’01 Leading The Way

CARNIVAL CORPORATION World’s Leading Cruise Lines

2001 ANNUAL R EPORT ¨

www.carnival.com www.leaderships.com Carnival Corporation is the most profitable and has the strongest financial posi- tion of any cruise company in the world. We are a global vacation and leisure travel provider that offers holidays that appeal to a wide range of lifestyles and budgets. We own and operate six cruise lines under the brand names Carnival Cruise Lines, , , Holland America Line, Seabourn Cruise Line and Windstar Cruises. Our cruise lines operate 43 ships that travel to a wide variety of www.costacruises.com exciting destinations around the world. In addition, we currently have 14 new ships scheduled for delivery during the next four years.

We also own a tour company that operates hotels, motor coaches, rail cars and excursion vessels primarily in Alaska and the Canadian Yukon. TM

Carnival Cruise Lines is the most popular and most profitable cruise line in the world. The leader in the contemporary cruise sector, Carnival operates 16 ships, including its newest ship, the . The line currently has five new ships at an estimated www.cunard.com cost of $2.3 billion scheduled for delivery during the next three years. Carnival ships cruise to destinations in the Bahamas, Canada, the Caribbean, Mexico, New , the , Alaska and Hawaii.

Costa Cruises is Europe’s leading cruise line. Headquartered in Italy, Costa offers guests on its eight ships a multi-ethnic, multi-cultural and multi-lingual ambiance. The line currently has three new ships at an estimated cost of $1.1 billion slated to enter service during the next three years. Costa ships, including its newest, the popular , sail to destinations in Europe, South America and the Caribbean.

Cunard Line offers the only regular transatlantic crossings aboard the , and has recently repositioned the Caronia to service the growing U.K. market with round-trip cruises from . The line currently has two new ships at an esti- mated cost of $1.2 billion scheduled for delivery in December 2003 and early 2005, www.hollandamerica.com including the $780 million , Queen Mary 2.

Holland America Line is a leader in the premium cruise sector. Holland America oper- ates a five-star fleet of ten ships, including its two newest ships, the Zaandam and the Amsterdam. The line currently has four new ships at an estimated cost of $1.6 billion TM scheduled for delivery during the next four years. Primary Holland America destina- tions include Alaska, the Caribbean, the Panama Canal and Europe.

Seabourn Cruise Line epitomizes luxury cruising aboard each of its three intimate all suite ships. The Yachts of Seabourn are lavishly appointed with virtually one staff member for every guest, which assures superlative award-winning service as they sail to destinations around the world. www.seabourn.com Windstar Cruises is one of the world’s highest rated cruise lines. A leader in the luxury sail/cruise sector, Windstar offers travelers five-star accommodations and service aboard four computer-controlled sailing vessels. Windstar’s ships cruise to destinations in Europe, the Caribbean, Central America and Tahiti.

Holland America Tours is the largest cruise/tour operator in Alaska and the Canadian Yukon. Tours owns and/or manages 12 hotels; more than 300 motor coaches; 13 private,

¨ domed rail cars and two luxury dayboats. Tours also markets sightseeing packages to Holland America Line passengers and to the public. www.windstarcruises.com Carnival Corporation Financial Highlights Total . Assets . Cash FromOperations . Earnings PerShare . Net Income . Revenues (In millionsofdollars,exceptEarningsPerShare) $11,564 1,239 $ 1.58 $ 4,536 $ 926 $ 2001 6 107$86$666 $ 836 $ $1,027 965 $ 981$,8 719$5,427 $7,179 $8,286 $9,831 878 $ $1,092 $1,330 1.12 $ $1,280 1.40 $ 1.66 $ 1.60 $ $2,447 $3,009 $3,497 $3,779 0019 981997 1998 1999 2000 1 Carnival Corporation 2001 Annual Report To Our Shareholders:

I’ve always believed that the skills of a ship’s captain are best tested in rough waters. Likewise, the most telling test of a

company’s strength is its response to adversity. In 2001, our Company and our management teams were mightily tested by

a range of challenges that affected the entire leisure travel industry, including a global economic slowdown, a U.S. recession,

a struggling stock market and rising unemployment. Then, during our fourth fiscal quarter, we along with our nation were

dealt a heavy blow by the terrorist attacks of September 11th, after which many travelers chose not to fly, postponed vacations

they had not yet booked, and cancelled advance cruise bookings and other vacation plans. These were rough waters indeed,

and unlike any that we had ever navigated.

I am proud to report that Carnival Corporation’s solid, long-standing strategy and our strong balance sheet positioned us

exceedingly well to address these unexpected adversities, and our management teams overcame them with enormous skill

and determination.

During the year, we undertook several long-term strategic measures to bolster our competitive position. We transferred two

vessels from our North American brands to Costa Cruises to accelerate our near-term growth in the European vacation market

and maximize demand for cruise travel. We reduced our exposure to the higher-priced luxury segment by selling two small

ships and rationalizing our shoreside operations. We also fortified our balance sheet, selling our 25 percent investment in

Airtours plc for $500 million and opportunistically issuing two convertible debt offerings, using $1.1 billion in proceeds to

strengthen our financial position.

We also engaged in several tactical moves to improve our position in the challenging post-

September 11th travel environment. Guest safety and security has always been Carnival’s top “In light of the enormous priority, and we moved swiftly to institute even more intensive security measures. We furthered challenges that Carnival our strategy to position vessels in home ports close to vacationers, making it more convenient and affordable to take a cruise. We stimulated cruise bookings with aggressive price promotions faced in 2001, we are proud that resulted in occupancy levels of nearly 98 percent in our fourth quarter, a powerful testament that we were the most to the attractiveness of our vacation offerings. We also worked to manage down our non- essential capital expenditures, even scaling back our 2001 Annual Report to generate savings. profitable company in the These concerted efforts permitted us to close the year with results that, once again, signifi-

leisure travel business.” cantly outperformed the leisure travel industry. Revenues for the fiscal year rose to $4.54 billion,

compared with $3.78 billion in 2000. Earnings per share were $1.58, nearly equal to the $1.60

we delivered in 2000. In light of the enormous challenges that Carnival faced in 2001, we are proud that we were the most

profitable company in the leisure travel business. Our ability to post these achievements is the direct result of prompt

actions taken at crucial moments during the year by our management teams and by our employees.

2 to ourbusiness. onboard experienceofourguests,whilemaintainingindustry leadershipbyapplyingadisciplinedmanagementapproach As ourindustrycontinuestoregainitsstrength,primarygoals atCarnivalCorporationwillbefocusedonenhancingthe ified thatourpromotionalactivityhasstimulateddemandfor cruising andattractedcustomersfromothervacationchoices. attract alargershareofthevacationmarket.We aregreatlyencouragedbytherecoveryinbookingtrends,andwegrat- Carnival’s brands,whicharetheWorld’s LeadingCruiseLines,arethemostdiverseinourindustry, andthispositions usto British vacationers,andisslatedfordeliveryapproximatelyone yearaftertheQueenMary2islaunched. inearlyfiscal2004.Thesecondvessel,orderedrecently,in morethan30years,isscheduledtoenterservice willserve Cunard LineLimitedalsohastwonewshipsunderdevelopment.TheQueenMary2,thefirsttransatlanticoceanlinerbuilt appeal tothepreferencesofourGermanguests. the Europeanvacationmarket.We arealsoexpandingCosta’s presenceinEuropebyofferingacruiseproductcreatedto brandrecognitioninItaly,powerful FranceandSpainthroughtheintroductionofthreenewvesselsspecificallydesignedfor forCarnivalCorporation,andwearecapitalizing onCosta’sEurope continuestooffersignificantgrowthopportunities offer morethan25percentgreaterguestcapacityanyvesseleverbuiltforHollandAmericaLine. each, launch inlate2002.Italsoencompassesfournext-generationshipsforHollandAmericaLinethat,at1,848berths Conquest-classship—Carnival’sships forCarnivalCruiseLines,includingthefirst2,974-berth largest—whichisslatedfor America,ourdevelopmentprogramconsistsoffivenew are constructing14excitingnewvesselsthrough2005.InNorth strong commitmenttoour$6.2billionnewshipbuildingprogram,underwhichwe we facedin2001,ourgrowthstrategiesremainasfocusedever. We maintainour Steadiness andconsistencyareCarnivalhallmarks,despitetheturbulenttimes atoptimumlevels. selves, asalways,toperform andlong-termgrowthstrategies,positioningour- steam toexecuteourothershort- cannotyetbedetermined,wearestillmovingaheadatfull come ofourefforts toacquireP&OPrincess.Whiletheout- which willallowustocontinueourefforts ment oftheP&OPrincessExtraordinaryGeneralMeetingonFebruary14,2002, thatweweresuccessfulinachievingashareholderadjourn- are pleasedtoreport to securetwowell-knownbrandsandbroadenCarnival’s We diversebrandportfolio. Carnival, andweviewedthepotentialacquisitionasaone-timestrategicopportunity for controlofP&OPrincessCruisesplc.haslongheldappeal We alsofacedanothermajorissueat year-end whenweengagedinaheatedbattle approach toourbusiness.” a disciplinedmanagement try leadership by applying while maintainingourindus- experience ofourguests, on enhancingtheonboard Corporation willbefocused primary goalsatCarnival to regain itsstrength, our “As ourindustrycontinues 3 Carnival Corporation 2001 Annual Report Shareholders’ Letter (continued)

Carnival is a company with a vast array of inherent strengths and for this reason we are confident and enthusiastic about our

future. Our innovative new ships will provide a host of exciting amenities to meet the ever-increasing demands of our

guests and attract a broad range of vacationers. Our cruises are a superior vacation option in every way, compared with land-

based alternatives. We have a proven operating strategy and strong management teams to implement it. We are the most

efficient, profitable and cost-effective company in the cruise industry, with the strongest operating and financial record, the

best margins and the highest credit ratings. What’s more, we have delivered investor returns that are superior to any com-

pany in our industry. The plain fact is that Carnival leads in every single way that counts—a status that we aim to maintain

not just in 2002, but in the years to come.

I began by saying that adversity is the test of a strong company and a skilled management—a test that Carnival and our peo-

ple clearly passed with flying colors in 2001. However, adversity does more than merely test people. It also produces lead-

ers, and I am proud to say that we have many at Carnival: Our management teams, who guided us well in difficult times; our

shoreside employees, who extended their best efforts to mitigate the challenges of 2001; and our shipboard personnel, who

worked diligently to make cruising on one of Carnival Corporation’s six brands the ultimate enjoyable and memorable vaca-

tion experience. To all, we say a heartfelt thank you. We look forward to a rewarding and prosperous 2002.

Micky Arison Chairman and Chief Executive Officer February 15, 2002 Shareholder Benefit

Carnival Corporation is pleased to extend the following benefit to our Shareholders:

$250 Onboard credit per stateroom on sailings of 14 days or longer $100 Onboard credit per stateroom on sailings of 7–13 days $ 50 Onboard credit per stateroom on sailings of 6 days or less

This benefit is applicable on sailings through July 31, 2003 aboard Carnival Cruise Lines, Costa Cruises, Cunard Line, Holland America Line, Seabourn Cruise Line and Windstar Cruises. This benefit is available to shareholders holding a minimum of 100 shares. Employees, travel agents cruising at travel agent rates, tour conductors or anyone cruising on a reduced-rate or complimentary basis are excluded from this offer. This benefit is not transferable, not combinable with any other shipboard offer and cannot be used for casino credits/charges and tips charged to your onboard account. Only one onboard credit per shareholder-occupied stateroom. Reservations must be made by February 28, 2003. Please provide your name, reservation number, ship and sailing date, along with proof of ownership of Carnival Corporation stock (i.e., photocopy of shareholder proxy card or a current brokerage statement) and the initial deposit to your travel agent or to the cruise line you have selected.

C ARNIVAL C RUISE L INES H OLLAND A MERICA L INE/WINDSTAR C OSTA C RUISES C UNARD L INE/SEABOURN Research Supervisor, Reservation Administration Reservation Administration Agent Director, Passenger Services Supervisor, Guest Services 3655 N.W. 87th Avenue 300 Elliott Avenue West 200 S. Park Road, Suite 200 6100 Blue Lagoon Drive, #400 , FL 33178 Seattle, WA 98119 Hollywood, FL 33021 Miami, FL 33126 Tel 800-438-6744 ext. 70041 Tel 800-426-0327 ext. 4042 Tel 800-462-6782 Tel 800-528-6273 ext. 1214 Fax 305-406-5882 Fax 206-298-3059 Fax 954-266-2100 Fax 305-463-3038 4 Shareholders’ Equity Commitments andContingencies(Notes78) Current Assets ASSETS The accompanyingnotesarean integral partoftheseconsolidatedfinancialstatements. Fair Value ofHedgedFirmCommitments (in thousands,exceptparvalue) Carnival Corporation Consolidated BalanceSheets Property andEquipment,Net Fair Value ofDerivativeContracts Long-Term Debt Current Liabilities LIABILITIES ANDSHAREHOLDERS’EQUITY Other Assets Goodwill, lessAccumulatedAmortizationof$117,791and$99,670 Investments inandAdvancestoAffiliates Deferred IncomeandOtherLong-Term Liabilities cuuae te opeesv os. Accumulated othercomprehensiveloss . . Unearned stockcompensation . . Retained earnings . . Additional paid-incapital Common stock;$.01parvalue;960,000sharesauthorized; consrcial,nt. . Accounts receivable,net . investments. Short-term . Cash andcashequivalents netre . Inventories arvleo egdfr omtet . Fair valueofhedgedfirmcommitments rauysok 388ad3,8 hrsa ot. . Treasury stock;33,848and33,087sharesatcost . Fair valueofderivativecontracts conspybe. Accounts payable . oflong-termdebt Current portion rpi xessadohr. Prepaid expensesandother cre iblte . Accrued liabilities utmrdpst . Customer deposits iied aal . Dividends payable 620,019 and 617,568 shares issued. . 620,019 and617,568sharesissued. oa hrhles qiy. . Total shareholders’equity . . Total currentliabilities oa urn ses. . Total currentassets . . . . . 437,391 . . . 21,764 $ 1,421,300 $ $11,563,552 $11,563,552 5,556,296 1,805,248 6,590,777 1,480,240 1,958,988 8,390,230 2,954,854 (727,637) 2001 373,605 379,683 204,347 201,731 157,998 269,467 113,798 651,814 188,915 298,032 627,698 (36,932) (12,398) 90,763 36,784 91,996 61,548 November 30, 6,200 $9,831,320 $9,831,320 189,282 $ 248,219 $ 4,884,023 1,772,897 5,870,617 1,715,294 8,001,318 2,099,077 (705,137) 100,451 549,482 146,332 332,694 158,918 701,385 141,744 302,585 770,425 2000 (75,059) (12,283) 95,361 61,371 6,176 5,470 5 Carnival Corporation 2001 Annual Report Consolidated Statements of Operations

Carnival Corporation

Years Ended November 30, (in thousands, except earnings per share) 2001 2000 1999 Revenues ...... $4,535,751 $3,778,542 $3,497,470 Costs and Expenses Operating ...... 2,468,730 2,058,342 1,862,636 Selling and administrative ...... 618,664 487,403 447,235 Depreciation and amortization ...... 372,224 287,667 243,658 Impairment charge ...... 140,378 3,599,996 2,833,412 2,553,529 Operating Income Before (Loss) Income From Affiliated Operations ...... 935,755 945,130 943,941 (Loss) Income From Affiliated Operations, Net ...... (44,024) 37,828 75,758 Operating Income ...... 891,731 982,958 1,019,699 Nonoperating Income (Expense) Interest income ...... 34,255 16,506 41,932 Interest expense, net of capitalized interest ...... (120,692) (41,372) (46,956) Other income, net ...... 108,649 8,460 29,357 Income tax benefit (expense) ...... 12,257 (1,094) (2,778) Minority interest ...... (14,014) 34,469 (17,500) 7,541 Net Income ...... $ 926,200 $ 965,458 $1,027,240 Earnings Per Share: Basic ...... $ 1.58 $ 1.61 $ 1.68 Diluted ...... $ 1.58 $ 1.60 $ 1.66

