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12 Brands, 7 Continents
The Power of Our Global Brands
2005 Annual Report

Table of contents

  • Page 1
    2005 Annual Report 12 Brands, 7 Continents The Power of Our Global Brands

  • Page 2
    ... FTSE 100 Index in the United Kingdom. Headquartered in Miami, Florida, U.S.A. and London, England, Carnival has over 71,000 employees worldwide. We operate a fleet of 79 ships, and we have another 16 vessels scheduled for delivery by 2009. With approximately 144,000 guests and 57,000 crew members...

  • Page 3
    ...฀Mary฀2฀in฀New฀York Regal฀Princess฀in฀the฀Panama฀Canal Carnival฀Victory฀in฀the฀Caribbean P&O฀Aurora฀in฀Norway More Ports More Options Seabourn฀Legend฀in฀London Windstar฀Wind฀Spirit฀in฀Greece Holland฀America฀Line฀Ryndam฀in฀Antarctica...

  • Page 4
    ... of Ships (b) ...Number of Employees ... (a) Gives pro forma effect for the merger with P&O Princess as if the P&O Princess brands had been included in our consolidated results for all of 2003 and excludes $51 million of P&O Princess' merger related costs, or $0.06 earnings per share. This differs...

  • Page 5
    ... past year with 8 percent driven by added capacity of new ships and 6 percent from the combination of higher ticket prices, occupancies, and onboard guest spending. Our company benefited from the continued demand for cruising worldwide, with North American brands enjoying robust growth in 2005. 2005...

  • Page 6
    ...Corporation & plc's board of directors, who passed away suddenly in November. John's experience, wisdom and friendship will be missed by everyone in the Carnival organization. And, finally, a word of thanks to our valued shareholders for their continued support and, of course, the millions of guests...

  • Page 7
    ..., 2007 aboard the brands listed below. Certain restrictions apply. Applications to receive these benefits must be made prior to cruise departure date. This benefit is available to shareholders holding a minimum of 100 shares of Carnival Corporation or Carnival plc. Employees, travel agents cruising...

  • Page 8
    ...฀share฀data) Years฀Ended฀November฀30, 2005 ฀ 2004 ฀ 2003 ฀ Revenues ฀ Cruise ฀ ฀ Passenger฀tickets Onboard฀and฀other Other Costs฀and฀Expenses ฀ Operating ฀ ฀ Cruise Commissions,฀transportation฀and฀other Onboard฀and฀other Payroll฀and฀related...

  • Page 9
    ...and฀Contingencies฀(Notes฀7฀and฀8) Shareholders'฀Equity ฀ Common฀stock฀of฀Carnival฀Corporation;฀$.01฀par฀value;฀1,960฀shares฀authorized 639฀shares฀at฀2005฀and฀634฀shares฀at฀2004฀issued Ordinary฀shares฀of฀Carnival฀plc;฀$1.66฀par฀value...

  • Page 10
    ...activities ฀ ฀ Depreciation฀and฀amortization Investment฀write-down Accretion฀of฀original฀issue฀discount Other Changes฀in฀operating฀assets฀and฀liabilities,฀excluding฀business฀acquired฀ ฀ ฀ Receivables Inventories Prepaid฀expenses฀and฀other Accounts...

  • Page 11
    ... Statements of Shareholders' Equity Unearned Accumulated Total CompreAdditional stock other sharehensive Common Ordinary paid-in Retained compen- comprehensive Treasury holders' income ฀ stock ฀ shares ฀ capital ฀ earnings ฀ sation ฀ income฀(loss) ฀ stock ฀ equity $6 $1,194...

  • Page 12
    ....฀Each฀company's฀shares฀continue฀to฀be฀ publicly฀traded;฀on฀the฀New฀York฀Stock฀Exchange฀("NYSE")฀ for฀Carnival฀Corporation฀and฀the฀London฀Stock฀Exchange฀for฀ Carnival฀plc.฀In฀addition,฀Carnival฀plc฀American฀Depository฀ Shares฀("ADSs...

