Carnival Cruises 2008 Annual Report Download

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1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2008 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 Commission file number: 1-15136
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 (I.R.S. Employer
Identification No.) Identification No.)
3655 N.W. 87th Avenue Carnival House, 5 Gainsford Street,
Miami, Florida 33178-2428 London SE1 2NE, United Kingdom
(Address of principal (Address of principal
executive offices) executive offices)
(Zip code) (Zip code)
(305) 599-2600 011 44 20 7940 5381
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
Securities registered pursuant Securities registered pursuant
to Section 12(b) of the Act: to Section 12(b) of the Act:
Title of each class Title of each class
Common Stock Ordinary Shares each represented
($.01 par value) by American Depositary Shares
($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
Name of each exchange on which registered Name of each exchange on which registered
New York Stock Exchange, Inc. New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of
the Securities Act. Yes  No 
Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or
Section 15(d) of the Act. Yes  No 
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrants' knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form
10-K. 
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, or non
-accelerated filers. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the
Act. Large Accelerated Filers  Accelerated Filers  Non-Accelerated Filers  Smaller Reporting Company 
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the
Act). Yes  No 
The aggregate market value of the voting and The aggregate market value of the voting and
non-voting common equity held by non-affiliates non-voting common equity held by non-affiliates
computed by reference to the price at which the computed by reference to the price at which the
common equity was last sold was $16.0 billion common equity was last sold was $6.3 billion
as of the last business day of the registrant's as of the last business day of the registrant's
most recently completed second fiscal quarter. most recently completed second fiscal quarter.
At January 22, 2009, Carnival Corporation At January 22, 2009, Carnival plc had outstanding
had outstanding 625,374,532 shares of its 213,249,933 Ordinary Shares $1.66 par value, one
Common Stock, $0.01 par value. Special Voting Share, GBP 1.00 par value and
625,374,532 Trust Shares of beneficial interest
in the P&O Princess Special Voting Trust.

Table of contents

  • Page 1
    ... Miami, Florida 33178-2428 (Address of principal executive offices) (Zip code) (305) 599-2600 (Registrant's telephone number, including area code) Securities registered pursuant to Section 12(b) of the Act: Title of each class Common Stock ($.01 par value) Commission file number: 1-15136 Carnival...

  • Page 2
    DOCUMENTS INCORPORATED BY REFERENCE The information described below and contained in the Registrants' 2008 annual report to shareholders to be furnished to the U.S. Securities and Exchange Commission pursuant to Rule 14a-3(b) of the Securities Exchange Act of 1934 is shown in Exhibit 13 and is ...

  • Page 3
    ... information. As of January 28, 2009, the summary by brand of our passenger capacity, the number of cruise ships we operate, and the primary areas in which they are marketed is as follows: Cruise Brands Carnival Cruise Lines Princess Cruises ("Princess") Costa Cruises ("Costa") Holland America Line...

  • Page 4
    ... health, safety and security of our guests, employees and all others working on our behalf, thereby promoting an organization that is free of injuries, ill health and loss. Protecting the environment, including the marine environment in which our vessels sail and the communities in which we operate...

  • Page 5
    ... such as Asia, the South Pacific, including Australia and New Zealand, and South America are a source of much lower numbers of cruise passengers, and we also believe these regions have growth potential. See Note 11, "Segment Information" to our Consolidated Financial Statements in Exhibit 13 to this...

  • Page 6
    ... seven days and sail from 22 different homeports, including 15 in North America. Carnival Cruise Lines' ships call year-round on ports in the Caribbean, the Bahamas and Mexican Riviera. In addition, Carnival Cruise Lines' ships also offer seasonal cruises to Alaska, Canada/New England, Europe, South...

  • Page 7
    ... more exotic cruises, such as the world cruise which lasts over 118 days. Most sailings in the Caribbean visit Holland America Line's private island, Half Moon Cay. Holland America's ships, which tend to be smaller and more intimate than the bigger contemporary cruise ships, were designed with airy...

  • Page 8
    ... These figures include some ships that were, or are expected to be, marketed in both Europe and elsewhere during different times of the year. Net capacity serving European-sourced cruise guests has increased at a compound annual growth rate of 9.8% for the past three years. The future growth rate is...

