets)	Cash and cash equivalents (Consolidated Balance Sheets)	$	1,354	$	518	Cash and cash equivalents (Consolidated Balance Sheets)	$	8,176	$	518
Restricted cash included in prepaid expenses and other and other assets	Restricted cash included in prepaid expenses and other and other assets	15		13		Restricted cash included in prepaid expenses and other and other assets	15		13
Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows)	Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows)	$	1,368	$	530	Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows)	$	8,191	$	530

~~We did not issue notes receivable upon sale~~In connection with the Convertible Notes Repurchase Transaction, as an administrative convenience, we permitted the purchasers of ~~ships during~~83.3 million of Carnival Corporation common stock to offset the ~~three~~purchase price payable to us against our obligation to pay the purchase price for $744 million aggregate principal amount of the Convertible Notes held by them, which is reflected as a non-cash transaction for the nine months ended ~~February 29/28, 2020 and 2019.~~August 31, 2020.

NOTE 10 – Other Assets

We have a minority interest in CSSC Carnival Cruise Shipping Limited (“CSSC-Carnival”), a China-based cruise company which will operate its own fleet designed to serve the Chinese market. Our investment in CSSC-Carnival was ~~$132~~$135 million as of ~~February 29,~~August 31, 2020 and $48 million as of November 30, 2019. In December 2019, we sold to CSSC-Carnival a controlling interest in an entity with full ownership of 2 EA segment ships and recognized a related gain of $107 million, included in other operating expenses in our Consolidated Statements of Income (Loss). We will continue to operate ~~both~~each of these ships under bareboat charter agreements ~~into 2021.~~through December 2020 and May 2021, respectively.

NOTE 11 – Defined Benefit Pension Plans and Restructuring Costs

We have several single-employer defined benefit pension plans, which cover some of our shipboard and shoreside employees. The U.S. and UK shoreside employee plans are closed to new membership and are funded at or above the level required by U.S. or UK regulations. As required by UK regulations, the UK employee plan is undergoing its triennial valuation. Due to the COVID-19 pandemic and its impact on the economic environment and our operations, the finalization of the valuation may result in a plan deficit, which would then trigger a funding obligation under UK regulations. The remaining defined benefit plans are primarily unfunded. In determining all of our plans’ benefit obligations at November 30, 2019 and 2018, we assumed a weighted-average discount rate of 2.4% for 2019 and 3.4% for 2018.

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In May 2020, we announced a combination of layoffs, furloughs and salary reductions across the company in response to the extended pause in our global cruise operations. For the three and nine months ended August 31, 2020, we incurred restructuring costs of $3 million and $42 million, principally consisting of severance and our continued payment of health benefits to affected employees. These costs are included in the selling and administrative line item within our Consolidated Statements of Income (Loss).

NOTE 12 – Property and Equipment

Ship Sales

During 2020, we sold 7 NAA segment ships and 3 EA segment ships, which represents a passenger-capacity reduction of 11,560 for our NAA segment and 5,510 for our EA segment. In addition, we have either entered into agreements to sell or expect to sell 6 NAA segment ships and 2 EA segment ships, which represents a passenger-capacity reduction of 9,620 for our NAA segment and 4,320 for our EA segment.

NOTE 1113 – Subsequent Events

The spread of COVID-19 and the recent developments surrounding the global pandemic are having material negative impacts on all aspects of our business. On March 13, 2020, we announced voluntary pauses of our global fleet cruise operations across all brands. The duration of the pauses will be dependent in part on various travel restrictions and travel bans issued by countries around the world.

As of April 1, 2020, substantially all our ships have disembarked their passengers. There are approximately 6,000 passengers onboard ships still at sea that are expected to disembark their passengers by the end of April. Some of our crew is unable to return home, and we will be providing them with food and housing.

We have updated our cancellation policies, the terms of which vary widely by brand and sailing date, to permit cruisers to cancel certain upcoming cruises and elect to receive refunds in cash or future cruise credits. As an incentive to accept the future cruise credits, our brands have offerings which vary widely in terms but generally increase the value of the future cruise credits or onboard credits (credits that can be used as onboard spending money on a future sailing). The volume and pace of cash refunds could have a material adverse effect on our liquidity and capital resources.

Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of 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 have, a material negative impact on our financial results and liquidity, and such negative impact may continue well beyond the containment of such outbreak. 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 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.

~~The effects of further decreases in estimated future operating cash flows could result in the need to recognize additional impairment charges in future periods.~~

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.

~~In March 2020, we fully drew down our $3.0 billion Existing Multicurrency Facility.~~

In March 2020, we early settled all outstanding cross currency swaps designated as net investment hedges and received proceeds of $180 million, of which $167 million will remain in AOCI until either the sale or substantially complete liquidation of the related subsidiary. We also early settled our foreign currency forwards that were designated as cash flow hedges and

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~~received proceeds of $53 million which will remain in AOCI until recognized in earnings proportionately to the related depreciation expense of the underlying vessel that was hedged.~~Public Equity Offering

On ~~April 1,~~September 15, 2020, we ~~announced the pricing terms~~entered into an equity distribution agreement with sales agents pursuant to which we may, from time to time, offer and sell shares of ~~offerings of $4.0 billion of the Secured Notes, $1.75 billion Convertible Notes and a public offering of $500 million of~~Carnival Corporation's common stock inhaving an aggregate offering price of up to $1.0 billion through the ~~Public Equity Offering. In~~sales agents (the “ATM Offering”). We have filed a prospectus supplement with the Securities and Exchange Commission in connection with the ~~Convertible Notes offering,~~ATM Offering on September 15, 2020. As of October 2, 2020, 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~~sold 23 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 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 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 be completed in early April, subject to customary closing conditions. The~~for net proceeds ~~from~~of $352 million and paid $4 million in compensation with respect of such sales of shares under 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.

~~One of our directors purchased 1.25 million shares of our common stock as part of the Public Equity Offering for a purchase price of approximately $10 million.~~

ATM Offering.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Concerning Factors That May Affect Future Results

Some of the statements, estimates or projections contained in this document are “forward-looking statements” that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, operations, outlooks, plans, goals, reputation, cash flows, liquidity and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking. These statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like “will,” “may,” “could,” “should,” “would,” “believe,” “depends,” “expect,” “goal,” “anticipate,” “forecast,” “project,” “future,” “intend,” “plan,” “estimate,” “target,” “indicate,” “outlook,” and similar expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding:


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

Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward-looking statements. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward looking statements and adversely affect our business, results of operations and financial position. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:

•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, litigation, cash flows, liquidity, and stock price

•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, for which we have waivers for the period through March 31, 2021 with the next testing date of May 31, 2021

•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, including the recent ransomware incident, 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

•Increases in fuel prices, changes in the types of fuel consumed and availability of fuel supply may adversely impact our scheduled itineraries and costs

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•Fluctuations in foreign currency exchange rates may adversely impact our financial results

•Overcapacity and competition in the cruise and land-based vacation industry may lead to a decline in our cruise sales, pricing and destination options

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•Geographic regions in which we try to expand our business may be slow to develop or ultimately not develop how we expect

•Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.

Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this document, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.

Recent Developments

~~COVID-19~~

~~The spread~~Resumption of ~~novel coronavirus (COVID-19) and the recent developments surrounding the global pandemic are having material negative impacts on all aspects of our business. In particular:~~Guest Operations

•In the face of the global impact of COVID-19, we paused our guest cruise operations in mid-March. We resumed limited guest operations in September 2020, with Costa Cruises ("Costa") successful voyages on two of our ships, ~~Numerous passengers~~Costa Deliziosa and Costa Diadema. We are continuing the limited resumption of our guest cruise operations with sailings on additional Costa ships shortly, as well as with sailings on AIDA Cruises ("AIDA") which are anticipated to begin in mid-October 2020. These brands are beginning our anticipated gradual, phased-in resumption of guest cruise operations. The initial cruises will continue to take place with adjusted passenger capacity and enhanced health protocols developed with government and health authorities, and guidance from our roster of medical and scientific experts.

Other brands and ships are expected to return to service over time to provide guests with unmatched joyful vacations in a manner consistent with our highest priorities, which are compliance, environmental protection and the health, safety and well-being of our guests, crew, shoreside employees and the people in the communities our ships visit. Many of our brands source the majority of their guests from the geographical region in which they operate. In the current environment, we believe this will benefit us in resuming guest cruise operations.

Health and Safety Protocols

Working with global and national health authorities and medical experts, Costa and AIDA have a comprehensive set of health and hygiene protocols to help facilitate a safe and healthy return to cruise vacations. Both brands are providing guests with detailed information about enhanced protocols, which are modeled after shoreside health and mitigation guidelines as provided by each brand's respective country, and approved by the flag state, Italy. Protocols will be updated based on evolving scientific and medical knowledge related to mitigation strategies.

Costa is the first cruise company to earn the Biosafety Trust Certification from Registro Italiano Navale ("RINA"). The certification process examined all aspects of life onboard and ashore and assessed the compliance of the system with procedures aimed at the prevention and control of infections. Costa's comprehensive set of measures and procedures implemented on the ships that resumed operations cover key areas such as crew health and safety, the booking process, guest activities, entertainment and dining, and medical care on board, as well as pre-boarding, embarkation and disembarkation operations, which includes testing for all guests prior to embarkation.

More broadly, as the understanding of COVID-19 continues to evolve, we have been working with a number of world-leading public health, epidemiological and policy experts to support our ongoing efforts with enhanced protocols and procedures for the return of cruise vacations. These advisors will continue to provide guidance based on the latest scientific evidence and best practices for protection and mitigation.