  • Page 13
    ...Significant Accounting Policies Basis฀of฀Presentation We...scheduled฀maintenance.฀These฀costs฀are฀included฀ in฀prepaid฀expenses฀and฀are฀amortized฀to฀other฀ship฀operating฀ expenses฀using฀the฀straight-line฀method฀generally฀over฀one฀฀ to฀two฀years...

  • Page 14
    ...฀value฀of฀the฀net฀assets฀ allocated฀to฀the฀reporting฀unit.฀Fair฀values฀of฀our฀reporting฀ units฀were฀determined฀based฀on฀our฀estimates฀of฀comparable฀ market฀price฀or฀discounted฀future฀cash฀flows.฀If฀this฀fair฀value฀ exceeds฀the...

  • Page 15
    ...฀or฀ less฀and฀on฀a฀pro฀rata฀basis฀for฀voyages฀in฀excess฀of฀ten฀nights.฀ Future฀travel฀discount฀vouchers฀issued฀to฀guests฀are฀typically฀ recorded฀as฀a฀reduction฀of฀revenues฀when฀such฀vouchers฀are฀ 12 Carnival Corporation & plc

  • Page 16
    ...January฀2005,฀Carnival฀Corporation฀granted฀approximately฀1.4฀million฀ employee฀stock฀options,฀with฀a฀$57.30฀exercise฀price฀and฀a฀2-year฀vesting฀ term,฀in฀substitution฀for฀a฀similar฀number฀of฀outstanding฀options฀whose฀ termination฀date...

  • Page 17
    ...DLC฀structure.฀The฀contracts฀governing฀ the฀DLC฀structure฀provide฀that฀Carnival฀Corporation฀and฀ Carnival฀plc฀each฀continue฀to฀have฀separate฀boards฀of฀directors,฀but฀the฀boards฀and฀senior฀executive฀management฀of฀ both฀companies฀are...

  • Page 18
    ...largest฀cruise฀company฀in฀the฀ world฀and฀operated฀many฀well-known฀global฀brands฀with฀ leading฀positions฀in฀the฀U.S.,฀UK,฀Germany฀and฀Australia.฀The฀ combination฀of฀Carnival฀Corporation฀with฀Carnival฀plc฀under฀ the฀DLC฀structure฀has...

  • Page 19
    ...any฀net฀transaction฀benefits.฀In฀addition,฀the฀pro฀forma฀ information฀does฀not฀...rates. (b)฀These฀loans฀are฀denominated฀in฀U.S.฀dollars. November฀30, 2005 ฀ 2004 ฀ $฀ 187 113฀ $฀ 300฀ 3.1% $฀ 284 97฀ $฀ 381฀ 2.4% 16 Carnival Corporation...

  • Page 20
    ...฀of฀P&O฀Cruises'฀purchase฀price฀for฀ the฀Arcadia.฀Finally,฀we฀entered฀into฀interest฀rate฀swap฀agreements฀to฀fix฀the฀interest฀rates฀on฀these฀euro฀and฀sterling฀borrowings฀at฀3.50%฀and฀5.40%,฀respectively. Carnival Corporation & plc...

  • Page 21
    ...฀an฀annual฀rate฀of฀3.75%฀thereafter,฀until฀maturity.฀The฀trigger฀price฀was฀$36.72฀for฀the฀฀ 2005฀fourth฀quarter.฀Since฀the฀third฀quarter฀of฀2003,฀the฀ZeroCoupon฀Notes฀have฀been฀convertible฀into฀Carnival฀Corporation฀ common฀stock...

  • Page 22
    ...30,฀2005,฀the฀scheduled฀annual฀maturities฀of฀ our฀long-term฀debt฀was฀as฀follows฀(in฀millions): Fiscal 2006 2007 2008 2009 2010 Thereafter 1,325(a) 1,035 1,672(a) 169 944 1,907฀ $7,052฀ (a)฀฀ Includes฀$283฀million฀of฀Carnival฀Corporation's฀Zero...