  • Page 9
    ... the level of market penetration is estimated at approximately 26% of North America. We intend to increase our penetration in southern Europe through Costa, one of the most recognized cruise brands marketed in Europe, which currently has the most cruise ships on order of any cruise brand, and Ibero...

  • Page 10
    Costa is Italy and Europe's #1 Cruise Line based on guests carried and capacity of its ships, and boasts over 60 years of cruising history. Costa operates 12 contemporary ships, with two additional ships contracted for delivery in 2009 and one ship in each of 2010, 2011 and 2012. With these five new...

  • Page 11
    ... sail in the Mediterranean, the North Sea and the Baltic Sea, while itineraries for the winter include the Caribbean, Central America, the Western Mediterranean, the Atlantic Isles, the Arabian Gulf and TransSuez Canal passages. In the fall of 2008, AIDA began offering New England and Canada cruises...

  • Page 12
    ... markets. During the remaining non-peak vacation months, the Costa Allegra sails 14-day Far East cruises sourcing guests principally from Europe. In April 2009, Costa Cruises will deploy a second ship, the 1,302-passenger capacity Costa Classica, to Asia for 4-day and 5-day cruises sailing...

  • Page 13
    ... Bahamas Total Carnival Cruise Lines Princess Ruby Princess Emerald Princess Crown Princess Sapphire Princess Caribbean Princess Diamond Princess Island Princess Coral Princess Star Princess Royal Princess Golden Princess Tahitian Princess Pacific Princess Sea Princess Grand Princess Dawn Princess...

  • Page 14
    Brand and Ship Registry Calendar Year Delivered 2008 2006 2004 2003 2002 2000 2000 1999 1997 1996 1994 1993 1993 1988 Passenger Capacity 2,104 1,918 1,916 1,848 1,916 1,432 1,380 1,432 1,316 1,258 1,260 1,258 1,258 792 21,088 Holland America Line(b) Eurodam Netherlands Noordam Netherlands ...

  • Page 15
    ... as follows: Expected Service Passenger Date(a) Capacity Brand and Ship Costa Costa Luminosa Costa Pacifica Costa Deliziosa Newbuild Newbuild Total Costa AIDA AIDAluna AIDAblu Newbuild Newbuild Total AIDA Carnival Carnival Carnival Total Cruise Lines Dream Magic Carnival Cruise Lines 5/09 6/09 2/10...

  • Page 16
    destinations, while also providing hotel accommodations, food and some entertainment for one all-inclusive, competitive price. In order to make cruising even more cost effective and more easily accessible to our guests, we offer a number of drive-to-homeports, which reduces certain cruise guests' ...

  • Page 17
    ... Texas, Miami, Florida, New York City, New York, San Diego, California, Southampton, England and St. Maarten, Netherlands Antilles. In addition, we currently operate port facilities in Barcelona, Spain, Cozumel, Mexico, Grand Turk, Turks and Caicos Islands, Juneau, Alaska, Long Beach, California and...

  • Page 18
    ..." booking program that allows guests to make a reservation two to three months before sailing, but the exact cruise ship and specific itinerary are not determined by AIDA until two weeks prior to sailing in order to help AIDA maximize their net revenue yields. When a guest elects to purchase air...

  • Page 19
    ...principally on our Holland America Line, Princess and Carnival Cruise Lines ships, we sell pre- and post-cruise land packages, utilizing, to a large extent, our transportation and hotel assets. XII. Sales Relationships and Marketing Activities We are a customer service-driven company and continue to...

  • Page 20
    ... Europe with other North American cruise competitors, including Celebrity Cruises, Disney Cruise Line and Norwegian Cruise Line. Our primary cruise competitors for guests sourced from other parts of the world, such as Australia, New Zealand, Asia and South America, are Royal Caribbean International...

  • Page 21
    ... at Sea, sometimes referred to as SOLAS, which is applicable to all of our ships. Among other things, SOLAS establishes requirements for vessel design, structural features, materials, construction, life saving equipment, safe management and operation and security in order to help ensure guest and...

  • Page 22
    ... to increasing compliance costs in the future. b. Permits for Glacier Bay, Alaska In connection with certain of our Alaska cruise operations, Holland America Line, Princess and Carnival Cruise Lines rely on concession permits from the U.S. National Park Service ("NPS") to operate their cruise ships...

