AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1996JANUARY 21, 1998
REGISTRATION NO. 333-13997333-43269
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CARNIVAL CORPORATION
(Exact name of registrant as specified in its charter)
REPUBLIC OF PANAMA 59-1562976
(State or other jurisdiction of (I.R.S. Employer
of incorporation or organization) Identification Number)No.)
3655 N.W. 87TH AVENUE
MIAMI, FLORIDA 33178-2428
(305) 599-2600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
ARNALDO PEREZ, ESQ.
GENERAL COUNSEL
CARNIVAL CORPORATION
3655 N.W. 87TH AVENUE
MIAMI, FLORIDA 33178-2428
(305) 599-2600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
JAMES M. DUBIN, ESQ. ROBERT S. RISOLEO, ESQ.
PAUL, WEISS, RIFKIND, WHARTON & GARRISON SULLIVAN & CROMWELL
GARRISON
1285 AVENUE OF THE AMERICAS 125 BROAD STREET
NEW YORK, NEW YORK 10019-6064 NEW YORK, NEW YORK 10004
(212) 373-3000 (212) 558-4000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicableFrom time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Formform are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Formform are to be offered on
a delayed or continuous basis pursuant to Rule 415 underof the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. / //X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:offering. / /
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering:offering. / /
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:box. / /
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
Pursuant to Rule 429 under the Securities Act of 1933, as amended, this
Registration Statement relates to $730,000,000 principal amount of securities
registered hereby and to the remaining unsold $70,000,000 principal amount of
such securities previously registered by the Registrant under its Registration
Statement on Form S-3 (File No. 33-50947).
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SUBJECT TO COMPLETION, DATED OCTOBER 16, 1996
20,300,000 SHARES
[LOGO]$800,000,000
CARNIVAL CORPORATION
CLASS A COMMON STOCK, (PAR VALUE $.01 PER SHARE)
------------------------
OfDEBT SECURITIES AND WARRANTS
Carnival Corporation (the "Company") may offer from time to time in one or
more series up to $800,000,000 aggregate public offering price (or its
equivalent (based on the 20,300,000applicable exchange rate at the time of sale) if issued
with principal amounts denominated in one or more foreign currencies or currency
units as shall be designated by the Company) of (i) shares of its Class A Common
Stock ("Class A Common Stock"), (ii) its debt securities ("Debt Securities"),
consisting of notes, debentures or other evidences of indebtedness denominated
in United States dollars or any other currency, including composite currencies
such as the European Currency Unit, and (iii) warrants to purchase Class A
Common Stock or Debt Securities or any combination thereof or to buy and sell
government debt securities, foreign currencies, currency units or units of a
currency index or basket, units of a stock index or basket or a commodity or
commodity index ("Warrants") on terms to be determined at or prior to the time
of sale. The Class A Common Stock, Debt Securities and Warrants are collectively
referred to as the "Securities."
The Securities may be offered independently or together for sale. This
Prospectus will be supplemented by one or more prospectus supplements (each, a
"Prospectus Supplement") which will set forth,
(i) in the case of Class A Common Stock, offered, 16,240,000the number of shares are being offered hereby inand the United States and 4,060,000 shares are
being offered in a concurrent international offering outside the United States.
The initial
public offering price; (ii) in the case of Debt Securities, the specific
designation, aggregate principal amount, ranking as senior debt ("Senior
Securities") or subordinated debt ("Subordinated Securities"), purchase price,
maturity, rate (or method of calculation thereof) and the aggregate underwriting discount per
share will be identical for both offerings. See "Underwriting".
Alltime of payment of
interest, if any, any conversion or exchange provisions, any redemption
provisions, any subordination provisions and any other specific terms of the
21,600,000 sharesDebt Securities offered hereby not set forth herein under the caption
"Description of Debt Securities" in this Prospectus, and any listing thereof on
a securities exchange; and, (iii) in the case of the Warrants, the duration,
purchase price, exercise price, detachability and any other specific terms not
set forth herein of such Warrants.
The Class A Common Stock offered are being sold
by certain shareholders of the Company. See "Selling Shareholders". The Company
will not receive any of the proceeds from the sale of the shares being sold by
the Selling Shareholders.
The last reported sale price of the Class A Common Stock, which is quoted
under the symbol "CCL,"listed on the New York Stock Exchange on October 15, 1996 was
$30.875 per share. See "Price Range of("NYSE"),
under the symbol "CCL." Any Class A Common Stock".Stock sold pursuant to a Prospectus
Supplement will be listed on the NYSE, subject to official notice of issuance.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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PROCEEDS TO
INITIAL PUBLIC UNDERWRITING SELLING
OFFERING PRICE DISCOUNT(1) SHAREHOLDERS(2)
---------------- -------------- ----------------
Per Share.................................................... $ $ $
Total(3)..................................................... $ $ $
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(1) The Company may sell the Securities to or through underwriters, and also may
sell the Selling Shareholders have agreedSecurities directly to indemnifyother purchasers or through agents. See "Plan of
Distribution." In addition, the Underwriters against certain liabilities, including liabilities underSecurities may be sold to dealers at the
applicable price to the public set forth in the Prospectus Supplement relating
to the Securities who later resell to investors. Such dealers may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933.
(2) Before deducting estimated expenses1933, as amended.
If any agents of $ payable by the Company, or any underwriters, are involved in the sale of
any Securities, the names of such agents or underwriters and $ payable byany applicable
commissions or discounts are set forth in the Selling Shareholders.
(3) One of the Selling Shareholders has granted the U.S. Underwriters an option
for 30 days to purchase up to an additional 2,436,000 shares at the initial
public offering price per share, less the underwriting discount, solely to
cover over-allotments. Additionally, one of the Selling Shareholders has
granted the International Underwriters a similar option with respect to an
additional 609,000 shares as part of the concurrent international offering.
If such options are exercisedaccompanying Prospectus
Supplement.
Any statement contained in full, the total initial public offering
price, underwriting discount and proceeds to Selling Shareholdersthis Prospectus will be $ , $ and $ , respectively. See
"Underwriting".
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The shares offered hereby are offered severallydeemed to be modified or
superseded by any inconsistent statement contained in the U.S. Underwriters,
as specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that
certificates for the shares will be ready for delivery in New York, New York, on
or about , 1996, against payment therefor in immediately
available funds.
GOLDMAN, SACHS & CO.
BEAR, STEARNS & CO. INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
------------------------accompanying
Prospectus Supplement.
The date of this Prospectus is , 1996.January 21, 1998.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
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AVAILABLE INFORMATION
Carnival Corporation (the "Company")The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports proxy materials and other information with the Securities and Exchange
Commission (the "Commission"). Such
reports,Reports, proxy materialsstatements and other information
concerningfiled by the Company andwith the Registration Statement (as defined below)Commission can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549 or at its Regional Offices located at SuiteRoom
1400, 500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade Center,
13th Floor, New York, New York 10048. Copies10048, and copies of such material can be
obtained by mail from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 at prescribed rates. The Commission maintains a web siteSuch materials can
also be inspected on the World Wide
Web that contains reports, proxy and other information regarding issuers that
file electronically with the Commission. The address of such site is
"http:Internet at http://www.sec.gov".www.sec.gov. In addition, reports,
proxy statements and other information concerning the Company can also be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005, on which the Company's Class A Common Stock par value $.01 per share (the "Class A
Common Stock"), and 4 1/2% Convertible Subordinated Notes Due July 1, 1997 (the
"Convertible Notes") areis listed.
The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), with respect to the shares of Class A Common StockSecurities offered hereby (the
"Shares").hereby. This Prospectus doesand any
applicable Prospectus Supplement do not contain all the information set forth in
the Registration Statement, certain parts of which have been omitted in accordance
withpursuant to
the rules and regulations of the Commission. For furtherThe information reference is hereby made toso omitted may be
obtained from the Registration Statement includingCommission's principal office in Washington, D.C. upon payment
of the exhibits
filed as a part thereof and otherwise incorporated therein. Statements made in
this Prospectus as tofees prescribed by the contents of any documents referred to are not
necessarily complete, and in each instance reference is made to such exhibit for
a more complete description and each such statement is qualified in its entirety
by such reference.Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended November
30, 19951996, the Company's Current Report on Form 8-K filed with the Commission on
June 26, 1997 and the Company's Quarterly Reports on Form 10-Q for the three
months ended February 28, 1997, May 31, 1997 and August 31, 1997, filed with the
Commission (File No. 1-9610) pursuant to the Exchange Act, the Company's Quarterly Reports on Form 10-Q for the quarters ended
February 28, 1996, May 31, 1996 and August 31, 1996, the Company's Current
Report on Form 8-K dated April 23, 1996 and the description of the Company's
Class A Common Stock contained in its Registration Statement on Form 8-A dated
October 31, 1991 filed with the Commission pursuant to Section 12(d) of the
Exchange Act, including any amendments or reports filed for the purpose of
updating such description, are incorporated
herein by reference.
All other documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the SharesSecurities made hereby shall be
deemed incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemeddeeemed to be incorporated herein by reference, or contained in
this Prospectus, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus hasand any Prospectus Supplement have been delivered, upon written or
oral request of such person, a copy (without exhibits other than exhibits
specifically incorporated by reference) of any or all documents incorporated by
reference into this Prospectus. Requests for such copies should be directed to
Investor Relations, Carnival Corporation, 3655 N.W. 87th Avenue, Miami, Florida
33178-2428; telephone number (305) 599-2600.
2
PROSPECTUS SUMMARY
The following is a summary of certain information contained in this
Prospectus. This summary is not intended to be complete and should be read in
conjunction with, and is qualified in its entirety by, the more detailed
information and financial statements appearing elsewhere in this Prospectus or
incorporated herein by reference. Unless indicated otherwise, the information
contained in this Prospectus assumes the Underwriters' over-allotment options
are not exercised. For all periods, the information contained in this Prospectus
reflects a two for one stock split of the Company's Common Stock that was
effective on November 30, 1994. Investors should carefully consider the
information set forth in "Certain Considerations" before making any decision to
invest in the Class A Common Stock. Certain Statements in this Prospectus
(including this Prospectus Summary) constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). See "Special Note Regarding Forward-Looking Statements."
THE COMPANY
Carnival CorporationThe Company is the world's largest multiple-night cruise company based on
the number of passengers carried, revenues generated and revenues generated.available capacity. The
Company offers a broad range of cruise products, serving the contemporary cruise
market through Carnival Cruise Lines, the premium market through Holland America
Line and the luxury market through Windstar Cruises and the Company's joint venture,
Seabourn Cruise Line.Cruises. In total, the Company owns
and operates 2122 cruise ships
(not including three ships owned by the Seabourn joint venture), with an aggregate capacity of 28,19531,078 passengers
based on two passengers per cabin. The teneleven Carnival Cruise Lines ships have
an aggregate capacity of 17,69020,332 passengers with itineraries primarily in the
Caribbean, the Mexican Riviera and Alaska. The eight Holland America Line ships have
an aggregate capacity of 10,06110,302 passengers, with itineraries in the Caribbean,
the Mediterranean and Alaska and through the Panama Canal, as well as other
worldwide itineraries. The three Windstar ships have an aggregate capacity of
444 passengers with itineraries in the Caribbean, the South Pacific,Costa Rica, the Mediterranean
and the Far East. The Company also owns equity interests in Seabourn Cruise
Line, Costa Cruises and Airtours plc, an integrated leisure travel group. The
three Seabourn ships have an aggregate capacity of 612 passengers with
itineraries in the Caribbean, the Baltic, the Mediterranean and the Far East.
The seven Costa Cruises ships have an aggregate capacity of 7,710 passengers
with itineraries in the Mediterranean, Northern Europe, the Carribean and South
America. Airtours owns tour operators, charter airlines, travel agencies, three
cruise ships and holiday hotels.
The Company has signed agreements with a Finnish shipyard providing for the
construction of two additional SuperLiners, each with a capacity of 2,040
passengers, for Carnival Cruise Lines with delivery expected in MarchFebruary 1998
and November 1998. The Company also has agreements with an Italian shipyard for
the construction of two cruise ships, each with a capacity of 2,640 passengers,
for Carnival Cruise Lines with delivery expected in October 1996June 1999 and mid-1999July 2000 and
for the construction of one cruise ship with a capacity of 1,320 passengers and
two cruise ships each with a capacity of 1,440 passengers for
Holland America Line, with delivery expected in October 1997, FebruaryMay 1999 and September 1999,
respectively. As a result of this shipbuilding program and planned ship sales
and retirements, the Company currently expects its passenger capacity to
increase by 11,463 to 39,658 in mid-1999.December 1999.
The Company also operates a tour business, through Holland America
Line-Westours Inc. ("Holland America Westours"), which markets sightseeing tours
both separately and as a part of Holland America Line cruise/tour packages.
Holland America Westours operates 1614 hotels in Alaska and the Canadian Yukon,
two luxury day-boats offering tours to the glaciers of Alaska and the Yukon
River, over 290 motor coaches used for sightseeing and charters in the states of
Washington and Alaska and in the Canadian Rockies and 1312 private domed rail cars
which are run on the Alaskan railroad between Anchorage and Fairbanks.
3
In April 1996, the Company acquired a 29.5% interest in Airtours plc
("Airtours") for approximately $307 million. Airtours is a leisure travel
company publicly traded on the London Stock Exchange and provides air inclusive
packaged holidays to the British, Scandinavian and North American markets.
Airtours provides holidays to approximately 4.4 million people per year and owns
or operates 41 hotels, 3 cruise ships and 31 aircraft. The Company's investment
in Airtours significantly broadens the Company's geographic reach, providing
enhanced access to the important European and Canadian markets. The investment
also serves to expand the Company's scope of operations into other segments of
the leisure travel industry.
In September 1996, the Company entered into a joint venture agreement with
Hyundai Merchant Marine Co., Ltd. ("HMM") to develop the Asian cruise vacation
market. Under the joint venture agreement, the Company and HMM will each make a
capital contribution of $10 million to the new joint venture which intends to
create a cruise product specifically tailored to the desires and tastes of the
growing middle-class market of Asian vacation travelers. The Company has also
entered into an agreement with the joint venture to sell Carnival Cruise Lines'
cruise ship Tropicale to the joint venture, subject to the immediate charter
back of the vessel to the Company. A charter agreement between the Company and
the joint venture will allow the Company to operate the Tropicale until the
joint venture begins its cruise operations, which is currently expected to occur
in the spring of 1998. The closing of the joint venture is subject to the
consummation of certain ancillary agreements, which are expected to be entered
into in the near future.
The Company was incorporated under the laws of the Republic of Panama in
November 1974. The Company's executive offices are located at 3655 N.W. 87th
Avenue, Miami, Florida 33178-2428, telephone number (305) 599-2600. The
Company's registered office in Panama is located at 10 Elvira Mendez Street,
Interseco Building, Panama, Republic of Panama.
4
THE OFFERINGS
Class A Common Stock offered by the Selling Shareholders(1):
U.S. Offering........................................... 16,240,000 shares
International Offering.................................. 4,060,000 shares
Total................................................... 20,300,000 shares
Class A Common Stock
outstanding (2)....................................... 239,376,865 shares of Class A Common Stock. In addition,
54,957,142 shares of the Company's Class B Common Stock,
par value $.01 per share (the "Class B Common Stock"
and, collectively with the Class A Common Stock, the
"Common Stock"), are outstanding.
NYSE Symbol............................................. CCL
Use of Proceeds......................................... The Company will not receive any proceeds from the sale
of the Shares being sold by the Selling Shareholders (as
defined below). See "Use of Proceeds".
Selling Shareholders.................................... The selling shareholders are Ted Arison, The Arison
Foundation, Inc. and The Royal Bank of Scotland Trust
Company as trustee for the Ted Arison Charitable Trust
(collectively, the "Selling Shareholders"). Ted Arison
is selling his Shares for certain estate planning and
other related purposes.
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(1) Ted Arison has granted the U.S. and International Underwriters
over-allotment options to purchase a total of 3,045,000 additional shares of
Class A Common Stock.
(2) Excludes approximately 2,545,140 shares of Class A Common Stock subject to
outstanding options granted under the Company's stock option plans and
approximately 2,599,954 shares that are reserved for issuance upon
conversion of the Convertible Notes.
5
SUMMARY FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS ENDED AUGUST 31,
YEAR ENDED NOVEMBER 30,
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1996(1) 1995(1) 1995 1994 1993 1992(2)
------------- ------------- ------------- ------------- ------------- -------------
OPERATIONS DATA:
Revenues.................... $ 1,737,613 $ 1,545,244 $ 1,998,150 $ 1,806,016 $ 1,556,919 $ 1,473,614
Operating income before
income from affiliated
operations.................. 458,360 397,300 490,038 443,674 347,666 324,896
Income from affiliated
operations(3)............... 12,956 -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Operating income............ 471,316 397,300 490,038 443,674 347,666 324,896
Income from continuing
operations.................. 451,479 366,863 451,091 381,765 318,170 281,773
Discontinued
operations(4)............... -- -- -- -- -- --
------------- ------------- ------------- ------------- ------------- -------------
Net income.................. 451,479 366,863 451,091 381,765 318,170 276,584
Earnings per share:
Continuing operations..... $ 1.56 $ 1.29 $ 1.59 $ 1.35 $ 1.13 $ 1.00
Net income................ $ 1.56 $ 1.29 $ 1.59 $ 1.35 $ 1.13 $ .98
Dividends declared per
share....................... $ .27 $ .225 $ .315 $ .285 $ .280 $ .280
Weighted average shares..... 288,524 283,921 284,220 282,744 282,474 281,686
Passenger cruise days....... 8,088 6,825 9,201 8,102 7,003 6,766
Percentage of total cruise
capacity(5)................. 109.7% 105.1% 105.0% 104.0% 105.3% 105.3%
1991
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OPERATIONS DATA:
Revenues.................... $ 1,404,704
Operating income before
income from affiliated
operations.................. 315,905
Income from affiliated
operations(3)............... --
-------------
Operating income............ 315,905
Income from continuing
operations.................. 253,824
Discontinued
operations(4)............... (168,836)
-------------
Net income.................. 84,988
Earnings per share:
Continuing operations..... $ .93
Net income................ $ .31
Dividends declared per
share....................... $ .245
Weighted average shares..... 273,832
Passenger cruise days....... 6,365
Percentage of total cruise
capacity(5)................. 105.7%
AUGUST 31,
1996
--------------
BALANCE SHEET DATA:
Cash and cash equivalents and short-term investments.......................................................... $ 104,673
Total current assets.......................................................................................... 263,695
Total assets.................................................................................................. 4,703,096
Customer deposits(6).......................................................................................... 311,765
Total current liabilities..................................................................................... 689,568
Long-term debt and convertible notes.......................................................................... 1,059,519
Total shareholders' equity.................................................................................... 2,937,219
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(1) In the nine months ended August 31, 1996, the Company recognized a $32.0
million gain from the settlement of bankruptcy claims against Wartsila (as
defined herein) and a loss of $15.8 million on the sale of notes receivable
generated from the sale of Carnival's Crystal Palace Resort and Casino (the
"CCP Resort"). In the nine months ended August 31, 1995, the Company
recognized a $14.4 million gain from the settlement of litigation with Metra
Oy, the former parent of Wartsila.
(2) In the fiscal year ended November 30, 1992, the Company took an
extraordinary charge of $5.2 million in connection with the early redemption
of its Zero Coupon Convertible Subordinated Notes due 2005.
(3) Represents income from affiliated companies, including Airtours. The Company
acquired a 29.5% interest in Airtours in April 1996 and starting with the
quarter ended August 31, 1996, the Company's share of Airtours' operating
results is being recorded by the Company on a two-month lag basis.
(4) In November 1991, the Company adopted a formal plan to dispose of the CCP
Resort, which comprised the entire resort and casino segment of the
Company's operations. At that time, the Company recorded a provision for the
loss on disposal of the CCP Resort of approximately $135 million,
representing a write-down of $95 million to record the property at its
estimated net realizable value and a provision of $40 million for the
possible funding of the CCP Resort prior to disposal.
(5) In accordance with cruise industry practice, total capacity is calculated
based on two passengers per cabin even though some cabins can accommodate
three or four passengers. The percentages in excess of 100% indicate that
more than two passengers occupied some cabins.
(6) Represents customer deposits for cruises and tours which will be recognized
as revenue when earned in the future.
6
CERTAIN CONSIDERATIONS
TAXATION OF THE COMPANY
The Company believes that it is not subject to United States corporate tax
on its incomeINCOME TAXES
Non-U.S. companies are exempt from the international operation of ships ("Shipping Income").
(Certain of the Company's United States source income, such as Holland America
Line's income from bus, hotel and tour operations, is not Shipping Income, and
thus is subject to United States tax.) The applicable exemption from United
StatesU.S. corporate income tax which is provided by Section 883on U.S. source
income from international passenger cruise operations if (i) their countries of
incorporation exempt shipping operations of U.S. persons from income tax (the
"Incorporation Test") and (ii) they meet either the Internal
Revenue Code of 1986, as amended (the "Code"), is available under current United
States law for as long as"CFC Test" or the "Publicly
Traded Test." The Company and its subsidiaries that earn Shipping
Income (collectively,involved in the "Shipping Companies")cruise ship
operations meet both an "Incorporation
Test" and a "CFC Test".
