United States Securities and Exchange Commission Form 10-Q
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 2021 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: 001-9610 Commission file number: 001-15136 Carnival Corporation Carnival plc (Exact name of registrant as (Exact name of registrant as specified in its charter) specified in its charter) Republic of Panama England and Wales (State or other jurisdiction of (State or other jurisdiction of incorporation or organization) incorporation or organization) 59-1562976 98-0357772 (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 3655 N.W. 87th Avenue Carnival House, 100 Harbour Parade Miami, Florida 33178-2428 Southampton SO15 1ST United Kingdom (Address of principal (Address of principal executive offices) executive offices) (Zip Code) (Zip Code) (305) 599-2600 011 44 23 8065 5000 (Registrant’s telephone number, (Registrant’s telephone number, including area code) including area code) None None (Former name, former address (Former name, former address and former fiscal year, if and former fiscal year, if changed since last report) changed since last report) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock ($0.01 par value) CCL New York Stock Exchange, Inc. Ordinary Shares each represented by American Depository Shares CUK New York Stock Exchange, Inc. ($1.66 par value), Special Voting Share, GBP 1.00 par value and Trust Shares of beneficial interest in the P&O Princess Special Voting Trust 1.875% Senior Notes due 2022 CUK22 New York Stock Exchange LLC 1.000% Senior Notes due 2029 CUK29 New York Stock Exchange LLC Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☑ No ☐ Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filers ☑ Accelerated filers ☐ Non-accelerated filers ☐ Smaller reporting companies ☐ Emerging growth companies ☐ 1 If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ At March 31, 2021, Carnival Corporation had outstanding At March 31, 2021, Carnival plc had outstanding 184,023,036 973,540,516 shares of Common Stock, $0.01 par value. Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 973,540,516 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust. 2 Table of Contents CARNIVAL CORPORATION & PLC TABLE OF CONTENTS Page PART I - FINANCIAL INFORMATION Item 1. Financial Statements...................................................................................................................................... 3 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations........................ 21 Item 3. Quantitative and Qualitative Disclosures About Market Risk....................................................................... 29 Item 4. Controls and Procedures................................................................................................................................ 29 PART II - OTHER INFORMATION Item 1. Legal Proceedings.......................................................................................................................................... 31 Item 1A. Risk Factors.................................................................................................................................................... 31 Item 6. Exhibits.......................................................................................................................................................... 34 SIGNATURES 36 2 Table of Contents PART I - FINANCIAL INFORMATION Item 1. Financial Statements. CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF INCOME (LOSS) (UNAUDITED) (in millions, except per share data) Three Months Ended February 28/29, 2021 2020 Revenues Passenger ticket $ 3 $ 3,234 Onboard and other 23 1,556 26 4,789 Operating Costs and Expenses Commissions, transportation and other 15 766 Onboard and other 7 471 Payroll and related 218 610 Fuel 103 396 Food 11 277 Ship and other impairments — 330 Other operating 181 671 535 3,523 Selling and administrative 462 678 Depreciation and amortization 552 570 Goodwill impairments — 731 1,549 5,502 Operating Income (Loss) (1,524) (713) Nonoperating Income (Expense) Interest income 3 5 Interest expense, net of capitalized interest (398) (55) Other income (expense), net (61) (7) (455) (57) Income (Loss) Before Income Taxes (1,979) (770) Income Tax Benefit (Expense), Net 6 (11) Net Income (Loss) $ (1,973) $ (781) Earnings Per Share Basic $ (1.80) $ (1.14) Diluted $ (1.80) $ (1.14) The accompanying notes are an integral part of these consolidated financial statements. 3 Table of Contents CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (in millions) Three Months Ended February 28/29, 2021 2020 Net Income (Loss) $ (1,973) $ (781) Items Included in Other Comprehensive Income (Loss) Change in foreign currency translation adjustment 199 25 Other 4 13 Other Comprehensive Income (Loss) 203 38 Total Comprehensive Income (Loss) $ (1,770) $ (743) The accompanying notes are an integral part of these consolidated financial statements. 4 Table of Contents CARNIVAL CORPORATION & PLC CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in millions, except par values) February 28, November 30, 2021 2020 ASSETS Current Assets Cash and cash equivalents $ 9,674 $ 9,513 Short-term investments 1,840 — Trade and other receivables, net 250 273 Inventories 312 335 Prepaid expenses and other 382 443 Total current assets 12,459 10,563 Property and Equipment, Net 39,583 38,073 Operating Lease Right-of-Use Assets 1,354 1,370 Goodwill 814 807 Other Intangibles 1,195 1,186 Other Assets 1,821 1,594 $ 57,226 $ 53,593 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Short-term borrowings $ 3,083 $ 3,084 Current portion of long-term debt 1,726 1,742 Current portion of operating lease liabilities 142 151 Accounts payable 505 624 Accrued liabilities and other 1,336 1,144 Customer deposits 1,826 1,940 Total current liabilities 8,619 8,686 Long-Term Debt 26,522 22,130 Long-Term Operating Lease Liabilities 1,256 1,273 Other Long-Term Liabilities 1,017 949 Contingencies and Commitments Shareholders’ Equity Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 1,104 shares at 2021 and 1,060 shares at 2020 issued 11 11 Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2021 and 2020 issued 361 361 Additional paid-in capital 14,977 13,948 Retained earnings 14,102 16,075 Accumulated other comprehensive income (loss) (“AOCI”) (1,233) (1,436) Treasury stock, 130 shares at 2021 and 2020 of Carnival Corporation and 59 shares at 2021 and 60 shares at 2020 of Carnival plc, at cost (8,404) (8,404) Total shareholders’ equity 19,813 20,555 $ 57,226 $ 53,593 The accompanying notes are an integral part of these consolidated financial statements. 5 Table of Contents CARNIVAL CORPORATION & PLC CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in millions) Three Months Ended February 28/29, 2021 2020 OPERATING ACTIVITIES Net income (loss) $ (1,973) $ (781) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities Depreciation and amortization 552 570 Impairments 17 1,062 Share-based compensation 40 20 Amortization of discounts and debt issue costs 42 6 Noncash lease expense 36 42 (Gain) loss on ship sales and other, net 50 (121) (1,236) 798 Changes in operating assets and liabilities Receivables 6 21 Inventories (1) (15) Prepaid expenses and other (263) (120) Accounts payable (128) 148 Accrued liabilities and other 167 120 Customer deposits (49) (36) Net cash provided by (used in) operating activities (1,503) 916 INVESTING ACTIVITIES Purchases of property and equipment (1,774) (1,326) Proceeds from sales of ships 9 226 Purchase of minority interest — (81) Purchase of short-term investments (1,840) — Derivative settlements and other, net 17 20 Net cash provided by (used in) investing activities (3,589) (1,161) FINANCING ACTIVITIES Proceeds from (repayments