  • Page 23
    ...฀2005฀ship฀ orders,฀was฀as฀follows: Expected Service Date (a) ฀ Passenger Capacity ฀ Estimated฀Total฀Cost (b) Euros ฀ Sterling ฀ USD (in฀millions) Brand฀and฀Ship Carnival฀Cruise฀Lines Carnival฀Freedom Newbuild Newbuild (c Total฀Carnival฀Cruise฀Lines...

  • Page 24
    .... In฀November฀2005,฀two฀separate฀lawsuits฀were฀filed฀ against฀Carnival฀Corporation฀and฀Princess฀Cruise฀Lines,฀Ltd.฀฀ in฀the฀U.S.฀District฀Court฀for฀the฀Southern฀District฀of฀Florida฀ on฀behalf฀of฀some฀current฀and฀former฀crewmembers...

  • Page 25
    ...the฀2002฀Facsimile฀Complaints฀that฀reference฀฀ a฀Carnival฀Cruise฀Line฀product฀were฀not฀sent฀by฀Carnival฀ Corporation,฀but฀rather฀were฀distributed฀by฀a฀professional฀ faxing฀company฀at฀the฀behest฀of฀third฀party฀travel฀agencies.฀ The...

  • Page 26
    ...operations. Note 10-Shareholders' Equity Carnival฀Corporation's฀articles฀of฀incorporation฀authorize฀its฀ Board฀of฀Directors,฀at฀its฀discretion,฀to฀issue฀up฀to฀40฀million฀ shares฀of฀its฀preferred฀stock฀and฀Carnival฀plc฀has฀100,000฀ authorized...

  • Page 27
    ...2005,฀there฀were฀75.5฀million฀shares฀฀ of฀Carnival฀Corporation฀common฀stock฀reserved฀for฀issuance฀ pursuant฀to฀its฀convertible฀notes฀and฀its฀employee฀benefit฀฀ and฀dividend฀reinvestment฀plans.฀In฀addition,฀Carnival฀plc฀ shareholders...

  • Page 28
    ...฀Holland฀America฀ Tours฀or฀Princess฀Tours,฀and฀shore฀excursion฀and฀port฀hospitality฀services฀provided฀to฀cruise฀passengers฀by฀these฀tour฀companies.฀These฀intersegment฀revenues,฀ which฀are฀included฀in฀full฀in฀the฀cruise฀segment,฀are...

  • Page 29
    ...$9,727฀ (continued) Note 13-Benefit Plans Stock฀Option฀Plans We฀have฀stock฀option฀plans฀primarily฀for฀management฀฀ level฀employees฀and฀members฀of฀our฀Board฀of฀Directors.฀The฀ Carnival฀Corporation฀and฀Carnival฀plc฀plans฀are฀administered฀by...

  • Page 30
    ...options฀that฀were฀terminated฀early฀at฀an฀exercise฀price฀per฀share฀equal฀to฀the฀fair฀market฀value฀of฀Carnival฀Corporation฀common฀ stock฀on฀the฀grant฀date.฀In฀late฀2005,฀these฀1.4฀million฀unvested฀options฀were฀vested.฀See฀Note...

  • Page 31
    ...฀2.9฀years. (continued) Carnival฀Corporation฀Nonvested฀Stock Carnival฀Corporation฀has฀issued฀nonvested฀stock฀to฀a฀few฀ officers฀and฀some฀non-executive฀board฀members.฀These฀ shares฀have฀the฀same฀rights฀as฀Carnival฀Corporation฀common฀ stock...

  • Page 32
    ...newly฀issued฀Carnival฀ Corporation฀Common฀stock,฀which฀represented฀a฀noncash฀ financing฀activity. Note 14-Earnings Per Share Our฀basic฀and฀diluted฀earnings฀per฀share฀were฀computed฀ as฀follows฀(in฀millions,฀except฀per฀share฀data): Years฀Ended...