  • Page 23
    ...of new engine designs or exhaust gas treatment systems, which may result in significant additional costs. A further EU directive regarding the use of low sulfur fuel for passenger ships on regular service between EU ports was introduced in 2005. The application of this legislation to cruise ships is...

  • Page 24
    ... safe return to port requirements related to the development of survivability standards for a vessel also enter into force for keels laid after July 1, 2010, and will require development of new designs to meet these new requirements for future ship orders. All of our ships under contract to be built...

  • Page 25
    ...to help secure our shipboard employees. D. Suppliers Our largest purchases are for travel agency services, fuel, advertising, food and beverages, hotel and restaurant products and supplies, airfare, repairs and maintenance, including dry-docking, port facility utilization, communication services and...

  • Page 26
    ... of our ships covering our legal liability to crew, guests and other third parties as well as loss or damage to our vessels arising from war or war-like actions, including terrorist incidents. This coverage is provided by international marine insurance carriers and Mutual War Risk Clubs. In addition...

  • Page 27
    ...international transportation. We also own and operate, among other businesses, the hotel, transportation and tour businesses of Holland America Tours and Princess Tours through U.S. corporations. Our North American passenger vessel business and certain ship-owning subsidiaries are engaged in a trade...

  • Page 28
    ... profit calculated by reference to the net tonnage of qualifying vessels. UK corporation tax is not chargeable under the normal UK tax rules on these brands' relevant shipping income. Relevant shipping income includes income from the operation of qualifying ships and from shipping related activities...

  • Page 29
    ...income of companies doing business in Alaska and certain of their affiliated companies. H. Website Access to Carnival Corporation & plc SEC Reports Our Form 10-K, joint Quarterly Reports on Form 10-Q, joint Current Reports on Form 8-K, joint proxy statement related to our annual stockholders meeting...

  • Page 30
    ... from other cruise lines, both on the basis of cruise pricing and also in terms of the types of ships, services and destinations being offered to cruise guests. We try to differentiate ourselves from our cruise competitors by offering new itineraries, products and services to our guests, but the...

  • Page 31
    ... or series of cruises or tours. These types of incidents may bring into question guest health, safety, security and/or vacation satisfaction, and thereby adversely affect our sales and profitability. In addition, our cruises, hotels, port facilities, shore excursions and other service providers may...

  • Page 32
    ... our brands no longer charge the fuel supplement. Future increases in the global cost of fuel would increase the cost of our cruise ship operations. We may be unable to implement additional fuel conservation practices, or ticket price and/or fuel supplements, which would otherwise help offset these...

  • Page 33
    ... employees and/or guests, including value added taxes on cruise tickets and onboard revenues and changes in the scope of income that is includable within tonnage tax regimes, which could increase our operating costs and/or could decrease the demand for cruises and ultimately decrease our net revenue...

  • Page 34
    ... travel and related commission income as a result of an economic slowdown, could have an adverse effect on our sales and related commission costs. • We rely to a large extent on scheduled commercial airline services for guest connections and, therefore, increases in the price of, or major changes...

  • Page 35
    ... services as a result of strikes, financial instability, adverse weather conditions or other events, or the lack of availability due to schedule changes or a high level of airline bookings could adversely affect our ability to deliver guests to or from our cruise ships and increase our cost of sales...

  • Page 36
    ... and stock exchange requirements in the UK and the U.S. This structure requires more administrative time and cost than was the case for each company individually, which has an adverse effect on our operating efficiency. • Changes under the U.S. Internal Revenue Code, applicable U.S. income...

  • Page 37
    ...-K. Forward-looking statements include those statements which may impact the forecasting of our earnings per share, net revenue yields, booking levels, pricing, occupancy, operating, financing and/or tax costs, fuel costs, costs per available lower berth day, estimates of ship depreciable lives and...

  • Page 38
    ... we operate in Barcelona, Spain, Cozumel, Mexico, Grand Turk, the Turks & Caicos Islands, Juneau, Alaska, Long Beach, California and Savona, Italy. Our cruise ships, headquarters, port and shoreside facilities and Holland America Tours' and Princess Tours' properties, are all well maintained and in...

  • Page 39
    ...Executive Officer of Princess Cruises President and Chief Executive Officer of Carnival Cruise Lines Chief Executive Officer of Carnival UK Chairman and Chief Executive Officer of Costa Crociere, S.p.A. and Director Vice Chairman of the Board of Directors and Chief Operating Officer Chief Accounting...