Optimizing the Future Fleet

We expect future capacity to be moderated by the phased re-entry of our ships, the removal of capacity from our fleet and delays in new ship deliveries. Since the pause in guest operations, we have accelerated the removal of ships in fiscal 2020 which were previously expected to be sold over the ensuing years. We now expect to dispose of 18 ships, 10 of which have already left the fleet. In total, the 18 ships represent approximately 12 percent of pre-pause capacity and only three percent of operating income in 2019. The sale of less efficient ships will result in future operating expense efficiencies of approximately two percent per available lower berth day ("ALBD") and a reduction in fuel consumption of approximately one percent per ALBD. We expect only two of the four ships originally scheduled for delivery in 2020, following the start of the pause, to be delivered prior to the end of fiscal 2020, including ~~Diamond~~Enchanted Princess ~~were diagnosed with COVID-19~~which was delivered in September 2020. We currently expect only five of the nine ships originally scheduled for delivery in fiscal 2020 and 2021 to be delivered prior to the end of fiscal year 2021. We currently expect nine cruise ships and two smaller expedition ships of the 13 ships originally scheduled for delivery prior to the end of fiscal year 2022 to be delivered by then.

Based on the actions taken to date and the scheduled newbuild deliveries through 2022, our fleet will be more efficient with a roughly 13 percent larger average berth size per ship ~~was quarantined at a port~~and an average age of 12 years in ~~Japan. As of~~2022 versus 13 years, in each case as compared to 2019.


	Ships expected to return to service as of August 31, 2020 (a)
	Passenger Capacity	Percentage of Total Capacity		Number of Cruise Ships
NAA Segment
Carnival Cruise Line	66,440	30	%	23
Princess Cruises	38,950	18		13
Holland America Line	20,260	9		10
P&O Cruises (Australia)	7,230	3		3
Seabourn	2,570	1		5
	135,450	61		54

EA Segment
Costa Cruises ("Costa")	34,980	16		11
AIDA Cruises ("AIDA")	31,930	14		14
P&O Cruises (UK)	13,810	6		5
Cunard	6,830	3		3
	87,550	39		33
	223,000	100	%	87

(a) Excludes 18 ships that we expect to dispose. Ten ships have left the ~~time of disembarkation, a substantial portion of~~fleet and we expect six ships to leave the ~~passengers~~fleet by December 2020, one by February 2021 and ~~crew were diagnosed with COVID-19 and subsequently several passengers died due to the disease.~~one by May 2021.

Update on Bookings~~Additionally, numerous passengers and crew on~~ ~~Grand Princess~~ ~~were diagnosed with COVID-19, some of whom subsequently died due to the disease.~~

•~~Numerous passengers and crew on other ships, including~~ ~~Zaandam~~, ~~Costa Luminosa~~, ~~Ruby Princess~~, ~~Costa Magica~~ ~~and~~ ~~Costa Favolosa, have been diagnosed with COVID-19. Numerous passengers and crew on~~ ~~Zandaam~~ ~~are currently experiencing flu-like symptoms, and some have died.~~ ~~Costa Magica~~ ~~and Costa Favolosa~~ ~~are currently working with~~While we believe bookings in the ~~U.S. Coast Guard to facilitate medical evacuations, and both vessels are anchored near~~first half of 2021 reflect expectations of the ~~port of Miami.~~

•~~On March 13, 2020, we announced voluntary pauses~~phased resumption of our ~~global fleet~~guest cruise operations ~~by our continental European~~ and ~~North American brands. Subsequently, we implemented a voluntary pause~~anticipated itinerary changes, as of our global fleet cruise operations across all brands. Each brand has separately announced the duration of its pause, but we expect such pauses to be extended (and some extensions have already been announced) and any such extensions may be prolonged. The pauses will be dependent in part on various travel restrictions and travel bans issued by various countries around the world.

•~~As of April 1, 2020:~~

◦Substantially all our ships have disembarked their passengers. There are approximately 6,000 passengers onboard ships still at sea that are expected to disembark their passengers by the end of April. Some of our crew is unable to return home, and we will be providing them with food and housing.

◦We have updated our cancellation policies, the terms of which vary widely by brand and sailing date, to permit cruisers to cancel certain upcoming cruises and elect to receive refunds in cash or future cruise credits. As an incentive to accept the future cruise credits, our brands have offerings which vary widely in terms but generally increase the value of the future cruise credits or onboard credits (credits that can be used as onboard spending money on a future sailing).~~The volume and pace of cash refunds could have a material adverse effect on our liquidity and capital resources.~~

•For the seven week period beginning January 26, 2020 and ending March 15, 2020, booking volumes for the remainder of 2020 were significantly behind the prior year on a comparable basis as a result of the effects of COVID-19. As of March 15,September 20, 2020, cumulative advanced bookings for the ~~remainder~~second half of ~~2020 were meaningfully~~2021 capacity currently available for sale are at the higher end of the historical range. We believe this demonstrates the long-term potential demand for cruising. Pricing on these bookings are lower

~~Table~~ by mid-single digits versus the second half of ~~Contents~~

~~than the prior year and at prices that are considerably lower than the prior year~~2019, on a comparable ~~basis. As noted above, all~~basis, reflecting the effect of ~~our global fleet operations are subject~~FCCs from previously cancelled cruises being applied. We continue to ~~voluntary pauses that we expect to be extended. Due to the unknown length of the pauses, booking volume data~~take bookings for ~~2020 may not be informative. In addition, because of our updated cancellation policies, booking volumes may not be representative of actual cruise revenues.~~

•~~For the first half of 2021, booking volumes since mid-December 2019 through March 1, 2020, were running slightly higher than the prior year. In contrast, for the first half of~~both 2021 and during the two weeks ended March 15, 2020, we booked 546,000 Occupied Lower Berth Days, which was considerably behind the prior year pace. As of March 15, 2020, cumulative advanced bookings for the first half of 2021 were slightly lower than the prior year.2022.

We are providing flexibility to guests with bookings on sailings cancelled by allowing guests to receive enhanced FCCs or elect to receive refunds in cash. Enhanced FCCs increase the value of the guest's original booking or provide incremental onboard credits. As of ~~February 29,~~September 20, 2020, ~~we had a total~~approximately 45 percent 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~~guests affected by our ~~ships are under construction will result in delays in ship deliveries, which we cannot predict~~schedule changes have received enhanced FCCs and ~~may be prolonged.~~approximately 55 percent have requested refunds.

~~In March and April~~Total customer deposits balance at August 31, 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.

~~On March 13, 2020, we~~ ~~fully drew down our $3.0~~was $2.4 billion, ~~Existing Multicurrency Facility. On March 24, 2020, we settled derivatives in a net gain position~~the majority of ~~approximately $200 million. Consequently,~~ ~~as of the date hereof, our principal source of immediate liquidity includes our available cash and cash equivalents.Given the impact of COVID-19 on bookings,~~ which are ~~meaningfully reduced from the prior year comparative pace, and the pause of our global fleet cruise operations, which we expect~~FCCs, compared to ~~be extended, we~~ ~~are pursuing additional financing, including, but not limited to, the April 1 financing transactions~~

~~described in the next paragraph.~~

~~In addition, we had~~ $2.8 billion from four committed export credit facilities that are available to fund the originally planned ship deliveries for the remainder of 2020 and $5.9 billion from committed export credit facilities that are available to fund ship deliveries originally planned in 2021 and beyond.

To enhance our liquidity, as well as comply with the dividend restrictions contained in the Secured Notes, we have suspended the payment of dividends on, and the repurchase of, the common stock of Carnival Corporation and the ordinary shares of Carnival plc.

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.~~However, based on our assumptions and estimates with respect to the pause in our global~~ fleet cruise operations and our financial condition, we believe that the liquidity described in the preceding paragraphs will be sufficient to fund our liquidity requirements over at least the next twelve months. ~~We estimate our liquidity requirements, which include our ongoing ship and administrative operating costs, cash refunds of~~total customer deposits ~~debt maturities and interest, expected capital improvements, and new ship growth capital not addressed by committed export credit facilities, to be approximately, on average, $1.0~~balance of $2.9 billion ~~per month. In particular:~~

•~~Ongoing ship and administrative operating costs~~ ~~- During the pause~~at May 31, 2020. The decline in our global fleet cruise operations, certain of our ships will be in warm ship layup where the ship will be manned by a full crew and certain of our ships will be in a prolonged ship layup where the ship will be manned by a limited crew.~~We estimate the cost per warm ship layup~~customer deposits is approximately $2 million to $3 million per month and the cost per prolonged ship layup is approximately $1 million per month. We will decide whether each vessel in our global fleet will be in a warm ship layup or a prolonged ship layup depending on the circumstances, including the length of pause, which we expect to be extended and may be prolonged. We currently estimate the substantial majority of our fleet will be in prolonged ship layup.~~In addition, we expect to incur ongoing selling and administrative expenses, and incremental COVID-related costs associated~~consistent with ~~sanitizing our ships and defending lawsuits, although we anticipate substantially reducing our advertising spend during~~previous

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~~the pause in operations. After transitioning to a prolonged pause, we anticipate estimated ongoing ship and administrative operating costs to range from $200 million to $300 million per month.~~

•~~Cash refunds of customer deposits~~ - During the pause in our global fleet cruise operations, we expect to be required to pay cash refunds of customer deposits with respect to a portion of our cancelled cruises. The current portion of our customer deposits was $4.7 billion as of February 29, 2020. Depending on the length of the pause and level of guest acceptance of future cruise credits, we may be required to provide cash refunds for a substantial portion of the balance. For the two weeks ended March 15, 2020, and on a weighted average basis based on available lower berth days (“ALBD”), approximately 45% of the guests who have contacted us have accepted future cruise credits in lieu of cash refunds for cancelled voyages. We continue to take future bookings for 2020 and 2021, receiving customer deposits on those bookings.