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

6 Changes inoperatingassetsandliabilities, Operating itemsnotrequiringcash: . Net income OPERATING ACTIVITIES ucaeo rauysok...... (705,137) . Principal repaymentsoflong-termdebt . . Purchase oftreasurystock . . Proceeds fromissuanceoflong-termdebt FINANCING ACTIVITIES The accompanying notesareanintegralpartofthese consolidatedfinancialstatements. . . Cash andcashequivalentsat endofyear . Cash andcashequivalentsat beginningofyear . Debt issuancecosts . Other, net (in thousands) Carnival Corporation Consolidated StatementsofCashFlows custo fcnoiae usdais e 3360 (54,715) (383,640) (Purchase of)proceedsfromsaleof . Acquisition ofconsolidatedsubsidiaries,net . Proceeds fromsaleofships Proceeds fromsaleofinvestmentsinaffiliates. rcesfo suneo omnsok e . Proceeds fromissuanceofcommonstock,net . . Dividends paid . andequipment,net Additions toproperty INVESTING ACTIVITIES Effect ofexchangeratechangesoncashand excluding businessesacquiredandconsolidated: aheuvlns. cash equivalents hr-emivsmns e . investments,net short-term (Decrease) increasein: ioiyitrs 14,014 (Increase) decreasein: . Other . Minority interest Loss (income)fromaffiliatedoperations . Gain onsaleofinvestmentsinaffiliates,net . Impairment charge . . Depreciation andamortization cre n te iblte . Accrued andotherliabilities . Accounts payable . Prepaid expensesandother netre . Inventories . Receivables . and dividendsreceived utmrdpst . Customer deposits e ahue nivsigatvte . Net cashusedininvestingactivities . Net cashprovidedbyoperatingactivities Net cash provided by (used in) financing activities . . Net cashprovidedby(usedin)financingactivities Net increase(decrease)incash and aheuvlns. . cash equivalents 926,200 $ 1,421,300 $ (1,971,026) 2,574,281 1,232,018 1,238,936 (116,698) (142,727) (341,916) (245,844) (826,568) 2001 140,378 372,224 337,154 189,282 531,225 (63,227) (25,531) (28,178) (33,395) 43,691 21,199 56,910 15,000 (7,134) (2,156) 8,455 5,274 Years EndedNovember30, (335) 6,5 $1,027,240 965,458 $ 8,8 521,771 $ 189,282 $ 12207 (910,380) (1,292,027) 10338 (872,984) (1,003,348) ,2,9 7,772 1,020,091 ,7,3 1,329,724 1,279,535 3249 384,498 (332,489) 2433 (219,179) (254,333) 3849 (564,838) (388,429) 3997 (34,846) (319,997) 001999 2000 8,6 243,658 287,667 2,7 137,273 521,771 2,7)(9,465) (21,972) 1,3)(3,271) (15,132) 1,8)4,007 (60,671) (14,689) (21,362) 81327,333 58,133 56437,433 55,614 14129,209 21,441 51,350 210(11,890) 22,170 597 58,016 (5,977) (8,570) (8,205) ,1 741,575 7,811 (176) 7 Carnival Corporation 2001 Annual Report Consolidated Statements of Shareholders’ Equity

Carnival Corporation

Unearned Accumulated Total Compre- Additional stock other share- hensive Common paid-in Retained compen- comprehensive Treasury holders’ (in thousands) income stock capital earnings sation income (loss) stock equity Balances at November 30, 1998 . . . . . $5,955 $ 880,488 $3,379,628 $ (5,294) $ 24,699 $ 1 $4,285,476 Comprehensive income: Net income ...... $1,027,240 1,027,240 1,027,240 Foreign currency translation adjustment ...... (19,209) (19,209) (19,209) Changes in securities valuation allowance ...... (4,374) (4,374) (4,374) Total comprehensive income . . . $1,003,657 Cash dividends ...... (230,370) (230,370) Issuance of stock in public offering, net ...... 170 725,062 725,232 Issuance of stock to acquire minority interest in Cunard Line Limited ...... 32 127,037 127,069 Issuance of stock under stock plans ...... 13 24,821 (7,326) 17,508 Amortization of unearned stock compensation ...... 2,675 2,675 Balances at November 30, 1999 . . . . . 6,170 1,757,408 4,176,498 (9,945) 1,116 5,931,247 Comprehensive income: Net income ...... $ 965,458 965,458 965,458 Foreign currency translation adjustment ...... (73,943) (73,943) (73,943) Changes in securities valuation allowance, net ...... (2,232) (2,232) (2,232) Total comprehensive income . . . $ 889,283 Cash dividends ...... (250,923) (250,923) Issuance of stock under stock plans ...... 6 15,489 (5,977) 9,518 Amortization of unearned stock compensation ...... 3,639 3,639 Effect of conforming Costa’s reporting period ...... (7,010) (7,010) Purchase of treasury stock ...... (705,137) (705,137) Balances at November 30, 2000 . . . . . 6,176 1,772,897 4,884,023 (12,283) (75,059) (705,137) 5,870,617 Comprehensive income: Net income ...... $ 926,200 926,200 926,200 Foreign currency translation adjustment, net . . . 45,781 45,781 45,781 Changes in securities valuation allowance, net ...... 6,411 6,411 6,411 Minimum pension liability adjustment ...... (5,521) (5,521) (5,521) Changes related to cash flow derivative hedges, net ...... (4,330) (4,330) (4,330) Transition adjustment for cash flow derivative hedges . . . (4,214) (4,214) (4,214) Total comprehensive income . . . $ 964,327 Cash dividends ...... (246,021) (246,021) Issuance of stock under stock plans ...... 24 32,351 (4,601) (22,500) 5,274 Amortization of unearned stock compensation ...... 4,486 4,486 Effect of conforming Airtours’ reporting period ...... (7,906) (7,906) Balances at November 30, 2001 . . . . $6,200 $1,805,248 $5,556,296 $(12,398) $(36,932) $(727,637) $6,590,777

The accompanying notes are an integral part of these consolidated financial statements. 8 interest inCosta’s operatingresultsfor the monthsof November, 2000,wecontinuedtorecord our50% on atwo-month lagbasis.ForSeptember, Octoberand operating resultsasearnings from affiliatedoperations ofCosta’sequity methodandrecorded our portion we accountedforour50%interest inCostausingthe for usingtheequitymethod. See Note5. interest from20%to50%,theinvestmentisaccounted exists, astypicallyevidencedbyadirectownership nificant influenceoverfinancialandoperatingpolicies interest ofgreaterthan50%.Foraffiliateswheresig- control, astypicallyevidencedbyadirectownership Basis ofPresentation Accounting Policies Note 2—SummaryofSignificant in consolidation. consolidated groupandwithaffiliatesareeliminated unrealized profitsandlossesontransactionswithinour All materialintercompanyaccounts,transactionsand ments. Actualresultscoulddifferfromtheseestimates. and disclosedinourfinancialstate- amounts reported to makeestimatesandassumptionsthataffectthe accepted intheUnitedStatesofAmericarequiresus ments inaccordancewithaccountingprinciplesgenerally Preparation ofFinancialStatements of itscruise/tourpackages. both separatelyandaspart an Yukon. Tours alsomarketssightseeingpackages the largestcruise/touroperatorinAlaskaandCanadi- Central Americaandotherworldwidelocations.Tours is luxury shipswithdestinationstotheCaribbean,Europe, ships andSeabournWindstareachoperatefour America. Cunardoperatestwopremium/luxurycruise nations primarilytoEurope,theCaribbeanandSouth Europe. Costaoperatessevencruiseshipswithdesti- with destinationsprimarilytoAlaska,theCaribbeanand can Riviera.HollandAmericaoperatestencruiseships primarily totheCaribbean,BahamasandMexi- Carnival operatesfifteencruiseshipswithdestinations and atourbusiness,HollandAmericaTours (“Tours”). Line (“Seabourn”)andWindstarCruises(“Windstar”) America Line(“HollandAmerica”),SeabournCruise Cruises (“Costa”),CunardLine(“Cunard”),Holland brand namesCarnivalCruiseLines(“Carnival”),Costa travel providerthatoperatessixcruiselinesunderthe “our” and“us.”We areaglobalvacationandleisure as“we,” and elsewhereinthis2001AnnualReport collectively intheseconsolidatedfinancialstatements along withitsconsolidatedsubsidiariesisreferredto Description ofBusiness Note 1—General Carnival Corporation Notes toConsolidatedFinancialStatements Prior toouracquisitionofCosta inlatefiscal2000, We consolidate subsidiariesoverwhichwehave The preparationofourconsolidatedfinancialstate- Carnival CorporationisaPanamaniancorporationand rnpraineupetadohr 2-20 10-40 of leaseterm Shorter 30 . Leasehold improvements . . Transportation equipmentandother . . Buildings andimprovements . Ships of possibleimpairment isbasedonourability torecover assets maynot befullyrecoverable.Theassessment stances indicate thatthecarryingamountof these impairment wheneverevents orchangesincircum- as follows: line methodoverourestimateofaverageusefullives wascomputedusingthestraight- tion andamortization Property andEquipment average costormarket. supplies andfuelcarriedatthelowerofourweighted- Inventories determine realizedgainsorlosses. realized. Thespecificidentificationmethodisusedto income (loss)withinshareholders’equity(“AOCI”)until as acomponentofaccumulatedothercomprehensive fair values.Unrealizedgainsandlossesareincluded available forsaleand,accordingly, arestatedattheir debt andequitysecuritieswhicharecategorizedas in 2000. tions andmoneymarketfundsin2001timedeposits of stronginvestmentgradeasset-backeddebtobliga- million ofinvestments,respectively, primarilycomprised and cashequivalentsincluded$1.38billion$157 stated atcost.AtNovember30,2001and2000,cash original maturitiesofthreemonthsorlessandare Short-Term Investments Cash andEquivalents subsidiaries. SeeNote17. basis inthesamemannerasourotherwholly-owned of operationswereconsolidatedonacurrentmonth not material.Commencinginfiscal2001,Costa’s results 2000 revenues,operatingincomeandnetwas of conformingCosta’s periodonourfiscal reporting Costa’s November30,2000balancesheet.Theimpact November 30,2000consolidatedbalancesheetincluded November 30,2000consolidatedbalancesheetandour recorded asadirectchargetoretainedearningsinour for themonthsofOctoberandNovember2000were month’s results.Atthattime,Costa’s operatingresults onCosta’sa two-monthlagbasistoreporting current Costa’schanged howwereport operatingresultsfrom the equitymethod.AsofNovember30,2000,we July, AugustandSeptember, 2000,respectively, using We reviewourlong-livedassetsand goodwillfor Property andequipmentarestatedatcost.Deprecia- Property consistprimarilyofprovisions,spareparts, Inventories investments arecomprisedofmarketable Short-term Cash andcashequivalentsincludeinvestmentswith or relatedassetlife Years 9 Carnival Corporation 2001 Annual Report Notes to Consolidated Financial Statements (continued)