  • Page 40
    ... common stock and Carnival plc ordinary shares will depend upon, among other factors, our earnings, financial condition, capital requirements and the availability and cost of obtaining new debt. The payment and amount of any future dividend is within the discretion of the Boards of Directors. We...

  • Page 41
    ... an expiration date and may be discontinued by our Boards of Directors at any time. During the 2008 fourth quarter, 32,450 ordinary shares of Carnival plc, which are not registered under Section 12 of the Securities Exchange Act, were repurchased pursuant to this program at an average share price of...

  • Page 42
    ... procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing...

  • Page 43
    ... to be filed with the U.S. Securities and Exchange Commission not later than 120 days after the close of the 2008 fiscal year, except that the information concerning the Carnival Corporation and Carnival plc executive officers called for by Item 401(b) of Regulation S-K is included in Part I of this...

  • Page 44
    ..., if applicable, using the November 30, 2008 exchange rate of $1.54:£1. (2) Includes outstanding options to purchase Carnival plc ordinary shares under the Carnival plc Executive Share Option Plan and Carnival plc 2005 Employee Share Plan. Also includes 424,701 restricted share units outstanding...

  • Page 45
    (2) Financial Statement Schedules All schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instruction or are inapplicable and, therefore, have been omitted. (3) Exhibits The exhibits listed on the accompanying Index to Exhibits...

  • Page 46
    ... of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of each of the registrants and in the capacities and on the dates indicated. CARNIVAL CORPORATION /s/ Micky Arison Micky Arison Chairman of the Board of Directors and Chief Executive Officer...

  • Page 47
    ... January 29, 2009 /s/*Stuart Subotnick Stuart Subotnick Director January 29, 2009 /s/*Laura Weil Laura Weil Director January 29, 2009 /s/*Randall J. Weisenburger Randall J. Weisenburger Director January 29, 2009 /s/*Uzi Zucker Uzi Zucker Director January 29, 2009 *By: /s/ Arnaldo Perez (Arnaldo...

  • Page 48
    ... security holders, including indentures 4.1 Agreement of Carnival Corporation and Carnival plc, dated January 12, 2009 to furnish certain debt instruments to the Securities and Exchange Commission. Carnival Corporation Deed, dated April 17, 2003, between Carnival Corporation and P&O Princess Cruises...

  • Page 49
    ... 1, 1993, between Carnival Cruise Lines, Inc. and First Trust National Association, as Trustee, relating to the Debt Securities, including form of Debt Security. Second Supplemental Indenture, dated December 1, 2003, between Carnival plc and Carnival Corporation to The Bank of New York, as Trustee...

  • Page 50
    ... of financial institutions. Amended and Restated Carnival Corporation 1992 Stock Option Plan. Carnival Cruise Lines, Inc. 1993 Restricted Stock Plan adopted on January 15, 1993 and as amended January 5, 1998 and December 21, 1998. Carnival Corporation "Fun Ship" Nonqualified Savings Plan. Amendment...

  • Page 51
    ... for Executive Directors. Amended and Restated Carnival plc 2005 Employee Share Plan. Carnival Corporation Supplemental Executive Retirement Plan. Amendment to the Carnival Corporation Supplemental Executive Retirement Plan. Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings Plan...

  • Page 52
    ... "Fun Ship" Nonqualified Savings Plan. Amendment of the Carnival Corporation Nonqualified Retirement Plan For Highly Compensated Employees. The P&O Princess Cruises Executive Share Option Plan. The P&O Princess Cruises Deferred Bonus and CoInvestment Matching Plan. Carnival Cruise Lines Management...

  • Page 53
    ... Carnival Corporation 2001 Outside Director Stock Plan. Form of Share Option Certificate for the Amended and Restated Carnival plc 2005 Employee Share Plan. Deed of Guarantee, dated October 21, 2005, between Carnival Corporation as guarantor and the Royal Bank of Scotland plc as facilities agent...

  • Page 54
    ... Share Option Plan. Amendment to the P&O Princess Cruises Deferred Bonus and Co-Investment Matching Plan. Amendment to the Carnival plc 2005 Employee Share Plan. Form of Executive Restricted Stock Agreement for the Amended and Restated Carnival Corporation 2002 Stock Plan. Amendment Agreement, dated...