A corporation meets the Incorporation Test if it is organized underbecause they are incorporated in
countries which provide the laws of a foreign country that grants an equivalentrequired exemption to corporations
organizedU.S. persons involved in
the United States (an "equivalent exemption jurisdiction"). The
Company believes that all of the Shipping Companies are organized in equivalent
exemption jurisdictions.shipping operations. A Shipping Companycompany meets the CFC Test if it is a controlled foreign
corporation ("CFC"),. A CFC is defined by the Internal Revenue Code as defined in Section 957(a) of the Code. Aa foreign
corporation is a CFC if stock representing more than 50% of such corporation's
voting powerthe vote or equity value of whose stock is owned (or considered as owned) by United StatesU.S.
persons, each of whom owns (oror is considered to own) stock representingown 10% or more of the
corporation's voting power.
The Company andvote on any day during its fiscal year. Through July 15, 1997, the
Shipping Companies meetdate upon which all of the CFC Test because stockClass B Common Stock of the Company representing(the "Class B
Common Stock") was converted to Class A Common Stock (the "Conversion Date"),
all of the outstanding shares of Class B
3
Common Stock of the Company, which represented more than 50% of the total
combined voting power of all the Company'sclasses of stock, iswere owned by theThe Micky Arison
1994 "B" Trust (the "B Trust"), a United States trustU.S. Trust whose primary beneficiary is Micky
Arison, the Company's Chairman of the Board. The B Trust is a "United States
Person." Accordingly, the Company believes that it will meet the CFC Test for
its 1997 taxable year, but will not meet such test in its 1998 taxable year and
subsequent taxable year.
A corporation meets the Publicly Traded Test if the stock of the corporation
(or the direct or indirect corporate parent thereof) is "primarily and regularly
traded on an established securities market" in the United States. Although no
Treasury regulations have been promulgated that explain when stock is primarily
and regularly traded for purposes of this exemption, Treasury regulations have
been promulgated interpreting a similar phrase under another section, Section
884. Under the Section 884 regulations, stock is considered primarily and
regularly traded if (i) 80% (by vote and value) of the stock of the corporation
is listed on an established securities market in the United States where more
shares are traded than in any other country, (ii) trades of such stock are
effected on such market, other than in de minimis quantities, on at least 60
days during the taxable year, (iii) the aggregate number of shares so traded is
equal to 10% or more of the average number of shares outstanding during the
taxable year, and (iv) the company is not "closely held." The Company believes
that it will meet the foregoing requirements for the portion of its taxable year
beginning after the Conversion Date and for future taxable years. Since the
Conversion Date, the Company has had only one class of stock outstanding, the
Class A Common Stock, which is listed on the New York Stock Exchange, where more
shares trade than in any other country. Trades of such Class A Common Stock have
been effected in more than de minimis quantities on every business day since the
Company's initial public offering, and the annual volume of such trades has
significantly exceeded 10% of the average number of shares outstanding.
Moreover, the Company believes that any stock traded on the NYSE are considered
as traded on a qualifying exchange and, to the Company's knowledge, it is not
closely held because no person other than members of the Arison family and
certain related entities (the "B Trust""Arison Group"). owns more than 5% of its stock and
the Arison Group holds less than 50% of the outstanding shares.
Accordingly, the Company believes that virtually all of its income (with the
exception of its United States source income from the operations of the
transportation, hotel and tour business of Holland America Line) is exempt from
United States federal income taxes. There is, however, no authority that
addresses the treatment of a corporation that meets the test for a CFC for only
part of its taxable year. Similarly, there is no authority that addresses the
treatment of a corporation that meets the Publicly Traded Test for only a part
of its taxable year. If the Company and the
Shipping Companiesor its subsidiaries were to ceasefound to meet
neither the CFC test, and no other basis for
exemption were available,Test nor the Publicly Traded Test, much of their income would
become subject to taxation by the United States at higher than normal corporate
tax rates.
CONTROL BY PRINCIPAL SHAREHOLDERS
Following the sale of the Shares, Ted Arison (the Company's founder), the B Trust, certain members of the
Arison family and trusts for the benefit of Mr. Ted Arison's children and
the Arison Foundation, Inc., a private foundation established by Ted Arison (collectively,
the "Principal Shareholders"), will beneficially own on the date hereof, in the
aggregate, approximately 48.24%47.1% of the outstanding capital stock and will
control, in the aggregate, approximately 70.37% of the voting power of the Company.
For as long asAs a result, the B Trust holds a majority of the shares of the Class
B Common Stock and the number of outstanding shares of Class B Common Stock is
at least 12 1/2% of the number of outstanding shares of both Class A and Class B
Common Stock, the B Trust willPrincipal Shareholders have the power to elect at least 75%substantially
influence the election of the
directors and to substantially influence the Company's affairs and policies.
Micky Arison, the Chairman and Chief Executive Officer of the Company, has the
sole right to vote and direct the sale of the Class BA Common Stock held by the B
Trust, subject, during Ted Arison's lifetime, to the consent of the trustee of
the B Trust.
The Company has agreed under certain loan agreements to ensure that
Ted Arison or members of his immediate family beneficially own, directly or
indirectly, a number of sharesSOURCE OF INTEREST ON THE DEBT SECURITIES
Under the "branch tax" rules of the Company's capital stock at least
sufficient to electCode, it is possible that,
notwithstanding that the majority ofCompany is a Panamanian corporation, some or all
interest payable on the directors.
7Securities may be treated as United States source income
for United States federal income tax purposes.
4
USE OF PROCEEDS
TheExcept as otherwise provided in the applicable Prospectus Supplement, the
net proceeds to the Company will not receive any proceeds from the sale of the Shares being
soldSecurities offered hereby will
be added to the working capital of the Company and will be available for general
corporate purposes, which may include the repayment of indebtedness, the
financing of capital commitments and possible future acquisitions associated
with the continued expansion of the Company's business. Pending application as
set forth above, the net proceeds will be invested in marketable securities,
including, without limitation, certificates of deposit and commercial paper.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of "earnings" to "fixed charges" for the Company and its
subsidiaries were as follows for the nine months ended August 31, 1997 and 1996
and for the five years ended November 30, 1996:
NINE MONTHS
ENDED AUGUST 31, YEARS ENDED NOVEMBER 30,
- -------------------- -----------------------------------------------------
1997 1996 1996 1995 1994 1993 1992
- --------- --------- --------- --------- --------- --------- ---------
9.9x 7.2x 6.4x 6.2x 5.8x 5.7x 4.4x
The ratio of earnings to fixed charges has been computed by dividing
earnings from continuing operations available for fixed charges (income from
continuing operations before income taxes adjusted for interest expense and
one-third of rent expense) by fixed charges. Fixed charges include interest
costs (interest expense plus capitalized interest and one-third of rent
expense). The Company has assumed that one-third of rent expense is
representative of the interest factor.
DESCRIPTION OF DEBT SECURITIES
The Senior Debt Securities are to be issued in one or more series under an
indenture dated as of March 1, 1993, as supplemented from time to time (the
"Senior Indenture"), between the Company and First Trust National Association
(the "Senior Trustee"), as Trustee, and the Subordinated Securities will be
issued under an indenture to be dated as of a date prior to the first issuance
of Subordinated Securities, as supplemented from time to time (the "Subordinated
Indenture"), between the Company and a trustee to be named in the applicable
Prospectus Supplement (the "Subordinated Trustee"). The term "Indenture" as used
herein refers to either the Senior Indenture or the Subordinated Indenture, as
appropriate, and the term "Trustee" as used herein refers to either the Senior
Trustee or the Subordinated Trustee, as appropriate. Each Indenture will be
subject to and governed by the Selling Shareholders. Ted ArisonTrust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The following statements with respect to the Debt
Securities are subject to the detailed provisions of the Indenture, the form of
which is selling his Sharesfiled as an exhibit to the Registration Statement. Parenthetical
references below are to the Indenture (or the Form of Security contained therein
if so specified) and, whenever any particular provision of the Indenture or any
term used therein is referred to, such provision or term is incorporated by
reference as a part of the statement in connection with which such reference is
made, and the statement in connection with which such reference is made is
qualified in its entirety by such reference.
The particular terms of each series of Debt Securities, as well as any
modification or addition to the general terms of the Debt Securities as herein
described, which may be applicable to a particular series of Debt Securities,
are described in the Prospectus Supplement relating to such series of Debt
Securities and will be set forth in a filing with the Commission. Accordingly,
for certain
estate planninga description of the terms of a particular series of Debt Securities,
reference must be made to both the Prospectus Supplement relating to such series
and to the description of Debt Securities set forth in this Prospectus.
5
GENERAL
The Senior Debt Securities and Subordinated Debt Securities offered hereby
will be limited to $800,000,000 and $730,000,000, respectively, aggregate
principal amount (or (i) its equivalent (based on the applicable exchange rate
at the time of sale), if Senior Debt Securities and Subordinated Debt Securities
are issued with principal amounts denominated in one or more foreign currencies,
composite currencies or currency units as shall be designated by the Company, or
(ii) such greater amount, if Senior Debt Securities and Subordinated Debt
Securities are issued at an original issue discount, as shall result in
aggregate proceeds of $800,000,000 and $730,000,000, respectively, to the
Company). The Indenture provides that additional Debt Securities may be issued
thereunder up to the aggregate principal amount, which is not limited by the
Indenture, authorized from time to time by the Company's Board of Directors or
any duly authorized committee thereof. The Indenture also provides that there
may be more than one Trustee under the Indenture, each with respect to one or
more different series of Debt Securities. See also "Trustee" herein. The effect
of the provisions contemplating that there might be more than one Trustee acting
for different series of Debt Securities is that, in that event, those Debt
Securities (whether of one or more than one series) for which each Trustee is
acting would be treated as if issued under a separate Indenture.
The applicable Prospectus Supplement will set forth a description of the
particular series of Debt Securities being offered thereby, including: (1) the
designation or title of such Debt Securities; (2) the aggregate principal amount
of such Debt Securities; (3) the percentage of their principal amount at which
such Debt Securities will be offered; (4) the date or dates on which the
principal of such Debt Securities will be payable; (5) the rate or rates (which
may be either fixed or variable) and/or the method of determination of such rate
or rates at which such Debt Securities shall bear interest, if any; (6) the date
or dates from which any such interest shall accrue, or the method of
determination of such date or dates, and the date or dates on which any such
interest shall be payable; (7) the terms for redemption, extension or early
repayment of such Debt Securities, if any; (8) if other related purposes.
PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDENDS
The Company'sthan denominations of
$1,000 and any integral multiple thereof, the denominations in which such Debt
Securities are authorized to be issued; (9) the currencies in which such Debt
Securities are issued or payable; (10) the provisions for a sinking fund, if
any; (11) if other than the principal amount thereof, the portion of the
principal amount of such Debt Securities that will be payable upon the
declaration of acceleration of the maturity thereof; (12) any additional
restrictive covenants included for the benefit of the holders of such Debt
Securities; (13) any additional Event of Default with respect to such Debt
Securities; (14) whether such Debt Securities are issuable as a Global Security
or securities; (15) any applicable tax consequences with respect to such Debt
Securities; (16) the terms and conditions, if any, pursuant to which such Debt
Securities are convertible into or exchangeable for Class A Common Stock or
other securities; (17) the applicability of the provisions described in
"--Defeasance" below; (18) any subordination provisions applicable to such Debt
Securities in addition to or different than those described under
"--Subordination" below; and (19) any other term or provision relating to such
Debt Securities which is listed onnot inconsistent with the New York Stock Exchange
underprovisions of the symbol "CCL"Indenture.
One or more series of Debt Securities may be sold at a substantial discount
below their stated principal amount, bearing no interest or interest at a rate
which at the time of issuance is below market rates. Federal income tax
consequences and special considerations applicable thereto will be described in
the Prospectus Supplement relating to any such series of Debt Securities.
Except as otherwise provided in the applicable Prospectus Supplement,
principal, premium, if any, and interest, if any, will be payable at an office
or agency to be maintained by the Company, except that at the option of the
Company interest may be paid by check mailed to the person entitled thereto.
(Form of Security and Sections 10.1 and 10.2).
There is no established public trading marketThe Debt Securities will be issued only in fully registered form without
coupons and may be presented for registration of transfer or exchange at the
Company's Class B Common Stock.corporate trust office of the Trustee. No service charge will be made for any
transfer or exchange of the Debt Securities, but the Company may require payment
of a
6
sum to cover any tax or other governmental charge payable in connection
therewith. Not all Debt Securities of any one series need be issued at the same
time, and, unless otherwise provided, a series may be reopened for issuances of
additional Debt Securities of such series. (Sections 3.1 and 3.5).
The following table sets forth for the periods indicated the high and low
intra-day prices for the Class A Common Stock, as reported on the New York Stock
Exchange-Composite Transactions, and dividends paid on the Class A Common Stock.
CLASS A
COMMON STOCK PRICES
----------------------
HIGH LOW DIVIDENDS
---------- ---------- -------------
1996:
Fourth Quarter (through October 15, 1996)................................ $ 31.875 $ 30.875 $ .110
Third Quarter............................................................ 31.500 $ 24.500 .090
Second Quarter........................................................... 30.125 26.125 .090
First Quarter............................................................ 29.000 22.750 .090
1995:
Fourth Quarter........................................................... 27.125 20.625 .090
Third Quarter............................................................ 24.250 20.375 .075
Second Quarter........................................................... 26.625 22.125 .075
First Quarter............................................................ 23.750 19.125 .075
1994:
Fourth Quarter........................................................... 23.125 20.563 .075
Third Quarter............................................................ 24.063 21.750 .070
Second Quarter........................................................... 25.438 21.000 .070
First Quarter............................................................ 26.125 23.000 .070
As of October 15, 1996, there were approximately 3,756Indenture does not contain any covenants or provisions that are
specifically intended to afford holders of record of
the Company's Class A Common Stock. All of the issued and outstanding shares of
Class B Common Stock are held by the B Trust. The last reported sale price of
the Class A Common Stock on the New York Stock Exchange on October 15, 1996 was
$30.875 per share.
8
DIVIDEND POLICY
The Company declared cash dividends of $.070 per share in each of the first
three quarters of fiscal 1994, $.075 per share in the fourth quarter of fiscal
1994 and the first three quarters of fiscal 1995, $.090 per share in the fourth
quarter of fiscal 1995 and the first three quarters of fiscal 1996 and $.110 per
share in the fourth quarter of fiscal 1996. Payment of future quarterly
dividends will depend, among other factors, upon the Company's earnings,
financial condition and capital requirements and certain tax considerations of
certain of the Principal Shareholders, some of whom are required to include a
portion of the Company's earnings in their taxable income whether or not the
earnings are distributed. The Company may also declare special dividends to all
shareholdersDebt Securities protection in the
event thatof a highly leveraged transaction. With respect to any specific series of
Debt Securities, the Principal Shareholders are required to pay
additional income taxes by reasonexistence or non-existence of their ownershipsuch covenants or provisions
will be disclosed in the applicable Prospectus Supplement.
Neither Panamanian law nor the Company's Articles of the Common Stock, either
because of an income tax audit of the CompanyIncorporation or
the Principal Shareholders or
because of certain actions by the Company (such as a failure by the Company to
maintain its investment in shipping assets at a certain level) that would
trigger adverse tax consequences to the Principal Shareholders under the special
tax rules applicable to them.
Any dividend declared by the Board of DirectorsBy-laws impose limitations on the Company's Common
Stock will be paid concurrently at the same rate on the Class A Common Stock and
the Class B Common Stock.right of non-resident or foreign owners to
hold Debt Securities. While no tax treaty currently exists between the Republic
of Panama and the United States, under current law the Company believes that
distributionsinterest payments to holders of its shareholdersDebt Securities are not subject to taxation
under the laws of the Republic of Panama.
Dividends paid byBOOK-ENTRY SYSTEM
The Debt Securities of a series may be issued in the Companyform of one or more
Global Securities that will be taxable as ordinary incomedeposited with a depository (the "Depository") or
with a nominee for United States Federal income tax purposesthe Depository identified in the applicable Prospectus
Supplement and will be registered in the name of the Depository or a nominee
thereof. In such a case one or more Global Securities will be issued in a
denomination or aggregate denominations equal to the extent of the Company's current
or accumulated earnings and profits, but generally will not qualify for any
dividends-received deduction.
The payment and amount of any dividend is within the discretion of the
Board of Directors, and it is possible that the amount of any dividend may vary
from the levels discussed above. If the law regarding the taxation of the
Company's income to the Principal Shareholders were to change so that the amount
of tax payable by the Principal Shareholders were increased or reduced, the
amount of dividends paid by the Company might be more or less than is currently
contemplated.
9
CAPITALIZATION
The following table sets forth the capitalization of the Company at August
31, 1996. The information set forth below should be read in conjunction with the
financial statements and related notes incorporated in this Prospectus by
reference.
AUGUST 31, 1996
-------------------
(AMOUNTS IN
THOUSANDS)
Current portion of long-term debt............................................................ $ 72,525
-------------------
-------------------
Long-term debt and convertible notes:
Mortgages and other loans payable bearing interest at rates ranging from 8% to 9.9%,
secured by vessels........................................................................... $ 98,446
Unsecured Revolving Credit Facility Due 2000............................................... 25,000
Multi-currency Revolving Credit Facility Due 2001.......................................... 166,000
Other loans payable........................................................................ 75,336
5.75% Notes Due March 15, 1998............................................................. 200,000
6.15% Notes Due October 1, 2003............................................................ 124,951
7.70% Notes Due July 15, 2004.............................................................. 99,910
7.05% Notes Due May 15, 2005............................................................... 99,826
7.20% Debentures Due October 1, 2023....................................................... 124,870
4.50% Convertible Subordinated Notes Due July 1, 1997...................................... 45,180
-------------------
Total long-term debt and convertible notes............................................ $ 1,059,519
-------------------
Shareholders' equity:
Class A Common Stock ($.01 par value; one vote per share; 399,500 shares authorized;
239,377 shares issued and outstanding)....................................................... $ 2,393
Class B Common Stock ($.01 par value; five votes per share; 100,500 shares authorized;
54,957 shares issued and outstanding)........................................................ 550
Paid-in capital............................................................................ 812,808
Retained earnings.......................................................................... 2,125,374
Less--other................................................................................ (3,906)
-------------------
Total shareholders' equity............................................................ 2,937,219
-------------------
Total capitalization.................................................................. $ 3,996,738
-------------------
-------------------
10
SELECTED FINANCIAL DATA
The selected financial data presented below for the fiscal years ended
November 30, 1991 through 1995 and as of the end of each such fiscal year are
derived from the financial statements of the Company and should be read in
conjunction with such financial statements and the related notes incorporated in
this Prospectus by reference. The selected financial data for the nine-month
periods ended August 31, 1996 and 1995 are unaudited and, in the opinion of
management, include all adjustments, consisting of only normal recurring
accruals, necessary for a fair presentation of such data. The Company's
operations are seasonal, and results for interim periods are not necessarily
indicative of the results for the entire year. Certain amounts in prior years
have been reclassified to conform with the current year's presentation.