Carnival Corporation

the carrying value of our asset based on our estimate instruments be recorded on our balance sheet at their of its undiscounted future cash flows. If these estimated fair values. Derivatives that are not hedges must be future cash flows are less than the carrying value of the recorded at fair value and the changes in fair value asset, an impairment charge is recognized for the dif- must be immediately included in earnings. If a deriva- ference between the asset’s estimated fair value and tive is a fair value hedge, then changes in the fair value its carrying value (see Notes 4 and 16). of the derivative are offset against the changes in the Drydock costs are included in prepaid expenses and fair value of the underlying hedged firm commitment. are amortized to operating expenses using the straight- If a derivative is a cash flow hedge, then changes in the line method generally over one or two years. fair value of the derivative are recognized as a compo- Ship improvement costs that we believe add value to nent of AOCI until the underlying hedged item is recog- our ships are capitalized to the ships, and depreciated nized in earnings. The ineffective portion of a hedge over the improvements’ estimated useful lives, while derivative’s change in fair value is immediately recog- costs of repairs and maintenance are charged to expense nized in earnings. We formally document all relation- as incurred. We capitalize interest on ships and other ships between hedging instruments and hedged items, capital projects during the construction period. Upon as well as our risk management objectives and strate- the replacement or refurbishment of previously capital- gies for undertaking our hedge transactions. ized ship components, these assets’ estimated cost The total $578 million of current and long-term and accumulated depreciation are written-off and any fair value of hedged firm commitment assets on our resulting gain or loss is recognized in operations. No November 30, 2001 balance sheet, principally includes material gains or losses were recognized in fiscal 2001, $567 million of unrealized gains on our shipbuilding 2000 or 1999. See Note 3. commitments denominated in foreign currencies because of the strengthening of the dollar compared Investments in Affiliates to the . In addition, the total $581 million of fair At November 30, 2000, the costs in excess of the value of derivative contract liabilities on our November 30, net assets acquired (“goodwill”) of our affiliate, Airtours 2001 balance sheet, principally includes $567 million of plc (“Airtours”), was $195 million. Goodwill was amor- unrealized losses on our forward foreign currency con- tized using the straight-line method, principally over tracts relating to those same shipbuilding commitments, 40 years and was recorded as “(Loss) Income from which are used to fix the cost of our shipbuilding com- Affiliated Operations, Net” in the accompanying state- mitments in U.S. dollars, and effectively offsets the ments of operations (see Notes 5 and 16). related hedged firm commitment assets. Goodwill We classify the fair value of our derivative contracts Goodwill was amortized using the straight-line method and the offsetting fair value of our hedged firm commit- over 40 years. At November 30, 2001, goodwill con- ments as either current or long-term liabilities and sisted of $275 million from our acquisition of HAL assets depending on whether the maturity date of the Antillen, N.V., the parent company of Holland America, derivative contract is within or beyond one year from Windstar and Tours, $235 million from our acquisition our balance sheet date, respectively. The cash flows of Cunard and $260 million from our fiscal 2000 acqui- from derivatives treated as hedges are classified in our sition of Costa (see Notes 4 and 16). statements of cash flows in the same category as the item being hedged. Derivative Instruments and Hedging Activities Upon adoption of SFAS No. 133 on December 1, We utilize derivative instruments, currently forward 2000, our recorded assets and liabilities each increased and swap contracts, to limit our exposure to fluctua- by approximately $540 million. This increase in assets tions in foreign currency exchange rates, to manage and liabilities primarily represented the recording of off- our interest rate exposure, and to achieve a desired setting unrealized gains and losses on our shipbuilding proportion of variable and fixed rate debt (see Note 11). contracts and related foreign currency forward con- Our most significant contracts to buy foreign cur- tracts, respectively. In accordance with the transition rency are forward contracts entered into to fix the cost provisions of SFAS No. 133, we recorded an adjust- in United States (“U.S.”) dollars of ten of our foreign ment of $4.2 million in AOCI to record the unrealized currency denominated shipbuilding commitments (see net losses from our cash flow hedges that existed on Note 7). If our shipbuilding contract is denominated in December 1, 2000. the functional currency of the cruise line that is expected Derivative gains and losses included in AOCI are to be operating the ship, we do not enter into a forward reclassified into earnings at the same time the underly- contract to hedge that commitment. ing hedged transaction is recorded in earnings. During Effective December 1, 2000, we adopted Statement fiscal 2001, all net changes in the fair value of both our of Financial Accounting Standards (“SFAS”) No. 133, as fair value hedges and the offsetting hedged firm com- amended, “Accounting for Derivative Instruments and mitments and our cash flow hedges were immaterial, Hedging Activities,” which requires that all derivative as were any ineffective portions of these hedges. No 10 expenses wasnotmaterial. relatedcostsincluded inprepaid amount ofadvertising in fiscal1999. At November30,2001and2000, the fiscal 2001,$181 millioninfiscal2000and$178 million expensestotaled$214million in sumed. Advertising as prepaidexpensesandcharged toexpenseascon- tangible assets,suchasbrochures, whicharerecorded to expenseasincurred,except costswhichresultin Advertising Costs material impactonourfinancialstatements. statements. OuradoptionofthisSABdidnothavea presentation anddisclosureofrevenuesinfinancial ments” whichprovidesguidanceontherecognition, (“SAB”) 101,“RevenueRecognitioninFinancialState- orexpensesareincurred. are performed arerecognizedatthetimeservices related services ten days.Revenuesandexpensesfromourtour less andonaproratabasisforvoyagesinexcessof completion ofvoyageswithdurationstendaysor associated directcostsofavoyage,generallyupon together withrevenuesfromonboardactivitiesandall its aresubsequentlyrecognizedascruiserevenues, on ourbalancesheetwhenreceived.Customerdepos- and areinitiallyrecordedascustomerdepositliabilities Revenue andExpenseRecognition ing theeffectiveinterestrateonourunderlyingdebt. interest expenseoverthelifeofswap,therebyadjust- rate swaphedgeswererecognizedasadjustmentsto statements. Anydifferencespaidorreceivedoninterest swap agreementswerenotrecordedinourfinancial or increase,respectively, tothecostpaidforourships. with anyresultinggainsorlossesrecordedasadecrease related foreigncurrencypaymentsweretobemade, maturity, whichcoincidedwiththedateswhen foreign currencycontracthedgeswererecordedat any discountsorpremiumson,ourshipbuildingforward yard cannotperform. contractsashedges,iftheship- ing forthoseforward circumstances, wemayhavetodiscontinuetheaccount- shipbuilding contracts.Accordingly, baseduponthe contractsrelatedtothatshipyard’scurrency forward underourforeign we wouldstillberequiredtoperform have contractedtobuildourshipsisunableperform, to fixedinterestrateswapagreements. hedge derivatives,whichweresubstantiallyallvariable $8.5 millionofunrealizednetlossesfromcashflow is notmaterial.AtNovember30,2001,AOCIincluded to bereclassifiedearningsinthenexttwelvemonths estimated unrealizednetlosseswhichareexpected nized ordiscontinuedinfiscal2001,andtheamountof fair valuehedgesorcashflowwerederecog- Substantially all of our advertising costsarecharged Substantially allofouradvertising In fiscal2001,weadoptedStaffAccountingBulletin Guest cruisedepositsrepresentunearnedrevenues Prior tofiscal2001,thefairvaluesofourinterestrate Prior tofiscal2001,changesinthefairvaluesofand Finally, ifanyofthethreeshipyardswithwhichwe amounts toconform tothecurrentyearpresentation. Reclassifications new shipprogresspayments toshipyards. notesreceivableonsignificantassetsales and support we donormallyrequirecollateral and/orguaranteesto normalcreditsales.However,other securitytosupport receivables. We donotnormallyrequirecollateralor experienced onlyminimalcreditlossesonourtrade maturities.Wemal primarilyduetotheirshort have associated withthesereceivablesareconsideredmini- course ofourbusiness.Concentrationscreditrisk tomers towhichwegrantcredittermsinthenormal maintain safetyandliquidity. credit ratingsandinvestmentmaturitiesthatseekto In addition,wehaveestablishedguidelinesregarding tions whohavelong-termcreditratingsofAorabove. business withlarge,well-establishedfinancialinstitu- antees, isconsideredminimal,asweprimarilyconduct gent obligationsandnewshipprogresspaymentguar- under derivativeinstruments,contin- nonperformance significant business.Creditrisk,includingcounterparty cial andotherinstitutionswithwhichweconduct tor concentrationsofcreditriskassociatedwithfinan- Concentrations ofCreditRisk Note 13). and disclosefairvalueproformainformation(see based compensationusingtheintrinsicvaluemethod Stock-Based Compensation period. SeeNote14. potentially dilutivesecuritiesoutstandingduringeach of commonstock,stockequivalentsandother as adjusted,bytheweighted-averagenumberofshares earnings pershareiscomputedbydividingnetincome, common stockoutstandingduringeachperiod.Diluted income bytheweighted-averagenumberofshares Earnings PerShare ately includedinourearnings. functional currencyoftheentityinvolvedareimmedi- transactions denominatedinacurrencyotherthanthe for theperiod.Exchangegainsandlossesarisingfrom ates aretranslatedatweighted-averageexchangerates and expensesoftheseforeignsubsidiariesaffili- inAOCI.Revenues ing fromthisprocessarereported the balancesheetdates.Translation adjustmentsresult- liabilities aretranslatedatexchangeratesineffect local currencyastheirfunctionalcurrency, assetsand Foreign CurrencyTranslations andTransactions Reclassifications havebeenmade toprioryear We ofourcus- also monitorthecreditworthiness ofourongoing controlprocedures,wemoni- As part We accountforouremployeeanddirectorstock- Basic earningspershareiscomputedbydividingnet For ourforeignsubsidiariesandaffiliatesusingthe 11 Carnival Corporation 2001 Annual Report Notes to Consolidated Financial Statements (continued)

Carnival Corporation

Note 3—Property and Equipment The note receivable and ship fair values were based on third party appraisals or negotiations with unrelated Property and equipment consisted of the following third parties, and the fair values of the goodwill and (in thousands): hotels were based on our estimates of discounted November 30, future cash flows. 2001 2000 Ships ...... $ 8,892,412 $ 8,575,563 Note 5—Investments In and Ships under construction . . . . 592,781 320,480 Advances to Affiliates 9,485,193 8,896,043 Land, buildings and On June 1, 2001, we sold our investment in Airtours, improvements ...... 264,294 275,203 which resulted in a nonoperating net gain of $101 mil- Transportation equipment lion and net cash proceeds of $492 million. Cumulative and other ...... 349,188 314,417 foreign currency translation losses of $59 million were Total property and equipment . . 10,098,675 9,485,663 reclassified from AOCI and included in determining Less accumulated depreciation this 2001 net gain. We also recorded a direct charge and amortization ...... (1,708,445) (1,484,345) of $8 million to our retained earnings in fiscal 2001, which represented our share of Airtours’ losses for $ 8,390,230 $ 8,001,318 April and May 2001, since Airtours’ results were Capitalized interest, primarily on our ships under reported on a two-month lag. construction, amounted to $29 million in fiscal 2001 In fiscal 2001, we sold our interest in CRC Holdings, and $41 million in both fiscal 2000 and fiscal 1999. Inc. (“CRC”) to an unrelated third party, which resulted Ships under construction include progress payments in a nonoperating net gain of $16 million and net cash for the construction of the ship, as well as design and proceeds of $39 million. One of the members of our engineering fees, capitalized interest, construction Board of Directors was a principal shareholder in CRC. oversight costs and various owner supplied items. At Dividends received from affiliates were $13 million, November 30, 2001, two ships with an aggregate net $16 million and $15 million in fiscal 2001, 2000 and book value of $617 million were pledged as collateral 1999, respectively, which reduced the carrying value pursuant to a $126 million note and a $430 million of our investments in affiliates in accordance with the contingent obligation (see Notes 6 and 8). equity method of accounting. Maintenance and repair expenses and drydock amor- At November 30, 2000, affiliated companies that tization were $160 million, $132 million and $113 million we accounted for using the equity method, excluding in fiscal 2001, 2000 and 1999, respectively. Costa, had current assets, long-term assets, current liabilities, long-term liabilities and shareholders’ equity Note 4—Impairment Charge of $2.27 billion, $1.98 billion, $1.85 billion, $1.53 billion and $870 million, respectively. During fiscal 2001, we reviewed our long-lived assets Income statement and segment information for our and goodwill for which there were indications of possi- affiliated companies accounted for using the equity ble impairment. The assets we reviewed were primarily method, including Airtours and Costa, was as follows from our Cunard and Seabourn brands, since we had (in thousands): experienced continued losses from these brands and Fiscal Years Ended had recently restructured their operations and made 2000 1999 changes to their senior management. In addition, we reviewed a Holland America note receivable collateral- Revenues ...... $6,669,052 $5,963,425 ized by a ship, the former Nieuw Amsterdam, which Gross margin ...... $1,345,593 $1,265,614 Operating income ...... $ 5,114 $ 359,953 we sold to a company whose parent declared bank- Depreciation and amortization . . . $ 152,123 $ 133,302 ruptcy in the fourth quarter of fiscal 2001. Based on Net income ...... $ 19,770 $ 255,146 these reviews, we recorded an impairment charge, Capital expenditures ...... $ 650,098 $ 356,267 including a loss on the sale of two Seabourn ships, of approximately $140 million in fiscal 2001, including Since we sold our interest in Airtours and CRC during $39 million in the fourth quarter of 2001. This charge fiscal 2001, no data has been presented for fiscal 2001. included a $36 million write-off of Seabourn’s goodwill balance; a $71 million reduction in the carrying value of ships, primarily those operated by Cunard and Seabourn; a $15 million write-down of the Holland America note receivable; an $11 million loss from the sale of the Seabourn Goddess I and II; and a $6 million write-down of the carrying value of two of Tours’ hotel properties.

12 Less portion due within Less portion (b) Thesenotesarenotredeemablepriortomaturity. (a) AllborrowingsareinU.S.dollarsunlessotherwisenoted. te . Other Unsecured notes,bearing Euro note,securedbyoneship, Note 6—Long-Term Debt fiscal 2001.Subsequent toApril14,2008, we may the conversion price.Thisconditionwasnot metduring price ofourcommon stockbeinggreaterthan 110%of per share,subjecttoadjustment, contingentuponthe of ourcommonstockataconversion priceof$39.14 into15.3millionshares 2% notesthatareconvertible (in thousands): $200 millionmulti-currency Commercial paper, bearing Unsecured zero-coupon Unsecured 2%convertible Unsecured euronotes, Unsecured euronotes,bearing through 2028 from 6.15%to7.7%,due interest atratesranging . through 2008 2000, respectively),due at November30,2001and plus 0.5%(4.8%and5.7% bearing interestateuribor n er. one year oebr3,20 160,862 342,846 . November 30,2000 interest at5.3% drawn ineuros,bearing revolving creditfacility . interest at6.6% . of $1.05billion,duein2021 discount, withafacevalue notes,netof convertible . notes, duein2021 . due in2006 bearing interestat5.57%, . due 2005and2006 2001 and2000,respectively), 5.2% to6.1%atNovember30, plus 1.0%(3.9%to4.9%and euribor plus0.19%to interest atratesrangingfrom Long-term debtconsistedofthefollowing In April2001,weissued$600 millionofunsecured denominated, respectively. was U.S.dollardenominatedand34%48%euro 2001 and2000,approximately66%52%ofourdebt dollars attheperiodendexchangerate.AtNovember30, Euro denominatednoteshavebeentranslatedtoU.S. (b) . 125,770 $ $2,954,854 2,976,618 2001 501,945 600,000 266,223 604,068 848,779 (21,764) 29,833 November 30, (a) 141,628 $ $2,099,077 2,347,296 2000 (248,219) 814,076 848,657 39,227 (a) a minimum debt service coverageandlimit ourdebtto a minimumdebt service nants thatrequire us,amongotherthings,to maintain facility andother ofourloanagreementscontain cove- 2001, ourentire$1.4billionfacility wasavailable.This November 30,2000balancesheet. AtNovember30, paper programswereclassified aslong-terminour facilities, balancesoutstanding underourcommercial cial paperwasbackedbyour long-termrevolvingcredit amount availableunderthisfacility. Sinceourcommer- our commercialpaperprogramreducetheaggregate facility and,accordingly, anyamountsoutstandingunder bythisrevolvingcredit paper programissupported an undrawnfacilityfeeofeightBPS.Ourcommercial ior unsecuredlong-termdebtratings,andprovidesfor (“BPS”), whichwillvarybasedonchangestooursen- bears interestatlibor/euriborplus17basispoints facility, dueJune2006.Thenewrevolvingcreditfacility a $1.4billionunsecuredmulti-currencyrevolvingcredit unsecured multi-currencyrevolvingcreditfacilitywith unsecured revolvingcreditfacilityandour$200million ber 30,2001. facility ofwhich$137millionwasavailableatNovem- million unsecuredeurodenominatedrevolvingcredit deliverable. SeeNote14. otherwise total valueequaltotheofconsideration or acombinationofcashandcommonstockwith notes wemaychoosetodelivercommonstock,cash Upon conversion,redemptionorrepurchaseofthe oftheoutstandingnotes attheiraccretedvalues. portion the noteholdersmayrequireustorepurchaseallora addition, onOctober24of2006,2008,2011and2016 ofthenotesat their accretedvalues.In or aportion Subsequent toOctober23,2008,wemayredeemall to$65.92 pershareinfiscal2021. increase quarterly mence atalowof$31.94pershareinfiscal2002and levels, alsosubjecttoadjustment.Theselevelscom- targeted price ofourcommonstockreachingcertain notes. Theconversionfeatureiscontingentuponthe shares foreach$1,000principalamountatmaturityof conversion rate,subjecttoadjustment,of16.5964 17.4 millionsharesofourcommonstock,basedona commencingonMarch1,2002into and areconvertible notes. Thesenoteshaveayieldtomaturityof3.75% million fromtheissuanceofzero-couponconvertible wise deliverable.SeeNote14. total valueequaltotheofconsiderationother- or acombinationofcashandcommonstockwith notes wemaychoosetodelivercommonstock,cash Upon conversion,redemptionorrepurchaseofthe at theirfacevalueplusanyunpaidaccruedinterest. oftheoutstandingnotes us torepurchasealloraportion of 2005,2008and2011thenoteholdersmayrequire plus anyunpaidaccruedinterest.Inaddition,onApril15 ofthenotesattheirfacevalue redeem alloraportion Effective July2001,wereplacedour$1billion In May2001,Costaenteredintoafive-year$231 In October2001,wereceivednetproceedsof$489 13 Carnival Corporation 2001 Annual Report Notes to Consolidated Financial Statements (continued)

Carnival Corporation

tangible capital ratio. In addition, our ability to draw Debt issuance costs are generally amortized to inter- upon the then available portion of our $1.4 billion credit est expense using the straight-line method over the facility could be terminated if our business suffers a term of the notes or to the noteholders first put option material adverse change. At November 30, 2001, we date, whichever is earlier. In addition, all loan issue were in compliance with all of our debt covenants. discounts are amortized to interest expense using the At November 30, 2001, the scheduled annual maturi- effective interest method over the term of the notes. ties of our long-term debt was as follows (in thousands):

Fiscal 2002 ...... $ 21,764 2003 ...... 145,897 2004 ...... 140,209 2005 ...... 885,365(a) 2006 ...... 1,226,860(a) Thereafter ...... 556,523 $2,976,618

(a) Includes our 2% convertible notes in 2005 and our zero- coupon convertible notes in 2006 based on the date of the noteholders first put option.

