72731,737 FORM 10-Q SECURITIES and EXCHANGE COMMISSION Washington, DC 20549

[NOTIFY] 72731,737 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ________________ Commission file number 1-9610 CARNIVAL CORPORATION (Exact name of registrant as specified in its charter) Republic of Panama 59-1562976 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3655 N.W. 87th Avenue, Miami, Florida 33178-2428 (Address of principal executive offices) (zip code) (305) 599-2600 (Registrant's telephone number, including area code) None. (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No__ Indicate the number of shares outstanding of each of the issuers classes of common stock, as of July 9, 1998. Common Stock, $.01 par value: 595,327,624 shares outstanding CARNIVAL CORPORATION I N D E X Page Part I. Financial Information Item 1: Financial Statements Consolidated Balance Sheets - May 31, 1998 and November 30, 1997 1 Consolidated Statements of Operations - Six and Three Months Ended May 31, 1998 and 1997 2 Consolidated Statements of Cash Flows - Six Months Ended May 31, 1998 and 1997 3 Notes to Consolidated Financial Statements 4 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Part II. Other Information Item 1: Legal Proceedings 16 Item 4: Submission of Matters to a Vote of Security Holders 17 Item 5: Other Information 19 Item 6: Exhibits and Reports on Form 8-K 19 /TABLE PART I. FINANCIAL INFORMATION ITEM 1: FINANCIAL STATEMENTS CARNIVAL CORPORATION CONSOLIDATED BALANCE SHEETS (in thousands, except par value) May 31, November 30, 1998 1997 ASSETS CURRENT ASSETS Cash and cash equivalents $ 120,600 $ 139,989 Short-term investments 9,414 9,738 Accounts receivable, net 66,503 57,090 Consumable inventories, at average cost 76,226 54,970 Prepaid expenses and other 102,754 74,238 Total current assets 375,497 336,025 PROPERTY AND EQUIPMENT, NET 5,469,814 4,327,413 OTHER ASSETS Investments in and advances to affiliates 425,715 479,329 Goodwill, less accumulated amortization of $65,746 and $62,256 403,077 212,607 Other assets 37,733 71,401 $6,711,836 $5,426,775 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 58,457 $ 59,620 Accounts payable 187,897 106,783 Accrued liabilities 169,048 154,253 Customer deposits 755,890 420,908 Dividends payable 44,619 44,578 Total current liabilities 1,215,911 786,142 LONG-TERM DEBT 1,557,016 1,015,294 OTHER LONG-TERM LIABILITIES 23,907 20,241 MINORITY INTEREST 123,079 COMMITMENTS AND CONTINGENCIES (Note 5) SHAREHOLDERS' EQUITY Common Stock; $.01 par value; 960,000 shares authorized; 594,924 and 594,408 shares issued and outstanding 5,949 5,944 Preferred Stock; $.01 par value; 40,000 shares authorized; none issued or outstanding Paid-in-capital 871,676 863,125 Retained earnings 2,912,499 2,731,213 Other 1,799 4,816 Total shareholders' equity 3,791,923 3,605,098 $6,711,836 $5,426,775 The accompanying notes are an integral part of these consolidated financial statements. CARNIVAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Six Months Three Months Ended May 31, Ended May 31, 1998 1997 1998 1997 REVENUES $1,219,196 $1,117,696 $661,358 $596,614 COSTS AND EXPENSES Operating expenses 669,951 634,622 362,356 337,684 Selling and administrative 163,784 156,219 84,950 76,716 Depreciation and amortization 89,266 82,658 46,258 41,961 923,001 873,499 493,564 456,361 OPERATING INCOME BEFORE LOSS FROM AFFILIATED OPERATIONS 296,195 244,197 167,794 140,253 LOSS FROM AFFILIATED OPERATIONS (13,034) (11,694) (2,353) (2,712) OPERATING INCOME 283,161 232,503 165,441 137,541 NONOPERATING INCOME (EXPENSE) Interest income 5,885 3,382 2,148 1,565 Interest expense, net of capitalized interest (24,735) (31,536) (12,176) (14,446) Other (expense) income (662) 2,105 2,609 459 Income tax benefit 6,861 6,353 2,574 2,328 (12,651) (19,696) (4,845) (10,094) NET INCOME $ 270,510 $ 212,807 $160,596 $127,447 EARNINGS PER SHARE: Basic $.45 $.36 $.27 $.21 Diluted $.45 $.36 $.27 $.21 The accompanying notes are an integral part of these consolidated financial statements. CARNIVAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) Six Months Ended May 31, 1998 1997 OPERATING ACTIVITIES Net income $ 270,510 $212,807 Adjustments Depreciation and amortization 89,266 82,658 Loss from affiliated operations and dividends received 23,621 