  • Page 55
    ... Public Accounting Firm. X Power of attorney 24.1 Powers of Attorney given by certain Directors of Carnival Corporation and Carnival plc to Micky Arison, Howard S. Frank, David Bernstein and Arnaldo Perez authorizing such persons to sign this 2008 joint Annual Report on Form 10-K and any future...

  • Page 56
    ... 2002. Certification of Senior Vice President and Chief Financial Officer of Carnival Corporation pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification of Chief Executive Officer of Carnival plc pursuant to Rule 13a-14(a), as adopted pursuant...

  • Page 57
    ... of Senior Vice President and Chief Financial Officer of Carnival plc pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Form Exhibit Filing Date Filed/Furnished Herewith X 32.5** X 32.6** X *Indicates a management contract or...

  • Page 58
    ... of the Commission, and, in accordance with such regulation, such instruments are not being filed as part of the joint Annual Report on Form 10-K of the Companies for their year ended November 30, 2008. Very truly yours, CARNIVAL CORPORATION AND CARNIVAL PLC /s/ Arnaldo Perez Senior Vice President...

  • Page 59
    Exhibit 12 CARNIVAL CORPORATION & PLC Ratio of Earnings to Fixed Charges (in millions, except ratios) 2008 Net income Income tax expense, net Income before income taxes Fixed charges Interest expense, net Interest portion of rent expense (a) Capitalized interest Total fixed charges Fixed charges not...

  • Page 60
    ... (in millions, except per share data) Years Ended November 30, 2007 2006 2008 Revenues Cruise Passenger tickets Onboard and other Other Costs and Expenses Operating Cruise Commissions, transportation and other Onboard and other Fuel Payroll and related Food Other ship operating Other Total Selling...

  • Page 61
    ... value; 226 shares authorized; 213 shares at 2008 and 2007 issued Additional paid-in capital Retained earnings Accumulated other comprehensive (loss) income Treasury stock; 19 shares at 2008 and 2007 of Carnival Corporation and 52 shares at 2008 and 50 shares at 2007 of Carnival plc, at cost Total...

  • Page 62
    ...-term debt Principal repayments of other long-term debt Proceeds from (repayments of) short-term borrowings, net Dividends paid Purchases of treasury stock, net Other, net Net cash used in financing activities Effect of exchange rate changes on cash and cash equivalents Net decrease in cash and cash...

  • Page 63
    ... loss on marketable security Pension liability adjustments Changes related to cash flow derivative hedges, net Total comprehensive income Cash dividends declared Purchases of treasury stock, net Other Balances at November 30, 2008 $6 Ordinary shares $353 Retained earnings $10,141 Treasury stock...

  • Page 64
    ... in the world. As of November 30, 2008, a summary by brand of our passenger capacity, the number of cruise ships we operate, and the primary areas in which they are marketed is as follows: Cruise Brand Carnival Cruise Lines Princess Cruises ("Princess") Costa Cruises ("Costa") Holland America Line...

  • Page 65
    ... at cost. At November 30, 2008 and 2007, cash and cash equivalents are comprised of cash on hand, money market funds and time deposits. Marketable Securities We account for our marketable security investments as trading, available-for-sale or held-to-maturity securities. As of November 30, 2008 and...

  • Page 66
    ... trademarks are expensed as incurred. For certain of our acquisitions we have allocated a portion of the purchase prices to the acquiree's identified trademarks. Trademarks are estimated to have an indefinite useful life and, therefore, are not amortizable, but are reviewed for impairment annually...

  • Page 67
    ... time of the cancellation. Our sale to guests of air and other transportation to and from our ships and the related cost of purchasing this service is recorded as cruise passenger ticket revenues and cruise transportation costs, respectively. The proceeds that we collect from the sale of third party...

  • Page 68
    ... 30, 2008 and 2007, the amount of advertising costs included in prepaid expenses was not significant. Administrative expenses represent the costs of our shoreside ship support, reservations and other administrative functions, and include items such as salaries and related benefits, professional...

  • Page 69
    ... due to their short maturities and the large number of accounts within our customer base. We have experienced only minimal credit losses on our trade receivables. We do not normally require collateral or other security to support normal credit sales. However, we normally do require collateral and/or...