Note 7—Commitments Ship Commitments A description of our ships under contract for construction at November 30, 2001 was as follows (in millions, except passenger capacity data): Expected Estimated Service Passenger Total Ship Date(1) Shipyard Capacity(2) Cost(3) Carnival: Carnival Pride(4) ...... 12/01 Masa-Yards(5) 2,124 $ 375 ...... 8/02 Masa-Yards(5) 2,124 375 ...... 12/02 2,974 500 ...... 8/03 Fincantieri 2,974 500 ...... 4/04 Masa-Yards(5) 2,124 375 ...... 11/04 Fincantieri(5) 2,974 500 Total Carnival ...... 15,294 2,625 Holland America: Zuiderdam ...... 12/02 Fincantieri(5) 1,848 410 Oosterdam ...... 7/03 Fincantieri(5) 1,848 410 Newbuild ...... 5/04 Fincantieri(5) 1,848 410 Newbuild ...... 11/05 Fincantieri(5) 1,848 410 Total Holland America ...... 7,392 1,640 Costa: ...... 7/03 Masa-Yards(6) 2,114 335 ...... 1/04 Fincantieri(6) 2,720 390 ...... 12/04 Fincantieri(6) 2,720 390 Total Costa ...... 7,554 1,115 Cunard: Queen Mary 2 ...... 12/03 Chantiers de l’Atlantique(5) 2,620 780 Newbuild(7) ...... 2/05 Fincantieri(5) 1,968 410 Total Cunard ...... 4,588 1,190 Total ...... 34,828 $6,570

14 hratr 178,405 19,211 20,667 . . Thereafter 19,318 . . . 2006 18,947 . 2005 . 2004 21,831 $ . 2003 . 2002 Fiscal facilitiesasfollows(inthousands): port year, topayminimumamountsforourannualusageof 2023, withinitialorremainingtermsinexcessofone Port Facilities 688 2,037 . . 2005 1,501 . . 2004 $1,751 . . 2003 . . 2002 Fiscal (7) This constructioncontractandrelatedforwardcontracts (6) These constructioncontractsaredenominatedineuros, (5) These constructioncontractsaredenominatedineurosand (4) On December14,2001,weaccepteddeliveryofthe (3) Estimated totalcostofthecompletedshipincludes (2) In accordancewithcruiseindustrypractice,passenger (1) The expectedservicedateistheshipcurrently remaining estimatedtotalcostasfollows(inmillions): through November30,2001andanticipatepayingthe struction, wehavepaidapproximately$593million cise thisoption. No assurancecanbegivenastowhetherwewillexer- withFincantieriforaMay2006deliverydate. option December 2001,weenteredintooneshipbuilding At November30,2001,wehadcommitmentsthrough In connectionwithourshipsundercontractforcon- In additiontotheseshipconstructioncontracts,in December 2001. were transferredfromHollandAmericatoCunardin November 30,2001exchangerate. costs havebeentranslatedintoU.S.dollarsusingthe which isCosta’s functionalcurrency. Theestimatedtotal these constructioncontracts. and arealsoincludedintheaboveestimatedtotalcostof tract liabilitiesonourNovember30,2001balancesheet contracts hasbeenrecordedasfairvalueofderivativecon- the $567millionofunrealizedlossesfromtheseforward forward foreigncurrencycontracts.AtNovember30,2001, have beenfixedintoU.S.dollarsthroughtheutilizationof Carnival Pride. construction oversightcosts. fees, capitalizedinterest,variousownersupplieditemsand contract pricewiththeshipyard,designandengineering four passengers. even thoughsomecabinscanaccommodatethreeor capacity iscalculatedbasedontwopassengerspercabin expected tobeginitsfirstrevenuegeneratingcruise. $278,379 $5,977 Note 8—Contingencies 22,300 7,500 7,600 . Thereafter 7,700 . 2006 8,600 . 2005 . 2004 $10,100 . 2003 . 2002 Fiscal in excessofoneyear, wereasfollows(inthousands): for ouroperatingleases,withinitialorremainingterms 1999. AtNovember30,2001,minimumannualrentals fiscal 2001and$10millioninboth2000 for officeandwarehousespace,was$13millionin Operating Leases of thismattercannotbedetermined atthistime. other formsofrelief.However, theultimateoutcome provisions relatingtofuturecompliance practices,among ronment, ajudgmentcouldinclude finesandmandatory totheenvi- our compliancewithU.S.laws pertaining investigation resultsinadverse findingswithregardto have beenlodgedagainstus.Intheeventthat Attorney fortheSouthernDistrictofFlorida.Nocharges in settlementdiscussionswiththeOfficeofU.S. ments inresponsetothesubpoenaandareengaged concerning environmentalmatters.We produceddocu- requesting thatweproducedocumentsandrecords we intendtovigorouslydefendagainsttheseactions. meritorious defensestotheseclaimsand,accordingly, We believe thatweandourexecutiveofficershave Purchase Complaintscannotbedeterminedatthistime. feesandcosts. Thisactionisproceeding. expert unspecified compensatorydamagesandattorney public filingsviolatedfederalsecuritieslawsandseek The plaintiffshaveclaimedthatstatementswemadein one actioninFlorida(the“StockPurchaseComplaint”). chasers ofourcommonstockwereconsolidatedinto classofpur- executive officersonbehalfofapurported Southern DistrictofFloridaagainstusandfourour are proceeding. injunctive reliefandfeescosts.Theseactions (collectively the“ADAComplaints”).Plaintiffsseek cruise shipsaccessibletoindividualswithdisabilities with DisabilitiesAct(“ADA”)byfailingtomakecertain and Tours allegingthattheyviolatedtheAmericans Litigation In August2000,wereceivedagrandjurysubpoena The ultimateoutcomesofthependingADAandStock forthe Several actionsfiledintheU.S.DistrictCourt Several actionshavebeenfiledagainstCosta,Cunard Rent expenseunderouroperatingleases,primarily $63,800 15 Carnival Corporation 2001 Annual Report Notes to Consolidated Financial Statements (continued)

Carnival Corporation

In February 2001, Holland America Line-USA, Inc. we will account for the redemption of these travel (“HAL, Inc.”), our wholly-owned subsidiary, received a vouchers as a reduction to our future revenues as they grand jury subpoena requesting that it produce docu- are used. ments and records relating to the air emissions from Holland America ships in Alaska. HAL, Inc. is respond- Note 9—Income and Other Taxes ing to the subpoena. The ultimate outcome of this We believe that substantially all of our income, with matter cannot be determined at this time. the exception of our U.S. source income from the Costa has instituted arbitration proceedings in Italy to transportation, hotel and tour businesses of Tours, is confirm the validity of its decision not to deliver its ship, exempt from U.S. federal income taxes. If we were the Costa Classica, to the shipyard of Cammell Laird found not to qualify for exemption pursuant to applica- Holdings PLC (“Cammell Laird”) under a $70 million ble income tax treaties or under the Internal Revenue contract for the conversion and lengthening of the ship. Code, as amended, (the “Code”) or if the Code were Costa has also given notice of termination of the con- to be changed in a manner adverse to us, a portion of tract. It is expected that the arbitration tribunal’s decision our income would become subject to taxation by the will be made at the earliest by mid-2003. In the event U.S. at higher than normal corporate tax rates. that an award is given in favor of Cammell Laird the Some of our subsidiaries, including Costa and Tours, amount of damages which Costa will have to pay, if are subject to foreign and/or U.S. income taxes. In fis- any, is not currently determinable. The ultimate outcome cal 2001, we recognized a $9 million income tax benefit of this matter cannot be determined at this time. from Costa primarily due to changes in Italian tax laws. In the normal course of our business, various other Finally, we do not expect to incur income taxes on future claims and lawsuits have been filed or are pending distributions of undistributed earnings of foreign subsid- against us. The majority of these claims and lawsuits iaries and, accordingly, no deferred income taxes have are covered by insurance. We believe the ultimate out- been provided for the distribution of these earnings. come of any such actions, which are not covered by In addition to or in place of income taxes, virtually all insurance, will not have a material adverse effect on jurisdictions where our ships call, impose taxes based our financial statements. on passenger counts, ship tonnage or some other meas- Contingent Obligations ure. These taxes are recorded as operating expenses At November 30, 2001, we had contingent obliga- in the accompanying statements of operations. tions totaling $787 million to participants in lease out and lease back type transactions for three of our ships, Note 10—Shareholders’ Equity which had an aggregate net book value of $980 million. Our Articles of Incorporation authorize our Board of Only in the remote event of nonperformance by certain Directors, at their discretion, to issue up to 40 million major financial institutions, all of which have long-term shares of our preferred stock. At November 30, 2001 credit ratings of AAA or AA, would we be required to and 2000, no preferred stock had been issued. make any payments under these contingent obligations. In December 1998, we issued 17 million shares of Between 2017 and 2022, we have the right to exercise our common stock in a public offering and received net options that would terminate these transactions at no proceeds of approximately $725 million. We issued cost to us. As a result of these three transactions we the stock concurrent with the addition of our common have received $67 million, which was recorded as stock to the S&P 500 Composite Index. deferred income on our balance sheets and is being In February 2000, our Board of Directors authorized amortized to nonoperating income through 2022. These the repurchase of up to $1 billion of our common stock. transactions require that in the event our long-term As of November 30, 2001, we had repurchased 33.1 debt ratings are reduced to A-, we must provide a letter million shares of our common stock at a cost of $705 of credit for $22 million, and if reduced below BBB, we million pursuant to this authorization. In addition, we must provide a letter of credit for an additional $94 mil- received 761,000 shares of our common stock from lion, or alternatively provide mortgages in the amount our chief executive officer valued at its quoted market of $94 million on two of our ships. price of $23 million, which we recorded as treasury Travel Vouchers stock, in payment of the exercise price for two million Pursuant to Carnival’s and Holland America’s settle- shares of our common stock issued to him pursuant to ment of port litigation, travel vouchers with face values a stock option plan (see Note 13). of $10 to $55 were required to be issued to qualified At November 30, 2001, there were 53 million shares past passengers. Approximately $125 million of these of our common stock reserved for issuance pursuant to travel vouchers are available to be used for future travel our convertible notes and our stock option, employee prior to their expiration, principally in fiscal 2005. The stock purchase, restricted stock and dividend reinvest- amount and timing of the travel vouchers which may ment plans. During fiscal 2001, we declared cash divi- be redeemed is not reasonably determinable. Accordingly, dends aggregating $0.42 per share for the year. 16 Note 11—FinancialInstruments interest ratesbeingappliedtothisdebt. term debtwereestimatedbasedonappropriatemarket public marketprices.Thefairvaluesofourotherlong- and unsecured5.57%euronoteswerebasedontheir notes fair valuesofourunsecurednotes,convertible est ratesinexistenceatthemeasurementdates.The tions atfixedinterestratesthatarebelowmarketinter- value wasdueprimarilytoourissuanceofdebtobliga- the fairvalueofourlong-termdebtanditscarrying on thoserespectivedates.Thenetdifferencebetween $26 millionand$75lessthanitscarryingvalue $2.95 billionand$2.27billion,respectively, whichwas was our long-termdebt,includingthecurrentportion, Long-Term Debt of collateral. discounted futurecashflowsorestimatedfairvalue ues werebasedonpublicmarketprices,estimated 2001 and$135millionatNovember30,2000.Fairval- carrying andfairvaluesof$143millionatNovember30, ship, theformerNieuwAmsterdam.Theseassetshad notes andotherreceivables,principallycollaterizedbya Trusts ofournonqualifiedbenefitplans,and forcertain assets includedmarketablesecurities,heldinRabbi Other Assets maturities. short alents approximatetheirfairvaluesdueto Cash andEquivalents speculative purposes. financial instrumentsarenotheldfortradingorother that wecouldrealizeinacurrentmarketexchange.Our amounts arenotnecessarilyindicativeofthe data todevelopestimatesoffairvalueand,accordingly, tion. Considerablejudgmentisrequiredininterpreting from financialinstitutionsandotheravailableinforma- ments throughtheuseofpublicmarketprices,quotes and $68million,respectively. which decreasedshareholders’equityby$22million cumulative foreigncurrencytranslationadjustments At November30,2001and2000,thefairvalueof At November30,2001and2000,long-termother We estimatedthefairvalueofourfinancialinstru- At November30,2001and2000,AOCIincluded The carryingamountsofourcashandequiv- Note 12—SegmentInformation are thesameasthosedescribedinNote2—“Summary operations ofTours. hotelandtour segment representsthetransportation, Thetour onboardactivitiesandotherservices. certain tion toandfromthecruiseships,revenues cruise tickets,including,insomecases,airtransporta- Cruise revenuesarecomprisedofsalespassenger similarity oftheireconomicandothercharacteristics. aggregated asasingleoperatingsegmentbasedonthe excluding Costa,priortofiscal2001),whichhavebeen applied totheseinstruments. mated basedonappropriatemarketinterestratesbeing values ofourinterestrateswapagreementswereesti- of $3.3millionand$2.8million,respectively. Thefair of ourinterestrateswapswasanetunrealizedloss 2006. AtNovember30,2001and2000,thefairvalue 5.3% and5.2%,respectively. debt withaweighted-averagefixedinterestrateof respectively, ofeuriborfloatingratedebttofixed effectively changed$637millionand$762million, 2001 and2000,theseinterestrateswapagreements making fixedinterestratepayments.AtNovember30, receive variableinterestratepaymentsinexchangefor ments designatedascashflowhedgeswherebywe est rateof6.8%toLibor-based floatingratedebt. of fixedratedebtwithaweighted-averageinter- rate swapagreementseffectivelychanged$225million rate payments.AtNovember30,2001,theseinterest rate paymentsinexchangeformakingvariableinterest as fairvaluehedgeswherebywereceivefixedinterest Interest RateSwaps quoted byfinancialinstitutionsfortheseinstruments. contractswereestimatedbasedonprices forward contracts maturethrough2005.Thefairvaluesofour million and$538million,respectively. Theseforward contractswasanunrealizedlossof$567 these forward 7). AtNovember30,2001and2000,thefairvalueof our eurodenominatedshipbuildingcontracts(seeNote nated asforeigncurrencyfairvaluehedges,fortenof Foreign CurrencyContracts Our cruisesegmentincludedsixbrands(five, The significantaccountingpoliciesofthesegments These interestrateswapagreementsmaturethrough In addition,wealsohaveinterestrateswapagree- We haveinterestrateswapagreementsdesignated We foreigncurrencycontracts,desig- haveforward 17 Carnival Corporation 2001 Annual Report Notes to Consolidated Financial Statements (continued)

Carnival Corporation

of Significant Accounting Policies.” Cruise revenues included a cost allocation of certain corporate and other included intersegment revenues which primarily repre- expenses. Information for the cruise and tour seg- sent billings to the tour segment for the cruise portion ments for fiscal 2001, 2000 and 1999 was as follows of a tour when a cruise is sold as a part of a tour pack- (in thousands): age. In addition, cruise and tour operating expenses

Operating Depreciation income and Capital Total Revenues (loss) amortization expenditures assets 2001 Cruise ...... $4,357,942 $ 958,273(a) $359,314 $ 801,453 $ 9,905,353(b) Tour ...... 229,483 (10,357)(a) 11,474 25,108 188,296(c) Affiliated operations(d) ...... (44,024) Intersegment elimination ...... (51,674) Corporate(e) ...... (12,161) 1,436 7 1,469,903 $4,535,751 $ 891,731 $372,224 $ 826,568 $11,563,552

2000 Cruise ...... $3,578,372 $ 957,226 $276,483 $ 972,270 $ 9,093,646(b) Tour ...... 259,662 7,664 10,825 30,129 199,722(c) Affiliated operations ...... 37,828(b) 437,391 Intersegment elimination ...... (59,492) Corporate(e) ...... (19,760) 359 949 100,561 $3,778,542 $ 982,958 $287,667 $1,003,348 $ 9,831,320

1999 Cruise ...... $3,286,701 $ 947,452 $232,942 $ 837,126 $ 6,938,411 Tour ...... 271,828 10,403 10,716 24,416 185,591(c) Affiliated operations ...... 75,758(b) 586,922 Intersegment elimination ...... (61,059) Corporate(e) ...... (13,914) 11,442 575,431 $3,497,470 $1,019,699 $243,658 $ 872,984 $ 8,286,355

(a) Cruise and tour operating income (loss) included $134 million and $6 million of impairment charges, respectively (see Note 4). (b) The November 30, 2001 and 2000 cruise assets included Costa, while Costa’s results of operations were presented in the affili- ated operations segment for 2000 and 1999 (see Notes 2 and 17). (c) Tour assets primarily included hotels in Alaska and the Canadian Yukon, luxury dayboats offering tours to the glaciers of Alaska, motor coaches used for sightseeing and charters in the states of Washington and Alaska and private, domed rail cars which are run on the Alaska Railroad between Anchorage and Fairbanks. (d) On June 1, 2001 we sold our investment in Airtours. Accordingly, we did not record any equity in the earnings or losses from the affiliated operations of Airtours after our quarter ended May 31, 2001. (e) Operating loss represented corporate expenses not allocated to segments. Corporate assets primarily included cash, cash equiv- alents, short-term investments, debt issuance costs and transportation assets.