NINE MONTHS ENDED
AUGUST 31, YEAR ENDED NOVEMBER 30,
-------------------------- --------------------------------------------------------------------
1996(1) 1995(1) 1995 1994 1993 1992(2) 1991
------------ ------------ ------------ ------------ ------------ ------------ ------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
OPERATIONS DATA:
Revenues........................ $ 1,737,613 $ 1,545,244 $ 1,998,150 $ 1,806,016 $ 1,556,919 $ 1,473,614 $ 1,404,704
Costs and expenses:
Operating expenses............ 962,435 865,311 1,131,113 1,028,475 907,925 865,587 810,317
Selling and administrative.... 209,221 187,880 248,566 223,272 207,995 194,298 193,316
Depreciation and
amortization.................... 107,597 94,753 128,433 110,595 93,333 88,833 85,166
------------ ------------ ------------ ------------ ------------ ------------ ------------
1,279,253 1,147,944 1,508,112 1,362,342 1,209,253 1,148,718 1,088,799
------------ ------------ ------------ ------------ ------------ ------------ ------------
Operating income before income
from affiliated operations.... 458,360 397,300 490,038 443,674 347,666 324,896 315,905
Income from affiliated
operations(3)................... 12,956 -- -- -- -- -- --
------------ ------------ ------------ ------------ ------------ ------------ ------------
Operating income................ 471,316 397,300 490,038 443,674 347,666 324,896 315,905
Nonoperating income (expense):
Interest income............... 17,280 10,311 14,403 8,668 11,527 16,946 10,596
Interest expense, net of
capitalized interest............ (49,889) (48,583) (63,080) (51,378) (34,325) (53,792) (65,428)
Other income (expense)........ 23,778 18,931 19,104 (9,146) (1,201) 2,731 1,746
Income tax expense............ (11,006) (11,096) (9,374) (10,053) (5,497) (9,008) (8,995)
------------ ------------ ------------ ------------ ------------ ------------ ------------
(19,837) (30,437) (38,947) (61,909) (29,496) (43,123) (62,081)
------------ ------------ ------------ ------------ ------------ ------------ ------------
Income from continuing
operations...................... 451,479 366,863 451,091 381,765 318,170 281,773 253,824
Discontinued operations:
Loss from operations of hotel
and casino segment(4)....... -- -- -- -- -- -- (33,373)
Estimated loss on disposal of
hotel and casino
segment(4)...................... -- -- -- -- -- -- (135,463)
Extraordinary item:
Loss on early extinguishment
of debt(2)...................... -- -- -- -- -- (5,189) --
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net income...................... $ 451,479 $ 366,863 $ 451,091 $ 381,765 $ 318,170 $ 276,584 $ 84,988
------------ ------------ ------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------ ------------ ------------
Earnings per share:
Continuing operations......... $ 1.56 $ 1.29 $ 1.59 $ 1.35 $ 1.13 $ 1.00 $ .93
Net income.................... $ 1.56 $ 1.29 $ 1.59 $ 1.35 $ 1.13 $ .98 $ .31
Dividends declared per share.... $ .270 $ .225 $ .315 $ .285 $ .280 $ .280 $ .245
Weighted average shares......... 288,524 283,921 284,220 282,744 282,474 281,686 273,832
Passenger cruise days........... 8,088 6,825 9,201 8,102 7,003 6,766 6,365
Percent of total cruise
capacity(5)..................... 109.7% 105.1% 105.0% 104.0% 105.3% 105.3% 105.7%
11
AUGUST 31, NOVEMBER 30,
------------ --------------------------------------------------------------------
1996(1) 1995(1) 1994 1993 1992(1) 1991
------------ ------------ ------------ ------------ ------------ ------------
(AMOUNTS IN THOUSANDS)
BALANCE SHEET DATA:
Cash and cash equivalents and short-term
investments................................... $ 104,673 $ 103,760 $ 124,220 $ 148,920 $ 226,062 $ 278,136
Total current assets.......................... 263,695 256,378 240,449 253,798 311,424 363,788
Total assets.................................. 4,703,096 4,105,487 3,669,823 3,218,920 2,645,607 2,650,252
Customer deposits(6).......................... 311,765 292,606 257,505 228,153 178,945 167,723
Total current liabilities..................... 689,568 594,710 564,957 549,994 474,781 551,287
Long-term debt and convertible notes.......... 1,059,519 1,150,031 1,161,904 1,031,221 776,600 921,689
Total shareholders' equity.................... 2,937,219 2,344,873 1,928,934 1,627,206 1,384,845 1,171,129
- ---------------
(1) In the nine months ended August 31, 1996, the Company recognized a $32.0
million gain from the settlement of bankruptcy claims against Wartsila and a
loss of $15.8 million on the sale of notes receivable generated from the
sale of the CCP Resort. In the nine months ended August 31, 1995, the
Company recognized a $14.4 million gain from the settlement of litigation
with Metra Oy, the former parent of Wartsila.
(2) In the fiscal year ended November 30, 1992, the Company took an
extraordinary charge of $5.2 million in connection with the early redemption
of its Zero Coupon Convertible Subordinated Notes due 2005.
(3) Represents income from affiliated companies, including Airtours. The Company
acquired a 29.5% interest in Airtours in April 1996 and starting with the
quarter ended August 31, 1996, the Company's share of Airtours' operating
results is being recorded by the Company on a two-month lag basis.
(4) In November 1991, the Company adopted a formal plan to dispose of Carnival's
Crystal Palace Resort and Casino (the "CCP Resort"), which comprised the
entire resort and casino segment of the Company's operations. At that time,
the Company recorded a provision for the loss on disposal of the CCP Resort
of approximately $135 million, representing a write-down of $95 million to
record the property at its estimated net realizable value and a provision of
$40 million for the possible funding of the CCP Resort prior to disposal.
(5) In accordance with cruise industry practice, total capacity is calculated
based on two passengers per cabin even though some cabins can accommodate
three or four passengers. The percentages in excess of 100% indicate that
more than two passengers occupied some cabins.
(6) Represents customer deposits for cruises and tours which will be recognized
as revenue when earned in the future.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements contained in "Management's Discussion of Financial
Condition and Results of Operations" constitute forward-looking statements under
the Reform Act. See "Special Note Regarding Forward-Looking Statements."
RESULTS OF OPERATIONS
The Company earns cruise revenues primarily from (i) the sale of passenger
tickets, which include accommodations, meals, airfare and substantially all
shipboard activities, and (ii) the sale of goods and services on board its
cruise ships, such as casino gaming, liquor sales, gift shop sales and other
related services. The Company also derives revenues from the tour and related
operations of HAL Antillen N.V., a subsidiary of the Company ("HAL").
The following table presents statements of operations data expressed as a
percentage of total revenues and selected statistical information for the
periods indicated:
NINE MONTHS ENDED
AUGUST 31 YEAR ENDED NOVEMBER 30,
-------------------------- ----------------------------------------
1996 1995 1995 1994 1993
------------ ------------ ------------ ------------ ------------
REVENUES............................. 100% 100% 100% 100% 100%
OPERATING COSTS AND EXPENSES:
Operating expenses................ 56 56 57 57 58
Selling and administrative........ 12 12 12 12 14
Depreciation and amortization..... 6 6 6 6 6
------------ ------------ ------------ ------------ ------------
OPERATING INCOME BEFORE INCOME FROM
AFFILIATED OPERATIONS............. 26 26 25 25 22
INCOME FROM AFFILIATED OPERATIONS.... 1 -- -- -- --
------------ ------------ ------------ ------------ ------------
OPERATING INCOME..................... 27 26 25 25 22
NONOPERATING INCOME (EXPENSE)........ (1) (2) (2) (4) (2)
------------ ------------ ------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS.... 26% 24% 23% 21% 20%
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
SELECTED STATISTICAL INFORMATION:
Passengers carried................... 1,351,000 1,139,000 1,543,000 1,354,000 1,154,000
Passenger cruise days................ 8,088,000 6,825,000 9,201,000 8,102,000 7,003,000
Occupancy percentage................. 109.7% 105.1% 105.0% 104.0% 105.3%
GENERAL
The growth in the Company's revenues during the last three fiscal years has
primarily been a function of the expansion of its fleet capacity.
Fixed costs, including depreciation, fuel, insurance, and crew costs
represent more than one-third of the Company's operating expenses and do not
significantly change in relation to changes in passenger loads and aggregate
passenger ticket revenue. The Company's different businesses experience varying
degrees of seasonality. The Company's revenue from the sale of passenger
13
tickets for Carnival Cruise Lines' ("Carnival") ships is moderately seasonal.
Historically, demand for Carnival cruises has been greater during the periods
from late June through August and lower during the fall months. HAL cruise
revenues are more seasonal than Carnival's cruise revenues. Demand for HAL
cruises is strongest during the summer months when HAL ships operate in Alaska
and Europe and HAL typically obtains higher pricing for these summer products.
Demand for HAL cruises is lower during the winter months when HAL ships sail in
more competitive markets. The Company's tour revenues are extremely seasonal
with a large majority of tour revenues generated during the late spring and
summer months in conjunction with the Alaska cruise season.
In April 1996, the Company made an investment in Airtours which it records
using the equity basis of accounting. Starting with the Company's quarter ending
August 31, 1996, the Company's share of Airtours' operating results is being
recorded by the Company on a two month lag basis. Airtours' earnings are
seasonal due to the seasonal nature of the European leisure travel industry.
During the last two fiscal years, Airtours' third and fourth fiscal quarters,
ending June 30 and September 30, respectively, have been profitable, with the
fourth quarter being its most profitable quarter. During this same period,
Airtours experienced seasonal losses in its first and second fiscal quarters
ending on December 31 and March 31, respectively.
Average capacity is expected to increase 8.2% during the fourth fiscal
quarter of 1996 as compared with the same period in 1995, as a result of the
introduction into service of the Inspiration in March 1996 and the Veendam in
May 1996. See "Special Note Regarding Forward-Looking Statements."
NINE MONTHS ENDED AUGUST 31, 1996 COMPARED TO NINE MONTHS ENDED AUGUST 31, 1995
REVENUES
The increase in total revenues of $192.4 million, or 12.4%, from the first
nine months of 1995 to the first nine months of 1996 was primarily comprised of
a $180.2 million, or 13.2%, increase in cruise revenues. The increase in cruise
revenues was primarily the result of a 13.5% increase in capacity for the period
resulting from the addition of the Carnival cruise ships Imagination in July
1995 and Inspiration in March 1996 and Holland America Line's cruise ship
Veendam in May 1996. Occupancy rates were up 4.4% and gross pricing was down
4.5% resulting in a decrease of 0.3% in gross yield (total revenue per lower
berth). Net yields, i.e., net revenue per lower berth (net revenue is total
revenues less travel agent commissions, airfare costs and other less significant
cruise costs), increased 1.1% during the first nine months of the year due to
improved occupancy rates. Also affecting cruise revenues during 1995 were lost
revenues caused by the shipboard incident described under "Nonoperating Income
(Expense)" below.
Revenues from the Company's tour operations increased $20.9 million, or
9.6%, to $238.6 million in 1996 from $217.7 million in 1995. The increase was
primarily the result of an increase in tour and transportation revenues due to
an increase in the number of tour passengers.
COSTS AND EXPENSES
Operating expenses increased $97.1 million, or 11.2%, from the first nine
months of 1995 to the first nine months of 1996. Cruise operating costs
increased by $85.0 million, or 11.4%, to $827.9 million in the first nine months
of 1996 from $742.9 million in the first nine months of 1995, primarily due to
additional costs associated with the increased capacity.
Tour operating expenses increased $20.8 million, or 12.7%, from the first
nine months of 1995 to the first nine months of 1996, primarily due to an
increase in the number of tour passengers.
14
Selling and administrative costs increased $21.3 million, or 11.4%, mainly
due to an increase in advertising expenses and an increase in payroll and
related costs associated with the increase in capacity during the first nine
months of 1996 as compared with the same period of 1995.
Depreciation and amortization increased by $12.8 million, or 13.6%, to
$107.6 million in the first nine months of 1996 from $94.8 million in the first
nine months of 1995, primarily due to the addition of the Imagination,
Inspiration and the Veendam.
AFFILIATED OPERATIONS
During April 1996, the Company acquired a 29.5% interest in Airtours and is
recording its share of Airtours' earnings on a two-month lag basis. During the
Company's quarter ended August 31, 1996, the Company's share of earnings for
Airtours was recorded for Airtours' quarter ended June 30, 1996. The Company
also began reporting its equity in earnings of certain other affiliates.
NONOPERATING INCOME (EXPENSE)
Total nonoperating expense (net of nonoperating income) decreased to $19.8
million for the first nine months of 1996 from $30.4 million in the first nine
months of 1995. Interest income increased $7.0 million primarily due to the
Company's holding of 13% Senior Secured Notes (which were redeemed in April
1996) of Norwegian Cruise Line, Ltd. (the "NCL Bonds") and, to a lesser degree,
increases in cash balances. Cash balances, up to the closing of the Airtours
transaction in April 1996, increased due to United Kingdom regulatory
requirements applicable to the Company's tender offer to acquire its interest in
Airtours. Gross interest expense (excluding capitalized interest) increased $6.6
million primarily as a result of additional borrowings required in connection
with the acquisition of Airtours. Capitalized interest increased $5.3 million
due to higher investment levels in vessels under construction.
Other income increased to $23.8 million in the first nine months of 1996
primarily as a result of a $32.0 million gain from settlement of bankruptcy
claims against Wartsila (see "Business-- Litigation"), less a loss on the sale
of the notes receivable generated from the sale of CCP Resort of $15.8 million.
Other income of $18.9 million in the first nine months of 1995 included a $14.4
million gain from the settlement of litigation with Metra Oy (see
"Business--Litigation") and a gain on the sale of the Company's entire interest
in Epirotiki Cruise Line less a loss of $3.0 million from a fire on Carnival
Cruise Lines' Celebration as well as other non-related, non-recurring items. In
addition, the Company estimated the loss of revenue, net of related variable
expense, from the Celebration being out of service due to the fire reduced
operating income and net income by an additional $7.3 million in the third
quarter of 1995.
FISCAL YEAR ENDED NOVEMBER 30, 1995 COMPARED TO FISCAL YEAR ENDED
NOVEMBER 30, 1994
REVENUES
The increase in total revenues of $192.1 million from 1994 to 1995 was
comprised primarily of a $177.7 million, or 10.9%, increase in cruise revenues.
The increase in cruise revenues was primarily the result of a 12.5% increase in
capacity for the period resulting from the addition of Carnival's cruise ship
Fascination in July 1994, HAL's Ryndam in October 1994, and Carnival's
Imagination in July 1995, partially offset by the discontinuation of the
FiestaMarina division of Carnival in September 1994. Also affecting cruise
revenues were lower gross passenger per diems. The gross passenger per diems
decreased primarily due to a reduction in the percentage of passengers electing
the Company's air program. When a passenger elects to purchase his/her own air
transportation, rather than use the Company's air program, both the Company's
cruise
15
revenues and operating expenses decrease by approximately the same amount.
Occupancy rates increased by approximately 1%. Also affecting cruise revenues in
1995 and 1994 were lost revenues caused by the incidents described under
"Nonoperating Income (Expense)" below.
Revenues from the Company's tour operations increased $14.3 million, or
6.3%, to $241.9 million in 1995 from $227.6 million in 1994. The increase was
primarily the result of an increase in the tour and transportation revenues
generated by the Company's tour business and Gray Line of Alaska tour and
motorcoach operations.
COSTS AND EXPENSES
Operating expenses increased $102.6 million, or 10.0%, from 1994 to 1995.
Cruise operating costs increased by $93.8 million, or 10.5%, to $990.0 million
in 1995 from $896.3 million in 1994, primarily due to additional costs
associated with the increased capacity in 1995.
Tour operating expenses increased $8.7 million, or 4.9%, from 1994 to 1995,
primarily due to an increase in tour passengers.
Selling and administrative expenses increased $25.3 million, or 11.3%,
primarily due to a 14.6% increase in advertising expenses and an increase in
payroll and related costs during 1995 as compared with the same period in 1994.
Depreciation and amortization increased by $17.8 million, or 16.1%, to
$128.4 million in 1995 from $110.6 million in 1994 primarily due to the addition
of the Ryndam, the Fascination and the Imagination.
NONOPERATING INCOME (EXPENSE)
Total nonoperating expense (net of nonoperating income) decreased to $38.9
million in 1995 from $61.9 million in 1994. Interest income increased $5.7
million in 1995 due to the recognition of interest income on notes received from
the sale of the CCP Resort and higher investment balances. Total interest
expense increased to $81.9 million in 1995 from $73.2 million in 1994, primarily
as a result of increased average debt levels and higher variable interest rates.
The higher debt levels were the result of expenditures made in connection with
the ongoing construction and delivery of new cruise ships. Capitalized interest
decreased to $18.8 million in 1995 from $21.9 million in 1994 due to lower
levels of investments in vessels under construction.
Other income increased to $19.1 million in 1995 primarily as a result of a
$14.4 million gain from the settlement of litigation with Metra Oy and a gain
from the sale of the Company's entire interest in Epirotiki Cruise Line. These
gains were partially offset by the loss from the Celebration incident discussed
below and certain other non-related, non-recurring items. See "Business--
Litigation."
In June 1995, a fire, which was quickly extinguished, broke out in the
engine control room on Carnival's Celebration. There were no injuries to
passengers or crew, however, there was damage to one of the vessel's electrical
control panels. The time necessary to complete repairs to the Celebration as a
result of this incident caused the cancellation of four one-week cruises. Costs
associated with repairs to the ship, passenger handling and various other
expenses, net of estimated insurance recoveries, amounted to $3.0 million and
were included in other expenses. In addition, the Company estimates that the
loss of revenue, net of related variable expenses, from the Celebration being
out of service, reduced operating income and net income by an additional $7.3
million in 1995.
16
Other expenses of $9.1 million in 1994 were primarily the result of two
events. In September 1994, the Company discontinued its FiestaMarina division
because of lower than expected passenger occupancy levels which resulted in a
charge of $3.2 million to other expenses. In August 1994, HAL's Nieuw Amsterdam
ran aground in Alaska resulting in the cancellation of three one-week cruises.
Costs associated with repairs to the ship, passenger handling and various other
expenses, net of estimated insurance recoveries, amounted to $6.4 million and
were included in other expenses. In addition, the Company estimates that the
loss of revenue, net of related variable expenses, from the Nieuw Amsterdam
being out of service during that three-week period, reduced operating income and
net income by an additional $4.5 million in 1994.
FISCAL YEAR ENDED NOVEMBER 30, 1994 COMPARED TO FISCAL YEAR ENDED
NOVEMBER 30, 1993
REVENUES
The increase in total revenues of $249.1 million from 1993 to 1994 was
comprised of a $241.6 million, or 17.5%, increase in cruise revenues and an
increase of $7.5 million, or 4.3%, in tour revenues for the period. The increase
in cruise revenues was primarily the result of a 17.2% increase in capacity for
the period. This capacity increase resulted from additional capacity provided by
Carnival's SuperLiners Sensation and Fascination which entered service in
November 1993 and July 1994, respectively, and Holland America Line's Maasdam
and Ryndam which entered service in December 1993 and October 1994,
respectively. Also affecting cruise revenues were slightly higher yields,
slightly lower occupancies and lost revenues related to the grounding of the
Nieuw Amsterdam which resulted in the cancellation of three one-week cruises in
August 1994. See "--Nonoperating Income (Expense)" above.
Revenues from the Company's tour operations increased to $227.6 million in
1994 from $214.4 million in 1993 primarily due to an increase in the number of
tour passengers.
COSTS AND EXPENSES
Operating expenses increased $120.6 million, or 13.3%, from 1993 to 1994.
Cruise operating costs increased by $113.4 million, or 14.5%, to $896.3 million
in 1994 from $782.8 million in 1993. Cruise operating costs increased primarily
due to costs associated with the increased capacity in 1994.
Selling and administrative expenses increased $15.3 million, or 7.3%, from
1993 to 1994. These increases were attributable to additional advertising and
other costs associated primarily with the increase in capacity.
Depreciation and amortization increased by $17.3 million, or 18.5%, to
$110.6 million in 1994 from $93.3 million in 1993. Depreciation and amortization
increased primarily due to the additional capacity discussed above. Also, the
depreciable lives of four of the Carnival ships built in the 1980s were extended
from 20 or 25 years to 30 years to conform to industry standards. This resulted
in a reduction of depreciation of approximately $4 million during 1994.
NONOPERATING INCOME (EXPENSE)
Total nonoperating expense (net of nonoperating income) increased in 1994
to $61.9 million from $29.5 million in 1993. Interest income decreased to $8.7
million in 1994 from $11.5 million in 1993 due to a lower level of investments
in 1994. Interest expense increased to $73.3 million in 1994 from $58.9 million
in 1993 as a result of increased debt levels. Both the lower investment levels
and higher debt levels were the result of expenditures made in connection with
the ongoing
17
construction and delivery of cruise ships. Capitalized interest decreased to
$21.9 million in 1994 from $24.6 million in 1993.
Other expenses increased to $9.1 million in 1994 because of two events
which occurred during 1994 which are discussed in the nonoperating income
(expense) section for the fiscal year ended November 30, 1995 compared to fiscal
year ended November 30, 1994, above.
Income tax expense increased to $10.1 million in 1994, primarily as a
result of taxes, of approximately $3.0 million on a dividend paid by the tour
company, a U.S. company, to its parent company, a foreign shipping company.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES AND USES OF CASH
The Company's business provided $587.2 million of net cash from operations
during the year ended November 30, 1995 (an increase of 9.3% over the comparable
period in 1994) and $656.2 million of net cash from operations during the nine
months ended August 31, 1996 (an increase of 25.6% over the comparable period in
1995). The increase in fiscal 1995 was primarily the result of higher net income
for the period. The increase during the nine months ended August 31, 1996 was
primarily the result of an increase in net income and changes in working capital
accounts.
In April 1995, the Company received $47 million of net proceeds from the
sale of 2.1 million shares of Class A Common Stock by the Company pursuant to
the underwriters' exercise of an overallotment option in a secondary offering by
certain shareholders of the Company. Also during fiscal 1995, the Company issued
$100 million of 7.05% Notes Due May 15, 2005 and received approximately $99.2
million in cash proceeds net of underwriting fees and other costs and made
borrowings of $269 million under its $750 million revolving credit facility due
2000 (the "$750 Million Revolver").
During fiscal 1995 and the nine months ended August 31, 1996, the Company
spent approximately $484 million and $514 million, respectively, on capital
projects. During fiscal 1995, $432 million was spent in connection with its
ongoing shipbuilding program, and $34 million was spent on the purchase and
expansion of the Company's shore side operations facilities located in Miami,
Florida. During the nine months ended August 31, 1996, $447 million was spent in
connection with the Company's ongoing ship-building program, and $36 million was
spent on the expansion of the Company's shore side operations facilities located
in Miami, Florida.
The Company also made scheduled principal payments during fiscal 1995,
totaling approximately $79.6 million, under various individual vessel mortgage
loans and repaid $322 million of the outstanding balance on the $750 Million
Revolver. During the nine months ended August 31, 1996, the Company made
scheduled principal payments totaling approximately $43 million under various
individual vessel mortgage loans and a repayment of $160 million on the $750
Million Revolver. During the nine months ended August 31, 1996, the Company
borrowed and repaid $475 million under the $750 Million Revolver for the final
payment on the Inspiration and the Veendam.