•~~Debt maturities and interest~~ -expectations. As of ~~February 29,~~August 31, 2020, the current portion of ~~our long-term debt~~customer deposits was ~~$2.2 billion. The current portion~~$2.1 billion with $0.1 billion relating to fourth quarter sailings. Approximately 60 percent of ~~our long-term debt~~bookings taken during the three weeks ended September 20, 2020 were new bookings, as ~~of February 29, 2020 that was maturing on~~opposed to FCC re-bookings, despite minimal advertising or ~~prior to November 30, 2020 was $1.5 billion. In addition, on March 13, 2020 we fully drew down our $3.0 billion~~ ~~Existing Multicurrency Facility, which amounts are currently due in September 2020 and which we currently expect to repay and redraw, in whole or in part.~~Our approximately $200 million per year interest expense for the year ended November 30, 2019 will be increased by the additional interest accrued under the $4.0 billion of Secured Notes and $1.75 billion of Convertible Notes.marketing.

In addition to pursuing additional financing, we are taking additional actions to improve our liquidity, including capital expenditure and operating expense reductions. In particular, we have identified approximately $1.0 billion of reduction opportunities from our previously disclosed estimated fiscal 2020 capital expenditures (which reduction does not take into account the impactUpdate on ~~timing of payments in connection with new ship build as a result of the delays in ship deliveries discussed above).~~We have also identified various projects and initiatives within our selling and administrative expenses for reduction or elimination, which we expect will result in reduced cash outflows and cost savings. While we cannot guarantee an outcome, we also intend to pursue deferrals of existing debt maturities, including through available government programs.Liquidity

~~We have never previously experienced a complete cessation of our cruising operations,~~Refer to “Liquidity, Financial Condition 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 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.Capital Resources.”

Refer to “Risk Factors” - "“COVID-19 has had, and is expected to continue to have, a ~~materially adverse~~significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund ~~any~~ resulting ~~shortfalls~~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, litigation, cash flows, liquidity, and stock ~~price".~~price.”

Update on Cyber Incident

New Accounting Pronouncements

Refer to ~~our~~Note 1 - “General, Accounting Pronouncements” of the consolidated financial statements for ~~further information on~~ ~~New Accounting Pronouncements~~.additional discussion regarding accounting pronouncements.

Critical Accounting Estimates

For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that is included in the Form 10-K. A discussion of our goodwill impairment charges recognized during the first ~~quarter~~and second quarters of 2020, ~~for goodwill~~ and ship impairment charges recognized during 2020 is included in the accompanying ~~consolidated financial statements.~~

~~Refer to Note 11 - “Subsequent Events” in our~~ consolidated financial statements.

Seasonality

Our passenger ticket revenues are seasonal. Historically, demand for cruises has been greatest during our third quarter, which includes the Northern Hemisphere summer ~~months.~~months, although 2020 will continue to be adversely impacted by COVID-19. This higher demand during the third quarter results in higher ticket prices and occupancy levels and, accordingly, the largest share of our operating income is earned during this period. ~~The seasonality of our results also increases due to ships being taken out-of-service for maintenance, which we schedule during non-peak demand periods.~~This historical trend has been disrupted by the pause in global cruise operations. In addition, substantially all of Holland America Princess Alaska Tours’ revenue and net income (loss) is generated from May through September in conjunction with Alaska's cruise season. During 2020, the Alaska cruise season was adversely impacted by the effects of COVID-19.

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Statistical Information


		Three Months Ended February 29/28,										Three Months Ended August 31,									Nine Months Ended August 31,
		2020			2019				2020			2019			2020			2019
Available Lower Berth Days (“ALBDs”) (in thousands) (a) (b)		21,977			21,299
ALBDs (in thousands) (a)								ALBDs (in thousands) (a)	—			22,727			25,598			65,671
Occupancy percentage ~~(c)~~(b)	Occupancy percentage ~~(c)~~(b)	104.3		%	104.8		%	Occupancy percentage ~~(c)~~(b)	—		%	113.0		%	103.1		%	107.8		%
Passengers carried (in thousands)	Passengers carried (in thousands)	3,063			2,937			Passengers carried (in thousands)	—			3,752			3,489			9,790

Fuel consumption in metric tons (in thousands)	Fuel consumption in metric tons (in thousands)	831			830			Fuel consumption in metric tons (in thousands)	325			822			1,639			2,487
Fuel consumption in metric tons per thousand ALBDs		37.8			38.9
Fuel cost per metric ton consumed	Fuel cost per metric ton consumed	$	477		$	459		Fuel cost per metric ton consumed	$	371		$	487		$	438		$	484

Currencies (USD to 1)	Currencies (USD to 1)							Currencies (USD to 1)
AUD	AUD	$	0.68		$	0.72		AUD	$	0.70		$	0.69		$	0.67		$	0.70
CAD	CAD	$	0.76		$	0.75		CAD	$	0.74		$	0.76		$	0.74		$	0.75
EUR	EUR	$	1.10		$	1.14		EUR	$	1.15		$	1.12		$	1.12		$	1.13
GBP	GBP	$	1.31		$	1.28		GBP	$	1.28		$	1.24		$	1.27		$	1.28
RMB	RMB	$	0.14		$	0.15		RMB	$	0.14		$	0.14		$	0.14		$	0.15

We paused our guest operations in mid-March 2020 and have been in a pause for a majority of the second quarter and all of the third quarter. The pause in guest operations is continuing to have material negative impacts on all aspects of our business, including the above statistical information.

Notes to Statistical Information

(a)ALBD is a standard measure of passenger capacity for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

(b)For the three months ended February 29, 2020 compared to the three months ended February 28, 2019, we had a 3.2% capacity increase in ALBDs comprised of a 1.4% capacity increase in our NAA segment and a 6.3% capacity increase in our EA segment.

~~Our NAA segment’s capacity increase was caused by the impacts of:~~

•~~One Holland America Line 2,670-passenger capacity ship that entered into service in December 2018~~

•~~One Princess Cruises 3,660-passenger capacity ship that entered into service in October 2019~~

•~~One Carnival Cruise Line 4,010-passenger capacity ship that entered into service in December 2019~~

~~The increase in our NAA segment’s capacity was partially offset by the impacts of:~~

•~~One P&O Cruises (Australia) 1,680-passenger capacity ship removed from service in March 2019~~

•~~One P&O Cruises (Australia) 1,260-passenger capacity ship removed from service in April 2019~~

•~~One Holland America Line 840-passenger capacity ship removed from service in July 2019~~

•~~Five ships out of service related to the ongoing COVID-19 outbreak in February 2020~~

~~Our EA segment’s capacity increase was caused by the impacts of:~~

•~~One AIDA 5,230-passenger capacity ship that entered into service in December 2018~~

•~~One Costa Cruises 4,200-passenger capacity ship that entered into service in March 2019~~

•~~One Costa Cruises 5,220-passenger capacity ship that entered into service in December 2019~~

~~The increase in our EA segment’s capacity was partially offset by the impacts of:~~

•~~One P&O UK 1,880-passenger capacity ship removed from service in August 2019~~

•~~Six ships out of service related to the ongoing COVID-19 outbreak in February 2020~~

~~(c)~~ In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.

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Results of Operations


Consolidated
	Three Months Ended August 31,								% increase (decrease)			Nine Months Ended August 31,								% increase (decrease)
(in millions)	2020		2019		Change						2020			2019			Change
Revenues
Passenger ticket	$	—	$	4,477	$	(4,477)	(100)	%	$	3,680		$	10,934		$	(7,254)		(66)	%
Onboard and other	31		2,056		(2,024)		(98)	%	1,881			5,110			(3,229)			(63)	%
	31		6,533		(6,501)		(100)	%	5,561			16,043			(10,483)			(65)	%
Operating Costs and Expenses
Commissions, transportation and other	34		803		(769)		(96)	%	1,098			2,125			(1,027)			(48)	%
Onboard and other	9		668		(659)		(99)	%	593			1,620			(1,027)			(63)	%
Payroll and related	248		548		(300)		(55)	%	1,563			1,671			(108)			(6)	%
Fuel	121		401		(280)		(70)	%	718			1,204			(486)			(40)	%
Food	19		284		(265)		(93)	%	404			821			(417)			(51)	%
Ship and other impairments	910		23		887		3838	%	1,829			24			1,806			7682	%
Other operating	208		805		(597)		(74)	%	1,349			2,367			(1,018)			(43)	%
	1,549		3,532		(1,983)		(56)	%	7,556			9,833			(2,277)			(23)	%

Selling and administrative	265		563		(298)		(53)	%	1,435			1,813			(378)			(21)	%
Depreciation and amortization	551		548		3		—	%	1,698			1,607			91			6	%
Goodwill impairment	—		—		—		—	%	2,096			—			2,096			100	%
	2,364		4,643		(2,279)		(49)	%	12,784			13,252			(468)			(4)	%
Operating Income (Loss)	$	(2,333)	$	1,890	$	(4,223)	(223)	%	$	(7,223)		$	2,791		$	(10,015)		(359)	%


NAA
	Three Months Ended August 31,								% increase (decrease)			Nine Months Ended August 31,								% increase (decrease)
(in millions)	2020		2019		Change						2020			2019			Change
Revenues
Passenger ticket	$	5	$	2,896	$	(2,891)	(100)	%	$	2,329		$	6,976		$	(4,647)		(67)	%
Onboard and other	9		1,361		(1,351)		(99)	%	1,283			3,519			(2,236)			(64)	%
	15		4,256		(4,242)		(100)	%	3,612			10,495			(6,883)			(66)	%

Operating Costs and Expenses	1,292		2,327		(1,034)		(44)	%	5,197			6,370			(1,172)			(18)	%
Selling and administrative	144		339		(194)		(57)	%	841			1,034			(193)			(19)	%
Depreciation and amortization	348		345		3		1	%	1,081			1,012			69			7	%
Goodwill impairment	—		—		—		—	%	1,319			—			1,319			100	%
	1,785		3,010		(1,225)		(41)	%	8,439			8,416			23			—	%
Operating Income (Loss)	$	(1,770)	$	1,246	$	(3,016)	(242)	%	$	(4,827)		$	2,079		$	(6,906)		(332)	%