See Note 5 for affiliated operations segment 2001 2000 1999 information which were not included in our consoli- Revenues: dated operations. United States . . . $ 3,489,913 $3,180,667 $2,934,492 Foreign revenues for our cruise brands, including Foreign ...... 1,045,838 597,875 562,978 Costa in 2001, represent sales generated from outside $ 4,535,751 $3,778,542 $3,497,470 the U.S. primarily by foreign tour operators and foreign travel agencies. The majority of these foreign revenues Assets: are from Italy, Canada, United Kingdom, , Germany United States . . . $ 2,040,145 $ 680,897 $1,063,963 and Spain. Foreign assets represent assets which are Foreign ...... 9,523,407 9,150,423 7,222,392 located outside of the U.S. and included all of our ships. $11,563,552 $9,831,320 $8,286,355 Revenues and year-end asset information by geographic area was as follows (in thousands):

18 pin xrie . Options exercised . Options granted . Outstanding options—beginningofyear rc ag hrsLf Yas rc hrsPrice Shares Price Life(Years) Shares $25.96 $44.73 2,972,498 909,540 $28.95 $44.36 8.1 7.7 (1) Thesestockoptionsdonothaveanexpirationdate. 12,774,293 3,074,100 . Total . $43.56-$48.56 35,980 . 2.25 1.94-$ $ Price Range . . Options exercisable—endofyear . Outstanding options—endofyear . Options canceled and 1999weregrantedatanexercisepricepershare stantially alloptionsgrantedduringfiscal2001,2000 common stockonthedateoptionisgranted.Sub- the Committeeat100%offairmarketvalue fied term.Theoptionexercisepriceisgenerallysetby and theamountsthatmaybeexercisedwithinaspeci- number ofsharesforwhichoptionsaretobegranted the which determineswhoiseligibletoparticipate, committee ofthreeourdirectors(the“Committee”) Board ofDirectors.Theplansareadministeredbya and managementlevelemployeesmembersofour Stock OptionPlans Note 13—BenefitPlans income andearnings pershareforfiscal2000 and1999. net not havebeen materially differentfromreported have been$904 millionand$1.54pershare, andwould fair valueofstockoptions) SFAS No.123,would value approach(whichcharges earningsfortheestimated share forfiscal2001,hadwe electedtoadoptthefair awards. Ourproformanetincome andearningsper noncompensatory employee and directorstockoption we havenotrecognizedcompensationexpenseforour director stock-basedcompensationawards.Accordingly, intrinsic valuemethodofaccountingforemployeeand 3.4$13 ...... 240078$52 1,3 $36.04 $26.40 117,733 $19.31 7.31 $11.37 $ 460,894 $35.22 545,551 707,000 195,800 $28.75 $21.59 7.8 $11.37 7.31 $ 8.6 9.1 294,000 3.3 0.7 4,307,144 . $33.04-$41.34 4,160,269 707,000 . $24.63-$29.81 195,800 . $16.28-$22.57 . . $10.59-$15.00 . 6.94-$10.31 $ Exercise We havestockoptionplansprimarilyforsupervisory Information withrespecttooutstandingandexercisablestockoptionsatNovember30,2001wasasfollows: Pursuant toSFAS No.123,weelectedtousethe $11.70 $26.44 $26.80 $25.96 $28.95 $35.15 2001 vrg xriePieNumberofOptions Average ExercisePrice and statusofourstockoptionplanswasasfollows: able forfutureoptiongrants.Asummaryoftheactivity approval, underwhich40millionshareswillbeavail- of our2002StockOptionPlan,subjecttoshareholder 2002, ourBoardofDirectorsauthorizedtheadoption Directors StockOptionPlan.Inaddition,onJanuary14, were availableforfuturegrantsunderour2001Outside At November30,2001,optionsfor704,000shares vest evenlyoverfiveyearsandhaveatenyearterm. Director optionsgrantedsubsequenttofiscal2000will vested immediatelyandhaveafiveortenyearterm. and directoroptionsgrantedpriortofiscal2001have vested evenlyoverfiveyearsandhaveatenyearterm the dateofgrant.Employeeoptionsgenerallyhave equal tothefairmarketvalueofourcommonstockon years forallperiods. 4.5%, 6.4%and 4.8%;andexpectedoption lifeofsix 50.0%, 28.9%and26.3%;risk freeinterestratesof of 1.16%,1.17%and0.80%; expectedvolatilityof 2000 and1999,respectively; expected dividendyields following weighted-averageassumptions forfiscal2001, using theBlack-Scholesoption pricingmodelwiththe of grant.Thefairvaluesoptionswereestimated $13.31 and$15.15pershare,respectively, atthedates 2001,2000and1999were$12.67, granted during fiscal e hr Years EndedNovember30, Per Share Weighted The weighted-averagefairvaluesofoptionswe 1.3$11.01 $44.54 $13.43 $14.95 $35.92 $22.70 1.2$12.64 $15.82 $22.70 $26.80 $26.55 $35.91 001999 2000 pin usadn OptionsExercisable Options Outstanding eann xrieExercise Exercise Remaining egtdWihe Weighted Weighted Weighted vrg vrg Average Average Average (1) 12,774,293 (2,218,075) 6,580,250 8,840,793 2,972,498 (428,675) .53,8 2.05 $ 35,980 2.05 $ 2001 ,1,7 1,641,400 5,987,574 2,910,575 6,517,168 ,4,5 3,601,993 4,042,452 ,4,9 6,517,168 8,840,793 3210 (155,100) (342,100) 2480 (956,706) (244,850) 001999 2000 19 Carnival Corporation 2001 Annual Report Notes to Consolidated Financial Statements (continued)

Carnival Corporation

Restricted Stock Plan participate. The Carnival shipboard nonqualified plan We have a restricted stock plan under which three is funded by contributions into a Rabbi Trust and the executive officers have been issued restricted shares SERP is unfunded. At November 30, 2001, the Carnival of our common stock. These shares have the same shipboard plan had a minimum pension liability adjust- rights as our common stock, except for restriction and ment of $5.5 million included in AOCI. Total expense forfeiture provisions. During fiscal 2001, 2000 and for these defined benefit pension plans was $8 million, 1999, 150,000 shares of common stock were issued $6 million and $4 million in fiscal 2001, 2000 and each year which were valued at $5 million, $6 million 1999, respectively. and $7 million, respectively. Unearned stock compensa- Defined Contribution Plans tion was recorded in stockholders’ equity at the date of We have several defined contribution plans available award based on the quoted market price of the shares to substantially all U.S. and Canadian employees, to on the date of grant and is amortized to expense using Cunard’s United Kingdom employees and to Carnival’s the straight-line method from the grant date through shipboard deck and engine officers. We contribute to the vesting date. These shares vest five years after the these plans based on employee contributions, salary grant date. As of November 30, 2001 and 2000 there levels and length of service. Total expense relating to were 647,000 shares and 497,000 shares, respectively, these plans was $8 million, $7 million and $6 million in issued under the plan which remain to be vested. fiscal 2001, 2000 and 1999, respectively. Defined Benefit Pension Plans Employee Stock Purchase Plan We have one qualified and one nonqualified defined We have an Employee Stock Purchase Plan which is benefit pension plan that is available to full-time Carnival authorized to issue up to 4,000,000 shares of our com- and corporate shoreside employees who were employed mon stock to substantially all of our employees. The by Carnival before January 1, 1998. Our funding policy purchase price is derived from a formula based on 85% for this qualified plan is to annually contribute at least of the fair market value of our common stock during the amount required under the applicable labor regula- the six-month purchase period, as defined. During fiscal tions. The nonqualified plan is unfunded. In addition, 2001, 2000 and 1999, we issued 82,733, 171,886 and we have two nonqualified plans, one for the Carnival 144,911 shares, respectively, at a weighted-average shipboard employees, except for deck and engine offi- share price of $21.94, $26.36 and $36.67, respectively, cers, and one supplemental executive retirement plan under this plan. (“SERP”) in which two executive officers currently

Note 14—Earnings per Share Our basic and diluted earnings per share were computed as follows (in thousands, except per share data):

Years Ended November 30, 2001 2000 1999 Net income ...... $926,200 $965,458 $1,027,240 Effect on net income of assumed issuance of affiliate securities ...... (3,299) Net income, as adjusted ...... $926,200 $965,458 $1,023,941

Weighted average common shares outstanding ...... 585,064 599,665 612,484 Dilutive effect of stock plans ...... 1,798 2,247 3,516 Diluted weighted average shares outstanding ...... 586,862 601,912 616,000

Basic earnings per share ...... $ 1.58 $ 1.61 $ 1.68

Diluted earnings per share ...... $ 1.58 $ 1.60 $ 1.66

During fiscal 2001, 2000 and 1999, the exercise In addition, our 2001 diluted earnings per share com- prices for 5.4 million, 4.4 million and 1.1 million options, putation did not include 32.7 million shares of our com- respectively, were greater than the average fair market mon stock issuable upon conversion of our 2% and prices of our common stock for those periods and, con- zero-coupon convertible notes, as this common stock sequently, were excluded from our diluted earnings per was not issuable under the contingent issuance provi- share computations since they were anti-dilutive. sions of these debt instruments.

20 Noncash investingandfinancingactivities: Cash paid(received)for: Note 16—RecentAccounting Pronouncements (in thousands) Note 15—SupplementalCashFlow Information value. We mustcompletethefirst stepofthetransitional sary, goodwillisthenwritten-down toitsimpliedfair intangible assets,basedontheir fairvalue.Ifneces- ing bothrecognizedandunrecognized tangibleand allocated toallunderlyingassets andliabilities,includ- unitis assets, theimpliedfairvalue of thereporting unitislessthanthecarryingvalueof net reporting analysisisrequired.Ifthefairvalueof further unit. Ifthisfairvalueexceedsthecarryingvalue,no rying valueofthenetassetsallocatedtoreporting unitandcomparingittothecar- value ofthereporting sists ofatwo-stepprocessfirstdeterminingthefair 1999, respectively. $23 millionand$21infiscal2001,2000 was$25million, of goodwill.Goodwillamortization assumingnofutureimpairment goodwill amortization, tion willresultinareductionof$20millionannual annually thereafter. Ourcessationofgoodwillamortiza- of ourexistinggoodwillasDecember1,2001and atransitionalimpairmenttest 2001, andwillperform goodwill asofDecember1, longer intendtoamortize as ofthebeginningfiscal2002.Accordingly, weno upon adoption.We intendtoearlyadoptSFAS No.142 assets acquiredpriortoJune30,2001willbeaffected after June30,2001.Goodwillandotherintangible diately togoodwillandotherintangibleassetsacquired provisionsapplyimme- Theamortization be amortized. assets withadeterminableusefullifewillcontinueto intangible assets.Identifiableintangible amortizable more frequent,impairmentreviewofboththesenon- annual, orwheneventscircumstancesdictatea and indefinite-livedintangibleassetsrequiresan on ouraccountingforpriorbusinesscombinations. this standardisnotexpectedtohaveamaterialeffect gible assetsseparatelyfromgoodwill.Ouradoptionof clarifiesthe criteriaforrecognitionofintan- also further accounted forusingthepurchasemethod.SFAS No.141 combinations initiatedafterJune30,2001tobe Assets” wereissued.SFAS No.141requiresbusiness tions” andSFAS No.142,“GoodwillandOtherIntangible omnsokise o custo fCnr ieLmtdmnrt neet $127,069 $84,500 . Common stockissuedforacquisitionofCunardLineLimitedminorityinterest . Note receiveduponthesaleofNieuwAmsterdam . Common stockreceivedaspaymentofoptionexerciseprice . Income taxes . Interest, netofamountcapitalized The SFAS No.142goodwillimpairmentreviewcon- SFAS ofgoodwill No.142eliminatestheamortization In June2001,SFAS No.141,“BusinessCombina- ahaqie n osldtd...... (130,539) Net cashpaidasreflectedinour 510,824 . Cash acquiredandconsolidated (94,354) . Cash paidforacquisition (310,259) . Other liabilitiesassumed 915,437 $ . Debt assumed . Fair valueofacquiredassets Note 17—CostaAcquisition acquisition wasasfollows(inthousands): been material. per shareforfiscal2000and1999wouldnothave our unauditedconsolidatednetincomeandearnings billion and$4.1billion,respectively. Theimpacton 2000 and1999wouldhavebeenapproximately$4.3 1998, ourunauditedconsolidatedrevenuesforfiscal the purchaseaccountingmethod. borrowings. We accountedforthistransactionusing the purchasepricewasfundedbyeurodenominated atacostof$511 million.Substantiallyallof Airtours acquired theremaining50%interestinCostafrom owned 50%ofCosta.OnSeptember29,2000,we existing literature. ment underSFAS No.144islargelyunchangedfrom our financialstatementssincetheimpairmentassess- tion ofthisstandardwillnothaveamaterialeffecton of SFAS No.144,however, weexpectthattheadop- us infiscal2003.We havenotcompletedourreview assets tobeheldforsale.SFAS No.144iseffectivefor be heldandused(ii)themeasurementoflong-lived measurement oftheimpairmentlong-livedassetsto issued. SFAS No.144requires(i)therecognitionand Impairment orDisposalofLong-LivedAssets”was will uponadoption. expect thattherewillbeanyimpairmentofourgood- the secondstepbyNovember30,2002.We donot impairment reviewbyMay31,2002and,ifnecessary, 00saeeto ahfos 380,285 $ . 2000 statementofcashflows From June1997throughSeptember28,2000,we The impactonourassetsandliabilitiesrelatedtothis Had theabovetransactionoccurredonDecember1, In August2001,SFAS No.144,“Accountingforthe . 22,500 $ 3,931 $ $109,321 2001 Years EndedNovember30, 80 3,841 $ (800) 49,836 $ $ $40,431 001999 2000 21 Carnival Corporation 2001 Annual Report Notes to Consolidated Financial Statements (continued)

Carnival Corporation

Note 18—Subsequent Event portion of our offer that will be paid in shares of our com- mon stock. As of the date we made our pre-conditional Subsequent to November 30, 2001, we announced offer, P&O and Royal Caribbean Cruises Ltd. (“RCL”) that we had made a pre-conditional offer to acquire were parties to a series of agreements that would P&O Princess Cruises plc (“P&O”), the world’s third result in a combination of P&O and RCL in a dual listed largest cruise company. The value of our offer as of structure. P&O has rejected our pre-conditional offer February 15, 2002 was approximately $5.4 billion to be and has recommended the combination with RCL to its paid in shares of our common stock. In addition, we shareholders. Both the combination with RCL and our will assume P&O net debt, which was approximately offer are subject to certain conditions, including regula- $1.4 billion at December 31, 2001. It is our intention, tory clearances. No assurance can be given that we upon closing of the transaction, to pay approximately will be successful in acquiring P&O. $2.4 billion of the purchase price in cash, subject to our obtaining satisfactory financing, which will reduce the

Report of Independent Certified Public Accountants

To the Board of Directors and Shareholders of Carnival Corporation

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, cash flows and shareholders’ equity present fairly, in all material respects, the financial position of Carnival Corporation and its subsidiaries at November 30, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended November 30, 2001 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As described in Note 2, the Company changed its method of accounting for derivative instruments and hedging activities in 2001.