  • Page 70
    ..., respectively. Ships under construction include progress payments for the construction of these ships, as well as design and engineering fees, capitalized interest, construction oversight costs and various owner supplied items. At November 30, 2008, five ships with an aggregate net book value of...

  • Page 71
    ... expenses, including minor improvement costs and dry-dock expenses, were $676 million, $597 million and $555 million in fiscal 2008, 2007 and 2006, respectively. NOTE 5 - Debt Long-term debt and short-term borrowings consisted of the following (in millions): November 30, 2007(a) 2008(a) SECURED LONG...

  • Page 72
    ... pay a portion of Eurodam's purchase price. The loan principal is due in seven years and interest is paid semi-annually. The lenders have a one-time option on the third anniversary of the loan to elect to switch the interest rate to a floating rate of LIBOR plus 55 basis points ("bps"). (f) Carnival...

  • Page 73
    ... of this new put option is being amortized to interest expense over its eighteen-month term using the straight-line method, which approximates the effective interest rate method. The terms of the 1.75% Notes were also amended to include an additional semi-annual cash interest payment of 0.5% per...

  • Page 74
    ...' purchase prices. These euro-denominated facilities are repayable semi-annually over a 12 year period and we have the option to terminate each facility up until 60 days prior to the underlying ship's delivery date. Details of the facilities, with U.S. dollar amounts based on the November 30, 2008...

  • Page 75
    ... the aggregate of the net present value of all these obligations was paid by Carnival Corporation to a group of major financial institutions, one of which includes American International Group Inc. ("AIG"), who agreed to act as payment undertakers and directly pay these obligations. Accordingly, the...

  • Page 76
    ... brands constitutes shipping profits and, accordingly, Italian and UK income tax expenses for these operations have been minimal under the existing tax regimes. Carnival Cruise Lines, Princess, Holland America Line and Seabourn are primarily subject to the income tax laws of Panama, Bermuda, the...

  • Page 77
    ... and related accrued interest are not material to our November 30, 2008 financial position. NOTE 9 - Shareholders' Equity Carnival Corporation's articles of incorporation authorize its Board of Directors, at its discretion, to issue up to 40 million shares of preferred stock, and Carnival plc...

  • Page 78
    ... to the impact of lower interest rates in 2008 and changes in the Carnival Corporation common stock price on the value of our convertible notes in 2007. The fair values of our publicly-traded convertible notes were based on their market prices. In September 2006, the FASB issued SFAS No. 157, "Fair...

  • Page 79
    ... as a single reportable segment based on the similarity of their economic and other characteristics, including the products and services they provide. Substantially all of our other segment represents the hotel, tour and transportation operations of Holland America Tours and Princess Tours. The...

  • Page 80
    ... Tours or Princess Tours, and shore excursion and port hospitality services provided to cruise guests by these tour companies. These intersegment revenues, which are included in full in the cruise segment, are eliminated directly against the other segment revenues and operating expenses in the line...

  • Page 81
    ...at an exercise price per share equal to or greater than the fair market value of the Carnival Corporation common stock and Carnival plc ordinary shares on the date of grant. Generally employee options either vest evenly over five years or at the end of three years. Our employee options granted prior...

  • Page 82
    ... quoted market price of the Carnival Corporation or Carnival plc shares on the date of grant, and is amortized to expense using the straight-line method from the grant date through the earlier of the vesting date or the estimated retirement eligibility date. During the year ended November 30, 2008...

  • Page 83
    ...-average discount rate of 7.1%. The net assets or liabilities related to the obligations under these single-employer defined benefit pension plans are not material. In addition, P&O Cruises, Princess and Cunard participate in an industry-wide British Merchant Navy Officers Pension Fund ("MNOPF...

  • Page 84
    ... date. The $451 million purchase price was allocated as follows: $254 million to ships, $161 million to goodwill, $35 million to trademarks and $1 million to other. NOTE 16 - Recent Accounting Pronouncement In May 2008, the FASB issued Financial Accounting Standards Board Staff Position Accounting...

  • Page 85
    ... financial reporting, included in Management's Report on Internal Control Over Financial Reporting appearing under Item 9A of the 2008 Annual Report on Form 10-K. Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting...