Table of Contents

~~Three Months Ended February 29, 2020 (“2020”) Compared to Three Months Ended February 28, 2019 (“2019”)~~


EA
	Three Months Ended August 31,								% increase (decrease)			Nine Months Ended August 31,								% increase (decrease)
(in millions)	2020		2019		Change						2020			2019			Change
Revenues
Passenger ticket	$	(4)	$	1,609	$	(1,613)	(100)	%	$	1,393		$	4,021		$	(2,628)		(65)	%
Onboard and other	—		426		(426)		(100)	%	393			1,101			(708)			(64)	%
	(4)		2,035		(2,039)		(100)	%	1,785			5,122			(3,336)			(65)	%

Operating Costs and Expenses	225		1,058		(833)		(79)	%	2,314			3,166			(852)			(27)	%
Selling and administrative	71		150		(79)		(53)	%	404			540			(136)			(25)	%
Depreciation and amortization	165		165		—		—	%	499			483			16			3	%
Goodwill impairment	—		—		—		—	%	777			—			777			100	%
	461		1,373		(912)		(66)	%	3,994			4,189			(195)			(5)	%
Operating Income (Loss)	$	(465)	$	662	$	(1,127)	(170)	%	$	(2,208)		$	933		$	(3,141)		(337)	%

~~Revenues~~We paused our guest operations in mid-March 2020 and as a result have been in a pause for a majority of the second quarter and all of the third quarter. We resumed limited guest cruise operations in September 2020 as part of our phased-in return to service. The partial pause in guest operations is continuing to have material negative impacts on all aspects of our business. The longer the partial pause in guest operations continues, the greater the impact on our liquidity and financial position.

~~Consolidated~~

~~Passenger ticket revenues made up 68% of our 2020 total revenues. Passenger ticket revenues increased by $35 million, or 1.1%, to $3.2 billion in 2020 from $3.2 billion in 2019.~~

~~This increase was caused by:~~

•~~$102 million - 3.2% capacity increase in ALBDs, net of $78 million as~~As a result of ~~cancelled voyages~~the pause in our guest cruise operations, we have experienced essentially no revenue for the three months ended and ~~other voyage disruptions directly related~~meaningfully lower revenues for the nine months ended August 31, 2020 compared to ~~COVID-19~~

•the prior year periods resulting in operating losses for the current periods. ~~$32 million - increase in other revenues~~

•We are unable to definitively predict the timing of our complete return to service. As a result, we are currently unable to provide an earnings forecast. We expect a net loss on both a U.S. GAAP and adjusted basis for the quarter and year ending November 30, 20~~$15 million - increase in air transportation revenues~~20.

~~These increases were partially offset by:~~

•W~~$91 million - decrease~~hile maintaining compliance, environmental protection and safety, we significantly reduced ship operating expenses, including cruise payroll and related expenses, food, fuel, insurance and port charges by transitioning ships into paused status, either at anchor or in ~~cruise ticket revenues, primarily driven by sourcing in Continental Europe~~port and ~~net unfavorable foreign currency transactional impact~~

•~~$24 million - net unfavorable foreign currency translational impact~~staffed at a safe manning level. We continue to seek ways to further reduce our ongoing ship operating expenses.

~~Onboard~~In addition, during the nine months ended August 31, 2020, we incurred incremental COVID-19 related costs associated with repatriating guests and ~~other revenues made up 32% of~~crew members, enhancing health protocols and sanitizing our ~~2020 total revenues. Onboard~~ships, restructuring costs and ~~other revenues increased by $82 million, or 5.5%, to $1.6 billion in 2020 from $1.5 billion in 2019.~~defending lawsuits.

~~This increase was caused by:~~

•~~$46 million - 3.2% capacity increase in ALBDs, net of $41 million as~~As a result of ~~cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$29 million - higher onboard spending by our guests~~

•~~$26 million - increase in sales of Advanced Air Quality Systems to third parties~~

~~Concession revenues, which are included in onboard and other revenues, increased by $2 million, or 0.7%, to $257 million in 2020 from $255 million in 2019.~~

~~NAA Segment~~

~~Passenger ticket revenues made up 65% of our NAA segment’s 2020 total revenues. Passenger ticket revenues increased by $39 million, or 1.9%, to $2.1 billion in 2020 from $2.0 billion in 2019.~~

~~This increase was caused by:~~

•~~$29 million - 1.4% capacity increase in ALBDs, net of $34 million as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$24 million - increase in other revenues~~

~~These increases were partially offset by $14 million decrease in cruise ticket revenues, primarily driven by net unfavorable foreign currency transactional impact~~

The remaining 35% of our NAA segment’s 2020 total revenues were comprised of onboard and other revenues, which increased by $25 million, or 2.3%, to $1.1 billion in 2020 compared to $1.1 billion in 2019.

~~This increase was caused by:~~

•~~$15 million - 1.4% capacity increase in ALBDs, net of $19 million as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$13 million - higher onboard spending by our guests~~

~~Concession revenues, which are included in onboard and other revenues, increased by $1 million, or 0.8%, to $183 million in 2020 from $182 million in 2019.~~

~~Table of Contents~~

~~EA Segment~~

~~Passenger ticket revenues made up 78% of our EA segment’s 2020 total revenues. Passenger ticket revenues increased by $16 million, or 1.3%, to $1.2 billion in 2020 compared to $1.2 billion in 2019.~~

~~This increase was caused by:~~

•~~$75 million - 6.3% capacity increase in ALBDs, net of $41 million, as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$9 million - increase in air transportation revenues~~

~~These increases were partially offset by:~~

•~~$36 million - decrease in cruise ticket revenues, primarily driven by sourcing in Continental Europe~~

•~~$22 million - net unfavorable foreign currency translational impact~~

•~~$17 million - decrease in occupancy primarily related to the effects of COVID-19~~

The remaining 22% of our EA segment’s 2020 total revenues were comprised of onboard and other revenues, which increased by $10 million, or 3%, to $339 million in 2020 from $329 million in 2019. This increase was caused by $21 million, or 6.3% capacity increase in ALBDs, net of $15 million as a result of cancelled voyages and other voyage disruptions directly related to COVID-19.

~~Concession revenues, which are included in onboard and other revenues, was $73 million in 2020 and 2019.~~

~~Costs and Expenses~~

~~Consolidated~~

~~Operating costs and expenses increased by $381 million, or 12%, to $3.5 billion in 2020 from $3.1 billion in 2019.~~

~~This increase was caused by:~~

•~~$330 million - impairment of ships, resulting from~~ the effects of COVID-19 on our expected future operating cash flows,

•~~$99 million - 3.2% capacity increase in ALBDs~~

•~~$46 million - increase in commissions, transportation and other expenses which includes expenses incurred as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$45 million - changes in fuel mix~~

•~~$35 million - voyage related operating costs incurred in connection with disrupted voyages directly related to COVID-19~~

•~~$26 million - higher cruise payroll and related expenses~~

~~These increases were partially offset by:~~

•~~$132 million - gains on ship sales in 2020, net of gains on ship sales in 2019~~

•~~$30 million - lower fuel prices~~

•~~$29 million - net favorable foreign currency translational impact~~

•~~$16 million - lower dry-dock expenses and repair and maintenance expenses~~

•~~$11 million - lower fuel consumption per ALBD~~

~~Selling and administrative expenses increased by $49 million, or 7.9%, to $678 million in 2020 from $629 million in 2019.~~

Depreciation and amortization expenses increased by $54 million, or 10%, to $570 million in 2020 from $516 million in 2019. This increase was caused by an increase in the net book value of ships in service.

~~Goodwill~~ we recognized goodwill impairment charges of ~~$731 million recognized~~$2.1 billion during the ~~first quarter~~nine months ended August 31, 2020. In addition, we recognized ship impairment charges of $0.8 billion and $1.7 billion during the three and nine months ended August 31, 2020, ~~resulting from the effects of COVID-19 on our expected future operating cash flows.~~respectively.

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~~NAA Segment~~Key Performance Non-GAAP Financial Indicators

~~Operating costs~~The table below reconciles Adjusted net income (loss) and ~~expenses increased by $264 million, or 13%,~~Adjusted EBITDA to ~~$2.3 billion in 2020 from $2.0 billion in 2019.~~Net Income (loss) and Adjusted earnings per share to Earnings per share for the periods presented:

~~This increase was caused by:~~

•~~$172 million - impairment of ships, resulting from the effects of COVID-19 on our expected future operating cash flows~~

•~~$37 million - voyage related operating costs incurred in connection with disrupted voyages directly related to COVID-19~~

•~~$29 million - 1.4% capacity increase in ALBDs~~

•~~$22 million - increase in commissions, transportation and other expenses which includes expenses incurred as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$21 million - changes in fuel mix~~

•~~$11 million - higher cruise payroll and related expenses~~

~~These increases were partially offset by $18 million of lower fuel prices.~~

~~Selling and administrative expenses increased by $47 million, or 13%, to $400 million in 2020 from $353 million in 2019.~~

~~This increase was driven by:~~

•~~$18 million - increase in administrative expenses~~

•~~$14 million - increase in advertising and promotional expenses~~

Depreciation and amortization expenses increased by $36 million, or 11%, to $364 million in 2020 from $328 million in 2019. This increase was caused by an increase in the net book value of ships in service.