Additionally, approximately $70 million of the Company's $115 million of
Convertible Notes were converted into approximately four million shares of the
Company's Class A Common Stock during the nine months ending August 31, 1996.
During the year ended November 30, 1995 and the nine months ended August
31, 1996, the Company paid cash dividends of approximately $85 million and $77
million, respectively.
18
In October 1995, the Company purchased $101 million face amount of NCL
Bonds for $81 million. In February 1996, the Company sold an option to NCL
Holding AS, the parent company of Norwegian Cruise Line, Ltd. (formerly named
Kloster Cruise Ltd.), to purchase the NCL Bonds. The option was exercised in
April 1996, and the Company sold the NCL Bonds to NCL Holding AS. The
transaction resulted in a small gain.
In April 1996, the Company acquired a 29.5% interest in Airtours. The
Company paid approximately $163 million in cash and funded the remaining $144
million through the issuance of 5,301,186 shares of the Company's Class A Common
Stock. The Company borrowed $168 million under a $200 million multi-currency
revolving credit facility due 2001 (the "$200 Million Multi-currency Revolver")
to fund the cash portion of the Airtours investment described above.
FUTURE COMMITMENTS
The Company is scheduled to take delivery of seven new vessels over the
next three years. The Company will pay approximately $374 million in the twelve
month period ending August 31, 1997 related to the construction and delivery of
ships and $1.7 billion beyond August 31, 1997. In addition, the Company has $1.1
billion of outstanding long-term debt and convertible notes of which
approximately $73 million is due in the twelve month period ending August 31,
1997. The Company also enters into forward foreign currency contracts and
interest rate swap agreements to hedge the impact of foreign currency and
interest rate fluctuations. See "Special Note Regarding Forward-Looking
Statements."
FUNDING SOURCES
Cash from operations is expected to be the Company's principal source of
capital to fund its debt service requirements and ship construction costs. In
addition, the Company may fund a portion of the construction cost of new ships
from borrowings under the revolving credit facilities and/or through the
issuance of long-term debt in the public or private markets. At August 31, 1996,
approximately $725 million was available for borrowing by the Company under the
$750 Million Revolver, $34 million was available under the $200 Million
Multi-currency Revolver and an additional $250 million was available under a
short-term general purpose revolving credit facility (the "$250 Million
Revolver"). The Company intends to initiate a $1 billion commercial paper
program that is supported by the $750 Million Revolver and the $250 Million
Revolver.
To the extent that the Company should require or choose to fund future
capital commitments from sources other than operating cash or from borrowings
under the $200 Million Multi-Currency Revolver, the $750 Million Revolver, the
$250 Million Revolver, or the commercial paper program, the Company believes
that it will be able to secure such financing from banks or through the offering
of debt and/or equity securities in the public or private markets. In this
regard, the Company has filed two Registration Statements on Form S-3 (the
"Shelf Registration") relating to a shelf offering of up to $500 million aggregate
principal amount of debt or equity securities. Through August 31,
1996, the Company has issued $230 million of debt securities under the shelf. A
balance of $270 million aggregate principal amount of debt or equity securities
remains available for issuance under the Shelf Registration.
19
BUSINESS
The Company is the world's largest multiple-night cruise company based on
the number of passengers carried and revenues generated. The Company offers a
broad range of cruise products, serving the contemporary cruise market through
Carnival Cruise Lines, the premium market through Holland America Line and the
luxury market through Windstar Cruises and the Company's joint venture, Seabourn
Cruise Line. In total, the Company owns and operates 21 cruise ships (not
including three ships held through the Seabourn joint venture) with an aggregate
capacity of 28,195 passengers based on two passengers per cabin. The Company
also operates a tour business through Holland America Westours.
Certain statements under this heading "Business" constitute
"forward-looking statements" under the Reform Act. See "Special Note Regarding
Forward-Looking Statements."
CRUISE SHIP SEGMENT
INDUSTRY
The passenger cruise industry as it exists today began in approximately
1970. Over time, the industry has evolved from a trans-ocean carrier service
into a vacation alternative to land-based resorts and sight-seeing destinations.
According to Cruise Lines International Association ("CLIA"), an industry trade
group, approximately 500,000 North American passengers took cruises in 1970 for
three consecutive nights or more. CLIA estimates that this number reached 4.4
million passengers in 1995, an average compound annual growth rate of 9% since
1970. Also, according to CLIA, by the end of 1995 the number of ships in service
totaled 124 with an aggregate capacity of approximately 106,000 berths.
CLIA estimates that the number of cruise passengers will grow to 4.8
million in 1996. CLIA also projects that by the end of 1996, North America will
be served by 120 vessels having an aggregate capacity of approximately 112,000
berths.
The following table sets forth the North American industry and Company
growth over the past five years based on passengers carried for at least three
consecutive nights:
NORTH AMERICAN COMPANY CRUISE
YEAR CRUISE PASSENGERS PASSENGERS CARRIED
- --------------------------------------------------- ------------------- --------------------
CALENDAR (FISCAL)
1995............................................... 4,378,000 1,543,000
1994............................................... 4,448,000 1,354,000
1993............................................... 4,480,000 1,154,000
1992............................................... 4,136,000 1,153,000
1991............................................... 3,979,000 1,100,000
- ---------------
Source: CLIA.
From 1991 through 1995, the Company's average compound annual growth rate
in number of passengers carried was 8.8% versus the industry average of 2.0%.
The Company's passenger capacity has grown from 17,973 at November 30, 1991
to 28,195 at August 31, 1996. The deliveryoutstanding Debt Securities of the Statendam, Sensationseries to be represented
by such Global Security or Securities. Unless and Maasdamuntil it is exchanged in 1993 increased capacity by 4,572 passengers, more than offsettingwhole
or in part for Debt Securities in definitive certificated form, a capacity decrease of 906 passengers relatedGlobal
Security may be transferred, in whole but not in part, only to the saleanother nominee
of the Mardi Gras in
that year. During 1994, net capacity increased by 2,369 passengers dueDepository for such series, or to the
delivery of the Fascination and Ryndam, net of the 937 decrease in
20
passenger capacity related to the sale of the FiestaMarina. In 1995, with the
delivery of the Imagination, capacity increased by 2,040. To date in 1996, net
capacity increased by 2,158 passengers due to the delivery of the Inspiration
and the Veendam, net of the 1,146 decrease in passenger capacity related to the
charter of the Festivale to Dolphin Cruise LIne. See "--Other Cruise
Activities".
In spite of the cruise industry's growth since 1970, the Company believes
cruises represent only approximately 2% of the applicable North American
vacation market, defined as persons who travela successor Depository for leisure purposes on trips of
three nightssuch series
selected or longer involving at least one night's stay in a hotel. Only an
estimated 7% of the North American population has ever cruised.
CRUISE SHIPS AND ITINERARIES
Under the Carnival Cruise Lines name, the Company serves the contemporary
market with ten ships (collectively, the "Carnival Ships"). All of the Carnival
Ships were designed by and built for Carnival, including nine SuperLiners which
are among the largest in the cruise industry. Eight of the Carnival Ships
operate in the Caribbean and two Carnival Ships call on ports in the Mexican
Riviera. During 1996, the Carnival ship Tropicale began operating in Alaska
during the summer season. Carnival also offers cruises through the Panama Canal
and to the Hawaiian Islands. See "--Sales and Marketing."
Through its subsidiary, HAL, the Company operates eleven ships offering
premium or luxury specialty vacations. Eight of these ships, the Rotterdam, the
Nieuw Amsterdam, the Noordam, the Westerdam, the Statendam, the Maasdam, the
Ryndam and the Veendam are operated under the Holland America Line name (the
"HAL Ships"). The remaining three ships, the Wind Star, the Wind Song and the
Wind Spirit, are operated under the Windstar Cruises name (the "Windstar
Ships"). Seven of the HAL Ships were designed by and built for HAL. The three
Windstar Ships were built for Windstar Sail Cruises, Ltd. ("WSCL") between 1986
and 1988.
HAL offers premium cruises of various lengths in the Caribbean, Alaska,
Panama Canal, Europe, the Mediterranean, Hawaii, Mexico, South Pacific, South
America and the Orient. Cruise lengths for HAL vary from one to 99 days, with a
large proportion being seven or ten days in length. Periodically, the HAL Ships
make longer grand cruises or operate on short-term special itineraries. For
example, in 1996, the Rotterdam made a 50-day world cruise and a 99-day Grand
South America voyage. HAL will continue to offer these special and longer
itineraries in order to increase travel opportunities for its customers and
strengthen its cruise offerings in view of the fleet expansion. The majority of
the HAL Ships operate in the Caribbean during fall to late spring and in Alaska
during late spring to early fall. The three Windstar Ships currently operate in
the Caribbean, the Mediterranean and the South Pacific.
21
The following table presents summary information concerning the Company's
ships. Areas of operation are based on current itineraries and are subject to
change.
GROSS
PASSENGER REGISTERED PRIMARY AREAS
VESSEL REGISTRY BUILT CAPACITY(1) TONS OF OPERATION
- -------------------------------------------- -------------- --------- -------------- ------------- ----------------------
CARNIVAL CRUISE LINES:
Inspiration................................. Panama 1996 2,040 70,367 Caribbean
Imagination................................. Panama 1995 2,040 70,367 Caribbean
Fascination................................. Panama 1994 2,040 70,367 Caribbean
Sensation................................... Panama 1993 2,040 70,367 Caribbean
Ecstasy..................................... Liberia 1991 2,040 70,367 Caribbean
Fantasy..................................... Liberia 1990 2,044 70,367 Bahamas
Celebration................................. Liberia 1987 1,486 47,262 Caribbean
Jubilee..................................... Panama 1986 1,486 47,262 Mexican Riviera
Holiday..................................... Panama 1985 1,452 46,052 Mexican Riviera
Tropicale................................... Liberia 1982 1,022 36,674 Caribbean, Alaska
--------------
Total Carnival Ships Capacity............. 17,690
--------------
HOLLAND AMERICA LINE:
Veendam..................................... Bahamas 1996 1,266 55,451 Alaska, Caribbean
Ryndam...................................... Netherlands 1994 1,266 55,451 Alaska, Caribbean
Maasdam..................................... Netherlands 1993 1,266 55,451 Europe, Caribbean
Statendam................................... Netherlands 1993 1,266 55,451 Alaska, Caribbean
Westerdam................................... Netherlands 1986 1,494 53,872 Canada, Caribbean
Noordam..................................... Netherlands 1984 1,214 33,930 Alaska, Caribbean
Nieuw Amsterdam............................. Netherlands 1983 1,214 33,930 Alaska, Caribbean
Rotterdam................................... Netherlands 1959 1,075 37,783 Alaska, Worldwide
--------------
Total HAL Ships Capacity.................. 10,061
--------------
WINDSTAR CRUISES:
Wind Spirit................................. Bahamas 1988 148 5,736 Caribbean,
Mediterranean
Wind Song................................... Bahamas 1987 148 5,703 South Pacific
Wind Star................................... Bahamas 1986 148 5,703 Caribbean,
Mediterranean
--------------
Total Windstar Ships Capacity............. 444
--------------
Total Capacity............................ 28,195
--------------
--------------
Carnival Corporation also owns the Festivale, a 1,146 berth vessel built in
196`1, which it currently charters to Dolphin Cruise Line. In addition, Holland
America Line's Rotterdam is expected to be replaced in September 1997 by the
Rotterdam VI, which is currently under construction, and the Tropicale is
expected to enter service with the HMM joint venture in the spring of 1998.
- ---------------
(1) In accordance with cruise industry practice, passenger capacity is
calculated based on two passengers per cabin even though some cabins can
accommodate three or four passengers.
22
CRUISE SHIP CONSTRUCTIONS
The Company is currently constructing four cruise ships to be operated
under the Carnival name and three cruise ships to be operated under the Holland
America Line name. The following table presents summary information concerning
ships under construction:
EXPECTED PASSENGER APPROXIMATE
VESSEL SERVICE DATE SHIPYARD CAPACITY(1) TONS COST
- --------------------------------- ------------------- --------------- -------------- ---------- ------------------
(IN THOUSANDS)
CARNIVAL CRUISE LINES:
Carnival Destiny................. November 1996 Fincantieri(2) 2,640 101,000 $ 430,000
Elation.......................... March 1998 Masa-Yards 2,040 70,367 300,000
Paradise......................... December 1998 Masa-Yards 2,040 70,367 300,000
Carnival Triumph................. July 1999 Fincantieri(2) 2,640 101,000 415,000
-------------- ------------------
Total Carnival Ships........... 9,360 $ 1,445,000
-------------- ------------------
HOLLAND AMERICA LINE:
Rotterdam VI..................... October 1997 Fincantieri(2) 1,320 62,000 235,000
To Be Named...................... February 1999 Fincantieri(2) 1,440 63,000 300,000
To Be Named...................... September 1999 Fincantieri(2) 1,440 63,000 300,000
-------------- ------------------
Total HAL Ships................ 4,200 835,000
-------------- ------------------
Total.......................... 13,560 $ 2,280,000
-------------- ------------------
-------------- ------------------
- ---------------
(1) In accordance with cruise industry practice, passenger capacity is
calculated based on two passengers per cabin even though some cabins can
accommodate three or four passengers.
(2) The construction contracts with such shipyards are denominated in Italian
Lire. Contracts denominated in foreign currencies have been fixed into U.S.
Dollars through the utilization of forward currency contracts.
OTHER CRUISE ACTIVITIES
In April 1992, the Company acquired 25% of the capital stock of Seabourn
Cruise Line Limited ("Seabourn"). As part of the transaction, the Company also
made a subordinated secured ten-year loan of $15 million to Seabourn and a $10
million convertible loan to Seabourn. In December 1995, the $10 million
convertible loan was convertedapproved by the Company, into an additional 25% equity
interest in Seabourn. Seabourn operates three ultra-luxury ships, which have an
aggregate capacityor to a nominee of 612 passengers and have itinerariessuch successor
Depository. (Section 2.5).
The specific depository arrangement with respect to any series of Debt
Securities to be represented by a Global Security will be described in the
Caribbean, the
Baltic, the Mediterranean and the Far East.
CRUISE TARIFFS
The table below sets forth certain price information for the Company's
cruises. Unless otherwise noted, brochure prices include round trip airfare from
over 175 cities in the United States and Canada. If a passenger chooses not to
have the Company provide air transportation, the ticket price is reduced.
Brochure prices vary depending on size and location of cabin, the time of year
that the voyage takes place, and when the booking is made. The cruise brochure
price includes a wide variety of activities and facilities, such as a fully
equipped casino, nightclubs, theatrical shows, movies, parties, a discotheque, a
health club and swimming pools on each ship. The brochure price also includes
numerous dining opportunities daily.
23
Brochure pricing information below is per person based on double occupancy:
AREA OF OPERATION CRUISE LENGTH PRICE RANGE
- -------------------------------------------------------------------------- ----------------- -------------------
CARNIVAL CRUISE LINES:
Caribbean................................................................. 3-day $ 579- 1,199
4-day 679- 1,369
7-day 1,399- 2,469
Mexico.................................................................... 3-day 579- 1,199
4-day 679- 1,369
7-day 1,369- 2,469
HOLLAND AMERICA LINE (1):
Alaska.................................................................... 7-day $ 975- 7,000
Caribbean................................................................. 7-day 1,212- 5,775
10-day 2,030- 6,000
3,-14,045
Europe.................................................................... 10- to 12-day 3,335
Panama Canal.............................................................. 10- to 22-day 2,795-15,400
WINDSTAR CRUISES (1):
Caribbean................................................................. 7-day $ 3,195- 3,295
Mediterranean............................................................. 7- to 16-day 2,695- 6,095
South Pacific............................................................. 7-day 3,195- 3,495
- ---------------
(1) Prices represent cruise only
Brochure prices are regularly discounted through the Company's early
booking discount program and other promotions.
ON-BOARD AND OTHER REVENUESapplicable Prospectus Supplement.
PAYMENT OF ADDITIONAL AMOUNTS
The Company derives revenues from certain on-board activities and services
including casino gaming, liquor sales, gift shop sales, shore tours, photography
and promotional advertising by merchants located in ports of call.
The casinos, which contain slot machines and gaming tables including
blackjack, craps, roulette and stud poker are open when the ships are at sea in
international waters. The Company also earns revenue from the sale of alcoholic
beverages. Certain onboard activities are managed by independent concessionaires
from which the Company collects a percentage of revenues, while certain other
activities are managed by the Company.
The Company receives additional revenue from the sale to its passengers of
shore excursions at each ship's ports of call. On the Carnival Ships, such shore
excursions are operated by independent tour operators and include bus and taxi
sight-seeing excursions, local boat and beach parties, and nightclub and casino
visits. On the HAL Ships, shore excursions are operated by Holland America
Westours and independent parties.
In conjunction with its cruise vacations on the Carnival Ships, the Company
sells pre- and post-cruise land packages. Such packages generally include one,
two or three-night vacations at locations such as Walt Disney World in Orlando,
Florida or resorts in the South Florida and the San Juan, Puerto Rico areas.
In conjunction with its cruise vacations on the HAL Ships, HAL sells
pre-cruise and post-cruise land packages which are more fully described below.
See "--Tour Segment".
24
PASSENGERS
The following table sets forth the aggregate number of passengers carried
and percentage occupancy for the Company's ships for the periods indicated:
YEAR ENDED NOVEMBER 30,
NINE MONTHS ENDED ----------------------------------------
AUGUST 31, 1996 1995 1994 1993
------------------------ ------------ ------------ ------------
Number of Passengers.......................... 1,351,000 1,543,000 1,354,000 1,154,000
Occupancy Percentage(1)....................... 109.7% 105.0% 104.0% 105.3%
- ---------------
(1) In accordance with cruise industry practice, total capacity is calculated
based on two passengers per cabin even though some cabins can accommodate
three or four passengers. Occupancy percentages in excess of 100% indicate
that more than two passengers occupied some cabins.
The following table sets forth the actual occupancy percentage for all
cruises on the Company's ships for each quarter since the third quarter of
fiscal 1994:
OCCUPANCY
QUARTER ENDING PERCENTAGE
- ------------------------------------------------------------------------------ ---------------
August 31, 1996............................................................... 114.5%
May 31, 1996.................................................................. 107.2
February 28, 1996............................................................. 107.1
November 30, 1995............................................................. 104.6
August 31, 1995............................................................... 114.6
May 31, 1995.................................................................. 100.3
February 28, 1995............................................................. 99.9
November 30, 1994............................................................. 100.9
August 31, 1994............................................................... 113.4
SALES AND MARKETING
The Company's products are positioned to appeal to the contemporary,
premium and luxury specialty segments. The luxury specialty segment, which is
not as large as the other segments, is served by cruises with per diems of $300
or higher. The premium segment typically is served by cruises that last for
seven to 14 days or more at per diem rates of $250 or higher, and appeal
principally to more affluent customers. The contemporary segment, on the other
hand, is served typically by cruises that are seven days or shorter in length,
are priced at per diem rates of $200 or less, and feature a casual ambience. The
Company believes that the success and growth of the Carnival cruises is
attributable in large part to its early recognition of this market segmentation
and its efforts to reach and promote the expansion of the contemporary segment.
Carnival believes that its success is due in large part to its unique
product positioning within the industry. Carnival markets the Carnival Ship
cruises not only as alternatives to competitors' cruises, but as vacation
alternatives to land-based resorts and sight-seeing destinations. Carnival seeks
to attract passengers from the broad vacation market, including those who have
never been on a cruise ship before and who might not otherwise consider a cruise
as a vacation alternative. Carnival's strategy has been to emphasize the cruise
experience itself rather than particular destinations, as well as the advantages
of a prepaid, all-inclusive vacation package. Carnival markets the Carnival Ship
cruises as the "Fun Ships(R)" experience, which includes a wide variety of
shipboard activities and entertainment, such as full-scale casinos and
nightclubs, an atmosphere of pampered service and unlimited food.
25
The Company markets the Carnival Ships as the "Fun Ships(R)" and uses the
themes "Carnival's Got the Fun(R)" and "The Most Popular Cruise Line in the
World(R)", among others. Carnival advertises nationally directly to consumers on
network television and through extensive print media featuring its spokesperson,
Kathie Lee Gifford. Carnival believes its advertising generates interest in
cruise vacations generally and results in a higher degree of consumer awareness
of the "Fun Ships(R)" concept and the "Carnival(R)" name. Substantially all of
Carnival's cruise bookings are made through travel agents, which arrangement is
encouraged as a matter of policy. In fiscal 1995, Carnival took reservations
from about 29,000 of approximately 45,000 travel agencies in the United States
and Canada. Travel agents receive a standard commission of 10% (15% in the State
of Florida), plus the potential of an additional commission based on sales
volume. Moreover, because cruise vacations are substantially all-inclusive,
sales of Carnival cruise vacations yield a significantly higher commission to
travel agents than selling air tickets and hotel rooms. During fiscal 1995, no
one travel agency accounted for more than 2% of Carnival's revenues.
Carnival engages in substantial promotional efforts designed to motivate
and educate retail travel agents about its "Fun Ships(R)" cruise vacations.