  • Page 33
    ...฀registered฀certified฀public฀accounting฀firm฀as฀stated฀in฀their฀report,฀which฀ is฀included฀in฀this฀2005฀joint฀Annual฀Report. Micky฀Arison฀ Chairman฀of฀the฀Board฀and฀ Chief฀Executive฀Officer฀ February฀8,฀2006฀ Howard฀S.฀Frank...

  • Page 34
    ...฀Public฀Company฀Accounting฀Oversight฀Board฀(United฀States).฀Our฀opinions฀on฀ Carnival฀Corporation's฀and฀Carnival฀plc's฀November฀30,฀2005,฀2004฀and฀2003฀consolidated฀financial฀statements฀and฀its฀internal฀ control฀over฀financial฀reporting...

  • Page 35
    ...฀results.฀Subject฀to฀any฀continuing฀obligations฀under฀applicable฀law฀or฀any฀relevant฀listing฀rules,฀we฀ expressly฀disclaim฀any฀obligation฀to฀disseminate,฀after฀the฀ date฀of฀this฀2005฀Annual฀Report,฀any฀updates฀or฀revisions฀to฀ any...

  • Page 36
    ...the฀expected฀ sale฀of฀the฀Pacific฀Sky฀by฀P&O฀Cruises฀Australia฀in฀May฀2006. Outlook for Fiscal 2006 ("2006") As฀of฀December฀16,฀2005฀we฀said฀that฀we฀expected฀our฀ 2006฀full฀year฀earnings฀per฀share฀will฀be฀between฀$3.00฀to฀ $3.10...

  • Page 37
    ...฀year฀ended฀November฀30,฀2003,฀ as฀well฀as฀the฀required฀reported฀information,฀in฀the฀discussion฀ of฀our฀results฀of฀operations. The฀2003฀pro฀forma฀information฀was฀computed฀by฀adding฀ the฀results฀of฀P&O฀Princess'฀annual฀operations...

  • Page 38
    ...value฀includes฀numerous฀uncertainties,฀unless฀a฀viable฀actively฀traded฀market฀exists฀for฀the฀ asset฀or฀for฀a฀comparable฀reporting฀unit,฀which฀is฀usually฀not฀ the฀case฀for฀cruise฀ships,฀cruise฀lines฀and฀trademarks.฀For฀ example,฀in...

  • Page 39
    ...with฀onboard฀and฀other฀revenues,฀and฀ include฀the฀costs฀of฀liquor฀and฀some฀beverages,฀costs฀฀ of฀tangible฀goods฀sold฀by฀us฀from฀our฀gift,฀photo฀and฀art฀ auction฀activities,฀pre-฀and฀post฀cruise฀land฀packages฀and฀ credit฀card...

  • Page 40
    ...information฀were฀as฀follows: Years฀Ended฀November฀30, ฀ Pro฀Forma Reported ฀ 2004 ฀ 2003 ฀ 2003 ฀ ฀ Revenues ฀ Cruise ฀ ฀ Passenger฀tickets Onboard...฀the฀cost฀of฀our฀fuel฀by฀the฀number฀of฀metric฀tons฀consumed. Carnival Corporation & plc 37

  • Page 41
    ...฀revenues ฀ Passenger฀tickets Onboard฀and฀other Gross฀cruise฀revenues Less฀cruise฀costs ฀ Commissions,฀transportation฀and฀other Onboard฀and฀other Net฀cruise฀revenues ALBDs Gross฀revenue฀yields Net฀revenue฀yields 2005 Reported 2003 ฀ $฀ 8,379...

  • Page 42
    ...฀revenues฀increased฀$69฀million,฀or฀17.3%,฀ to฀$467฀million฀in฀2005฀from฀$398฀million฀in฀2004฀primarily฀ due฀to฀the฀increase฀in฀the฀number฀of฀cruise/tours฀sold. expense,฀a฀$23฀million฀MNOPF฀contribution฀(see฀Note฀13฀in฀ the...