  • Page 86
    ... ratings; increases in our future fuel expenses of implementing recently approved International Maritime Organization regulations, which require the use of higher priced low sulfur fuels in certain cruising areas; changes in operating and financing costs, including changes in interest rates, food...

  • Page 87
    ... financial viability of our travel agent distribution system and air service providers; availability and pricing of air travel services, especially as a result of significant increases in air travel costs; changes in the global credit markets on our counterparty risks, including those associated...

  • Page 88
    ... have been designated for our European brands (see Note 6 in the accompanying financial statements). These new ships should help us maintain our leadership position in the world-wide cruise industry. The year-over-year percentage increase in our ALBD capacity for fiscal 2009, 2010, 2011 and 2012...

  • Page 89
    ... reporting unit, which is usually not the case for cruise ships, cruise lines and trademarks. For example, in determining fair values of ships utilizing discounted forecasted cash flows, significant judgments are made concerning, among other things, future net revenue yields, net cruise costs...

  • Page 90
    ... primarily from the following: • sales of passenger cruise tickets and, in some cases, the sale of air and other transportation to and from our ships. The cruise ticket price includes accommodations, most meals, some non-alcoholic beverages, entertainment and many onboard activities, and F-31

  • Page 91
    ...which include both our guest and crew food costs, and other ship operating costs, which include repairs and maintenance, including minor improvements and dry-dock expenses, port costs, entertainment, insurance, and all other shipboard operating costs and expenses. For segment information related to...

  • Page 92
    ... additional ship improvement expenditures. Our total costs and expenses as a percentage of total revenues rose from 79.1% in 2007 to 81.4% in 2008. Operating Income Our operating income increased $4 million primarily due to increased fleet capacity and the effect of increased cruise ticket pricing...

  • Page 93
    ... net of our most significant variable costs, which are travel agent commissions, cost of air transportation and certain other variable direct costs associated with onboard and other revenues. Substantially all of our remaining cruise costs are largely fixed, except for the impact of changing prices...

  • Page 94
    ...2007 accounted for $907 million of the increase, and the remaining $412 million was from increased net revenue yields, which increased 3.7% in 2008 compared to 2007 (gross revenue yields increased by 3.6%). Net revenue yields increased in 2008 primarily due to higher North American ticket prices and...

  • Page 95
    ... 2006 included $11 million of income tax expense for the Military Sealift Command charters and the reversal in 2007 of some uncertain income tax position liabilities, partially offset by higher state income taxes in Alaska. Key Performance Non-GAAP Financial Indicators Net cruise revenues increased...

  • Page 96
    ...-year decrease in cash received from customers' deposits. This decrease resulted primarily from guests booking cruises and paying their deposits closer to the sailing dates and cruises being purchased for lower ticket prices compared to the comparable prior period when guests booked their cruises...

  • Page 97
    ... payments for Ventura, AIDAbella, Eurodam, Carnival Splendor and Ruby Princess. In addition to our new shipbuilding program, we had capital expenditures of $391 million for ship improvements and replacements and $231 million for Alaska tour assets, cruise port facility developments and information...

  • Page 98
    ... noteholders have put options in October 2009 and April 2011, respectively. If these notes are put to us, at our election we can settle these obligations through the issuance of common stock, cash, or a combination thereof. Based on the Carnival Corporation current common stock price, we expect that...

  • Page 99
    ... the purchase of the Carnival plc ordinary shares in open market transactions with a resulting economic benefit, which is derived from the fact that Carnival plc ordinary shares sometimes trade at a discount to Carnival Corporation common stock. As previously discussed, in October 2008 the Board of...

  • Page 100
    ... international business operations, conducted primarily through AIDA in Germany, Costa in southern Europe and China, Ibero in Spain, P&O Cruises, Cunard, and Ocean Village in the UK and P&O Cruises Australia in Australia, subject us to an increasing level of foreign currency exchange risk related...

  • Page 101
    ... of Carnival Cruise Lines, Princess, Holland America Line and Seabourn, and our sterling functional currency brands, comprised of P&O Cruises and Cunard, have foreign currency exchange rate risks related to our outstanding or possible future commitments under ship construction contracts denominated...

  • Page 102
    ... our ability to order future new cruise ships for U.S. dollar or sterling functional currency brands. Interest Rate Risks We manage our exposure to fluctuations in interest rates through our investment and debt portfolio management strategies. These strategies include purchasing high quality short...