Carnival employs approximately 90 field sales representatives and 30 in-house
service representatives to motivate independent travel agents and promote its
cruises. Carnival believes it has the largest sales force in the industry.
To facilitate access and to simplify the reservation process, Carnival
employs approximately 360 reservation agents to take bookings from independent
travel agents. Carnival's fully-automated reservation system allows its
reservation agents to respond quickly to book cabins on its ships. Carnival has
a policy of pricing comparable cabins (based on size, location and length of
voyage) on its various ships at the same rate ("common rating"). Such common
rate includes round-trip airfare, which meanswill agree that any passenger can fly from
any one of over 140 cities in the United States and Canada to ports of
embarkation for the same price. Through common rating, Carnival is able to offer
customers a wider variety of voyages for the same price, which the Company
believes improves occupancy on all its cruises. However, discounts from brochure
prices may vary depending upon the ship, intinerary, time of year and demand for
each cruise.
Carnival's cruises generally are substantially booked several months in
advance of the sailing date. This lead time allows Carnival to adjust its
prices, if necessary, in relation to demand for available cabins, as indicated
by the level of advance bookings. Carnival's SuperSaver fares, introduced
several years ago, are designed to encourage potential passengers to book cruise
reservations earlier, which helps the Company to more effectively manage yields
(pricing and occupancy). Carnival's payment terms require that a passenger pay
approximately 15% of the cruise price within seven days of the reservation date
and the balance not later than 45 days before the sailing date for three- and
four-day cruises and 60 days before the sailing date for seven-day cruises.
The HAL and Windstar Ships cater to the premium and luxury specialty
markets, respectively. The Company believes that the hallmarks of the HAL
experience are beautiful ships and gracious attentive service. HAL communicates
this difference as "A Tradition of Excellence(R)", a reference to its long
standing reputation as a first class and grand cruise line.
Substantially all of HAL's bookings are made through travel agents, which
arrangement HAL encourages as a matter of policy. In fiscal 1995, HAL took
reservations from about 20,000 of approximately 45,000 travel agencies in the
United States and Canada. Travel agents receive a standard commission of between
10% and 15%, depending on the specific cruise product sold, with the potential
for override commissions based upon sales volume. During 1995, no one travel
agency accounted for more than 1% of HAL's total revenue.
HAL has focused much of its recent sales effort at creating an excellent
relationship with the travel agency community. This is related to the HAL
marketing philosophy that travel agents have a
26
large impact on the consumer cruise selection process, and will recommend HAL
more often because of its excellent reputation for service to both consumers and
independent travel agents. HAL solicits continuous feedback from consumers and
the independent travel agents making bookings with HAL to insure they are
receiving excellent service.
HAL's marketing communication strategy is primarily composed of newspaper
and magazine advertising, large scale brochure distribution and direct mail
solicitations to past passengers (referred to as "alumni") and television. HAL
engages in substantial promotional efforts designed to motivate and educate
retail travel agents about its products. HAL employs approximately 50 field
sales representatives, 15 teleaccount sales representatives and 15 sales and
service representatives to support the field sales force. Carnival's field sales
representatives also promote HAL products. To facilitate access to HAL and to
simplify the reservation process for the HAL ships, HAL employs approximately
260 reservation agents to take bookings from travel agents. HAL's cruises
generally are booked several months in advance of the sailing date. The Company
solicits current and former passengers of the Carnival Ships to take future
cruises on the HAL and Windstar Ships.
Windstar Cruises has its own marketing and reservations staff. Field sales
representatives for both HAL and Carnival act as field sales representatives for
Windstar. Marketing efforts are primarily devoted to (a) travel agent support
and awareness, (b) direct mail solicitation of past passengers, and (c)
distribution of brochures. The marketing features the distinctive nature of the
graceful, modern sail ships and the distinctive "casually elegant" experience on
"intimate itineraries" (apart from the normal cruise experience). Windstar's
cruise market positioning is embodied in the phrase "180 deg. from ordinary".
SEASONALITY
The Company's revenue from the sale of passenger tickets for the Carnival
Ships is moderately seasonal. Historically, demand for Carnival cruises has been
greater during the periods from late June through August. Demand traditionally
is lower during the period from September through mid-December and during May.
To allow for full availability during peak periods, drydocking maintenance is
usually performed in September, October and early December. HAL cruise revenues
are more seasonal than Carnival's cruise revenues. Demand for HAL cruises is
strongest during the summer months when HAL ships operate in Alaska and Europe
and HAL typically obtains higher prices for these summer products. Demand for
HAL cruises is lower during the winter months when HAL ships sail in more
competitive markets.
COMPETITION
Cruise lines compete for consumer disposable leisure time dollars with
other vacation alternatives such as land-based resort hotels and sight-seeing
destinations, and public demand for such activities is influenced by general
economic conditions.
The Carnival Ships compete with cruise ships operated by six different
cruise lines which operate year round from Florida, California and Puerto Rico
with similar itineraries and with ten other cruise lines operating seasonally
from other ports in Florida, California, and Puerto Rico including cruise ships
operated by HAL. Competition for cruise passengers in South Florida is
substantial. Ships operated by Royal Caribbean Cruise Line and Norwegian Cruise
Line sail regularly from Miami on itineraries similar to those of the Carnival
Ships. Carnival competes year round with ships operated by Royal Caribbean
Cruise Line and Princess Cruises embarking from Los Angeles to the west coast of
Mexico. Cruise lines such as Norwegian Cruise Lines, Royal Caribbean Cruise
Line, Costa Cruise Lines, Cunard and Princess Cruises offer voyages competing
with Carnival from San Juan to the Caribbean.
27
In the Alaska market, HAL and Carnival compete directly with cruise ships
operated by ten different cruise lines with the largest competitors being
Princess Cruises and Royal Caribean Cruise Lines. Over the past several years,
there has been a steady increase in the available capacity among all cruise
lines in the Alaska market.
In the Caribbean market, HAL competes with cruise ships operated by 16
different cruise lines, its primary competitors being Princess Cruises, Royal
Caribbean Cruise Line and Norwegian Cruise Line, as well as the Carnival Ships.
GOVERNMENTAL REGULATION
The Ecstasy, Fantasy, Celebration and Tropicale are Liberian flagged ships,
the Festivale is a Bahamian flagged ship, and the balance of the Carnival Ships
are registered in Panama. The, Ryndam, Maasdam, Statendam, Westerdam, Noordam,
Nieuw Amsterdam and Rotterdam are registered in the Netherlands, while the
Veendam is flagged in the Bahamas. The Windstar Ships are registered in the
Bahamas. The ships are subject to inspection by the United States Coast Guard
for compliance with the Convention for the Safety of Life at Sea and by the
United States Public Health Service for sanitary standards. The Company is also
regulated by the Federal Maritime Commission, which, among other things,
certifies ships on the basis of the ability of the Company to meet obligations
to passengers for refunds in case of non-performance. The Company believes it is
in compliance with all material regulations applicable to its ships and has all
licenses necessary to the conduct of its business. In connection with a
significant portion of its Alaska cruise operations, HAL relies on a concession
permit from the National Park Service to operate its cruise ships in Glacier Bay
National Park, which is periodically renewed. There can be no assurance that the
permits will continueamounts to be renewed or that regulations relating to the renewal
of such permits, including preference rights, will remain unchanged in the
future.
The International Maritime Organization has adopted safety standards as
part of the "Safety of Life at Sea" ("SOLAS") Convention, applicable generally
to all passenger ships carrying 36 or more passengers. Generally, SOLAS imposes
enhanced vessel structural requirements designed to improve passenger safety.
The SOLAS requirements are phased in through the year 2010. However, certain
stringent SOLAS fire safety requirements must be implementedpaid by 1997. Only two
of the Company's vessels, the Festivale (which is chartered to Dolphin Cruise
Line) and the Rotterdam are expected to be significantly affected by the SOLAS
1997 requirements. The Rotterdam will be retired from service effective
September 30, 1997. The decision regarding the additional SOLAS related
investment for the Festivale has not yet been made, but such expenditures would
not be material to the Company.
Public Law 89-777 administered by the Federal Maritime Commission ("FMC")
requires most cruise line operators to establish financial responsibility for
nonperformance of transportation. The FMC's regulations require that a cruise
line demonstrate its financial responsibility through a guaranty, escrow
arrangement, surety bond, insurance or self-insurance. Currently, the amount
required must equal 110% of the cruise line's highest amount of customer
deposits over a two-year period up to a maximum coverage level of $15 million
subject to a sliding scale. The FMC has proposed increasing the coverage
requirements under the FMC regulations. The proposed new regulations are viewed
favorably by the Company and are not expected to have a material effect on the
Company. The FMC has received public comments regarding the proposed regulations
and may take final action at any time.
From time to time various other regulatory and legislative changes have
been or may in the future be proposed that could have an effect on the cruise
industry in general.
28
TOUR SEGMENT
In addition to its cruise business, HAL markets sight-seeing tours
separately and as a part of cruise/tour packages under the Holland America
Westours name. Tour operations are based in Alaska, Washington State and western
Canada. Since a substantial portion of Holland America Westours' business is
derived from the sale of tour packages in Alaska during the summer tour season,
tour operations are highly seasonal.
HOLLAND AMERICA WESTOURS
Holland America Westours is a wholly-owned subsidiary of HAL. The group of
subsidiaries which together comprise the tour operations perform three
independent yet interrelated functions. During 1995, as part of an integrated
travel program to destinations in Alaska, the tour service group offered 35
different tour programs varying in length from seven to 19 days. The
transportation group and hotel group support the tour service group by supplying
facilities needed to conduct tours. Facilities include dayboats, motor coaches,
rail cars and hotels.
Two luxury dayboats perform an important role in the integrated Alaska
travel program offering tours to the glaciers and fjords of Alaska and the Yukon
River. The Yukon Queen cruises the Yukon River between Dawson City, Yukon
Territory and Eagle, Alaska and the Ptarmigan operates on Portage Lake in
Alaska. The two dayboats have a combined capacity of 249 passengers.
A fleet of over 290 motor coaches using the trade name Gray Line operates
in Alaska, Washington and western Canada. These motor coaches are used for
extended trips, city sight-seeing tours and charter hire. HAL conducts its tours
both as part of a cruise/tour package and as individual sight-seeing products
sold under the Gray Line name. In addition, HAL operates express Gray Line motor
coach service between downtown Seattle and the Seattle-Tacoma International
Airport.
Thirteen private domed rail cars, which are called "McKinley Explorers",
run on the Alaska railroad between Anchorage and Fairbanks, stopping at Denali
National Park.
In connection with its tour operations, HAL owns or leases motor coach
maintenance shops in Seattle, and at Juneau, Denali Park, Fairbanks, Anchorage,
Skagway and Ketchikan in Alaska. HAL also owns or leases service offices at
Anchorage, Fairbanks, Juneau, Ketchikan and Skagway in Alaska, at Whitehorse in
the Yukon Territory, in Seattle and at Vancouver in British Columbia. Certain
real property facilities on federal land are used in HAL's tour operations
pursuant to permits from the applicable federal agencies.
WESTMARK HOTELS
HAL owns and/or operates 16 hotels in Alaska and the Canadian Yukon under
the name Westmark Hotels. Four of the hotels are located in Canada's Yukon
Territory and offer a combined total of 585 rooms. The remaining 12 hotels, all
located throughout Alaska, provide a total of 1,649 rooms, bringing the total
number of hotel rooms to 2,234.
The hotels play an important role in HAL's tour program during the summer
months when they provide accommodations to the tour passengers. The hotels
located in the larger metropolitan areas remain open during the entire year,
acting during the winter season as centers for local community activities while
continuing to accommodate the traveling public. HAL hotels include dining,
lounge and conference or meeting room facilities. Certain hotels have gift shops
and other tourist services on the premises.
29
The hotels are summarized in the following table:
OPEN DURING
HOTEL NAME LOCATION ROOMS 1996 SEASON
- -------------------------------------------------------------------- ---------------- ----------- --------------
ALASKA HOTELS:
Westmark Anchorage................................................ Anchorage 198 year-round
Westmark Inn...................................................... Anchorage 90 seasonal
Westmark Inn...................................................... Fairbanks 173 seasonal
Westmark Fairbanks................................................ Fairbanks 238 year-round
Westmark Juneau................................................... Juneau 105 year-round
The Baranof....................................................... Juneau 193 year-round
Westmark Cape Fox................................................. Ketchikan 72 year-round
Westmark Kodiak................................................... Kodiak 81 year-round
Westmark Shee Atika............................................... Sitka 101 year-round
Westmark Inn Skagway.............................................. Skagway 209 seasonal
Westmark Tok...................................................... Tok 92 seasonal
Westmark Valdez................................................... Valdez 97 year-round
CANADIAN HOTELS (YUKON TERRITORY):
Westmark Inn...................................................... Beaver Creek 174 seasonal
Westmark Klondike Inn............................................. Whitehorse 99 seasonal
Westmark Whitehorse............................................... Whitehorse 181 year-round
Westmark Inn...................................................... Dawson 131 seasonal
Thirteen of the hotels are owned by a HAL subsidiary. The remaining three
hotels, Westmark Anchorage, Westmark Cape Fox and Westmark Shee Atika, are
operated by Westmark under arrangements involving third parties such as
management agreements and leases.
For the hotels that operate year-round, the occupancy percentage for 1995
was 58.9%, and for the hotels that operate only during the summer months, the
occupancy percentage for 1995 was 76.7%.
SEASONALITY
The Company's tour revenues are extremely seasonal with a large majority
generated during the late spring and summer months in connection with the Alaska
cruise season. Holland America Westours' tours are conducted in Washington and
Alaska. The Alaska tours coincide to a great extent with the Alaska cruise
season, May through September. Washington tours are conducted year-round
although demand is greatest during the summer months. During periods in which
tour demand is low, HAL seeks to maximize its motor coach charter activity such
as operating charter tours to ski resorts in Washington and Canada.
SALES AND MARKETING
HAL tours are marketed both separately and as part of cruise-tour packages.
Although most HAL cruise-tours include a HAL cruise as the cruise segment, other
cruise lines also market HAL tours as a part of their cruise tour packages and
sight-seeing excursions. Tours sold separately are marketed through independent
travel agents and also directly by HAL, utilizing sales desks in major hotels.
General marketing for the hotels is done through various media in Alaska, Canada
and the continental United States. Travel agents, particularly in Alaska, are
solicited, and displays are used
30
in airports in Seattle, Washington, Portland, Oregon and various Alaskan cities.
Rates at Westmark Hotels are on the upper end of the scale for hotels in Alaska
and the Canadian Yukon.
CONCESSIONS
Certain tours in Alaska are conducted on federal property requiring
concession permits from the applicable federal agencies such as the National
Park Service or the United States Forest Service.
COMPETITION
Holland America Westours competes with independent tour operators and motor
coach charter operators in Washington, Alaska and the Canadian Rockies. The
primary competitors in Alaska are Princess Tours (which owns approximately 130
motor coaches and three hotels) and Alaska Sightseeing/Trav-Alaska (which owns
approximately 43 motor coaches). The primary competitor in Washington is Gazelle
(with approximately 18 motor coaches). The primary competitors in the Canadian
Rockies are Tauck Tours, Princess Tours and Brewster Transportation.
Westmark Hotels compete with various hotels throughout Alaska, including
the Super 8 national motel chain, many of which charge prices below those
charged by HAL. Dining facilities in the hotels also compete with the many
restaurants in the same geographic areas.
GOVERNMENT REGULATION
HAL's motor coach operations are subject to regulation both at the federal
and state levels, including primarily the U.S. Department of Transportation, the
Washington Utilities Department of Transportation, the British Columbia Motor
Carrier Commission and the Alaska Department of Transportation. Certain of HAL's
tours involve federal properties and are subject to regulation by various
federal agencies such as the National Park Service, the Federal Maritime
Administration and the U.S. Forest Service.
In connection with the operation of its beverage facilities in the Westmark
Hotels, HAL is required to comply with state, county and/or city ordinances
regulating the sale and consumption of alcoholic beverages. Violations of these
ordinances could result in fines, suspensions or revocation of such licenses and
preclude the sale of any alcoholic beverages by the hotel involved.
In the operation of its hotels, HAL is required to comply with applicable
building and fire codes. Changes in these codes have in the past and may in the
future, require substantial capital expenditures to insure continuing compliance
such as the installation of sprinkler systems.
AIRTOURS
In April 1996, the company acquired a 29.5% interest in Airtours for
approximately $307 million. Airtours is a leisure travel company publicly traded
on the London Stock Exchange and provides air inclusive packaged holidays to the
British, Scandinavian and North American markets. Airtours provides holidays to
approximately 4.4 million people per year and owns or operates 41 hotels, 3
cruise ships and 31 aircraft.
Airtours was founded in the United Kingdom in 1972 and is currently the
second largest provider of air inclusive packages in the United Kingdom. In
1994, Airtours entered the Scandinavian market via the acquisition of the
Scandinavian Leisure Group and expanded its share of this market in 1996 with
the acquisition of Spies. In 1995 Airtours acquired Sunquest Vacations, a
Canadian tour operator. Today Airtours is the market leader in Scandinavia and
is one of Canada's leading tour operators.
31
Airtours principal brands in the United Kingdom are Airtours, Aspro and
Tradewinds. Airtours and Aspro offer packaged tours on charter flights primarily
to the Mediterranean, Canary Islands, Caribbean and Florida. Tradewinds focuses
on long haul destinations and offers scheduled flights. In addition , Eurosites
provides self drive camping holidays mainly to the south of France. Eurosites is
also sold in Germany, Holland and Denmark.
In Scandinavia, Airtours' primary brands are Ving, Spies, Tjacreborg, Saga
and Always. Each brand is focused on a particular segment of the Scandinavian
market and primarily provides holidays to the Mediterranean and Canary Islands.
Sunquest and Alba are Airtours main brands in Canada and their principal
destinations are the Caribbean, the United States and Mexico. In contrast to the
United Kingdom and Scandinavia, Canada's peak season is the winter. Alba also
offers a summer program to Italy.
Under the Going Places brand, Airtours owns over 700 retail travel
branches, most of which offer foreign exchange facilities. Going Places is the
second largest travel agency in the United Kingdom and distributes Airtours's
own products together with those of other tour operators. In 1994, Airtours
acquired Late Escapes, a telephone sales business specializing in the sale of
vacations within eight weeks of departure.
Airtours operates 18 aircraft exclusively for its U.K. tour operators
providing a large proportion of their flying requirements. In addition,
Airtours' subsidiary Premiair operates a fleet of 13 aircraft, which provides
most of the flying requirements for Airtours' Scandinavian tour operators.
Airtours owns or operates 41 hotels (6,500 rooms) which provide rooms to
Airtours' tour operators principally in the Mediterranean and the Canary
Islands. 16 of the hotels are marketed by Airtours' tour operators under the
exclusive Sunwing brand. In addition, Airtours has a 50% interest in Tenerife
Sol, a joint venture with Sol Hotels Group of Spain, which owns and operates
three hotels in the Canary Islands providing 1,300 rooms.
Through its subsidiary Sun Cruises, Airtours owns and operates two cruise
ships. Both the 800-berth MS Seawing and the 1,062-berth MS Carousel commenced
operations in 1995. Recently, Airtours acquired a third ship, the MS Song of
Norway, which is a sister ship of the MS Carousel. The MS Song of Norway is
expected to commence operations in May 1997. The ships operate in the
Mediterranean, the Caribbean and around the Canary Islands and are sold
exclusively by Airtours' tour operators.
LITIGATION
Wartsila Marine Industries Incorporated ("Wartsila") operated a Finnish
shipyard and had contracted to build three ships for the Company in the late
1980s. Wartsila filed for bankruptcy in 1989 without completing construction of
the vessels, causing the Company to incur incremental costs to complete the
ships and to lose profits because of the delay in their delivery. During 1995,
the Company received $40 million in cash from the settlement of litigation with
Metra Oy, the former parent company of Wartsila, related to losses suffered in
connection with the construction of these three ships. Of the $40 million
received, $6.2 million was used to pay related legal fees, $14.4 million was
recorded as other income and $19.4 million was used to reduce the cost basis of
certain ships which had been the subject of the Company's lawsuit against Metra
Oy.
On June 25, 1996, the Company reached an agreement with the trustees of
Wartsila and creditors for the bankruptcy which resulted in an additional cash
payment of approximately $80 million. Of the $80 million received, $5 million
was used to pay certain costs, $32 million was recorded as other income and $43
million was used to reduce the cost basis of certain ships which had been
affected by the bankruptcy.
32
The United States Attorney for the District of Alaska has commenced an
investigation to determine if a Holland America Line vessel discharged bilge
water, alleged to have contained oil or oily mixtures, at various locations
allegedly within United States territorial waters at various times during the
summer and early fall of 1994. It is unknown whether any proceedings will be
initiated and, if so, what violations will be alleged. To date, no penalties
have been sought or imposed. Management does not believe that the amount of
potential penalties will have a material impact on the Company.