  • Page 43
    ...increase฀of฀$53฀million,฀or฀15.4%฀from฀$345฀million฀in฀฀ reported฀2003)฀primarily฀due฀to฀the฀increase฀in฀the฀number฀฀ of฀cruise/tours฀sold,฀as฀well฀as฀price฀increases. Fiscal฀2004฀("2004")฀Compared฀to฀฀ Pro฀Forma฀2003฀("pro...

  • Page 44
    ...฀$487฀million฀ of฀euro฀debt฀in฀2005฀to฀reduce฀our฀future฀borrowing฀rate.฀฀ We฀also฀paid฀cash฀dividends฀of฀$566฀million฀and฀purchased฀ $386฀million฀of฀treasury฀stock฀during฀2005. Nonoperating฀(Expense)฀Income Net฀interest฀expense...

  • Page 45
    ...฀30,฀2005฀exchange฀rates. During฀2004,฀the฀Boards฀of฀Directors฀authorized฀the฀ repurchase฀of฀up฀to฀an฀aggregate฀of฀$1฀billion฀of฀Carnival฀ Corporation฀common฀stock฀and/or฀Carnival฀plc฀ordinary฀shares฀ commencing฀in฀2005,฀subject...

  • Page 46
    ... Specifically,฀our฀expanded฀international฀business฀operations฀ through฀P&O฀Cruises,฀Ocean฀Village฀and฀Swan฀Hellenic฀in฀the฀ UK฀and฀AIDA฀in฀Germany฀subject฀us฀to฀an฀increasing฀level฀of฀ foreign฀currency฀exchange฀risk฀related฀to฀the...

  • Page 47
    ...฀of฀our฀interest฀rate฀swaps,฀would฀increase฀or฀ decrease฀by฀approximately฀$7฀million. In฀addition,฀based฀upon฀a฀hypothetical฀10%฀decrease฀or฀ increase฀in฀Carnival฀Corporation's฀November฀30,฀2005฀common฀stock฀price,฀the฀fair฀value...

  • Page 48
    ...฀data฀presented฀below฀for฀fiscal฀2001฀through฀2005฀and฀as฀of฀the฀end฀of฀each฀such฀year,฀฀ are฀derived฀from฀our฀audited฀financial฀statements฀and฀should฀be฀read฀in฀conjunction฀with฀those฀financial฀statements฀and฀the฀ related...

  • Page 49
    ...of฀Carnival฀Corporation฀ common฀stock฀or฀Carnival฀plc฀ADS's฀receive฀a฀dividend฀payable฀in฀U.S.฀dollars.฀The฀dividends฀payable฀for฀Carnival฀plc฀ ordinary฀shares฀are฀payable฀in฀sterling,฀unless฀the฀shareholders฀ elect฀to฀receive฀the...

  • Page 50
    ...฀all฀of฀ Holland฀America฀Tours'฀and฀Princess฀Tours'฀revenues฀and฀net฀income฀are฀generated฀from฀May฀through฀September฀in฀conjunction฀ with฀the฀Alaska฀cruise฀season. Quarterly฀financial฀results฀for฀fiscal฀2005฀were฀as฀follows...

  • Page 51
    ... Florida International University Chairman National Grid plc and The Peninsular and Oriental Steam Navigation Company Carol Marlow President and Managing Director HOLLAND AMERICA LINE INC. Peter G. Ratcliffe Stuart Subotnick Uzi Zucker Chief Executive Officer P&O Princess Cruises International...

  • Page 52
    Swan฀Hellenic฀Minerva฀II฀in฀Chile Ocean฀Village฀at฀sea More Ships AIDAvita฀at฀sea P&O฀Australia฀Pacific฀Sun฀in฀Sydney

  • Page 53
    Carnival Place 3655 N.W. 87th Avenue Miami, Florida 33178-2428 U.S.A. www.carnivalcorp.com Carnival House 5 Gainsford Street London SE1 2NE UK www.carnivalplc.com