~~Goodwill impairment charges of $300 million recognized during the first quarter of 2020, resulting from the effects of COVID-19 on our expected future operating cash flows.~~

~~EA Segment~~

~~Operating costs and expenses increased by $241 million, or 22%, to $1.3 billion in 2020 from $1.1 billion in 2019.~~

~~This increase was caused by:~~

•~~$158 million - impairment of ships, resulting from the effects of COVID-19 on our expected future operating cash flows~~

•~~$67 million - 6.3% capacity increase in ALBDs~~

•~~$19 million - increase in commissions, transportation and other expenses which includes expenses incurred as a result of cancelled voyages and other voyage disruptions directly related to COVID-19~~

•~~$17 million - changes in fuel mix~~

•~~$15 million - higher cruise payroll and related expenses~~

~~These increases were partially offset by net favorable foreign currency translational impact of $25 million.~~

~~Selling and administrative expenses increased by $1 million, or 0.7%, to $207 million in 2020 from $205 million in 2019.~~

Depreciation and amortization expenses increased by $14 million, or 10%, to $166 million in 2020 from $152 million in 2019. This increase was caused by an increase in the net book value of ships in service.

~~Goodwill impairment charges of $431 million recognized during the first quarter of 2020, resulting from the effects of COVID-19 on our expected future operating cash flows.~~

~~Operating Income (Loss)~~


	Three Months Ended						Nine Months Ended
	August 31,						August 31,
(in millions, except per share data)	2020		2019		2020		2019
Net income (loss)
U.S. GAAP net income (loss)	$	(2,858)	$	1,780	$	(8,014)	$	2,567
(Gains) losses on ship sales and impairments	937		14		3,819		—
Restructuring expenses	3		—		42		—
Other	220		25		223		47
Adjusted net income (loss)	$	(1,699)	$	1,819	$	(3,930)	$	2,614
Interest expense, net of capitalized interest	310		52		547		157
Interest income	(3)		(8)		(15)		(16)
Income tax expense, net	(2)		47		(2)		56
Depreciation and amortization	551		548		1,698		1,607
Adjusted EBITDA	$	(844)	$	2,458	$	(1,702)	$	4,418
Weighted-average shares outstanding	775		691		727		693

Earnings per share
U.S. GAAP diluted earnings per share	$	(3.69)	$	2.58	$	(11.03)	$	3.71
(Gains) losses on ship sales and impairments	1.21		0.02		5.26		—
Restructuring expenses	—		—		0.06		—
Other	0.28		0.04		0.31		0.07
Adjusted earnings per share	$	(2.19)	$	2.63	$	(5.41)	$	3.77

Our consolidated operating income (loss) decreased by $1.1 billion to $(0.7) billion in 2020 from $0.4 billion in 2019. Our NAA segment’s operating income (loss) decreased by $583 million to $(0.2) billion in 2020 compared to $0.4 billion in 2019, and our EA segment’s operating income (loss) decreased by $662 million to $(569) million in 2020 from $93 million in 2019. These changes were primarily due to the reasons discussed above.

~~Table of Contents~~

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 (loss) 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.

We believe that gains and losses on ship sales, impairment charges, restructuring costs and other gains and ~~expenses~~losses 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 these items to be excluded from our net income (loss) and earnings per share and, accordingly, we present adjusted net income (loss) and adjusted earnings per share excluding these items.

Adjusted EBITDA is a non-GAAP measure, and we believe that the presentation of Adjusted EBITDA provides additional information to investors about our operating profitability adjusted for certain non-cash items and other gains and expenses that we believe are not part of our core operating business and are not an indication of our future earnings performance. Further, we believe that the presentation of Adjusted EBITDA provides additional information to investors about our ability to operate our business in compliance with the restrictions set forth in our debt agreements. We define Adjusted EBITDA as adjusted net income (loss) adjusted for (i) interest, (ii) taxes and (iii) depreciation and amortization. There are material limitations to using Adjusted EBITDA. Adjusted EBITDA does not take into account certain significant items that directly affect our net income (loss). These limitations are best addressed by considering the economic effects of the excluded items independently, and by considering Adjusted EBITDA in conjunction with net income (loss) as calculated in accordance with U.S. GAAP.

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 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 cost, which are travel agent commissions, 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 cruise costs excluding fuel~~ reflect gross cruise 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 passenger ticket revenues and net 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.

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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 currency” basis assuming the 2020 periods’ currency exchange rates have remained constant with the 2019 periods’ rates. This metric facilitates a comparative view for the changes in our business in an environment with fluctuating exchange rates.

~~Table of Contents~~

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

Three Months Ended February 29/28,
(dollars in millions, except yields) 2020 2020
Constant
Currency 2019
Passenger ticket revenues $ 3,234 $ 3,199
Onboard and other revenues 1,556 1,474
Less: Tour and other revenues (52) (29)
Gross cruise revenues 4,737 4,645
Less cruise costs
Commissions, transportation and other (766) (709)
Onboard and other (471) (467)
(1,238) (1,177)
Net cruise revenues $ 3,499 $ 3,537 $ 3,468
Net passenger ticket revenues $ 2,467 $ 2,497 $ 2,490
Net onboard and other revenues $ 1,032 $ 1,039 $ 978
ALBDs 21,977,115 21,977,115 21,299,196
Gross revenue yields $ 215.53 $ 218.06
% increase (decrease) (1.2) %
Net revenue yields $ 159.22 $ 160.93 $ 162.82
% increase (decrease) (2.2) % (1.2) %
Net passenger ticket revenue yields $ 112.26 $ 113.64 $ 116.90
% increase (decrease) (4.0) % (2.8) %
Net onboard and other revenue yields $ 46.96 $ 47.30 $ 45.92
% increase (decrease) 2.3 % 3.0 %

~~Table of Contents~~

~~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 %

~~Table of Contents~~

~~Adjusted 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

~~Net cruise revenues increased by $31 million, or 0.9%, to $3.5 billion in 2020 compared to $3.5 billion in 2019.~~

~~The increase was caused by a 3.2% capacity increase in ALBDs of $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:~~

•~~$41 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)~~

The 1.2% decrease in constant currency net revenue yields was due to a 2.8% decrease in constant currency net passenger ticket revenue yields, partially offset by a 3.0% increase in constant currency net onboard and other revenue yields.

This 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 5.8% decrease from our EA segment, offset by a 0.3% increase from our NAA segment.

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

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

~~The increase was caused by:~~

•~~$93 million - 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~~

•~~$69 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 increased by $16 million, or 4.2%, to $396 million in 2020 from $381 million in 2019.~~

~~This increase was caused by:~~

•~~$45 million - changes in fuel mix~~

•~~$12 million - 3.2% capacity increase in ALBDs~~

~~These increases were partially offset by:~~

•~~$30 million - lower fuel prices~~

~~Table of Contents~~

•~~$11 million - lower fuel consumption per ALBD~~

Liquidity, Financial Condition and Capital Resources

~~Due to the spread of COVID-19~~We have taken, and the effects of growing port restrictions around the world, we previously announced a voluntary pause of our global fleet cruise operations. Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of 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 ~~have a material negative impact on~~take, significant actions to preserve cash and secure additional financing to increase our ~~financial results and liquidity, and such negative impact may continue well beyond the containment of such outbreak.~~

~~As of February 29,~~liquidity. Since March 2020, we ~~had $3.0~~have raised $12.5 billion through a series of ~~immediate liquidity, which consisted of available cash and cash equivalents and available borrowings under our Existing Multicurrency Facility.~~ financing transactions through October 2, 2020. We have completed the following transactions:

•In addition, we had $2.8 billion from four committed export credit facilities that are available to fund the originally planned ship deliveries for the remainder of this year and $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~~Revolving Facility.

•In March 2020, we settled outstanding derivatives resulting in proceeds of $220 million.

•In April 2020, we completed (i) a public offering of 71,875,000 shares of Carnival Corporation’s common stock at a price per share of $8.00, resulting in net proceeds of $556 million and (ii) a private offering of $2.0 billion aggregate principal amount of 5.75% Convertible Notes.

•In April 2020, we completed a private offering of $4.0 billion aggregate principal amount of 11.5% 2023 Secured Notes that mature on April 1, 2023.

•In April 2020, we extended a $166 million euro-denominated bank loan, originally maturing in 2020, to March 2021.

•Certain of the counterparties to our export credit facilities have offered the Debt Holiday. We have entered into supplemental agreements or side letters for the Debt Holiday amendments to defer certain principal repayments otherwise due through March 31, 2021 through the creation of separate tranches of loans with repayments made over the following four years. We have also entered into supplemental agreements or side letters to waive the Financial Covenant for our funded export credit facilities through March 31, 2021, August 31, 2021, November 30, 2021 or December 31, 2021, as applicable. We will be required to comply with the Financial Covenant beginning with the next testing date of May 31, 2021, November 30, 2021, February 28, 2022 or February 28, 2022, respectively.

•Subsequent to August 31, 2020, we extended the Financial Covenant waivers for our funded export credit facilities through at least November 30, 2021 (with the next testing date of February 28, 2022) except that for three of our funded export credit facilities with Financial Covenant waivers through March 31, 2021 (with the next testing date of May 31, 2021) or August 31, 2021 (with the next testing date of November 30, 2021), with total aggregate indebtedness of $1.3 billion as of August 31, 2020, we are currently ~~due~~engaged in ~~September 2020.~~ discussions to extend the waivers for these facilities through November 30, 2021 (with the next testing date of February 28, 2022).

•We ~~borrowed under the Existing Multicurrency Facility in order to increase our cash position and preserve financial flexibility in light~~obtained waivers of the ~~impact~~Financial Covenant for certain of our bank loans through November 2021. We will be required to comply with the covenant beginning with the next testing date of February 28, 2022. We have also obtained waivers of the ~~COVID-19 outbreak on our results of operations and liquidity.~~covenant for the remaining applicable bank loans through their respective maturity dates.