In April 1996, a complaint was filed in the Circuit Court of the Eleventh
Judicial Circuit against the Company and a complaint was filed in the Superior
Court of Washington against Holland America Westours (the "Port Charges
Complaints"). The Port Charges Complaints, brought on behalf of a purported
class of all persons who traveled on a Company ship within the past four years
and paid "Port Charges" to the Company, allege that statements made by the
Company in advertising and promotional materials concerning Port Charges were
false and misleading. The Port Charges Complaints allege claims of negligent
misrepresentation and unjust enrichment and violations of the Washington
Consumer Protection Act and seek unspecified compensatory damages on behalf of
the purported class (or, alternatively, refunds of Port Charges allegedly in
excess of certain charges levied by governmental authorities), attorney's fees
and costs and punitive damages and injunctive relief. Two other complaints
containing allegations similar to those set forth in the Port Charges Complaints
have been filed in the Circuit Court of the Eleventh Judicial Circuit against
the Company since the filing of the Port Charges Complaints.
In June and August 1996, respectively, two complaints were filed against
both the Company and Holland America Westours in the Superior Court for the
State of California for the County of Los Angeles (the "Travel Agent
Complaints"). The Travel Agent Complaints, brought on behalf of a class of all
travel agencies who during the past four years booked a cruise with the Company,
contain allegations that the Company's advertising practices regarding Port
Charges resulted in an improper and concealed form of commission bypass. The
Travel Agent Complaints allege claims of breach of contract, negligent
misrepresentation, unjust enrichment, unlawful business practices and common law
fraud and seek unspecified compensatory damages (or alternatively, the payment
by the Company of usual and customary commissions on Port Charges in excess of
certain charges levied by government authorities), attorneys' fees and costs,
punitive damages and injunctive relief.
The Port Charges Complaints and the Travel Agent Complaints are in
preliminary stages and it is not now possible to determine the ultimate outcome
of the lawsuits. Management of the Company believes that the Company has
substantial and meritorious defenses to the claims and intends to vigorously
defend the lawsuits. Management understands that purported class action lawsuits
similar to the Port Charges Complaints and the Travel Agent Complaints have been
filed against five other cruise lines.
In the normal course of business, various other claims and lawsuits have
been filed or are pending against the Company. The majority of these claims and
lawsuits are covered by insurance. Management believes the outcome of any such
suits which are not covered by insurance would not have a material adverse
effect on the Company's financial condition or results of operations.
33
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Class A Common Stock as of October 15, 1996, and as adjusted to
reflect the sale of the Shares offered hereby, for the Selling Shareholders:
SHARES OF CLASS A COMMON SHARES OF CLASS A COMMON
STOCK BENEFICIALLY OWNED STOCK TO BE BENEFICIALLY
BEFORE SALE UNDER THIS OWNED AFTER SALE UNDER THIS
PROSPECTUS PROSPECTUS
NAME OF SELLING ----------------------------- SHARES TO BE ---------------------------
SHAREHOLDER NUMBER PERCENTAGE SOLD NUMBER PERCENTAGE
- -------------------------------------------- ------------ --------------- -------------- ------------ -------------
Ted Arison(1)............................... 74,289,600 31.0% 15,225,000(2) 59,064,600 24.7%
Arison Foundation, Inc.(3).................. 3,175,000 1.3% 3,175,000 0 0%
The Royal Bank of Scotland
Trust Company, as Trustee for
the Ted Arison Charitable Trust........... 1,900,000 (4) 1,900,000 0 0%
------------ ------ -------------- ------------ -------------
79,364,600 33.1% 20,300,000 59,064,600 24.7%
------------ ------ -------------- ------------ -------------
------------ ------ -------------- ------------ -------------
- ---------------
(1) Includes 2,332,458 shares of Class A Common Stock held by TAMMS Investment
Company, Limited Partnership ("TAMMS"). TAMMS' general partners are Ted
Arison and TAMMS Management Corporation ("TAMMS Corp."), a corporation
wholly-owned by Ted Arison. By virtue of his interest in TAMMS Corp., Ted
Arison may be deemed to beneficially own all of the 2,332,458 shares of
Class A Common Stock owned by TAMMS. Ted Arison disclaims beneficial
ownership of 1,810,364 of such shares, which are beneficially owned by the
partners of TAMMS (other than TAMMS Corp.).
(2) Ted Arison has granted the U.S. and International Underwriters
over-allotment options to purchase a total of 3,045,000 additional shares of
Class A Common Stock. If such options are exercised, Ted Arison will
beneficially own 56,019,600 shares of Class A Common Stock, representing
23.4% of the total issued and outstanding shares of Class A Common Stock.
(3) Shari Arison, Ted Arison's daughter, is a director of the Company and
President of the Arison Foundation, Inc. (the "Foundation"). The Foundation
is directed by six trustees, a majority of whom are affiliates of Ted
Arison. Ted Arison disclaims beneficial ownership of the 3,175,000 shares
owned by the Foundation. In addition, Micky Arison, the Chairman of the
Board and Chief Executive Officer of the Company, is the son of Ted Arison.
(4) Less than one percent of the outstanding shares of Class A Common Stock.
CERTAIN RELATED TRANSACTIONS
CONSULTING AGREEMENT. In November 1990, subsequent to his resignation as
Chairman of the Board, Ted Arison and the Company entered into a consulting
agreement (the "Consulting Agreement") whereby Ted Arison agreed to act as a
consultant to the Company with
respect to the constructionDebt Securities will be paid without deduction or withholding for
any and all present and future taxes, levies, imposts or other governmental
charges whatsoever imposed, assessed, levied or collected by or for the account
of cruise ships. In
July 1992, the Consulting Agreement was replacedRepublic of Panama (or by or for the account of the jurisdiction of
incorporation (other than the United States) of a new consulting agreement
(the "New Consulting Agreement") betweensuccessor corporation to the
Company, to the extent that such taxes first become applicable as a result of
the successor corporation becoming the obligor on the Debt Securities) or any
political subdivision or taxing authority thereof or therein ("Panamanian
Taxes") or, if deduction or withholding of any Panamanian Taxes shall at any
time be required by the Republic of Panama (or the jurisdiction of incorporation
(other than the United States) of a successor corporation to the Company) or any
such subdivision or authority, the Company will (subject to compliance by the
holders or beneficial owners of the relevant Debt Securities with any relevant
administrative requirements) pay such additional amounts ("Additional Amounts")
in respect of principal, premium, if any, interest, if any, and Arison Investments Ltd.
("AIL"sinking fund or
analogous payments, if any, as may be necessary in order that the net amounts
paid to the holders of the Debt Securities or the Trustee under the Indenture,
as the case may be, after such deduction or withholding, shall equal the
respective amounts of principal, premium, if any, interest, if any, and sinking
fund or analogous payments, if any, as specified in the Debt Securities to which
such holders or the Trustee are entitled; PROVIDED, HOWEVER, that the foregoing
shall not apply to (i) any present or future Panamanian Taxes which would not
have been so imposed, assessed, levied or collected but for the fact that the
holder or beneficial owner of the relevant Debt Security being or having been a
domiciliary, national or resident of, or engaging or having been engaged in
business or maintaining or having maintained a permanent
7
establishment or being or having been physically present in, the Republic of
Panama (or the jurisdiction of incorporation of a successor corporation to the
Company) or such political subdivision or otherwise having or having had some
connection with the Republic of Panama (or the jurisdiction of incorporation of
a successor corporation to the Company) or such political subdivision other than
the holding or ownership of a Debt Security, or the collection of principal of
and interest, if any, on, or the enforcement of, a Debt Security, (ii) any
present or future Panamanian Taxes which would not have been so imposed,
assessed, levied or collected but for the fact that, where presentation is
required, the relevant Debt Security was presented more than thirty days after
the date such payment became due or was provided for, whichever is later, or
(iii) any present or future Panamanian Taxes which would not have been so
imposed, assessed, levied or collected but for the failure to comply with any
certification, identification or other reporting requirements concerning the
nationality, residence, identity or connection with the Republic of Panama (or
the jurisdiction of incorporation of a successor corporation to the Company) or
any political subdivision thereof of the holder or beneficial owner of the
relevant Debt Security, if compliance is required by statute or by rules or
regulations of the Republic of Panama (or the jurisdiction of incorporation of a
successor corporation to the Company) or such political subdivision as a
condition to relief or exemption from Panamanian Taxes. The provisions described
in (i) through (iii) above are referred to herein as "Excluded Taxes." The
Company or any successor to the Company, as the case may be, will indemnify and
hold harmless each holder of the Debt Securities and upon written request
reimburse each holder for the amount of (i) any Panamanian Taxes levied or
imposed and paid by such holder of the Debt Securities (other than Excluded
Taxes) as a result of payments made with respect to the Debt Securities, (ii)
any liability (including penalties, interest and expenses) arising therefrom or
with respect thereto, and (iii) any Panamanian Taxes with respect to payment of
Additional Amounts or any reimbursement pursuant to this sentence. The Company
or any successor to the Company, as the case may be, will also (1) make such
withholding or deduction and (2) remit the full amount deducted or withheld to
the relevant authority in accordance with applicable law. The Company or any
successor to the Company, as the case may be, will furnish the Trustee within 30
days after the date the payment of any Panamanian Taxes is due pursuant to
applicable law, certified copies of tax receipts evidencing such payment by the
Company or any successor to the Company, as the case may be, which the Trustee
will forward to the holders of the Debt Securities.
At least 30 days prior to each date on which any payment under or with
respect to the Debt Securities is due and payable, if the Company will be
obligated to pay Additional Amounts with respect to such payments, the Company
will deliver to the Trustee an officers' certificate stating the fact that such
Additional Amounts will be payable, stating the amounts so payable and setting
forth such other information as may be necessary to enable the Trustee to pay
such Additional Amounts to holders of the Debt Securities on the payment date.
Whenever in the Indenture or any Debt Securities there is mentioned, in any
context, the payment of the principal, premium, if any, or interest, or sinking
fund or analogous payment, if any, in respect of such Debt Securities or overdue
principal or overdue interest or overdue sinking fund or analogous payment, such
mention shall be deemed to include mention of the payment of Additional Amounts
provided for herein to the extent that, in such context, Additional Amounts are,
were or would be payable in respect thereof pursuant to the provisions of this
Section and express mention thereof in any provisions hereof shall not be
construed as excluding Additional Amounts in those provisions hereof where such
express mention is not made (if applicable). (Section 10.5).
REDEMPTION OR ASSUMPTION OF DEBT SECURITIES UNDER CERTAIN CIRCUMSTANCES
Unless otherwise specified in the Prospectus Supplement with respect to any
series of Debt Securities, if as the result of any change in or any amendment to
the laws, including any regulations thereunder and any applicable double
taxation treaty or convention, of the Republic of Panama (or the jurisdiction of
incorporation (other than the United States) of a successor corporation to the
Company), or of any political subdivision or taxing authority thereof or therein
affecting taxation, or any change in an
8
application or interpretation of such laws, including any applicable double
taxation treaty or convention, which change, amendment, application or
interpretation (the "Change"), becomes effective on or after the original
issuance date of such series (or, in certain circumstances, such later date on
which a corporation affiliatedbecomes a successor corporation to the Company), it is
determined by the Company based upon an opinion of independent counsel of
recognized standing that (i) the Company would be required to pay Additional
Amounts in respect of principal, premium, if any, interest, if any, or sinking
fund or analogous payments, if any, on the next succeeding date for the payment
thereof, or (ii) any taxes would be imposed (whether by way of deduction,
withholding or otherwise) by the Republic of Panama (or the jurisdiction of
incorporation (other than the United States) of a successor corporation to the
Company) or by any political subdivision or taxing authority thereof or therein,
upon or with Ted Arison.respect to any principal, premium, if any, interest, if any, or
sinking fund or analogous payments, if any, then the Company may, at its option,
on giving not less than 30 nor more than 60 days' notice (which shall be
irrevocable) redeem such series of Debt Securities in whole, but not in part, at
any time (except in the case of Debt Securities of a series having a variable
rate of interest, which may be redeemed only on an interest payment date) at a
redemption price equal to 100% of the principal amount thereof plus accrued
interest to the date fixed for redemption (except in the case of outstanding
original issue discount Debt Securities which may be redeemed at the redemption
price specified by the terms of each series of such Debt Securities); provided,
however, that (i) no notice of redemption may be given more than 90 days prior
to the earliest date on which the Company would be obligated to pay such
Additional Amounts or such tax would be imposed, as the case may be, and (ii) at
the time that such notice of redemption is given, such obligation to pay
Additional Amounts or such tax, as the case may be, remains in effect. For
purposes of the foregoing, all references to the Company in this paragraph shall
include any successor corporation thereto. (Section 11.8).
MERGER AND CONSOLIDATION
The New Consulting Agreement
was amendedCompany may not consolidate with or merge into any other Person (as
defined in August 1996the Indenture) or transfer or lease all or substantially all of its
assets to extendany Person unless, after giving effect to such transaction, no Event
of Default, and no event which after notice or lapse of time or both would
become an Event of Default, shall have occurred and be continuing and the Person
formed by such consolidation or into which the Company is merged or the Person
which acquires or leases all or substantially all of its assets assumes all the
obligations of the Company under the Debt Securities and the Indenture. (Article
8).
EVENTS OF DEFAULT AND NOTICE THEREOF
Except as may otherwise be provided in an indenture supplemental to the
Indenture (a "Supplemental Indenture"), the following events in respect of a
particular series of Debt Securities are defined in the Indenture as "Events of
Default": (a) failure to pay interest (including Additional Amounts) for 30 days
after becoming due; (b) failure to pay the principal or premium, if any, when
due at maturity, on redemption or otherwise; (c) failure to make a sinking fund
payment for five days after becoming due; (d) failure to perform any other
covenants for 60 days after written notice as provided in the Indenture; (e)
failure to pay when due the principal of, or acceleration of, any indebtedness
for money borrowed by the Company in excess of $20 million, if such indebtedness
is not discharged, or such acceleration is not annulled, within 30 days after
written notice as provided in the Indenture; (f) certain events of bankruptcy,
insolvency or reorganization; and (g) any other Event of Default provided with
respect to Securities of such series (as indicated in the Prospectus Supplement
relating to such series of Securities). (Section 5.1).
If an Event of Default in respect of a particular series of Debt Securities
outstanding occurs and is continuing, either the Trustee or the holders of at
least 25% in aggregate principal amount of the Debt Securities outstanding of
such series may declare the principal amount (or, if the Debt Securities of such
series are Original Issue Discount Securities (as defined in the Indenture),
such portion of the principal amount as may be specified in the terms of such
series) of all of the Debt Securities of such series to be due
9
and payable immediately. At any time after such a declaration of acceleration in
respect of a particular series of Debt Securities has been made, but before a
judgment or decree for the payment of money due upon acceleration has been
obtained by the Trustee, the holders of a majority in aggregate principal amount
of the Debt Securities outstanding of such series may, under certain
circumstances, rescind and annul such declaration and its consequences if all
Events of Default in respect of the Debt Securities of such series, other than
the non-payment of principal due solely by such declaration of acceleration,
have been cured or waived as provided in the Indenture. (Section 5.2).
The Indenture provides that the Trustee shall, within 90 days after the
occurrence of a default in respect of a particular series of Debt Securities,
give the holders of such series notice of all uncured defaults known to it (the
term "default" to include the events specified above without grace periods);
PROVIDED that, except in the case of default in the payment of the principal of,
or premium, if any, on or interest on any of the Debt Securities of such series,
or in the payment of any sinking fund installment with respect to the Debt
Securities of such series, the Trustee shall be protected in withholding such
notice if it in good faith determines that the withholding of such notice is in
the interests of the holders of such series. (Section 6.2).
Pursuant to the terms of the agreement to November 25,
1999. Under the New Consulting Agreement,Indenture, the Company has agreedis required to pay AIL
$500,000 per yearfurnish
to the Trustee annually a statement of certain officers of the Company stating
whether or not to the best of their knowledge the Company is in default in
respect of any series of Debt Securities in the performance and observance of
the terms of the Indenture and, if the Company is in default, specifying such
default and the nature thereof. (Section 10.4).
The Indenture provides that the holders of a majority in aggregate principal
amount of all Debt Securities of a particular series then outstanding will have
the right to waive certain defaults in respect of such series and, subject to
certain limitations, to direct the time, method and place of conducting any
proceedings for any remedy available to the Trustee or exercising any trust or
power conferred on the Trustee. (Sections 5.12 and 5.13). The Indenture provides
that, in case an Event of Default in respect of a particular series of Debt
Securities shall occur (which shall not have been cured or waived), the Trustee
will be required to exercise such of its rights and powers under the Indenture,
and to reimburse it for all customaryuse the degree of care and usual expenses. The
New Consulting Agreement also hasskill in their exercise, that a non-competition clauseprudent man
would exercise or use in the conduct of his own affairs, but otherwise need only
perform such duties as are specifically set forth in the Indenture. (Section
6.1). Subject to such provisions, the Trustee will be under which AIL has
agreed that duringno obligation to
exercise any of its rights or powers under the termIndenture at the request of any
of the New Consulting Agreement itholders of such series unless they shall have offered to the Trustee
reasonable security or indemnity. (Section 6.3).
No holder of any series of Debt Securities will not, and
will cause its affiliate nothave any right to compete ininstitute
any way with the Company. In each of
fiscal 1993, 1994, and 1995, $500,000 in fees were paid to AIL under the New
Consulting Agreement. In connection with the performance of his consulting
services, Mr. Arison periodically utilizes an airplane leased by the Company.
Mr. Arison reimburses the Company for his personal
34
use of the airplane. In 1994 and 1995, Mr. Arison paid the Company $396,720 and
$264,000, respectively, for his personal use of the airplane.
REGISTRATION RIGHTS AGREEMENT. Under a registration rights agreement (the
"Arison Registration Rights Agreement"), the Company has granted certain
registration rights to Ted Arisonproceeding with respect to the sharesIndenture or for any remedy thereunder,
unless such holder shall have previously given to the Trustee written notice of
a continuing Event of Default and unless the holders of at least 25% in
aggregate principal amount of the outstanding Debt Securities of such series
shall have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as trustee, and the Trustee shall not have
received from the holders of a majority in aggregate principal amount of the
outstanding Debt Securities of such series a direction inconsistent with such
request and shall have failed to institute such proceeding within 60 days.
(Section 5.7). However, such limitations do not apply to a suit instituted by a
holder of a Debt Security for enforcement of payment of the principal of and
premium, if any, or interest on such Debt Security on or after the respective
due dates expressed in such Debt Security. (Section 5.8).
MODIFICATION OF THE INDENTURE
With certain exceptions, the Indenture, the rights and obligations of the
Company and the rights of the holders of a particular series may be modified by
the Company with the consent of the holders of not less than 66 2/3% in
aggregate principal amount of the Debt Securities of such series then
outstanding, but no such modification may be made which would (i) change the
stated maturity of the principal of (or
10
premium, if any, on) or interest on (including any Additional Amounts) any Debt
Security of such series, or reduce the principal amount thereof, or reduce the
rate of interest thereon, or reduce the amount of principal of an Original Issue
Discount Security payable upon acceleration of the maturity thereof, without the
consent of the holder of each Indenture Security of such series so affected; or
(ii) reduce the above-stated percentage of Debt Securities of such series, the
consent of the holders of which is required to modify or alter the Indenture,
without the consent of the holders of all Debt Securities of such series then
outstanding. (Section 9.2).
DEFEASANCE
An applicable Supplemental Indenture may provide that the Company may elect
either (i) to defease and be discharged from any and all obligations with
respect to the Debt Securities of any series pursuant to such Supplemental
Indenture, except for the obligation to pay Additional Amounts, and the
obligations to register the transfer or exchange of such Debt Securities, to
replace temporary or mutilated, destroyed, lost or stolen Debt Securities and to
maintain an office or agency in respect of such Debt Securities and to hold
moneys for payment in trust or (ii) to be released from its obligations with
respect to such Debt Securities under certain sections of such Indenture or
Supplemental Indenture or certain Events of Default, and any failure to comply
with such obligations will not constitute an Event of Default with respect to
such Debt Securities if, in either case, the Company irrevocably deposits with
the applicable Trustee, in trust, money or direct obligations of the United
States for the payment of which the full faith and credit of the United States
is pledged or obligations of an agency or instrumentality of the United States
the payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States, which, in either case, are not callable at the
issuer's option ("U.S. Government Obligations") or certain depositary receipts
therefor that through the payment of interest thereon and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
all the principal of and premium, if any, and any interest on, the Debt
Securities on the dates such payments are due in accordance with the terms of
such Debt Securities. Such defeasance may be effected only if, among other
things, (a) no Event of Default or event which with the giving of notice or
lapse of time, or both, would become an Event of Default under the applicable
Indenture has occurred and is continuing on the date of such deposit, (b) in the
event of defeasance under clause (i) above, the Company has delivered an opinion
of counsel, stating that (1) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (2) since the date of the
applicable Supplemental Indenture there has been a change in applicable federal
law, in either case to the effect that, the holders of the Debt Securities will
not recognize gain or loss for United States federal income tax purposes as a
result of such deposit or defeasance and will be subject to United States
federal income tax in the same manner as if such defeasance had not occurred and
(c) in the event of defeasance under clause (ii) above, the Company has
delivered an opinion of counsel to the effect that, among other things, the
holders of the Debt Securities will not recognize gain or loss for United States
federal income tax purposes as a result of such deposit or defeasance and will
be subject to United States federal income tax in the same manner as if such
defeasance had not occurred. In the event the Company fails to comply with its
remaining obligations under the applicable Indenture or Supplemental Indenture
after a defeasance of such Indenture and Supplemental Indenture with respect to
Debt Securities as described under clause (ii) above and the Debt Securities are
declared due and payable because of the occurrence of any undefeased Event of
Default, the amount of money and U.S. Government Obligations on deposit with the
applicable Trustee may be insufficient to pay amounts due on the Debt Securities
of such series at the time of the acceleration resulting from such Event of
Default. However, the Company will remain liable in respect of such payments.