  • Page 103
    ... in the event of a significant decrease in market interest rates. Bunker Fuel Price Risks We do not use financial instruments to hedge our exposure to the bunker fuel price market risk. We estimate that our fiscal 2009 fuel expense would change by approximately $3.3 million for each $1 per metric...

  • Page 104
    ... London Stock Exchange under the symbol "CCL." Carnival plc's American Depository Shares ("ADSs"), each one of which represents one Carnival plc ordinary share, are traded on the NYSE under the symbol "CUK." The depository for the ADSs is JPMorgan Chase Bank. The daily high and low stock sales price...

  • Page 105
    ... Reinvested Years Ended November 30, Carnival Corporation Common Stock Dow Jones Index S&P 500 Index FTSE 100 Index Carnival plc The following graph compares the Price Performance of $100 invested in Carnival plc ADSs, each representing one ordinary share of Carnival plc, with the Price Performance...

  • Page 106
    ...largest share of our net income is earned during these periods. The seasonality of our results is increased due to ships being taken out of service for maintenance, which we typically schedule during non-peak demand periods. In addition, substantially all of Holland America Tours' and Princess Tours...

  • Page 107
    ...$ 0.47 $ 0.40 (a) Includes a $31 million gain on the sale of QE2. Quarterly financial results for fiscal 2007 were as follows: Quarters Ended May 31 August 31 November 30 February 28 (in millions, except per share data) Revenues Operating income Net income Earnings per share Basic Diluted Dividends...

  • Page 108
    ... Netherlands Antilles Bermuda Bermuda Bermuda Name of Subsidiary Costa Crociere, S.p.A.(2) HAL Antillen N.V. Holland America Line N.V.(3) Princess Bermuda Holdings Ltd. Princess Cruise Lines Ltd.(4) Sunshine Shipping Corporation Ltd. ("Sunshine")(5) (1) (2) (3) (4) (5) Carnival Corporation...

  • Page 109
    ... 333-84968, 333-13794 and 333-12742), of our report, dated January 28, 2009, relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this joint Annual Report on Form 10-K. /s/PricewaterhouseCoopers LLP Miami, Florida January 28, 2009

  • Page 110
    ...fact and agents, and each of them with full power to act without the others, for him or her and in his or her name, place and stead, to sign the Carnival Corporation and Carnival plc joint Annual Report on Form 10-K ("Form 10-K") for the year ended November 30, 2008 and any and all future amendments...

  • Page 111
    ...-in-fact and agents, and each of them with full power to act without the others, for him and in his name, place and stead, to sign the Carnival Corporation and Carnival plc joint Annual Report on Form 10-K ("Form 10-K") for the year ended November 30, 2008 and any and all future amendments thereto...

  • Page 112
    ...; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 29, 2009 By:/s/ Micky Arison Micky Arison Chairman of the Board of Directors and Chief Executive Officer

  • Page 113
    ...Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 29, 2009 By:/s/ Howard S. Frank Howard S. Frank Vice Chairman of the Board of Directors and Chief Operating Officer

  • Page 114
    ...and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 29, 2009 By:/s/ David Bernstein David Bernstein Senior Vice President and...

  • Page 115
    ...; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 29, 2009 By:/s/ Micky Arison Micky Arison Chairman of the Board of Directors and Chief Executive Officer

  • Page 116
    ...Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 29, 2009 By:/s/ Howard S. Frank Howard S. Frank Vice Chairman of the Board of Directors and Chief Operating Officer

  • Page 117
    ...and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: January 29, 2009 By:/s/ David Bernstein David Bernstein Senior Vice President and...

  • Page 118
    ... Chairman of the Board of Directors and Chief Executive Officer Exhibit 32.2 In connection with the Annual Report on Form 10-K for the year ended November 30, 2008 as filed by Carnival Corporation with the Securities and Exchange Commission on the date hereof (the "Report"), I certify pursuant to...

  • Page 119
    ... Arison Chairman of the Board of Directors and Chief Executive Officer Exhibit 32.5 In connection with the Annual Report on Form 10-K for the year ended November 30, 2008 as filed by Carnival plc with the Securities and Exchange Commission on the date hereof (the "Report"), I certify pursuant to 18...