PricewaterhouseCoopers LLP

Miami, Florida January 29, 2002, except as to Note 18 which is dated as of February 15, 2002

22 Forward-Looking Statements Special Note Regarding Carnival Corporation Financial ConditionandResultsofOperations Management’s DiscussionandAnalysis of the following: looking statements.Suchfactorsinclude,amongothers, achievements expressedorimpliedbysuchforward- or different fromanyfutureresults,performances orachievementstobematerially results, performances tainties andotherfactors,whichmaycauseouractual prospects, involveknownandunknownrisks,uncer- yields, bookinglevels,pricing,occupancyorbusiness which mayimpacttheforecastingofournetrevenue statements,includingthose These forward-looking discussion offutureoperatingorfinancialperformance. and termsofsimilarsubstanceinconnectionwithany “expect,” “forecast,”“future,”“intend,”andwords words suchas“anticipate,”“assume,”“believe,” wherever possible,toidentifysuchstatementsbyusing Securities LitigationReformActof1995.We havetried, looking statements”withinthemeaningofPrivate constitute“forward- where inthis2001AnnualReport of Operations,”inourlettertoshareholdersandelse- sion andAnalysisofFinancialConditionResults • impactofpending orthreatenedlitigation; • incidentsinvolving cruiseships; • unscheduledshiprepairsand drydocking; • weatherpatternsornatural disasters; • deliveryofnewshipsonschedule andatthe changes inforeigncurrencyrates,securityexpenses, • • ourabilitytoattractandretainshipboardcrew; • ourabilitytoimplementshipbuildingprogram • ourabilitytoimplementbrandstrategy; • changesinfinancialandequitymarkets; • changesintaxlawsandregulations; destinations; • continuedavailabilityofattractiveport • increasesincruiseindustryandvacation • effectsonconsumerdemandofarmedconflicts, • othervacationindustrycompetition; • consumerdemandforcruisesandother • generaleconomicandbusinessconditionswhich statementsinthis“Management’sCertain Discus- contracted prices; interest rates; food, fuel,insuranceandcommodityprices Americanmarket; the North and tocontinueexpandourbusinessoutside industry capacity; andadversemedia publicity; service political instability, terrorism,theavailabilityofair vacation options; cruise products; consumers andthenetrevenueyieldsforour may impactlevelsofdisposableincome Critical Accounting Policies considerable judgment and are inherently uncertain. considerable judgment andareinherentlyuncertain. ships, alltheabove shipaccountingestimates require their salvagevaluesat15%of ouroriginalshipcost. our newships’averageuseful livesat30yearsand cal usefullivesofsimilarly-built ships.We haveestimated vacation marketconditionsand competitionandhistori- impact ofanticipatedtechnological changes,long-term . Inaddition,weconsider, amongotherthings,the cabins, maindiesels,electric,superstructureand lives oftheships’majorcomponentsystems,suchas based primarilyonourestimatesoftheaverageuseful and recognizetheresultinggainorlossinoperations. replacement orrefurbishmentofourshipcomponents their estimatedusefullives.Finally, weaccountforthe to ourshipsanddepreciatethoseimprovementsover capitalizing thosecostswhichwebelievewilladdvalue Secondly, weaccountforshipimprovementcostsby of eachourships,aswelltheirsalvagevalues. which requiresustoestimatetheaverageusefullives ing. First,wecomputeourships’depreciationexpense, critical accountingpoliciesdealingwithourshipaccount- represent 69%ofourtotalassets.We utilizeseveral Ship Accounting or usingdifferentassumptions,isasfollows: underdifferentconditions amounts wouldbereported application andthelikelihoodthatmateriallydifferent affectingtheir underlying judgmentsanduncertainties tain. Adiscussionofourcriticalaccountingpolicies,the about theeffectofmattersthatareinherentlyuncer- ments; oftenasaresultoftheneedtomakeestimates believe requireourmostsubjectiveorcomplexjudg- events orotherwise. ments, whetherasaresultofnewinformation,future state- to publiclyupdateorreviseanyforward-looking prediction ofactualresults.We noobligation undertake looking statementsshouldnotberelieduponasa statements.Accordingly,any forward-looking forward- cause actualresultstodifferfromthoseprojectedin extent towhichanyrisk,orcombinationofrisksmay the impact,ifany, ofsuchrisksonourbusinessorthe time. We cannotpredictsuchrisksnorcanweassess ness environment,andnewrisksemergefromtimeto exhaustive. We operateinacontinuallychangingbusi- Our criticalaccountingpoliciesarethosewhichwe Given thevery largeandcomplexnatureof our We determine theaverageusefullivesofourships Our mostsignificantassetsareourships,which We cautionthereaderthattheserisksmaynotbe • changesinlawsandregulationsapplicabletous. • continuingfinancialviabilityofourtravelagent • ability tosuccessfullyimplementcostimprove- distribution system;and plans; ment 23 Carnival Corporation 2001 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Carnival Corporation

We do not have cost segregation studies performed to values of ships utilizing discounted forecasted cash specifically componentize our ship systems; therefore, flows, significant judgments are made concerning our overall estimates of the relative costs of these future net revenue yields, operating, selling and admin- component systems are based principally on general istrative costs per available berth day, interest and and technical information known about major ship com- discount rates, cruise itineraries, ship additions and ponent system lives and our knowledge of the cruise retirements, technological changes, consumer demand, industry. In addition, we do not identify and track the governmental regulations and the effects of competi- depreciation of specific component systems, but instead tion. In addition, third party appraisers are sometimes utilize estimates when determining the net cost basis used to determine fair values and some of their valua- of assets being replaced or refurbished. If materially tion methodologies are also subject to similar types of different conditions existed, or if we materially changed uncertainties. We believe that we have made reason- our assumptions of ship lives and salvage values, our able estimates and judgments in determining whether depreciation expense, gain or loss on replacement or our long-lived assets and goodwill have been impaired, refurbishment of ship assets and net book value of our however, if there is a material change in the assump- ships would be materially different. In addition, if we tions used in our determination of fair values or if there change our assumptions in making our determinations is a material change in the conditions or circumstances as to whether improvements to a ship add value, the influencing fair value, we could be required to recog- amounts we expense each year as repair and mainte- nize a material impairment charge. nance costs could increase, partially offset by a decrease Contingencies—Litigation in depreciation expense, as less costs would have been We are a party to two grand jury investigations initially capitalized to our ships. related to environmental issues, as well as other legal We believe that the estimates we made for ship actions. See Note 8 in the accompanying financial accounting purposes are reasonable and our methods statements for additional information concerning our are consistently applied and, accordingly, result in litigation contingencies. We periodically assess the depreciation expense that is based on a rational and potential liabilities related to any lawsuits or claims systematic method to equitably allocate the costs of brought against us. While it is typically very difficult to our ships to the periods during which services are determine the timing and ultimate outcome of these obtained from their use. In addition, we believe that the actions, we use our best judgment to determine if it is estimates we made are reasonable and our methods probable that we will incur an expense related to the consistently applied (1) in determining the overall rela- settlement or final adjudication of such matters and tive costs of our ships’ component systems; (2) in whether a reasonable estimation of such probable loss, determining which ship improvement costs add value if any, can be made. to our ships; and (3) in determining the net cost basis Given the inherent uncertainty related to the even- of ship component assets being replaced or refurbished. tual outcome of litigation, it is possible that all or some Finally, we believe our critical ship accounting policies of these matters may be resolved for amounts materi- are generally comparable with those of other major ally different from any provisions that we may have cruise companies. made with respect to their resolution. Asset Impairment Proposed Exposure Draft Our review of our long-lived assets, principally ships, In June 2001, the Accounting Standards Executive and goodwill requires us to initially estimate the undis- Committee issued a Statement of Position exposed counted future cash flow of these assets, whenever draft, entitled “Accounting for Certain Costs and events or changes in circumstances indicate that the Activities Related to Property, Plant and Equipment” carrying amount of these assets may not be fully (“Proposed SOP”). If issued in its current form, the recoverable. If such analysis indicates that a possible Proposed SOP would require, among other things, impairment may exist, as described in Note 2 in the significant changes to our ship accounting. Specifically, accompanying financial statements, we are required we would be required to adopt the component method to then estimate the fair value of the asset, principally of accounting for our ships, which would require us, determined either by third party appraisals, sales price among other things, to maintain very detailed historical negotiations or estimated discounted future cash flows, cost records for the components of our ships and may which includes making estimates of the timing of the result in changes in the amount and timing of deprecia- future cash flows, discount rates and reflecting varying tion and repair and maintenance expenses and the degrees of perceived risk. amount of gain or loss recognized on the replacement The determination of fair value includes numerous or refurbishment of ship component parts. In addition, uncertainties, unless a viable actively traded market we would have to expense drydock costs as incurred exists for the asset, which is sometimes not the case instead of amortizing our costs to expense generally for used cruise ships. For example, in determining fair over one or two years. Finally, we would have to treat 24 prtn noeBfr Ls)Icm rmAflae prtos. . Operating IncomeBefore(Loss)FromAffiliatedOperations Costs andExpenses . Revenues Selected StatisticalInformation(inthousands): . Net Income . (Loss) IncomeFromAffiliatedOperations,Net Results ofOperations in whatform,thisProposedSOPwillbeadopted. whether,financial statements,asweareuncertain or of theimpactthisProposedSOPwouldhaveonour us infiscal2003.We havenotcompletedananalysis If adopted,theProposedSOPwouldbeeffectivefor a reimbursementforexpensesincurredandlostprofits. dated damagesasnonoperatingincome,sincetheyare basis insteadofourcurrenttreatmentrecordingliqui- delivery damagesasareductiontoourships’cost liquidated damagesreceivedfromshipyardsfordelay basis, thuseliminating thetwo-monthlagin reporting dated intoour financial statementsonacurrent month 2001, allofCosta’s resultsofoperations wereconsoli- operations onatwo-monthlag basis.Beginninginfiscal and Costa’s operatingresults asearningsfromaffiliated months inconjunctionwiththe Alaskacruiseseason. enues generatedduringthelate springandsummer are highlyseasonal,withavastmajorityoftourrev- greatest duringthesummermonths.Ourtourrevenues seasonal. Historically, demandforcruiseshasbeen passenger ticketsforourcruiseoperationsismoderately degrees ofseasonality. Ourrevenuefromthesaleof General not includedinthe2000or1999statisticalinformation. operations wererecordedinaffiliatedand 2000 and1999,our50%interestinCosta’s resultsof consolidation ofCosta’s resultsofoperations.Infiscal tions andselectedstatisticalinformationincludedthe following: Depreciation and amortization . Depreciation andamortization eln n diitaie. Selling andadministrative . Operating cuac ecnae. Occupancy percentage . Available days lowerberth . Passengers carried maretcag . Impairment charge Through fiscal2000,werecorded ourshareofAirtours’ Our cruiseandtouroperationsexperiencevarying • thesaleofpassengercruisetickets,which We earnourcruiserevenuesprimarilyfromthe Commencing infiscal2001,ourstatementsofopera- onboard activities, includes accommodations,meals,andmost expected toapproximate 4.2%,17.0%and 17.2%, for construction forfiscal2002,2003and2004 is 2002 andsubsequentdelivery ofshipsundercontract age passengercapacityresulting primarilyfromthe quarter.fourth profitsbeingrecognizedinour tially allofAirtours’ recorded inthefirsthalfofour fiscalyearandsubstan- resultswereveryseasonal,withlosses Airtours’ offiscal2001.Historically,end ofoursecondquarter resultsinouraffiliatedoperationsasofthe Airtours’ and,accordingly,in Airtours weceasedrecording infiscal2000. quarter infiscal2001versusthefourth our thirdquarter summer resultsofoperationshavebeenrecordedin Costa’s fiscalquarters. third andfourth seasonallystrong results ofoperations,mostsignificantlybetweenour ality, hasincreasedtheseasonalityofourquarterly periods,as wellasCosta’sof reporting greaterseason- Costa’s resultsofoperations.Thischangeinthetiming as follows: revenues andselectedstatisticalinformationwas Operations dataexpressedasapercentageoftotal Note 12intheaccompanyingfinancialstatements. operating incomeandotherfinancialinformationsee operations ofTours. We alsoderiverevenuesfromthetourandrelated onboardourcruise • thesaleofgoodsandservices toandfromour • thesaleofairtransportation The yearoverpercentage increaseinouraver- In addition,onJune1,2001wesoldourinvestment For segmentinformationrelatedtoourrevenues, and photosales,shoreexcursionsspaservices. ships, suchascasinogaming,barsales,giftshop cruise ships,and ...... 20,685 104.7% 3,385 2001 100% Years EndedNovember30, (1) 14 21 54 20% 8 3 58814,336 15,888 0.%104.3% 2,366 105.4% 2,669 001999 2000 0%100% 100% 313 13 527 25 453 54 6 29% 26% 87 12 25 Carnival Corporation 2001 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Carnival Corporation