SUBORDINATION
Upon any distribution of assets of the Company upon the dissolution, winding
up, liquidation or reorganization of the Company, the payment of the principal
of (and premium, if any) and interest on the Subordinated Debt Securities will
be subordinated to the extent provided in the Subordinated Indenture
11
and the applicable Supplemental Indenture in right of payment to the prior
payment in full of all senior indebtedness, including Senior Securities, but the
obligation of the Company to make payment of principal (and premium, if any) or
interest on the Subordinated Debt Securities will not otherwise be affected. No
payment on account of principal (or premium, if any), sinking fund or interest
may be made on the Subordinated Debt Securities at any time when there is a
default in the payment of principal, premium, if any, sinking fund or interest
on senior indebtedness. In the event that, notwithstanding the foregoing, any
payment by the Company described in the foregoing sentence is received by the
Subordinated Trustee under the Subordinated Indenture or the holders of any of
the Subordinated Debt Securities before all senior indebtedness is paid in full,
such payment or distribution will be paid over to the holders of such senior
indebtedness or on their behalf for application to the payment of all senior
indebtedness remaining unpaid until all such senior indebtedness has been paid
in full, after giving effect to any concurrent payment or distribution to the
holders of such senior indebtedness. Subject to payment in full of senior
indebtedness, the holders of the Subordinated Debt Securities will be subrogated
to the rights of the holders of the senior indebtedness to the extent of
payments made to the holders of such senior indebtedness out of the distributive
share of the Subordinated Debt Securities.
By reason of such subordination, in the event of a distribution of assets
upon insolvency, certain general creditors of the Company may recover more,
ratably, than holders of the Subordinated Debt Securities. A Subordinated
Indenture may provide that the subordination provisions thereof will not apply
to money and securities held in trust pursuant to the satisfaction and discharge
and the legal defeasance provisions of the Subordinated Indenture.
If this Prospectus is being delivered in connection with the offering of a
series of Subordinated Debt Securities, the accompanying Prospectus Supplement
or the information incorporated by reference therein will set forth the
approximate amount of senior indebtedness outstanding as of a recent date.
CONVERSION RIGHTS
The terms and conditions, if any, on which Debt Securities being offered are
convertible into Class A Common Stock or other Securities of the Company will be
set forth in an applicable Prospectus Supplement relating thereto. Such terms
will include the conversion price, the conversion period, provisions as to
whether conversion will be at the option of the holder or the Company, the
events requiring an adjustment of the conversion price and provisions affecting
conversion in the event of the redemption of such Debt Securities.
TRUSTEE
The Trustee may resign or be removed with respect to one or more series of
Debt Securities and a successor Trustee may be appointed to act with respect to
such one or more series. (Section 6.10). In the event that there shall be two or
more persons acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a trustee of a trust or trusts under the
Indenture separate and apart from the trust or trusts administered by any other
such Trustee, and any action described herein to be taken by the "Trustee" may
then be taken by each such Trustee with respect to, and only with respect to,
the one or more series of Debt Securities for which it is acting as Trustee.
(Section 6.11).
12
DESCRIPTION OF WARRANTS
The Company may issue Warrants for the purchase of Class A Common Stock beneficially owned by Ted Arison (the "Arison Shares"). If, at any time,
Ted Arison makes a written demand for the registration of any number of the
Arison Shares, subjector
Debt Securities, Warrants to a minimum amount of 500,000 shares, the Company will
within 90 days prepare and file with the SEC a registration statement, subject
to certain limitations. In addition, if the Company determines to file a
registration statement on its behalfpurchase or on behalf of any security holders (other
than a registration statement filed for the purpose of registering shares
issuable to employees under an employee benefit plan or in connection with a
business combination) relating to its Common Stock or any class of securities
convertible into Common Stock, Ted Arison may register the Arison Shares
pursuant to such registration statement, subject to certain limitations. The
Company has agreed to bear all expenses relating to such demand and piggyback
registrations, except for fees and disbursements of counsel for Ted Arison,
selling costs, underwriting discounts and applicable filing fees. In April 1995,
the Company filed a registration statement at the request of certain trusts for
the sale of 13,800,000 shares of the Company'ssell Class A Common Stock or Debt
Securities of or guaranteed by the United States ("Government Debt Securities"),
Warrants to purchase or sell foreign currencies, currency units or units of a
currency index or currency basket, Warrants to purchase or sell units of a stock
index or a stock basket and Warrants to purchase or sell a commodity or a
commodity index. Warrants may be issued independently or together with any Debt
Securities offered by any Prospectus Supplement and may be attached to or
separate from such Debt Securities. The Warrants will be settled either through
physical delivery or through payment of a cash settlement value as set forth
herein and in any applicable Prospectus Supplement. The Warrants will be issued
under warrant agreements (each a "Warrant Agreement") to be entered into between
the Company and a bank or trust company, as warrant agent (the "Warrant Agent"),
all as set forth in the Prospectus Supplement relating to the particular issue
of Warrants being offered pursuant thereto. The Warrant Agent will act solely as
an agent of the Company in connection with the Warrant certificates and will not
assume any obligation or relationship of agency or trust for or with any holders
of Warrant certificates or beneficial owners of Warrants. The following
summaries of certain provisions of the forms of Warrant Agreement do not purport
to be complete and are subject to, and are qualified in their entirety by
reference to the provisions of the forms of Warrant Agreement (including the
forms of Warrant certificates), copies of which are filed as an exhibit to the
Registration Statement.
The particular terms of the Warrants offered by any Prospectus Supplement,
as well as any modification or addition to the general terms of the Warrants as
herein described, which may be applicable to any Warrants are described in such
Prospectus Supplement relating to such Warrants and will be set forth in a
filing with the Commission. Accordingly, for a description of the terms of any
particular Warrants, reference must be made to both the Prospectus Supplement
relating to such Warrants and to the description of the Warrants set forth in
this Prospectus.
GENERAL
The Prospectus Supplement will describe the following terms of the Warrants
(to the extent such terms are applicable to such Warrants): (1) the title of
such Warrants; (2) the aggregate number of such Warrants; (3) whether the
Warrants are for the purchase or sale of Class A Common Stock, Debt Securities,
Government Debt Securities, currencies, currency units, composite currencies,
currency indices or currency baskets, stock indices, stock baskets, commodities,
commodity indices or such other index or reference as therein described; (4) the
price or prices at which such Warrants will be offered; (5) the currency or
currencies, including composite currencies or currency units, in which the price
of such Warrants may be payable; (6) the date, if any, on and after which such
Warrants and the related Class A Common Stock or Debt Securities will be
separately transferable; (7) the date on which the right to exercise such
Warrants shall commence, and the date on which such right shall expire; (8) the
maximum or minimum number of such Warrants which may be exercised at any time;
(9) a discussion of material federal income tax considerations, if any; (10) the
terms, procedures and limitations relating to the exercise of such Warrants; and
(11) any other terms of the Warrants, including any terms which may be required
or advisable under United States laws or regulations.
If the Warrants are to purchase Class A Common Stock, the Prospectus
Supplement will also describe the price at which the underlying Class A Common
Stock purchased upon exercise of the Warrants may be purchased.
If the Warrants are to purchase Debt Securities, the Prospectus Supplement
will also describe (a) the designation, aggregate principal amount, currency,
currency unit, composite currency or currency basket of denomination and other
terms of the Debt Securities purchasable upon exercise of the Warrants; (b) the
designation and terms of the Debt Securities with which the Warrants are issued
and the number of Warrants issued with each such Debt Security; (c) the date on
and after which the Warrants and the related
13
Debt Securities will be separately transferable, if any; and (d) the principal
amount of Debt Securities purchasable upon exercise of each Warrant and the
price at which and currency, currency unit, composite currency or currency
basket in which such principal amount of Debt Securities may be purchased upon
such exercise.
If the Warrants are to purchase or sell Government Debt Securities or a
foreign currency, currency unit, composite currency, currency index or currency
basket, such Warrants will be listed on a national securities exchange and the
Prospectus Supplement will describe the amount and designation of the Government
Debt Securities or currency, currency unit, composite currency, currency index
or currency basket, as the case may be, subject to each Warrant, whether such
Warrants are to purchase or sell the Government Debt Securities, foreign
currency, currency unit, composite currency, currency index or currency basket,
whether such Warrants provide for cash settlement or delivery of the Government
Debt Securities or foreign currency, currency unit, composite currency, currency
index or currency basket upon exercise, and the national securities exchange on
which the Warrants will be listed.
If the Warrants are to purchase or sell a stock index or a stock basket,
such Warrants will provide for payment of an amount in cash determined by
reference to increases or decreases in such stock index or stock basket and will
be listed on a national securities exchange, and the Prospectus Supplement will
describe the terms of the Arison Registration Rights Agreement. The Company incurred
approximately $300,000 in expenses in connection withWarrants, whether such warrants are to purchase or
sell the registrationstock index or stock basket, the stock index or stock basket covered by
the Warrants and the market to which such stock index or stock basket relates,
whether such warrants are to purchase or sell the stock index or stock basket
and the national securities exchange on which the Warrants will be listed.
If the Warrants are to purchase or sell a commodity or commodity index, such
Warrants will provide for cash settlement or delivery of the particular
commodity or commodities and such shares. In addition, this Registration Statement was filed atWarrants will be listed on a national
securities exchange, and the request of Ted
Arison pursuant toProspectus Supplement will describe the terms of
the Arison Registration Rights AgreementWarrants, the commodity or commodity index covered by the Warrants, whether
such Warrants are to purchase or sell the commodity or commodity index, whether
such Warrants provide for cash settlement or delivery of the commodity or
commodity index, the market, if any, to which such commodity or commodity index
relates and the national securities exchange on which the Warrants will be
listed.
Warrant certificates may be exchanged for new Warrant certificates of
different denominations, may be presented for registration of transfer, and may
be exercised at the corporate trust office of the Warrant Agent or any other
office indicated in the Prospectus Supplement. Warrants to purchase or sell
Government Debt Securities or a foreign currency, currency unit, composite
currency, currency index or currency basket, and Warrants to purchase stock
indices or stock baskets or commodities or commodity indices, may be issued in
the form of a single Global Warrant Certificate, registered in the name of the
nominee of the depository of the Warrants, or may initially be issued in the
form of definitive certificates that may be exchanged, on a fixed date, or on a
date or dates selected by the Company, for interests in a Global Warrant
Certificate, as set forth in the applicable Prospectus Supplement.
Prior to the exercise of their Warrants, holders of Warrants to purchase
Class A Common Stock or Debt Securities will not have any of the rights of
holders of such Securities purchasable upon such exercise.
EXERCISE OF WARRANTS
Each Warrant will entitle the holder to purchase such principal amount of
Class A Common Stock or Debt Securities or purchase or sell such amount of
Government Debt Securities or of such currency, currency unit, composite
currency, currency index or currency basket, stock index or stock basket,
commodity or commodities at such exercise price, or receive such settlement
value in respect of such amount of Government Debt Securities or of such
currency, currency unit, composite currency, currency index or currency basket,
stock index or stock basket, commodity or commodity index, as shall in each case
be set forth in or calculable from, the Prospectus Supplement relating to such
Warrants or as otherwise set forth in the Prospectus Supplement. Warrants may be
exercised on the date set forth in the Prospectus
14
Supplement relating to such Warrants or as may be otherwise set forth in the
Prospectus Supplement. After such time on that date (or such later date to which
such date may be extended by the Company), unexercised Warrants will become
void.
Subject to any restrictions and additional requirements that may be set
forth in the Prospectus Supplement relating thereto, Warrants may be exercised
by delivery to the Warrant Agent of the Warrant certificate evidencing such
Warrants properly completed and duly executed and of payment as provided in the
Prospectus Supplement of the amount required to purchase the Debt Securities, or
(except in the case of Warrants providing for cash settlement) payment for or
delivery of the Government Debt Securities or currency, currency unit, composite
currency, currency index, currency basket, stock index, stock basket, commodity
or commodities index as the case may be, purchased or sold upon such exercise.
Warrants will be deemed to have been exercised upon receipt of such Warrant
certificate and any such payment, if applicable, at the corporate trust office
of the Warrant Agent or any other office indicated in the Prospectus Supplement
and the Company expects to incur approximately $will, as soon as practicable thereafter, issue and deliver the
Debt Securities purchasable upon such exercise, or purchase or sell such
Government Debt Securities or currency, currency unit, composite currency,
currency index or currency basket, stock index or stock basket, commodity or
commodities or pay the settlement value in respect of expenses in connection with this
offering.
35
such Warrants. If fewer
than all of the Warrants represented by such Warrant certificate are exercised,
a new Warrant certificate will be issued for the remaining amount of the
Warrants.
DESCRIPTION OF CAPITAL STOCK
GENERAL
The Company's authorized capital stock consists of 399,500,000 shares of
Class A Common Stock and 100,500,000 shares of Class B Common Stock. As of the
date hereof, there are 297,206,642 shares of Class A Common Stock and no shares
of Class B Common Stock outstanding. The Company presently has no intention of
issuing any shares of Class B Common Stock.
VOTING
Holders of Class A Common Stock and Class B Common Stock vote as a single
class on all matters submitted to a vote of the shareholders, with each share of
Class A Common Stock entitled to one vote and each share of Class B Common Stock
entitled to five votes, except (i) for the election of directors, and (ii) as
otherwise provided by law. In the annual election of directors, the holders of
Class A Common Stock, voting as a separate class, are entitled to elect 25% of
the directors to be elected (rounded up to the nearest whole number). The
holders of Class B Common Stock, voting as a separate class, are entitled to
elect 75% of the directors to be elected (rounded down to the nearest whole
number), so long as the number of outstanding shares of Class B Common Stock is
at least 12 1/2% of the number of outstanding shares of both classes of Common
Stock. If the number of outstanding shares of Class B Common Stock falls below
12 1/2%, directors that would have been elected by a separate vote of that class
will instead be elected by the holders of both classes of Common Stock, with
holders of Class A Common Stock having one vote per share and holders of Class B
Common Stock having five votes per share. Because there are currently no shares
of Class B Common Stock outstanding, the holders of Class A Common Stock
currently elect all of the directors of the Company.
Directors may be removed, with or without cause, by the holders of the class
or classes of Common Stock that elected them. Vacancies in a directorship may be
filled by the vote of the class of shares that had previously filled that
vacancy, or by the remaining directors of that class; if there are no such
directors, however, the vacancy may be filled by the remaining directors of the
other class.
Except for the election or removal of directors as described above and
except for class votes as required by law, holders of both classes of Common
Stock vote or consent as a single class on all matters,
15
with each share of Class A Common Stock having one vote per share and each share
of Class B Common Stock having five votes per share.
CONVERSION
At the option of the holder of record, each share of Class B Common Stock is
convertible at any time into one share of Class A Common Stock. Shares of Class
A Common Stock are not convertible into shares of Class B Common Stock.
DIVIDENDS
The holders of the Common Stock are entitled to receive such dividends, if
any, as may be declared by the Board of Directors in its discretion out of funds
legally available therefor. Any dividend declared by the Board of Directors on
the Company's Common Stock must be paid concurrently at the same rate on the
Class A Common Stock and the Class B Common Stock. Panamanian law permits the
payment of dividends to the extent of retained earnings.
OTHER PROVISIONS
Upon liquidation or dissolution of the Company, the holders of shares of
Common Stock are entitled to receive on a pro rata basis all assets remaining
for distribution to common stockholders. The Common Stock has no preemptive or
other subscription rights and there are no other 36
conversion rights or redemption
or sinking fund provisions with respect to such shares. All shares of Class A
Common Stock that are currently outstanding are fully paid and non-assessable.
The B Trust is a party to an amended and restated shareholders agreement
with the Company and certain other parties pursuant to which the B Trust may not
voluntarily transfer its shares of Class B Common Stock until July 1, 1997,
except under certain conditions designed to ensure, to the extent feasible, that
the transfer will not affect the Company's CFC status. In addition, until such
date, pursuant to the shareholder's agreement, the B Trust may not cause the
Company to authorize or issue any securities, if after giving effect to the
issuance thereof and to any related transactions, the Company would cease to be
a CFC. The B Trust also may not convert its shares of Class B Common Stock into
Class A Common Stock until July 1, 1997.
Neither Panamanian law nor the Company's Articles of Incorporation or
By-laws impose limitations on the right of non-resident or foreign owners to
hold or vote shares of the Common Stock. While no tax treaty currently exists
between the Republic of Panama and the United States, under current law the
Company believes that distributions to its shareholders are not subject to
taxation under the laws of the Republic of Panama.
Under Panamanian law, directors of the Company may vote by proxy.
The Company's transfer agent and registrar for the Class A Common Stock is
First Union National Bank of North Carolina.
37
TAXATION
The following discussion summarizes certain United States Federal income
tax consequences to United States persons holding the Company's Class A Common
Stock. This discussion is a summary for general information only, and is not a
complete analysis of the tax considerations that may be applicable to a
prospective investor. This discussion also does not address the tax consequences
that may be relevant to particular categories of investors subject to special
treatment under certain Federal income tax laws, such as dealers in securities,
tax-exempt entities, banks, insurance companies and foreign individuals and
entities. In addition, it does not describe any tax consequences arising out of
the tax laws of any state, locality or foreign jurisdiction. The discussion is
based upon currently existing provisions of the Code, existing and proposed
regulations thereunder and current administrative rulings and court decisions.
All of the foregoing are subject to change and any such change could affect the
continuing validity of this discussion. In connection with the foregoing,
investors should be aware that the Tax Reform Act of 1986 (hereinafter, the
"1986 Tax Act") changed significantly the United States Federal income tax rules
applicable to the Company and certain holders of its stock (including the
Principal Shareholders). Although the relevant provisions of the 1986 Tax Act
are discussed herein, those provisions have not yet been the subject of
extensive administrative or judicial interpretation. Accordingly, there can be
no assurance that such interpretation will not have an adverse impact on an
investment in the Class A Common Stock.
PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEMPLAN OF ANY INVESTMENT IN THE CLASS A COMMON
STOCK, INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
DIVIDENDS; UNDISTRIBUTED INCOME OF THE COMPANY
A United States person whose holdings of the Company's Class A Common Stock
(including shares such person is considered to own under applicable attribution
rules) represent less than 10 percent of the total combined voting power of all
classes of the Company's capital stock, generally is not required to recognize
income by reason of the Company's earnings until such earnings are distributed.
Dividends paid by the Company to such a shareholder will be taxable to such
shareholder as dividend income to the extent of the Company's current or
accumulated earnings and profits. Such dividends generally will not be eligible
for any dividends-received deduction. The same treatment will apply to any
dividends that may be distributed to all shareholders by reason of certain tax
liabilities of the Principal Shareholders.
If, however, the Company is a CFC for an uninterrupted period of 30 days
during any taxable year of the Company, a United States person who owns (or is
considered to own) 10% or more of the Company's voting power (a "Ten Percent
Shareholder") on the last day of such taxable year on which the Company is a CFC
will generally be required to include in ordinary income his pro rata share of
the Company's "subpart F income" for that taxable year and, in addition, certain
other items, including, under certain circumstances, the Company's increase in
earnings invested in United States property, and amounts of previously excluded
subpart F income withdrawn by the Company from investment in certain shipping
and related assets, whether or not any amounts are actually distributed to
shareholders. "Subpart F income" includes, among other things, "foreign base
company shipping income," which is defined to include income derived from using
or chartering a vessel in foreign commerce or from the sale, exchange or other
disposition of a vessel. Accordingly, a substantial part of the Company's
earnings will be subpart F income. Earnings and profits of the Company already
included in income by a Ten Percent Shareholder by reason of the CFC provisions
discussed above are not again included in income by such Ten Percent Shareholder
or his assignee when an actual distribution is made. Other distributions by the
38
Company by way of dividends with respect to the Common Stock out of current or
accumulated earnings and profits will be taxed to Ten Percent Shareholders as
ordinary income.DISTRIBUTION
The Company is currently a CFC and thus, the special rules discussed above
will apply to certain of the Principal Shareholders.
DISPOSITIONS OF CLASS A COMMON STOCK
In general, any gain or loss on the sale or exchange of Class A Common
Stock of the Company by a United States shareholder will be capital gain or
loss, provided such stock is held as a capital asset. However, any United States
person who was a Ten Percent Shareholder of the Company at any time during the
five-year period ending on the date of sale or exchange (or a distribution
liquidation) when the Company was a CFC may be required to treat all or a
portion of the gain from a sale or exchange of Class A Common Stock as ordinary
income (to the extent of his proportionate share of certain earnings and profits
of the Company) rather than as capital gain. Any capital gain or loss recognized
on a sale or exchange of Class A Common Stock will be long-term capital gain or
loss if the shareholder has heldsell the Class A Common Stock, forDebt Securities and Warrants
to or through underwriters, and also may sell such Securities directly to one or
more than one
year.