•

~~We cannot assure you that our assumptions used to estimate~~To further enhance our liquidity, ~~requirements will be correct because~~as well as comply with the dividend restrictions contained in our recent debt agreements, we have ~~never previously experienced a complete cessation~~suspended the payment 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~~dividends on, and the repurchase of, the common stock of Carnival Corporation and the ordinary shares of Carnival ~~plc~~plc.

•In June 2020, we borrowed an aggregate principal amount of $2.8 billion in two tranches ($1.9 billion and ~~pursuing additional financing. Based~~€800 million), under the 2025 Secured Term Loan that matures on ~~these actions and assumptions regarding the impact of COVID-19, we have concluded that we will be able~~June 30, 2025. The U.S. dollar tranche bears interest at a rate per annum equal to ~~generate sufficient liquidity~~adjusted LIBOR (with a 1% floor) plus 7.5%. The euro tranche bears interest at a rate per annum equal to ~~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.~~EURIBOR (with a 0% floor) plus 7.5%.

•

~~At February 29,~~In July 2020, we ~~were~~extended a $337 million euro-denominated floating rate bank loan originally maturing 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~~2021 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 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 facilities, 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 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 debt facilities.”2022.

•

~~On April 1,~~July 2020, we ~~announced the pricing terms~~issued an aggregate principal amount of ~~offerings of $4.0~~$1.3 billion ~~of the~~in two tranches ($775 million and €425 million), under 2026 Secured Notes, ~~$1.75 billion~~that mature on February 1, 2026. The U.S. dollar tranche bears interest at a rate of ~~Convertible Notes and~~10.5% per year. The euro tranche bears interest at a ~~public~~rate of 10.1% per year.

•In August 2020, we completed a registered direct offering of ~~$500~~99.2 million shares of Carnival Corporation's common stock ~~in the Public Equity Offering. In connection with the Convertible Notes offering, we granted the initial purchasers~~at a price per share of $14.02 to a limited number of holders of the Convertible Notes ~~an option~~(the "Registered Direct Offering"). We used the proceeds from the Registered Direct Offering to ~~purchase on or before April 18, 2020, up to an additional $262.5~~repurchase $886 million aggregate principal amount of the 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.Notes and pay accrued interest thereon in privately negotiated transactions.

•

In August 2020, we issued an aggregate principal amount of $900 million of second-priority senior secured notes that mature on August 1, 2027. The 2027 Secured Notes ~~will pay~~bear interest ~~semi-annually on April 1 and October 1 of each year, beginning on October 1, 2020,~~ at a rate of ~~11.5%~~9.9% per year. ~~The Secured Notes will mature~~

•On September 15, 2020, we entered into an equity distribution agreement with sales agents pursuant to which we may, from time to time, offer and sell shares of Carnival Corporation's common stock having an aggregate offering price of up to $1.0 billion through the sales agents. We have filed a prospectus supplement with the Securities and Exchange Commission in connection with the ATM Offering on ~~April 1, 2023. The Convertible Notes will pay interest semi-annually on April 1~~September 15, 2020. As of October 2, 2020, we sold 23 million shares for net proceeds of $352 million and ~~October 1~~paid $4 million in compensation with respect of ~~each year, beginning on October 1,~~such sales of shares under the ATM Offering.

•In September 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~~we borrowed $610 million under an export credit facility due in semi-annual installments through 2032.

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~~amount~~

As of ~~Convertible Notes is equivalent to 100 shares~~August 31, 2020, we had a total of ~~common stock~~$8.2 billion of ~~the Corporation, which is equivalent to a conversion price of approximately $10 per share, subject to adjustment in certain circumstances.~~cash and cash equivalents.

~~The Public Equity Offering consists~~Our monthly average cash burn rate for the third quarter 2020 was $770 million, which was in line with the anticipated monthly cash burn rate. We expect the monthly average cash burn rate for the fourth quarter of ~~62,500,000 shares~~2020 to be approximately $530 million. This results in an average monthly burn rate for the second half of ~~common stock, par value $0.01 per share,~~the year of ~~Carnival Corporation, at a price~~$650 million, as previously disclosed. This rate includes approximately $250 million of ~~$8 per share.~~ongoing ship operating and administrative expenses, working capital changes (excluding changes in customer deposits), interest expense and committed capital expenditures (net of unfunded export credit facilities) and also excludes scheduled debt maturities as well as other cash collateral to be provided. We continue to explore opportunities to further reduce our monthly cash burn rate.

~~The Public Equity Offering,~~We estimate non-newbuild capital expenditures during the ~~Convertible Notes offering and the Secured Notes offering are expected~~fourth quarter of 2020 to be ~~completed~~approximately $130 million. Our scheduled debt maturities, for debt outstanding as of August 31, 2020, are as follows:

~~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.


(in billions)	4Q 2020		1Q 2021		2Q 2021			3Q 2021		4Q 2021
Principal Payments (a)	$	1.0	$	0.5	$	0.3	(b)	$	0.6	$	0.2	(b)

We had a working capital deficit of ~~$7.8 billion~~$916 million as of ~~February 29,~~August 31, 2020 compared to a working capital deficit of $7.1 billion as of November 30, 2019. The ~~increase~~decrease in working capital deficit was caused by an increase in cash and cash equivalents and a decrease in customer deposits, partially offset by increases in short-term ~~debt~~borrowings and ~~an increase in~~ the current portion of long-term ~~debt partially offset by an increase in cash and cash equivalents. We~~debt. Historically, 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 generally 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~~were $2.1 billion and $4.7 billion of customer deposits as of ~~February 29,~~August 31, 2020 and November 30, ~~2019.~~ 2019, respectively. We are providing flexibility to guests with bookings on sailings cancelled due to the pause by allowing guests to receive enhanced FCCs or elect to receive refunds in cash. We have paid and expect to continue to pay cash refunds of customer deposits with respect to a portion of these cancelled cruises. The amount of cash refunds to be paid may depend on the level of guest acceptance of FCCs and future cruise cancellations. We record a liability for FCCs to the extent we have received cash from guests with bookings on cancelled sailings. As of August 31, 2020, approximately 55% of guests affected have requested cash refunds.In addition, we have a relatively low-level of accounts receivable and limited investment in inventories. We expect that we will continue to have working capital deficits in the future.

Refer to Note 1 - “General, Liquidity and Management's Plans” of the consolidated financial statements for additional discussion regarding our liquidity.

Sources and Uses of Cash

Operating Activities

Our business ~~provided $916 million~~used $4.6 billion of net cash ~~from operations~~flows in operating activities during the ~~three~~nine months ended ~~February 29,~~August 31, 2020, a decrease of ~~$199 million,~~$9.1 billion, or ~~18%~~205%, compared to ~~$1.1~~$4.4 billion of net cash provided for the same period in 2019.

Investing Activities

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During the ~~three~~nine months ended ~~February 29,~~August 31, 2020, net cash used in investing activities was ~~$1.2~~$1.5 billion. This was ~~substantially due to~~caused by the following:

•Capital expenditures of ~~$861 million~~$1.0 billion for our ongoing new shipbuilding program

•Capital expenditures of ~~$399~~$855 million for ship improvements and replacements, information technology and buildings and improvements

•Proceeds from ~~sales~~sale of ships of ~~$226~~$271 million

•~~Purchase~~Proceeds of ~~minority interest~~$220 million from the settlement of ~~$83 million~~outstanding derivatives

During the ~~three~~nine months ended ~~February 28,~~August 31, 2019, net cash used in investing activities was ~~$2.1~~$3.3 billion. This was caused by the following:

•Capital expenditures of ~~$1.7~~$2.2 billion for our ongoing new shipbuilding program

•Capital expenditures of ~~$428 million~~$1.2 billion for ship improvements and replacements, information technology and buildings and improvements

•Proceeds from sale of ships of $15 million

Financing Activities

During the ~~three~~nine months ended ~~February 29,~~August 31, 2020, net cash provided by financing activities of ~~$1.1~~$13.7 billion was caused by the following:

•Net proceeds from short-term borrowings of ~~$779~~$3.1 billion in connection with our availability of, and needs for, cash at various times throughout the period, including proceeds of $3.0 billion from the Revolving Facility

•Repayments of $896 million of long-term debt, including the $222 million that was cash settled to repurchase a portion of the Convertible Notes

•Issuances of $11.5 billion of long-term debt, including net proceeds of $3.9 billion from the issuance of the 2023 Secured Notes, net proceeds of $2.6 billion from the issuance of the 2025 Secured Term Loan, net proceeds of $2.0 billion from the issuance of Convertible Notes, net proceeds of $1.2 billion from the issuance of the 2026 Secured Notes and net proceeds of $0.9 billion from the issuance of the 2027 Secured Notes.

•Payments of cash dividends of $689 million

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

•Net proceeds of $556 million from our public offering of Carnival Corporation common stock

•Net proceeds of $222 million from a registered direct offering of Carnival Corporation common stock used to repurchase a portion of the Convertible Notes

During the nine months ended August 31, 2019, net cash used in financing activities of $912 million was caused by the following:

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

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

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

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

•~~Purchases of $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~~$1.7 billion of long-term debt

•Payments of cash dividends of ~~$348 million~~$1.0 billion

•Purchases of ~~$274~~$472 million of Carnival Corporation common stock and Carnival plc ordinary shares in open market transactions under our Repurchase Program

~~Capital Expenditure and Capacity Forecast~~

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~~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

~~(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 %

~~(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

As of ~~February 29,~~August 31, 2020, we had ~~$3.0~~$8.2 billion of ~~immediate liquidity, which consisted of available~~ cash and cash ~~equivalents and available borrowings under our Existing Multicurrency Facility, which is scheduled to mature in 2024.~~equivalents. In addition, we had ~~$2.8~~$9.4 billion ~~from four committed~~of export credit facilities ~~that are available to fund the originally planned ship deliveries for the remainder of this year and $5.9 billion from committed export credit 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.~~ through 2024.