respectively. Substantially all of our fiscal 2002 capacity in demand for post-September 11 travel, we had lower increase will be in our Carnival and Costa brands. occupancies and prices during our 2001 fourth quarter. In addition, the slowdown in the general economic Outlook for Fiscal 2002 (“2002”) and business conditions throughout fiscal 2001 also adversely impacted our customers and, accordingly, The events of September 11 and their aftermath had an overall negative effect on our 2001 gross rev- coupled with the already soft global economy, both of enues compared to 2000. Our luxury cruise brands, which adversely affected leisure travel and lowered which comprised approximately 8% of our average consumer confidence, will negatively impact our 2002 capacity during 2001, were particularly affected by operating results. We believe the impact of September 11 this slowdown, and realized significantly lower pricing should be greatest in the first quarter of 2002, because during most of 2001 compared to 2000. of the tremendous reduction in booking volumes during the two months following September 11 and the result- Costs and Expenses ant reduction in cruise prices needed to stimulate book- Operating expenses increased $410 million, or ing volumes. Since mid-November 2001, we have 19.9%, in 2001 compared to 2000. Cruise operating continued to see an improvement in our booking vol- costs increased by $423 million, or 22.1%, to $2.33 bil- umes and prices. lion in 2001 from $1.91 billion in 2000. Approximately On February 12, 2002, we announced that our net $340 million of our cruise operating cost increase was bookings during the first five weeks of “Wave Season,” due to the consolidation of Costa, and the remaining traditionally the time of the cruise industry’s highest $83 million of the increase was from our other brands. booking levels, had increased 8% over the same period Cruise operating costs, excluding Costa, increased in last year, compared to an expected 3% capacity increase 2001 primarily from additional costs associated with our for the first nine months of 2002. In addition, pricing 9.6% increase in passenger capacity, partially offset by had largely recovered from the significantly discounted a 4.4% decrease in our operating expenses per avail- prices experienced after the events of September 11, able berth day. Excluding Costa, cruise operating costs 2001, with pricing during the weeks leading up to as a percentage of cruise revenues were 53% and February 12, 2002 almost equal to pricing at the same 53.4% in 2001 and 2000, respectively. time last year. Because of the improved booking levels Selling and administrative expenses increased $131 and pricing, we estimate that net revenue yields for the million, or 26.9%, to $619 million in 2001 from $487 mil- first quarter of 2002 will be down approximately 8% lion in 2000. Approximately $98 million of our increase compared to our previous guidance of 10% to 15%. was due to the consolidation of Costa, and the remain- Finally, while cumulative advance booking levels and ing $33 million of the increase was from our other prices for the second through fourth quarters of 2002 brands. Selling and administrative expenses, excluding were still below last year’s levels, we expect that net Costa, increased in 2001 primarily from additional revenue yields for the remainder of 2002 should con- expenses associated with our 9.6% increase in pas- tinue to improve compared to the 8% decrease expected senger capacity and the 0.6% increase in our cruise in the first quarter of 2002. selling and administrative expenses per available berth day. Excluding Costa, selling and administrative expenses Fiscal 2001 (“2001”) Compared to as a percentage of revenues were 13.2% and 12.9% Fiscal 2000 (“2000”) in 2001 and 2000, respectively. Depreciation and amortization increased by $85 mil- Revenues lion, or 29.4%, to $372 million in 2001 from $288 million Revenues increased $757 million, or 20%, in 2001 in 2000. This increase was primarily from our consoli- compared to 2000. Cruise revenues increased by $780 dation of Costa, which accounted for approximately million or 21.8%, to $4.36 billion in 2001 from $3.58 bil- $50 million of the increase, and the majority of the lion in 2000. Approximately $598 million of our cruise remaining $35 million increase was due to our expan- revenue increase was due to the consolidation of Costa, sion of the fleet and ship improvement expenditures. and $182 million was due to increased revenues from See Note 4 in the accompanying financial statements our other brands. Our other brands’ cruise revenues for additional information regarding our $140 million change resulted from an increase of 9.6% in our pas- impairment charge in 2001. senger capacity, partially offset by a 4.1% decrease in our gross revenue per passenger cruise day and a Affiliated Operations slight decrease in our occupancy rate of 0.4%. Our During 2001, we recorded $44 million of losses from post-September 11 cruise results were adversely affiliated operations as compared with $38 million of affected by the September 11 terrorist attacks, which income in 2000. Our portion of Airtours’ losses in 2001 impacted all leisure travel and caused significant price was $43 million as compared to $41 million of losses in competition among alternative vacation options in order 2000. In fiscal 2001 Costa’s results of operations have to stimulate demand. Due to this significant reduction been consolidated and are not included in our 2001 26 fall-off inpre-and postMillenniumbookings. Also,when ing, butnotlimited to,relativelysofterdemand anda ticket pricingwas causedbyanumberoffactors includ- tion oftheMillenniumcruises. Thispressureoncruise cruise ticketpricesthroughout theyear, withtheexcep- ger cruisedaywasprimarilydue topressureonour cruise day. Thedecrease ingrossrevenueperpassen- a 3.2%decreaseinourgross revenueperpassenger offsetby 1.2% increaseinouroccupancyrate,partially increase of10.8%inourpassengercapacityanda 1999. Thecruiserevenuechangeresultedfroman or 8.9%,to$3.58billionin2000from$3.29 pared to1999.Cruiserevenuesincreased$292million, Revenues Fiscal 1999(“1999”) Fiscal 2000(“2000”)Comparedto Italian taxlaws. benefit wasfromCosta,primarilyduetochangesin imately $9millionofthenetincreaseinincometax 2001 comparedtoa$1millionexpensein2000.Approx- estimated netlitigationexpenses. investment write-downsand$9millionof short-term offsetby$9millionof of ourinterestinCRC,partially during2000,a $16milliongainfromthesale service revenues andexpensesincurredduetodisruptionin our shippropulsionsystemstoreimburseusforlost ment agreementwiththemanufacturersofsome a$13 milliongainfromasettle- investment inAirtours, marily ofagain$101millionfromthesaleour construction projects. marily toourloweraveragelevelsofinvestmentinship $12 millionduring2001ascomparedto2000duepri- notes inApril2001.Capitalizedinterestdecreased and ourissuanceof$600million2%convertible primarily fromouracquisitionandconsolidationofCosta interest rates.Thehigheraveragedebtbalanceswere million reductioninnetinterestexpenseduetolower our higheraverageinvestedcashbalancesanda$19 offset by$30millionofadditionalinterestincomefrom higher averageoutstandingdebtbalances,partially million increaseininterestexpensewascausedbyour 2001 from$66millionin2000.Anapproximate$99 ing capitalizedinterest,increasedto$116millionin Nonoperating Income(Expense) affiliated operationsandtheacquisitionofCosta. cial statementsforadditionalinformationregardingour events. SeeNotes5and17intheaccompanyingfinan- nonrecurring sections belowforadiscussionofcertain operating Income(Expense)”and“AffiliatedOperations” during 2000fromourinterestinCosta.Seethe“Non- affiliated operations.We recordedincomeof$77million Revenues increased$281million,or8%,in2000com- Revenues Income taxbenefitof$12millionwasrecognizedin Other incomein2001of$109millionconsistedpri- Interest expense,netofinterestincomeandexclud- our $38million incometaxbenefitfromCosta’s change offsetby partially net chargesrecorded byAirtours, equity interest in restructuringandothernonrecurring $5 million,consistingofa$43 millionchargeforour operations includednetnonrecurring chargestotaling to ourinterestinCosta.Ourresults fromaffiliated $40 millionduring2000and1999, respectively, related million in1999.We recordedincomeof $77 millionand 2000 was$41millionascompared toincomeof$36 lossesin ofAirtours’ of incomein1999.Ourportion from affiliatedoperationsascomparedwith$76million Affiliated Operations and shipimprovementexpenditures. depreciation associatedwithourexpansionofthefleet in 1999.Thisincreasewasprimarilyfromtheadditional lion, or18.1%,to$288millionin2000from$244 1999, respectively. age ofrevenueswere12.9%and12.8%in2000 day. Sellingandadministrativeexpensesasapercent- selling andadministrativeexpensesperavailableberth city, offsetbya2.3%decreaseinourcruise partially associated withour10.8%increaseinpassengercapa- increased in2000primarilyfromadditionalexpenses $447 millionin1999.Sellingandadministrativeexpenses $40 million,or9.0%,to$487millionin2000from in 2000and1999,respectively. a percentageofcruiserevenueswere53.4%and52% for 2000comparedto1999.Cruiseoperatingcostsas dated operatingexpensesbyapproximately$51million The increasesinthepriceoffuelincreasedourconsoli- which continuedtoincreaseastheyearprogressed. due toaverylargeincreaseinthepriceofbunkerfuel 1999, webegantoincursignificantlyhigherfuelcosts of quarter our fuelcosts.Commencinginthefourth daywas primarilyduetoincreasesin available berth day.able berth Theincreaseinoperating and a0.9%increaseinouroperatingexpense ciated withour10.8%increaseinpassenger increased in2000primarilyfromadditionalcosts 2000 from$1.71billionin1999.Cruiseoperatingcosts increased by$201million,or11.8%,to$1.91billionin in 2000comparedto1999.Cruiseoperatingcosts Costs andExpenses operating expenses. per passengercruiseday, aswellareductionin accordingly, thiscausedareductioningrossrevenue passengers electingtouseourairprogramand, 2000, therewasareductioninthepercentageofour decrease byapproximatelythesameamount.During us, bothourcruiserevenuesandoperatingexpenses from ratherthanpurchasingairtransportation portation, a passengerelectstoprovidehisorherowntrans- During 2000,werecorded$38millionofincome increasedby$44mil- Depreciation andamortization Operating expensesincreased$196million,or10.5%, Selling andadministrativeexpensesincreased expense per capacity per avail- asso- 27 Carnival Corporation 2001 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Carnival Corporation

in tax status upon registration of its ships within the fiscal 2001 and fiscal 2000, respectively. Our fiscal 2001 Italian International Ship Registry and the reversal of cash flow from operations was reduced as a result of certain Costa tax liabilities. the events of September 11 and their aftermath. During fiscal 2001, our net expenditures for capital Nonoperating Income (Expense) projects were approximately $827 million, of which Interest expense, net of interest income and exclud- $643 million was spent for our ongoing shipbuilding ing capitalized interest, increased to $66 million in 2000 program. The $184 million of nonshipbuilding capital from $46 million in 1999. An approximate $28 million expenditures consisted primarily of ship improvements, increase in interest income was caused by our lower information technology assets, tour assets, and other. average invested cash balances, partially offset by a In addition, during fiscal 2001 we received $531 million $9 million reduction in interest expense from our lower of net proceeds from the sale of our interests in average outstanding debt balances. Airtours and CRC. Other income in 2000 of $8 million consisted prima- During fiscal 2001, we received proceeds of $710 rily of $21 million of net compensation received from million and we made payments of $1.05 billion under a shipyard, an $11 million gain on our forward foreign our commercial paper programs. We also made princi- currency contract purchased to fix our 2000 acquisition pal payments on other debt totaling $919 million. In price of Costa, partially offset by a $21 million port liti- addition, we raised net proceeds of $589 million from gation charge. The payments from the shipyard repre- the issuance of our 2% convertible notes in April 2001, sent reimbursements for expenses incurred and lost $765 million primarily for the refinancing of our Costa profits due to ship construction or design issues which acquisition and other Costa indebtedness and $489 mil- caused either delays in ship delivery or drydocks to lion from the issuance of our zero-coupon convertible correct the problems. notes in October 2001. We also paid cash dividends of $246 million in fiscal 2001. Liquidity and Capital Resources Future Commitments and Funding Sources Sources and Uses of Cash At November 30, 2001, our contractual cash obliga- Our business provided approximately $1.24 billion tions, with initial or remaining terms in excess of one and $1.28 billion of net cash from operations during year, were as follows (in thousands)(a):

Contractual Cash Payments Due by Fiscal Obligations Total 2002 2003 2004 2005 2006 Thereafter Shipbuilding ...... $5,977,000 $1,751,000 $1,501,000 $2,037,000 $ 688,000 $ 1 $ 1 Long-term debt ...... 2,976,618 21,764 145,897 140,209 885,365 1,226,860 556,523 Port facilities ...... 278,379 21,831 18,947 19,318 20,667 19,211 178,405 Operating leases ...... 63,800 10,100 8,600 7,700 7,600 7,500 22,300 Total contractual cash obligations ...... $9,295,797 $1,804,695 $1,674,444 $2,204,227 $1,601,632 $1,253,571 $757,228

(a) See Notes 6 and 7 in the accompanying financial statements for additional information regarding our debt and commitments.

At November 30, 2001, we had liquidity which con- requirements, dividend payments, working capital and sisted of $1.46 billion of cash, cash equivalents and other firm commitments, excluding the cash portion of short-term investments and $1.54 billion available for our P&O acquisition price. Our forecasted cash flow borrowing under our revolving credit facilities obtained from future operations may be adversely affected by through a group of banks, which have strong long-term various factors including, but not limited to, declines in credit ratings. Our revolving credit facilities mature in customer demand, increased competition, the dete- 2006. A key to our access to liquidity is the maintenance rioration in general economic and business conditions, of our strong long-term credit ratings. The proposed terrorist attacks, ship incidents, adverse media publicity acquisition of P&O, if consummated, may result in a and changes in fuel prices, as well as other factors ratings downgrade and, thereby, increase our cost-of- noted under “Special Note Regarding Forward-Looking borrowing, although we believe our senior unsecured Statements.” To the extent that we are required, or long-term debt will retain its long-term investment choose, to fund future cash requirements, including our grade debt ratings. future shipbuilding commitments, from sources other We believe that our liquidity of approximately $2.69 than as discussed above, we believe that we will be billion as of January 31, 2002, as well as our forecasted able to secure financing from banks or through the cash flow from future operations, will be sufficient to offering of debt and/or equity securities in the public or fund most or all of our capital projects, debt service private markets. Specifically, if our P&O acquisition is

28 in thefuturemay beaffectedbyforeigncurrency commitments resulting innonetdollarimpact tous. value oftherelatedforeigncurrency shipconstruction increase ordecreaseof$57million intheU.S.dollar or increaseby$57million,which wouldbeoffsetbyan estimated fairvalueofthese contracts woulddecrease assuming nochangesincomparative interestrates,the dollar comparedtotheeuroas ofNovember30,2001, upon a10%strengtheningorweakeningoftheU.S. contractsmaturethrough2005.Based currency forward our accompanying2001balancesheet.Theseforeign asset relatedtoourshipbuildingfirmcommitments,on recorded, alongwithanoffsetting$567millionfairvalue tracts wasanunrealizedlossof$567millionwhichis nation ofsuchrisk. construction commitments,thusresultingintheelimi- value ofthehedgedforeigncurrencydenominatedship contractsoffsetchangesintheU.S.dollarfair forward and decreasesinthefairvalueoftheseforeigncurrency panying financialstatements).Accordingly, increases to managethisrisk(seeNotes2and11intheaccom- contractsaregenerallyused Foreign currencyforward the valueofU.S.dollarascomparedtoeuro. currency commitmentsareaffectedbyfluctuationsin expected tobeoperatingtheship.Thesenon-functional than thefunctionalcurrencyofcruisebrandthatis construction contractsdenominatedinacurrencyother related toouroutstandingcommitmentsundership Exposure toForeignCurrencyExchangeRates for tradingorotherspeculativepurposes. hedged. Ourpolicyistonotusefinancialinstruments responding changesintheunderlyingexposuresbeing impacts ofthesehedginginstrumentsareoffsetbycor- the useofderivativefinancialinstruments.The strategies and,whenconsideredappropriate,through through ourlong-terminvestmentanddebtportfolio exposures totakeadvantageofanynaturaloffsets, ating andfinancingactivities,includingnettingcertain seek tominimizetheserisksthroughournormaloper- prices, interestratesandfoodcommodityprices.We tuations inforeigncurrencyexchangerates,bunkerfuel Market Risks Other Matter acquisition ofP&O. ofourproposed including financingforthecashportion tions orthatwewillbeabletoobtainadditionalfinancing, ating cashflowwillbesufficienttofundfutureobliga- equity. Noassurancecanbegiventhatourfutureoper- debt orequitysecuritiesacombinationofand $2.4 billionincashthroughtheissuanceoflong-term consummated we The costofshipbuilding orderswhichwemay place At November30,2001,thefairvalueofthesecon- Our primaryforeigncurrencyexchangeriskwas We areprincipallyexposedtomarketrisksfromfluc- intend tofinanceapproximately fix substantially allofitsinterestcostsoverthe short-term. into variableto fixedinterestrateswapagreements to fixed ratedebt instruments.Also,Costahas entered tions, wehaveenteredintoa substantialamountof Exposure toInterestRates compared tofiscal2001. increase ordecreasebyapproximately $15million mate thatourfiscal2002bunkerfuelcostwould in theNovember30,2001bunkerfuelprice,weesti- reduce thisrisk. decide toincreaseouruseoffinancialinstruments ing tomonitorthismarketrisk,andmay, inthefuture, of ourupcomingyear’s consumption.We arecontinu- intended tohedgethispriceriskforaveryminorportion 2001 and2000,weenteredintofuelswapagreements to thebunkerfuelpricemarketrisk.However, infiscal not usedfinancialinstrumentstohedgeourexposure 2000 ofourgrosscruiserevenues.We havetypically mately 2.5%infiscal1999to4.0%2001and over thepastthreefiscalyearsrangedfromapproxi- changes inbunkerfuelprices.Bunkerconsumed Exposure toBunkerFuelPrices warranted toreducesuchrisk. debt oruseofotherfinancialinstruments,wouldbe issuance ofadditionalforeigncurrencydenominated such itemstodetermineifanyactions,asthe eign currencies.However, wewillcontinuetomonitor nated borrowings,andtherelativestabilityoffor- operations, includinginterestexpenseoneurodenomi- natural hedgeswhichareexpectedtoexistwithinour ally affectourresultsofoperationsdueprimarilytothe denominated cruiserevenuesandexpensestomateri- eign currencyexchangerateonourforeign do notexpectthattheimpactoffluctuationsinfor- versus boththeeuroandU.K.PoundSterling.We we haveexchangerateexposurearetheU.S.dollar rency exchangerisk.Theprimarycurrenciesforwhich in foreigncurrencieswhichsubjectsustocur- ofthisrisk. currency ofCosta,toreduceaportion utilized debtdenominatedineuros,thefunctional However, inpayingtheCostaacquisitionprice,we through theuseofderivativefinancialinstruments. manage ourrelatedforeigncurrencyexchangeraterisk a long-termnatureand,accordingly, donottypically denominated inrelativelystablecurrenciesand/orof consider ourinvestmentsinforeignsubsidiariestobe subjects ustoforeigncurrencyexchangeraterisk.We relative totheU.S.dollar. struction inEuropeanshipyardsmaybeathigherprices relative totheeuro,futureordersfornewshipcon- exchange ratefluctuations.ShouldtheU.S.dollarweaken In ordertolimitourexposure tointerestratefluctua- Based upona10%hypotheticalincreaseordecrease Cruise shipoperatingexpensesareimpactedby Finally, wesellcruisesandincurcruiseexpenses Additionally, ourinvestmentsinforeignsubsidiaries 29 Carnival Corporation 2001 Annual Report Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Carnival Corporation