17,334 Other 7,047 (834) Changes in operating assets and liabilities, excluding effect of businesses acquired Increase in: Receivables (4,291) (11,441) Consumable inventories (4,690) (1,621) Prepaid expenses and other (20,196) (16,505) Increase (decrease) in: Accounts payable 38,109 23,387 Accrued liabilities 2,321 (6,821) Customer deposits 191,165 137,934 Net cash provided from operations 592,862 436,898 INVESTING ACTIVITIES Decrease in short-term investments 324 106 Additions to property and equipment, net (702,184) (84,132) Repayment of advances to affiliates, net 3,606 35,986 Acquisition of Cunard, net of cash received upon acquisition and consolidation of Seabourn (246,097) Decrease (increase) in other assets 34,438 (1,039) Net cash used for investing activities (909,913) (49,079) FINANCING ACTIVITIES Principal payments of long-term debt (801,841) (369,997) Dividends paid (89,183) (65,090) Proceeds from long-term debt 1,184,588 25,272 Proceeds from issuance of common stock 4,098 3,993 Net cash provided from (used for) financing activities 297,662 (405,822) Net decrease in cash and cash equivalents (19,389) (18,003) Cash and cash equivalents at beginning of period 139,989 111,629 Cash and cash equivalents at end of period $ 120,600 $ 93,626 Supplemental disclosure of non-cash transactions Conversion of 4-1/2% Convertible Notes into Class A Common Stock $ 39,085 The accompanying notes are an integral part of these consolidated financial statements. CARNIVAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS FOR PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS The financial statements included herein have been prepared by Carnival Corporation, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. The accompanying consolidated balance sheet at May 31, 1998 and the consolidated statements of operations for the six and three months ended May 31, 1998 and 1997 and consolidated statements of cash flows for the six months ended May 31, 1998 and 1997 are unaudited and, in the opinion of management, contain all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation. The operations of Carnival Corporation and its subsidiaries and affiliates are seasonal and results for interim periods are not necessarily indicative of the results for the entire year. Certain amounts in prior periods have been reclassified to conform with the current period's presentation. NOTE 2 - PROPERTY AND EQUIPMENT Property and equipment consists of the following: NOTE 3 - LONG-TERM DEBT Long-term debt consists of the following: NOTE 4 - SHAREHOLDERS' EQUITY An analysis of the changes in shareholders' equity for the six months ended May 31, 1998 is as follows: COMMON PAID-IN- RETAINED STOCK CAPITAL EARNINGS OTHER TOTAL (in thousands) Balances at November 30, 1997 as previously reported $2,972 $866,097 $2,731,213 $4,816 $3,605,098 Two-for-one stock split effective June 12, 1998 2,972 (2,972) Balances at November 30, 1997 as adjusted 5,944 863,125 2,731,213 4,816 3,605,098 Net income 270,510 270,510 Cash dividends (89,224) (89,224) Changes in securities valuation allowance 113 113 Foreign currency translation adjustment (906) (906) Issuance of stock to employees under stock plans 5 8,551 (2,905) 5,651 Vested portion of common stock under restricted stock plan 681 681 Balances at May 31, 1998 $5,949 $871,676 $2,912,499 $1,799 $3,791,923 /TABLE NOTE 5 - COMMITMENTS AND CONTINGENCIES Capital Expenditures A description of ships under contract for construction at May 31, 1998 is as follows (in millions, except berth data): Expected Number Service of Lower Estimated Remaining Vessel Date(1) Shipyard Berths Total Cost to Be Paid Carnival Cruise Lines Paradise 12/98 Masa-Yards 2,040 $ 300 $ 246 Carnival Triumph 7/99 Fincantieri(2) 2,766 410 326 Carnival Victory 8/00 Fincantieri 2,766 440 434 CCL Newbuild 12/00 Masa-Yards 2,100 375 358 Total Carnival Cruise Lines 9,672 1,525 1,364 Holland America Line Volendam 8/99 Fincantieri(2) 1,440 300 257 Zaandam 3/00 Fincantieri(2) 1,440 300 273 HAL Newbuild 9/00 Fincantieri(2) 1,380 300 65 Total Holland America Line 4,260 900 595 Total 13,932 $2,425 $1,959 (1) The expected service date is the date the vessel is expected to begin revenue generating activities.

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