(in billions)	(in billions)	2020		2021		2022		2023		(in billions)	2020		2021		2022		2023		2024
Availability of committed future financing at February 29, 2020		$	2.8	$	2.7	$	2.3	$	0.9
Future export credit facilities at August 31, 2020 (a)										Future export credit facilities at August 31, 2020 (a)	$	1.5	$	2.0	$	3.4	$	1.9	$	0.6

~~Substantially all~~(a)Under the terms of these export credit facilities, we are required to comply with the Financial Covenant. We have entered into supplemental agreements or side letters to amend our agreements with respect to the Financial Covenant for our unfunded export credit facilities to waive compliance through August 31, 2021 (with the next testing date of November 30, 2021) for aggregate principal of $2.7 billion, through November 30, 2021 (with the next testing date of February 28, 2022) for aggregate principal of $1.2 billion (of which we borrowed $610 million to fund delivery of a ship in September 2020), and through December 31, 2021 (with the next testing date of February 28, 2022) for aggregate principal of $3.7 billion. For the remaining three unfunded export credit facilities with an aggregate principal of $1.8 billion, we are engaged in discussions with the counterparties to waive the Financial Covenant through March 31, 2021 (with the next testing date of May 31, 2021). Simultaneously with obtaining the initial waivers for these three unfunded export credit facilities, we have also requested extension of waivers for these facilities through November 30, 2021 (with the next testing date of February 28, 2022).

Many of our debt agreements contain various other financial covenants, asincluding those described in Note 3 - “Debt” and in Note 5 - ~~“Unsecured Debt”~~“Deb” in the annual consolidated financial statements, which are included within our Form 10-K. At ~~February 29,~~August 31, 2020, we were in compliance with ~~our~~the applicable debt covenants.

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~~

~~As of February 29, 2020, based on a 10% change in all currency exchange rates, we estimate that our adjusted earnings per share would change by the following:~~

•~~$0.02 per share for the 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:


	~~February 29,~~August 31, 2020
Fixed rate	2144	%
EUR fixed rate	3713	%
Floating rate	1025	%
EUR floating rate	2514	%
GBP floating rate	74	%

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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 ~~February 29,~~August 31, 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 ~~February 29,~~August 31, 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~~In addition to the proceeding described below, the legal proceedings described in Note 4 – “Contingencies and Commitments” of our consolidated financial statements, including those described under “COVID-19 Actions,” are incorporated in this “Legal Proceedings” section 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.reference.

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 these discharges. ~~We believe the ultimate outcome of any penalty will not have~~The parties are negotiating a ~~material impact on our consolidated financial statements.~~final settlement.

InAs previously disclosed, in June and August of 2018, Holland America Line received four Notices of Violation from the Alaska Department of Environmental Conservation (“ADEC”) alleging that four ships violated the Alaska state visible emissions standards while docked in Skagway, Haines and Ketchikan. On ~~October 17, 2018,~~July 8, 2020, ADEC waived opacity penalties for two vessels and proposed a settlement of $112,500 to resolve all outstanding penalties, which Holland America Line ~~received an offer to settle the Notices of Violation and~~accepted 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~~.July 31, 2020.

Item 1A. Risk Factors.

The risk factors in this Form 10-Q below should be carefully considered, including the risk factors discussed in “Risk Factors” and other risks discussed in our Form 10-K, our Form 10-Q for the quarters ended February 29, 2020 and May 31, 2020 and other filings with the SEC since the date of the Form 10-K. These risks could materially and adversely affect our results, operations, outlooks, plans, goals, growth, reputation, cash flows, liquidity, and stock price. Our business also could be affected by risks that we are not presently aware of or that we currently consider immaterial to our operations.

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~~guest cruise operations in mid-March 2020 across all ~~brands and~~brands. Although we have begun the resumption of limited guest operations in September 2020, such partial 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 other regulatory authorities, 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~~paused our guest cruise operations, provided air transportation to return our passengers to their home destinations, repatriated shipboard team members and ~~assist~~assisted some of our crew that ~~is, or will be upon docking,~~were 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~~protocols to our ~~ships.~~ships, as well as prepare for the continued resumption of guest operations. 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~~may continue to receive, lawsuits, ~~from passengers aboard the Grand Princess voyage in February 2020. We may receive additional lawsuits~~other governmental investigations and other actions stemming from COVID-19. We cannot predict the quantum or outcome of any such proceedings, some of which could result in the imposition of civil and criminal penalties in the future, 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

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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,~~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.

In connection with our capacity optimization strategy, we have accelerated the removal of ships from our fleet in 2020 which were previously expected to be sold over the ensuing years. We have sold, expect to sell or have agreements for the disposal of various vessels. Some of these agreements or preliminary agreements for the disposal of vessels are for recycling. When we choose to dispose of a ~~total of 16 cruise ships scheduled~~ship, there can be no assurance that there will be a viable buyer to ~~be delivered through 2025, including four during the remainder of fiscal 2020. We believe the~~purchase it at a price that exceeds our net book value, which could result in ship impairment charges and losses on ship disposals.

The effects of COVID-19 on the operations of 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~~the timing of our ~~ships will begin~~complete return to ~~sail again~~service and when various ports will reopen to our ships. If we are delayed in recommencing guest cruise operations or there is a future pause in the resumption of limited guest operations, it could negatively impact our liquidity. Moreover, even ~~once~~as 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.~~vendors, counterparties and joint ventures. We may be adversely impacted as a result of the adverse impact our partners, counterparties and joint ventures suffer.

We have never previously experienced a complete cessation of our ~~cruising~~guest cruise 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 current partial 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 our ability to hire and the amounts we must pay our 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~~quarter and 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~~have raised, and expect to be required to further raise, significant additional capital, ~~and our~~including additional equity capital. 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~~COVID-19's effects on our liquidity, since March ~~and April~~ 2020, ~~Moody's~~Moody’s and S&P Global have downgraded our ~~long-term issuer and senior unsecured debt ratings. In addition, our long-term~~credit ratings ~~were placed on review for further downgrade by both rating agencies.~~to be below investment grade. Our current short-term commercial paper credit ~~ratings were downgraded and also placed on review for further downgrade.~~ rating prevents us from issuing additional commercial paper.

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

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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~~physical 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 available to us on terms that are favorable ~~to us~~or at all.

If any government provides or 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, incurrence of additional indebtedness and other similar restrictions until the aid is repaid or redeemed in full. In addition, the government may change the terms of the assistance or the eligibility requirements. We cannot assure you that any such government disaster relief assistance ~~if passed,~~ will not significantly limit our corporate activities or, even if we qualify for a program, will be available to us on terms that are favorable ~~to us~~ or at all. ~~Such~~For example, we initially qualified for a government commercial paper program providing over $700 million of available liquidity, and in September 2020, the relevant government agency paused our access to further drawings, and the ability to roll over existing drawings, under the government commercial paper program. Any restrictions, terms and ~~terms~~inability to access government disaster relief assistance could adversely impact our business, operations, liquidity 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.~~financial condition.

•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 have important negative consequences for us. 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. The instruments governing our existing indebtedness do not prevent us from incurring liabilities that do not constitute “Indebtedness” as defined therein. 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

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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~~company.

~~Our Existing Multicurrency Facility, the indenture governing the Secured Notes and certain~~Certain of our ~~other~~ debt instruments limit our flexibility in operating our business. For example, ~~the indenture governing the Secured Notes will restrict or~~some of our debt instruments 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 certain 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~~are 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, many of our debt agreements contain one or more financial covenants that require us to maintain minimum debt service coverage, maintain minimum shareholders equity and/or limit our debt to capital ratio. Our ability to comply with ~~these~~our debt covenants, including the financial maintenance covenants ~~relating to our consolidated net interest,~~described above, 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, if any, 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~~Refer to “Liquidity, Financial Condition 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.Capital Resources.”

•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.~~United Kingdom's Financial Conduct Authority, which regulates the London Interbank Offered Rate (“LIBOR”), announced that it ~~intends~~will no longer persuade or compel banks to ~~stop collecting~~submit LIBOR rates ~~from banks~~after 2021. It is unclear whether or not, at that time, LIBOR will cease to exist and a satisfactory replacement rate developed or if new methods of calculating LIBOR will be established such that it continues to exist after 2021. The ~~announcement indicates~~U.S. Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of, among other entities, large U.S. financial institutions, is considering replacing U.S. dollar LIBOR with a new index that measures the cost of borrowing cash overnight, backed by U.S. Treasury securities (“SOFR”). SOFR is observed and backward-looking, which stands in contrast with LIBOR ~~will~~under the current methodology, which is an estimated forward-looking rate and relies, to some degree, on the expert judgment of submitting panel members. Whether or not ~~continue~~SOFR attains market traction as a LIBOR replacement rate remains in question.

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As such, the future of LIBOR at this time is uncertain. If LIBOR ceases to exist, the level of interest payments on the ~~current basis. We are unable to predict~~portion of our indebtedness that bears interest at variable rates would be affected, which may adversely impact the ~~effect~~amount 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. Asour interest payments under such ~~LIBOR-related changes could affect our overall results of operations and financial condition.~~debt.

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, for which we have waivers for the period through March 31, 2021 with the next testing date of May 31, 2021.

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~~minimum debt service 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,~~August 31, 2020, we have ~~paused~~entered into supplemental agreements or side letters to amend our ~~global fleet cruise operations~~agreements with respect to this Financial Covenant to:

•Waive compliance for all of our funded export credit facilities through March 31, 2021, August 31, 2021 or December 31, 2021, as applicable.

•Waive compliance through November 30, 2021 for certain of our bank loans. We will be required to comply beginning with the next testing date of February 28, 2022.