OTHER JURISDICTIONSother purchasers or through agents.
The Prospectus Supplement will set forth the terms of the offering of the
particular series or issuance of Securities to which such Prospectus Supplement
relates, including (i) the name or names of any underwriters or agents with whom
the Company anticipates that distributionshas entered into arrangements with respect to its shareholdersthe sale of such
Securities, (ii) the initial public offering or purchase price of such
Securities, (iii) any underwriting discounts, commissions and other items
constituting underwriters' compensation from the Company and any other
discounts, concessions or commissions allowed or reallowed or paid by any
underwriters to other dealers, (iv) any commissions paid to any agents, (v) the
net proceeds to the Company, and (vi) the securities exchanges, if any, on which
such Securities will notbe listed.
Unless otherwise set forth in the Prospectus Supplement relating to a
particular series or issuance of Securities, the obligations of the underwriters
to purchase such Securities will be subject to taxation under the lawscertain conditions precedent and
each of the Republicunderwriters with respect to such series of Panama.
39Securities will be
obligated to purchase all of the Securities allocated to it if any such
Securities are purchased. Any initial public
16
UNDERWRITING
Subjectoffering price and any discounts or concessions allowed or reallowed or paid to
dealers may be changed from time to time.
The Securities may be offered and sold by the Company directly or through
agents designated by the Company from time to time. Unless otherwise indicated
in the applicable Prospectus Supplement, any such agent or agents will be acting
on a best efforts basis for the period of its or their appointment. Any agent
participating in the distribution of the Securities may be deemed to be an
"underwriter", as that term is defined in the Act, of the Securities so offered
and sold. The Securities also may be sold to dealers at the applicable price to
the termspublic set forth in the Prospectus Supplement relating to a particular
series or issuance of Securities who later resell to investors. Such dealers may
be deemed to be "underwriters" within the meaning of the Act.
If so indicated in the Prospectus Supplement relating to a particular series
or issuance of Securities, the Company will authorize underwriters or agents to
solicit offers by certain institutions to purchase Securities from the Company
pursuant to delayed delivery contracts providing for payment and delivery at a
future date. Such contracts will be subject only to those conditions set forth
in the Underwriting Agreement
amongapplicable Prospectus Supplement and such Prospectus Supplement will set
forth the commission payable for solicitation of such contracts.
Underwriters and agents may be entitled, under agreements entered into with
the Company, the Selling Shareholders and the U.S. Underwriters named
below, each of the Selling Shareholders has severally agreed to sell to each of
the U.S. Underwriters, and each of such U.S. Underwriters, for whom Goldman,
Sachs & Co., Bear, Stearns & Co. Inc., Lehman Brothers Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated are acting as representatives, has severally
agreed to purchase from the Selling Shareholders the respective number of shares
of Class A Common Stock set forth opposite its name below:
NUMBER OF SHARES
OF CLASS A
UNDERWRITER COMMON STOCK
- -------------------------------------------------------------------------------- ----------------------
Goldman, Sachs & Co.............................................................
Bear, Stearns & Co. Inc.........................................................
Lehman Brothers Inc. ...........................................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................................
----------------------
Total.............................................................. 16,240,000
----------------------
----------------------
Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.
The U.S. Underwriters propose to offer the shares of Class A Common Stock
in part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain securities dealers at
such price less a concession of $ per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Class A Common Stock
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the representatives.
The Company and the Selling Shareholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of 4,060,000 shares of Class A Common Stock in an
international offering outside the United States. The offering price and
aggregate underwriting discounts and commissions per share for the two offerings
are identical. The closing of the offering made hereby is a condition to the
closing of the international offering, and vice versa. The representatives of
the International Underwriters are Goldman Sachs International, Bear, Stearns
International Limited, Lehman Brothers International (Europe) and Merrill Lynch
International Limited.
40
Pursuant to an agreement between the U.S. and international underwriting
syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters named herein has agreed that, as a part of the distribution of
the shares offered hereby and subject to certain exceptions, it will offer, sell
or deliver the shares of Class A Common Stock, directly or indirectly, only in
the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for purposes of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof and
whose office most directly involved with the purchase is located in the United
States. Each of the International Underwriters has agreed or will agree pursuant
to the Agreement Between that, as part of the distribution of the shares offered
as a part of the international offering, and subject to certain exceptions, it
will (i) not, directly or indirectly, offer, sell or deliver shares of Class A
Common Stock, (a) in the United States or to any U.S. persons or (b) to any
person who it believes intends to reoffer, resell or deliver the shares in the
United States or to any U.S. persons, and (ii) cause any dealer to whom it may
sell such shares at any concession to agree to observe a similar restriction.
Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Class A Common Stock as may be mutually agreed. The price of any shares so sold
shall be the initial public offering price, less an amount not greater than the
selling concession.
Ted Arison has granted the U.S. Underwriters an option exercisable for 30
days after the date of this Prospectus to purchase up to an aggregate of
2,436,000 additional shares of Class A Common Stock solely to cover
over-allotments, if any. If the U.S. Underwriters exercise their over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the 16,240,000 shares of Class A Common Stock offered. Ted
Arison has granted the International Underwriters a similar option to purchase
up to an aggregate of 609,000 additional shares of Common Stock.
For a period of 90 and 365 days, respectively, after the date of this
Prospectus, the Company and the Selling Shareholders have agreed not to offer,
sell, contract to sell or otherwise dispose of any shares of Class A Common
Stock or any security substantially similar thereto, or any other security
convertible into, or exchangeable for, shares of Class A Common Stock of the
Company or any security substantially similar thereto, without the prior written
consent of Goldman Sachs & Co., except for any securities issuedindemnification by the Company pursuant to employee benefit plans or upon the conversion of convertible or
exchangeable securities currently outstanding. In addition, for a period of 365
days after the date of this Prospectus, each of Ted Arison and Micky Arison has
agreed not to consent to any such disposition by any trust that owns shares of
Class A Common Stock, Class B Common Stock or other securities of the type
described in the preceding sentence over which such person has voting or
dispositive power, without the prior written consent of Goldman Sachs & Co.
The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain civil
liabilities, including liabilities under the Act.
This Prospectus may be used by underwriters and dealers in connection with
offers and sales of Class A Common Stock, including shares initially sold in the
international offering, to persons located in the United States.
Mr. Uzi Zucker, a Director of the Company, is a Senior Managing Director of
Bear, Stearns & Co. Inc. ("Bear Stearns"). Bear Stearns is one of the investment
banking firms serving as a U.S. Underwriter in this offering and Bear, Stearns
International Limited is one of the International Underwriters in the
International Offering. In addition, Bear Stearns (i) is one of the investment
41
banking firms serving as an agent of the Company in connection with the
Company's ongoing offering of $100,000,000 of Medium Term Notes and (ii) has
served as an underwriter in previous public offerings by the Company. In
addition, Bear Stearns has provided other investment banking and consulting
services to the Company during the fiscal years ended November 30, 1995, 1994
and 1993, and during the current fiscal year. It is expected that Bear Stearns
may continue to provide investment banking and consulting services to the
Company when so requested by the Company.
VALIDITY OF SECURITIES
The validity of the SharesDebt Securities and Warrants will be passed upon for the
Company with respect to New York law by Paul, Weiss, Rifkind, Wharton &
Garrison, New York, New York and for any underwriters or agents with respect to
New York law by Sullivan & Cromwell, New York, New York. The validity of the
Securities with respect to Panamanian law will be passed upon by Tapia Linares y
Alfaro, Panama City, Republic of Panama. Paul, Weiss, Rifkind, Wharton & Garrison, New
York, New York, has acted as special United States counsel to the Company in
connection with the offering of the Shares. Sullivan & Cromwell, New York, New
York has acted as counsel for the Underwriters. James M. Dubin, a partner of Paul,
Weiss, Rifkind, Wharton & Garrison, is the sole stockholder of the trustee of
the B Trust and a director of the Company. Paul, Weiss, Rifkind, Wharton &
Garrison also serves as counsel to Micky Arison. See "Certain Considerations--ControlConsiderations--
Control by Principal Shareholders".
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended November 30, 1995,1996 have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
certified public accountants, given on the authority of said firm as experts in
auditing and accounting.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements under the headings "Prospectus Summary,"heading "The Company,"
"Management's DiscussionCompany" and Analysis of Financial Condition and Results of
Operations" and "Business" and elsewhere in this
Prospectus or incorporated by reference in this Prospectus constitute
"forward-looking statements" within the meaning of Section 27A of the ReformAct and
Section 21E of the Exchange Act. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors, which may cause the actual
results, performancesperformance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: general economic and business conditions which may impact levels of
disposable income of consumers and pricing and passenger yields for the
Company's cruise products; consumer demand for cruises; pricing policies
followed by competitors of the Company; increases in cruise industry capacity in
the Caribbean and Alaska; changes in tax laws and regulations (especially any change affecting the Company's status as a
"controlled foreign corporation" as defined in Section 957(a) of the Code (see "Certain
Considerations--Taxation of the Company")Considerations-- Income Taxes"); the ability of the Company to implement its
shipbuilding program and to expand its business outside the North American
market where it has less experience; delivery of new vessels on schedule and at
the contracted price; weather patterns in the Caribbean; unscheduled ship
repairs and drydocking; incidents involving cruise vessels at sea; and changes
in laws and government regulations applicable to the Company (including the
implementation of the "Safety of Life at Sea Convention" and changes in Federal
Maritime Commission surety and guaranty arrangements).
4217
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS 20,300,000 SHARES
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
TO WHICH IT RELATESDESCRIBED IN THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION CARNIVAL CORPORATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNCLASS A COMMON STOCK
DERHEREUNDER
OR THEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE (PAR VALUE $.01 PER SHARE)
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
------------------THE DATE OF SUCH INFORMATION.
------------------------
[CARNIVAL LOGO]
TABLE OF CONTENTS
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PAGE
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PAGE
-----------PROSPECTUS
Available Information.......................... 2
Incorporation of Certain Documents by
Reference......................................Reference.................................... 2
Prospectus Summary.............................The Company.................................... 3
Certain Considerations......................... 7
GOLDMAN, SACHS & CO.
3
Use of Proceeds................................ 8
Price Range5
Ratio of Class A Common Stock and
Dividends...................................... 8
BEAR, STEARNS & CO. INC.
Dividend Policy................................ 9
Capitalization................................. 10
Selected Financial Data........................ 11
LEHMAN BROTHERS
Management's Discussion and AnalysisEarnings to Fixed Charges............. 5
Description of Financial Condition and ResultsDebt Securities................. 5
Description of Operations.....................................Warrants........................ 13
MERRILL LYNCH & CO.
Business....................................... 20
Selling Shareholders........................... 34
Description of Capital Stock................... 36
REPRESENTATIVES OF THE UNDERWRITERS
Taxation....................................... 38
Underwriting................................... 4015
Plan of Distribution........................... 16
Validity of Securities......................... 4217
Experts........................................ 4217
Special Note Regarding Forward-Looking
Statements..................................... 42Statements................................... 17
[LOGO]
$800,000,000
Carnival
Corporation
Class A Common Stock,
Debt Securities and Warrants
---------------------
PROSPECTUS
------------------------
JANUARY 21, 1998
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PART IIII. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONDISTRIBUTION.
The estimatedfollowing table sets forth the various expenses payable in connection
with the issuance and distribution of the securitiesSecurities being registered hereby,
other than underwriting discounts and commissions are set forth(which will be described in
the following table.applicable Prospectus Supplement). All of the amounts shown are estimates,
except the Securities and Exchange Commission registration fee. All of such
expenses are being borne by the Company.
Securities and Exchange Commission Fee......................................Registration Fee............... $ 236,639
Accountants' fees215,350
Accounting Fees and expenses.............................................. *Expenses...................................... 30,000
Legal feesFees and expenses..................................................... *Expenses........................................... 100,000
Printing and engraving...................................................... *
Blue Sky feesEngraving Expenses................................... 50,000
Miscellaneous Fees and expenses.................................................. *
Miscellaneous expenses...................................................... *
------------
Total................................................................Expenses................................... 4,650
---------
Total......................................................... $ *
------------
------------400,000
- ---------------
* To be filed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERSOFFICERS.
The Company's ArticlesArticle of Incorporation and By-LawsBy-laws provide, subject to the
requirements set forth therein, that with respect to any person who was or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
the Company shall indemnify such person by reason of the fact that he is or was
a director or an officer, and may indemnify such person by reason of the fact
that he is or was an employee or agent of the Company or is or was serving at
its request as a director, officer, employee or agent in another corporation,
partnership, joint venture, trust or other enterprise, in either case against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The Company has entered
into indemnity agreements with Shari Arison, Maks L. Birnbach, Richard G. Capen,
Jr., David Crossland, James M. Dubin, Modesto Maidique, William S. Ruben, Stuart
Subotnick, Sherwood M. Weiser and Uzi Zucker providing essentially the same
indemnities as are described in the Company's Articles of Incorporation.
Under a registration rights agreement among the Company and certain
irrevocable trusts (the "Trusts"), the Trusts have agreed to indemnify the
Company, its directors and officers and each person who controls the Company
within the meaning of the Exchange Act, against certain liabilities. In
addition, under a registration rights agreement between the Company and Ted
Arison, Ted Arison has agreed to indemnify the Company, its directors and
officers and each person who controls the Company within the meaning of the Act
against certain liabilities.
II-1
ITEM 16. EXHIBITS The following Exhibits are filed as part of this Registration Statement:AND FINANCIAL STATEMENT SCHEDULES.
*1
1 -- Form of U.S. Underwriting Agreement
to be entered into by the Selling Shareholders,4.1 -- Senior Indenture, dated March 1, 1993, between the Company and the U.S. Underwriters
4(a)Senior
Trustee relating to the Senior Securities (Incorporated by reference to the
Registrant's Registration Statement on Form S-3 (File No. 33-53136) filed with
the Securities and Exchange Commission)
4.2 -- Form of Subordinated Indenture between the Company and Subordinated Trustee
relating to the Subordinated Securities
4.3* -- Form of Amended and Restated Articles of Incorporation of the Company
(Incorporated by reference to Exhibit No. 4.1 to the Company'sRegistrant's Quarterly Report on Form 10-Q
(File No. 1-9610) for the quarter ended February 28, 1995 (File No. 1-9610))
4(b)1995)
4.4* -- Form of By-laws of the Company (Incorporated by reference to Exhibit No. 3.2 to the Company's
Amendment No. 1 to the Registration Statement on Form S-1 (File No. 33-14844))
*5 -- Opinion of Tapia, Linares y Alfaro as to the legality of the Class A Common Stock
*8Warrant Agreement
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
as to tax matters
23(a) --Consent of Price Waterhouse LLP
*23(b)5.2 -- ConsentOpinion of Tapia Linares y Alfaro
(included in their opinion filed as Exhibit 5)
*23(c)12** -- Statement Regarding Computation of Ratios
23.1 -- Consent of Price Waterhouse LLP
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in their opinionExhibit 5.1)
23.3 -- Consent of Tapia Linares y Alfaro (included in Exhibit 5.2)
24** -- Power of Attorney
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1 of
the Senior Trustee to act as Trustee under the Senior Indenture (Incorporated
by reference to the Registrant's Registration Statement on Form S-3 (File No.
33-50947) filed with the Securities and Exchange Commission)
25.2* -- Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1 of
the Subordinated Trustee to act as Exhibit 8)
**24 --Power of AttorneyTrustee under the Subordinated Indenture
- ---------------------------------------
* To be filedincorporated by amendment.reference in connection with the offering of
Securities.
** Previously filed.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes that, for purposes of
determiningundertakes:
(1) To file, during any liability under the Act, each filingperiod in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Registrant's annual
reportSecurities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of a prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
II-2
registrant pursuant to Section 13(a)13 or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that isare
incorporated by reference in this Registration Statement;
(2) That, for the Registration Statementpurpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new Registration Statementregistration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(b)thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering;
(4) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(5) To file an application for the purpose of determining the eligibility of
the trustee to act under subsection (a) of Section 310 of the Trust Indenture
Act of 1939 in accordance with the rules and regulations prescribed by the
Commission under Section 305(b)(2) of the Trust Indenture Act of 1939.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer, or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining the liability under the Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
II-2II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Amendment
No. 1 to the Registration Statement to be filed on its behalf by the
undersigned, thereunto duly authorized, in the City of Miami, State of Florida,
on the 16th21st day of October, 1996.
CARNIVAL CORPORATION
By /s/Micky Arison
...................................
Micky Arison
(Chief Executive Officer)January, 1998.
CARNIVAL CORPORATION
By: /s/ HOWARD S. FRANK
-----------------------------------------
Howard S. Frank
(CHIEF FINANCIAL AND ACCOUNTING OFFICER)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- -------------------------------------------- -------------------------------------------- ----------------------
/s/ MICKY ARISON----------------------------- -------------------------- -------------------
* Chairman of the Board,
- ----------------------------- Chief Executive October 16, 1996
............................................ Officer,
Micky Arison Director and Authorized
Micky Arison Representative
*/s/ HOWARD S. FRANK Vice-Chairman, Chief January 21, 1998
- ----------------------------- Financial and October 16, 1996
............................................ Accounting
Howard S. Frank Officer and Director
Howard S. Frank
* Director
October 16, 1996
............................................- -----------------------------
Shari Arison
* Director
October 16, 1996
............................................- -----------------------------
Maks L. Birnbach
* Director
October 16, 1996
............................................- -----------------------------
Richard G. Capen, Jr.
* Director
October 16, 1996
............................................- -----------------------------
David Crossland
* Director
October 16, 1996
............................................- -----------------------------
Robert H. Dickinson
* Director
October 16, 1996
............................................- -----------------------------
James M. Dubin
II-4
SIGNATURE TITLE DATE
- ----------------------------- -------------------------- -------------------
* Director
October 16, 1996
............................................- -----------------------------
A. Kirk Lanterman
* Director
October 16, 1996
............................................- -----------------------------
Modesto A. Maidique
* Director
October 16, 1996
............................................- -----------------------------
William S. Ruben
* Director
October 16, 1996
............................................- -----------------------------
Stuart Subotnick
* Director
October 16, 1996
............................................- -----------------------------
Sherwood M. Weiser
* Director
October 16, 1996
............................................- -----------------------------
Meshulam Zonis
Director
- -----------------------------
Uzi Zucker
II-3*By: /s/ HOWARD S. FRANK
-------------------------
Howard S. Frank
ATTORNEY-IN-FACT
Dated: January 21, 1998
II-5
EXHIBIT INDEX
SIGNATURE TITLE DATE
- -------------------------------------------- -------------------------------------------- ----------------------
* Director October 16, 1996
............................................
Uzi Zucker
*By: /s/ MICKY ARISON
............................................
Name: Micky Arison
Title: Attorney-in-Fact
II-4
INDEX TO EXHIBITS
SEQUENTIAL
PAGE
EXHIBITS NUMBER
- ----------- -------------------
*11 -- Form of U.S. Underwriting Agreement
to be entered into by the Selling
Shareholders,4.1 -- Senior Indenture, dated March 1, 1993, between the Company and the U.S. Underwriters
4(a)Senior
Trustee relating to the Senior Securities (Incorporated by reference to the
Registrant's Registration Statement on Form S-3 (File No. 33-53136) filed with
the Securities and Exchange Commission)
4.2 -- Form of Subordinated Indenture between the Company and Subordinated Trustee
relating to the Subordinated Securities
4.3* -- Form of Amended and Restated Articles of Incorporation of the Company
(Incorporated by reference to Exhibit No. 4.1 to the Company'sRegistrant's Quarterly Report on Form 10-Q
(File No. 1-9610) for the quarter ended February 28, 1995 (File No. 1-9610))
4(b)1995)
4.4* -- Form of By-laws of the Company (Incorporated by reference to Exhibit No. 3.2 to
the Company's Amendment No. 1 to the Registration Statement on Form S-1 (File No.
33-14844))
*5 -- Opinion of Tapia, Linares y Alfaro as to the legality of the Class A Common
Stock
*8Warrant Agreement
5.1 -- Opinion of Paul, Weiss, Rifkind, Wharton & Garrison
as to tax matters
23(a) --Consent of Price Waterhouse LLP
*23(b)5.2 -- ConsentOpinion of Tapia Linares y Alfaro
(included in their opinion filed as Exhibit
5)
*23(c)12** -- Statement Regarding Computation of Ratios
23.1 -- Consent of Price Waterhouse LLP
23.2 -- Consent of Paul, Weiss, Rifkind, Wharton & Garrison (included in their opinionExhibit 5.1)
23.3 -- Consent of Tapia Linares y Alfaro (included in Exhibit 5.2)
24** -- Power of Attorney
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1 of
the Senior Trustee to act as Trustee under the Senior Indenture (Incorporated
by reference to the Registrant's Registration Statement on Form S-3 (File No.
33-50947) filed with the Securities and Exchange Commission)
25.2* -- Statement of Eligibility under the Trust Indenture Act of 1939 on Form T-1 of
the Subordinated Trustee to act as Exhibit 8)
**24 --Power of AttorneyTrustee under the Subordinated Indenture
- ---------------------------------------
* To be filedincorporated by amendment.reference in connection with the offering of
Securities.
** Previously filed.