We continuously evaluate our debt portfolio, including and common stock price on our existing debt and inter- interest rate swap agreements, and make periodic est rate swaps. This analysis does not consider the adjustments to the mix of floating rate and fixed rate effects of the changes in the level of overall economic debt based on our view of interest rate movements. activity that could exist in such environments or any Accordingly, in 2001 we entered into fixed to variable relationships which may exist between interest rate interest rate swap agreements, which has lowered and stock price movements. Furthermore, since sub- our fiscal 2001 interest costs and is also expected to stantially all of our fixed rate debt cannot be prepaid lower our fiscal 2002 interest costs. At November 30, and a large portion of our variable rate debt is subject 2001, 89% of our debt was effectively fixed and 11% to interest rate swaps which effectively fix the interest was variable. rate in the short-term, it is most likely we would be At November 30, 2001, our long-term debt had a unable to take any significant steps in the short-term carrying value of $2.98 billion. At November 30, 2001, to mitigate our exposure in the event of a significant our swap agreements effectively changed $225 million decrease in market interest rates. of fixed rate debt with a weighted-average fixed inter- Exposure to Food Commodity Prices est rate of 6.8% to Libor-based floating rate debt. In We have commodity price risk related to our food addition, interest rate swaps at November 30, 2001, purchases. We do not typically manage these risks effectively changed $637 million of euribor floating rate through the use of derivative financial instruments debt to fixed rate debt with a weighted-average fixed since we do not expect changes in food commodity interest rate of 5.3%. These interest rate swaps mature prices to be material. However, we will continue to through 2006. The fair value of our debt and swaps at monitor these risks to determine if any actions would November 30, 2001 was $2.95 billion. Based upon a be necessary to reduce such risks. hypothetical 10% decrease or increase in the Novem- ber 30, 2001 market interest rates, the fair value of our Selected Financial Data debt and swaps would increase or decrease by $64 mil- lion. In addition, based upon a hypothetical 10% decrease The selected consolidated financial data presented or increase in our November 30, 2001 common stock below for fiscal 1997 through 2001 and as of the end of price, the fair value of our convertible notes would each such fiscal year, are derived from our audited decrease or increase by approximately $45 million. financial statements and should be read in conjunction These hypothetical amounts are determined by con- with those financial statements and the related notes. sidering the impact of the hypothetical interest rates

Years Ended November 30, (in thousands, except per share data) 2001 2000 1999 1998 1997 Income Statement and Other Data(a): Revenues ...... $4,535,751 $3,778,542 $3,497,470 $3,009,306 $2,447,468 Operating income before (loss) income from affiliated operations ...... $ 935,755 $ 945,130 $ 943,941 $ 819,792 $ 660,979 Operating income ...... $ 891,731 $ 982,958 $1,019,699 $ 896,524 $ 714,070 Net income ...... $ 926,200(b) $ 965,458 $1,027,240 $ 835,885 $ 666,050 Earnings per share(c): Basic ...... $ 1.58 $ 1.61 $ 1.68 $ 1.40 $ 1.12 Diluted ...... $ 1.58 $ 1.60 $ 1.66 $ 1.40 $ 1.12 Dividends declared per share(c) ...... $ .420 $ .420 $ .375 $ .315 $ .240 Cash from operations ...... $1,238,936 $1,279,535 $1,329,724 $1,091,840 $ 877,580 Capital expenditures ...... $ 826,568 $1,003,348 $ 872,984 $1,150,413 $ 497,657 Available lower berth days ...... 20,685 15,888 14,336 12,237 10,992 Passengers carried ...... 3,385 2,669 2,366 2,045 1,945 Occupancy percentage(d) ...... 104.7% 105.4% 104.3% 106.3% 108.3%

30 (e) Effective December1,2000,weadoptedSFAS No.133whichrequiresthatallderivativeinstrumentsberecordedonourbalan (d) In accordancewithcruiseindustrypractice,occupancypercentageiscalculatedbasedupontwopassengers percabineven (c) All1998and1997pershareamountshavebeenadjustedtoreflectatwo-for-one stockspliteffectiveJune12, 1998. (b) Our netincomeforfiscal2001includesanimpairmentchargeof$140millionandanonoperatinggain$101fr (a) FromJune1997throughSeptember28,2000,weowned50%ofCosta.On29,completedtheacquisition Fiscal 2000: Fiscal 2001: Balance SheetandOtherData: Market PriceforCommonStock (in thousands) indicated wereasfollows: and lowcommonstocksalespricesfortheperiods Exchange underthesymbolCCL.Ourintra-dayhigh ett aia . Debt tocapital oa hrhles qiy. Total shareholders’equity orhQatr 2.8$19.56 $25.88 $18.31 $21.19 . $27.50 Quarter Fourth $27.25 $29.06 . Third Quarter $51.25 . Second Quarter . First Quarter . Quarter Fourth . Third Quarter . Second Quarter . . First Quarter ogtr et xldn urn oto . Long-term debt,excludingcurrentportion oa ses. . Total assets Our commonstockistradedontheNewYork Stock Costa. SeeNotes2,5and17intheaccompanyingfinancialstatements. and 2000consolidatedbalancesheetsincludeCosta’s balancesheet. Allstatisticalinformationpriorto2001doesnotinclude results ofoperationshavebeenconsolidatedinthesamemannerasourotherwholly-ownedsubsidiaries.OurNovember30,2001 fiscal 2000acquisition,weaccountedforour50%interestinCostausingtheequitymethod.Commencing2001,Costa’s of theremaining50%interestinCosta.We accountedforthistransactionusingthepurchaseaccountingmethod.Priorto accompanying financialstatements. sheet. Total 2001assetsinclude$578millionwhichrepresentsthefairvalueofhedgedfirmcommitments.SeeNote2in two passengersoccupiedsomecabins. though somecabinscanaccommodatethreeorfourpassengers.Thepercentagesinexcessof100%indicatethatmorethan the saleofourinvestmentinAirtours.SeeNotes4and5accompanyingfinancialstatements. 3.7$16.95 $25.89 $31.47 $23.60 $33.74 $21.94 $33.40 $34.94 ihLow High $11,563,552 6,590,777 $ 2,954,854 $ 2001 31.1% (a) (e) 58067$,3,4 42546$3,605,098 $4,285,476 $5,931,247 $5,870,617 20907$8755$,6,1 $1,015,294 $1,563,014 867,515 $ $2,099,077 98130$,8,5 71933$5,426,775 $7,179,323 $8,286,355 $9,831,320 for anydividends-receiveddeduction. lated earningsandprofits,butgenerallywillnotqualify tax purposestotheextentofourcurrentoraccumu- be taxableasordinaryincomeforU.S.federal extent treatedas“effectivelyconnected”income,will foreign corporationsdoingbusinessintheU.S.,to we paytoU.S.citizens,residents,corporationsand the lawsofRepublicPanama.Dividendsthat business inPanama,arenotsubjecttotaxationunder dents ofPanamaorotherbusinessentitiesconducting that distributionstoourshareholders,otherthanresi- with anyothercountry. Undercurrentlaw, webelieve Republic ofPanamadoesnotcurrentlyhavetaxtreaties 4,632 holdersofrecordourcommonstock.The 2000 As ofJanuary29,2002,therewereapproximately 86 53 76 23.0% 27.6% 15.3% 28.6% (a) As ofNovember30, 9919 1997 1998 1999 om ce 31 Carnival Corporation 2001 Annual Report Selected Quarterly Financial Data (Unaudited)

Carnival Corporation

Quarterly financial results for fiscal 2001 were as follows:

Quarters Ended (in thousands, except per share data) February 28 May 31 August 31 November 30 Revenues ...... $1,007,606 $1,079,125 $1,489,918 $959,102 Gross profit ...... $ 407,486 $ 477,791 $ 770,540 $411,204 Operating income before loss from affiliated operations ...... $ 160,004 $ 230,868 $ 425,346 $119,537 Operating income ...... $ 138,941 $ 207,907 $ 425,346 $119,537 Net income ...... $ 127,950(a) $ 186,963(b) $ 494,975(c) $116,312(d) Earnings per share: Basic ...... $ .22 $ .32 $ .84 $ .20 Diluted ...... $ .22 $ .32 $ .84 $ .20 Dividends declared per share ...... $ .105 $ .105 $ .105 $ .105

(a) Includes a $13 million gain from a settlement agreement with the manufacturers of some of our ship propulsion systems to reimburse us for lost revenues and expenses incurred due to disruption in service during 2000. (b) Includes a $16 million gain from the sale of our interest in CRC, partially offset by $9 million of short-term investment write- downs and $6 million of estimated litigation expenses. (c) Includes a $101 million impairment charge and $7 million of estimated litigation expenses, partially offset by a gain of $101 million from the sale of our investment in Airtours. (d) Includes a $39 million impairment charge, partially offset by $4 million of net nonoperating income related to port and other litigation.

Quarterly financial results for fiscal 2000 were as follows:

Quarters Ended (in thousands, except per share data) February 29 May 31 August 31 November 30 Revenues ...... $824,878 $875,127 $1,228,211 $850,326 Gross profit ...... $359,438 $378,006 $ 613,487 $369,269 Operating income before (loss) income from affiliated operations . . . . $170,955 $188,891 $ 418,910 $166,374 Operating income ...... $159,518 $194,419 $ 420,458 $208,563 Net income ...... $171,517(a) $203,956(a)(b) $ 396,190 $193,795(c) Earnings per share: Basic ...... $ .28 $ .34 $ .67 $ .33 Diluted ...... $ .28 $ .34 $ .67 $ .33 Dividends declared per share ...... $ .105 $ .105 $ .105 $ .105

(a) Includes $9 million and $7 million in the February 29 and May 31 quarters, respectively, of net compensation received from a shipyard relating to the delayed delivery of Holland America Line’s Zaandam. (b) Includes $13 million of gains from the reversal of certain of Costa’s tax liabilities. (c) Includes charges totaling $24 million consisting of (1) a $42 million charge for our equity interest in restructuring and other nonre- curring net charges recorded by Airtours and (2) a $21 million port litigation charge, partially offset by (3) a $12 million gain on our forward foreign currency contract purchased to fix our 2000 acquisition price of Costa and (4) a $27 million deferred income tax benefit from Costa’s change in tax status upon registration of its ships within the Italian International Ship Registry. In addition, includes approximately $7 million of net compensation received from a shipyard for reimbursements related to Holland America Line’s Rotterdam VI.

32 Corporate Information

Carnival Corporation

Principal Officers A. Kirk Lanterman Chairman of the Board and Chief Executive Officer C ARNIVAL C ORPORATION Holland America Line-Westours Inc. Micky Arison Modesto A. Maidique Chairman of the Board and Chief Executive Officer President Howard S. Frank Florida International University Vice Chairman of the Board and Chief Operating Officer Stuart Subotnick Gerald R. Cahill General Partner and Executive Vice President Senior Vice President Finance and Chief Financial Officer Metromedia Company Ian Gaunt Sherwood M. Weiser Senior Vice President International The Continental Companies, LLC Chairman of the Board and Chief Executive Officer Richard D. Ames Vice President Audit Services Meshulam Zonis Former Senior Vice President Operations Kenneth D. Dubbin Carnival Cruise Lines Vice President Corporate Development Uzi Zucker Arnaldo Perez Senior Managing Director Vice President, General Counsel and Secretary Bear Stearns & Co. Inc. Lowell Zemnick Vice President and Treasurer Shareholder Information C ARNIVAL C RUISE L INES Corporate Headquarters Robert H. Dickinson Carnival Corporation President and Chief Operating Officer 3655 N.W. 87th Avenue

C OSTA C ROCIERE S.P.A. Miami, Florida 33178-2428 Pier Luigi Foschi Independent Certified Public Accountants Chairman and Chief Executive Officer PricewaterhouseCoopers LLP 200 South Biscayne Boulevard, Suite 1900 C UNARD L INE L IMITED Miami, Florida 33131-2330 Pamela C. Conover President and Chief Operating Officer Registrar, Stock Transfer Agent and Dividend Reinvestment Plan Administrator H OLLAND A MERICA L INE-WESTOURS I NC. First Union National Bank A. Kirk Lanterman 1525 West W.T. Harris Blvd., Bldg. 3C3 Chairman of the Board and Chief Executive Officer Charlotte, North Carolina 28288-1153 1-800-829-8432 Board of Directors Legal Counsel Micky Arison Paul, Weiss, Rifkind, Wharton & Garrison Chairman of the Board and Chief Executive Officer 1285 Avenue of the Americas Carnival Corporation New York, New York 10019-6064 Shari Arison Shareholder Inquiries Chairman Copies of our Annual Report, Form 10-K, Proxy Arison Holdings (1998) Ltd. Statement, press releases and other documents, as Maks L. Birnbach well as information on our financial results and cruise Chairman of the Board brands are available through our home page on the Fullcut Manufacturers, Inc. Internet at www.carnivalcorp.com. Richard G. Capen, Jr. In addition to this Internet site, you may obtain copies Former United States Ambassador to Spain of this information by contacting us at: Robert H. Dickinson Carnival Corporation Investor Relations President and Chief Operating Officer MSEO 1000 Carnival Cruise Lines 3655 N.W. 87th Avenue Miami, Florida 33178-2428 Arnold W. Donald Chairman and Chief Executive Officer Annual Meeting Merisant Company Our annual meeting of shareholders will be held on James M. Dubin April 15, 2002, 11 a.m. at the Hotel Inter-Continental Senior Partner Miami, 100 Chopin Plaza, Miami, Florida 33131. Paul, Weiss, Rifkind, Wharton & Garrison Howard S. Frank Vice Chairman of the Board and Chief Operating Officer Carnival Corporation ’01

CARNIVAL CORPORATION

Carnival Place, 3655 N.W. 87th Avenue Miami, Florida 33178-2428 www.carnivalcorp.com