•Waive compliance for the remaining applicable bank loans through their respective maturity dates.

At August 31, 2020, we were in compliance with the applicable debt covenants.

Subsequent to August 31, 2020, we extended the Financial Covenant waivers for our funded export credit facilities through at least November 30, 2021 (with the next testing date of February 28, 2022) except that for three of our funded export credit facilities with Financial Covenant waivers through March 31, 2021 (with the next testing date of May 31, 2021) or August 31, 2021 (with the next testing date of November 30, 2021), with total aggregate indebtedness of $1.3 billion as of August 31, 2020, we are currently engaged in discussions to extend the waivers for these facilities through November 30, 2021 (with the next testing date of February 28, 2022).

In addition, we have entered into supplemental agreements or side letters to amend our agreements with respect to the Financial Covenant for our unfunded export credit facilities to waive compliance through August 31, 2021 (with the next testing date of November 30, 2021) for aggregate principal of $2.7 billion, through November 30, 2021 (with the next testing date of February 28, 2022) for aggregate principal of $1.2 billion (of which we borrowed $610 million to fund delivery of a ship in September 2020), and through December 31, 2021 (with the next testing date of February 28, 2022) for aggregate principal of $3.7 billion. For the remaining three unfunded export credit facilities with an aggregate principal of $1.8 billion, we are engaged in discussions with the counterparties to waive the Financial Covenant through March 31, 2021 (with the next testing date of May 31, 2021). Simultaneously with obtaining the initial waivers for these three unfunded export credit facilities, we have also requested extension of waivers for these facilities through November 30, 2021 (with the next testing date of February 28, 2022).

Although highly unlikely, if the covenant waiver for any unfunded facility for which we have not yet obtained a waiver is not obtained, the lender under that facility could terminate it if we ~~are unable~~did not comply with the Financial Covenant for any fiscal quarter ending on or after August 31, 2020.

Even though we have or expect to ~~re-commence normal operations~~have waivers in ~~the near-term,~~place with respect to this covenant, we may be out of compliance with ~~our interest coverage ratio covenant as~~the Financial Covenant following March 31, 2021 with the next testing date of ~~the end of our third fiscal quarter~~May 31, 2021 or in future ~~periods.~~periods for certain agreements because of the pause in our guest operations. If we expected to be out of compliance, we ~~expect to~~would again seek waivers from the lenders under ~~these numerous~~the applicable facilities prior to any covenant violation.

~~Any covenant waiver~~Covenant waivers have led and may continue to 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

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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~~•The covenants in certain of our debt facilities may require us to secure those facilities in the future.

Certain of our debt facilities contain provisions which may require that ~~affect~~we provide a security interest in certain assets. In certain of our debt facilities, there is a requirement that if the credit rating of our senior indebtedness should fall below investment grade (which occurred on June 24, 2020) and at such time we have granted liens or security interests in respect of indebtedness in an amount exceeding 25% of our total assets (excluding for these purposes the value of any intangible assets) as shown in our most recent Consolidated Balance Sheet, then we will be required to provide a first-priority security interest in certain designated assets. In addition, under our export credit facilities, there is a requirement that if a security interest or lien is granted in respect of a vessel to secure borrowed money under certain other debt facilities, then a first-priority security interest will be required to be provided over certain designated vessels.

If the events described above were to occur, we may be unable to comply with this requirement and expect to seek waivers from the lenders under the relevant facilities. Any such 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 give additional lender protections under these facilities, including the granting of security interests in collateral, will be limited by the restrictions in our indebtedness and security interest we have already granted. If we were not able to obtain a waiver, the occurrence of such events may result in an event of default under these facilities and other debt facilities that contain cross default provisions that would be triggered.

We have been and may continue to be impacted by breaches in data security and lapses in data privacy, which occur from time to time. These can vary in scope and intent from economically motivated attacks to malicious attacks intended to disrupt or compromise our shoreside and shipboard operations by targeting our key operating systems. Breach or circumvention of our systems or the systems of third parties, including by ransomware or other attacks, results in disruptions to our business operations; unauthorized access to (or the loss of company access to) competitively sensitive, confidential or other critical data (including sensitive financial, medical or other personal or business information) or systems; loss of customers; financial losses; regulatory enforcement actions and fines; litigation and misuse or corruption of critical data and proprietary information, any of which could be material.

On August 15, 2020, we detected a ransomware attack and unauthorized access to our information technology systems. We engaged a major cybersecurity firm to investigate the matter and notified law enforcement and regulators of the incident. While the investigation is ongoing, early indications are that the unauthorized third-party gained access to certain personal information relating to some guests, employees and crew for some of our operations. There is currently no indication of any misuse of this information. While at this time we do not believe that this information will be misused going forward or that this incident will have a material adverse effect on our business, operations or financial results, ~~are discussed in “Item 1A. Risk Factors,” included in the Form 10-K. We wish~~no assurances can be given and further we may be subject to ~~caution the reader~~future attacks or incidents 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.have such a material adverse effect.

Our principal offices, information technology operations and system networks may be impacted by actual or threatened natural

disasters (for example, hurricanes, earthquakes, floods, fires, tornadoes, tsunamis, typhoons and volcanic eruptions) or other

disruptive events. Our maritime and/or shoreside operations, including our ability to manage our inventory of cabins held for

sale and set pricing, control costs, and serve our guests, depends on the reliability of our information technology operations and

system networks as well as our ability to refine and update to more advanced systems and technologies.

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

A. Repurchase Program

Under a share repurchase program effective 2004, we ~~are~~had been 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~~To enhance our liquidity and ~~may be discontinued by~~comply with restrictions in our recent financing transactions, on June 15, 2020, the 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.~~

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

~~During the three months ended 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)
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~~18.2 million ordinary shares and is valid until the earlier of the conclusion of the Carnival plc ~~2020~~2021 annual general meeting or ~~July 15, 2020. Subsequent to quarter end, to~~October 5, 2021. To enhance our liquidity ~~as well as~~and comply with restrictions ~~anticipated~~ in ~~future~~our recent financing transactions, we have ~~suspended share repurchases.~~

terminated the Repurchase Program.

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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
X
10.2
Form of Management Incentive Tied Restricted Share Unit Agreement for the Carnival plc 2014 Employee Share Plan
X
10.3
Form of Shareholder Equity Alignment Restricted Stock Unit Agreement for the Carnival Corporation 2011 Stock Plan
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

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

Second Supplemental Indenture dated as of July 8, 2020 among Carnival Corporation as issuer, Carnival plc, the Subsidiary Guarantors and U.S. Bank, National Association, as trustee, relating to the 5.75% Convertible Senior Notes due 2023

10.2

Indenture dated as of July 20, 2020 among Carnival Corporation as issuer, Carnival plc, the other Guarantors party thereto and U.S. Bank, National Association, as trustee, security agent, principal paying agent, transfer agent and registrar, relating to the 10.500% Second-Priority Senior Secured Notes due 2026 and the 10.125% Second-Priority Senior Secured Notes due 2026 **

10.3

Indenture dated as of August 18, 2020 among Carnival Corporation as issuer, Carnival plc, the other Guarantors party thereto and U.S. Bank, National Association, as trustee, security agent, principal paying agent, transfer agent and registrar, relating to the 9.875% Second-Priority Senior Secured Notes due 2027 **

10.4

Form of Special Performance-Based Restricted Stock Unit Agreement for the Carnival Corporation 2020 Stock Plan

10.5

Form of Special Performance-Based Restricted Share Unit Agreement for the Carnival plc 2014 Employee Share Plan

10.6

For m of Retention Time-Based Restricted Stock Unit Agreement for the Carnival Corporation 2020 Stock Plan

10.7

Form of Special Time-Based Restricted Share Unit Agreement for the Carnival plc 2014 Employee Share 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

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INDEX TO EXHIBITS

Incorporated by Reference

Filed/
Furnished
Herewith

Exhibit

Number

Exhibit Description

Form

Exhibit

Filing
Date

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

Interactive Data File

101

The consolidated financial statements from Carnival Corporation & plc’s joint Quarterly Report on Form 10-Q for the quarter ended ~~February 29,~~August 31, 2020, as filed with the Securities and Exchange Commission on ~~April 3,~~October 8, 2020, formatted in Inline XBRL, are as follows:

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

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

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

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

(v) the Consolidated Statements of Shareholders’ Equity for the three and nine months ended ~~February 29/28,~~August 31, 2020 and 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 ~~February 29,~~August 31, 2020, as filed with the Securities and Exchange Commission on ~~April 3,~~October 8, 2020, formatted in Inline XBRL (included as Exhibit 101)

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*			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:

/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: ~~April 3,~~October 8, 2020

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	Three Months Ended February 29/28,
(dollars in millions, except yields)	2020			2020 Constant Currency			2019
Passenger ticket revenues	$	3,234					$	3,199
Onboard and other revenues	1,556						1,474
Less: Tour and other revenues	(52)						(29)
Gross cruise revenues	4,737						4,645
Less cruise costs
Commissions, transportation and other	(766)						(709)
Onboard and other	(471)						(467)
	(1,238)						(1,177)
Net cruise revenues	$	3,499		$	3,537		$	3,468

Net passenger ticket revenues	$	2,467		$	2,497		$	2,490
Net onboard and other revenues	$	1,032		$	1,039		$	978

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

Gross revenue yields	$	215.53					$	218.06
% increase (decrease)	(1.2)		%
Net revenue yields	$	159.22		$	160.93		$	162.82
% increase (decrease)	(2.2)		%	(1.2)		%
Net passenger ticket revenue yields	$	112.26		$	113.64		$	116.90
% increase (decrease)	(4.0)		%	(2.8)		%
Net onboard and other revenue yields	$	46.96		$	47.30		$	45.92
% increase (decrease)	2.3		%	3.0		%


	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		%


	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


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