10q10k10q10k.net

What changed in Carnival's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Carnival's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+451 added−376 removedSource: 10-K (2024-01-26) vs 10-K (2023-01-27)

Top changes in Carnival's 2023 10-K

451 paragraphs added · 376 removed · 260 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

201 edited+43 added−61 removed97 unchanged
Biggest changeThe new port will provide business opportunities for the residents of Grand Bahama with an estimated 1,000 local jobs • Working with ports of Miami, Galveston, Barcelona, Savona and Genoa to support their shore power development efforts • Joined the Alaska Green Corridor partnership to explore methods to accelerate the reduction of greenhouse gas emissions • Costa Cruises continued with the “Traditions in the Future” project which supports the preservation of traditional arts and crafts to a new generation of artisans Continue to support disaster resilience, relief, and recovery efforts Ongoing • Provided temporary housing for 1,500 Ukrainian refugees on a Holland America Line ship for five months • Launched brand specific projects and provided overall support to our Ukrainian crew members and their families Build stronger community relationships in our employment bases and destinations via employee volunteering programs Ongoing Conducted multiple costal cleanups involving shipboard- and shoreside employees and partners in various locations around the world 2030 Biodiversity and Conservation Goals Status (a) Our Progress Support biodiversity and conservation initiatives through select NGO partnerships Ongoing Continued working with the Ocean 100 Dialogues to support ocean stewardship with a focus on climate change and biodiversity Conduct audits and monitor animal encounter excursions regularly Ongoing Published Animal Welfare Statement for Excursions & Experiences on our website 15 2030 Diversity, Equity and Inclusion Goals Status (a) Our Progress Ensure our overall shipboard and shoreside employee base reflects the diversity of the world Ongoing Continued to employ shipboard crew members from approximately 150 countries around the world Expand shipboard and shoreside diversity, equity, and inclusion across all ranks and departments Ongoing • Half of the global direct reports to our CEO are women • Named as one of the World’s Top Female-Friendly Companies by Forbes • Named as one of the World’s Best Employers by Forbes • Recognized as one of America’s Best Employers for Diversity by Forbes • Named among Best Companies for Latinos to Work by Latino Leaders Magazine • Earned a perfect score of 100 from the Human Rights Campaign (HRC) and designation as one of the Best Places to Work for LGBTQ+ equality (a) On Track - Quantifiable/numerical goals that are showing a positive trend towards achieving the goal.
Biggest changeCelebration Key will provide business opportunities for the residents of Grand Bahama with an estimated 1,000 local jobs • Continued to support the Alaskan region through community projects and the Alaska Green Corridor partnership to explore methods to accelerate the reduction of GHG emissions • Continued to support our community efforts in the Caribbean through educational ship tour programs, celebratory events and community volunteerism Continue to support disaster resilience, relief, and recovery efforts Ongoing • Donated to Direct Relief to fund relief efforts in Hawaii after the devastating wildfires • Supported disaster relief efforts in Acapulco after hurricane Otis Build stronger community relationships in our employment bases and destinations via employee volunteering programs Ongoing • Conducted multiple coastal cleanups involving shipboard- and shoreside employees and partners in various locations around the world • Costa Cruises continued with its program donating meals to those who need them the most in local communities • AIDA Cruises continued with its initiatives to provide sustainable support to local communities through the construction of new school facilities, providing numerous children with access to education 2030 Biodiversity and Conservation Goals Status (a) Our Progress Support biodiversity and conservation initiatives through select NGO partnerships Ongoing • Completed efforts to support Giglio Island’s marine biodiversity • Engaged with several NGOs on potential partnership opportunities Conduct audits and monitor animal encounter excursions regularly Ongoing Continued audit and monitoring program 2030 Diversity, Equity and Inclusion Goals Status (a) Our Progress Ensure our overall shipboard and shoreside employee base reflects the diversity of the world Ongoing • Continued to employ shipboard crew members from approximately 150 countries around the world • Our CEO signed the CEO Action for Diversity & Inclusion pledge Expand shipboard and shoreside diversity, equity, and inclusion across all ranks and departments Ongoing • Our company was recognized with several top employer awards more broadly for advancing diversity, equity and inclusion in the workplace • Launched the employee resource group Women Officer Network • Re-joined the International LGBTQ+ Travel Association (a) Accelerated - Quantifiable/numerical goals whose timeline has been moved forward.
Global supply markets and supply chains have been impacted by certain events, resulting in shortages, extended lead times and increased inflation impacting our operations and profitability.
Global supply markets and supply chains have been impacted by certain global events, resulting in shortages, extended lead times and increased inflation impacting our operations and profitability.
UK and Australian Income Tax Cunard, P&O Cruises (UK) and P&O Cruises (Australia) are divisions of Carnival plc and have elected to enter UK tonnage tax under a rolling ten-year term and, accordingly, reapply every year. Companies to which the tonnage tax regime applies pay corporation taxes on profits calculated by reference to the net tonnage of qualifying ships.
UK and Australian Income Tax Cunard, P&O Cruises (UK) and P&O Cruises (Australia) are divisions of Carnival plc and have elected to enter UK tonnage tax regime under a rolling ten-year term and, accordingly, reapply every year. Companies to which the tonnage tax regime applies pay corporation taxes on profits calculated by reference to the net tonnage of qualifying ships.
These regulations include requirements as to the following: • Implementation of specific security measures, including onboard installation of a ship security alert system • Assessment of vessel security • Efforts to identify and deter security threats • Training, drills and exercises • Security plans that may include guest, vehicle and baggage screening procedures, security patrols, establishment of restricted areas, personnel identification procedures, access control measures and installation of surveillance equipment • Establishment of procedures and policies for reporting and managing allegations of crimes 4.
These regulations include requirements as to the following: • Implementation of specific security measures, including onboard installation of a ship security alert system • Assessment of vessel security • Efforts to identify and deter security threats • Training, drills and exercises • Security plans that may include guest, vehicle and baggage screening procedures, security patrols, establishment of restricted areas, personnel identification procedures, access control measures and installation of surveillance equipment • Establishment of procedures and policies for reporting and managing allegations of crimes 20 4.
For 90 years, P&O Cruises (Australia) has taken Australians & New Zealanders on dream holidays to the most incredible destinations along the Australian coast as well as the idyllic South Pacific. The home-grown cruise line delivers a holiday with great entertainment, world-class dining and unforgettable onboard experiences.
For over 90 years, P&O Cruises (Australia) has taken Australians & New Zealanders on dream holidays to the most incredible destinations along the Australian coast as well as the idyllic South Pacific. The home-grown cruise line delivers a holiday with great entertainment, world-class dining and unforgettable onboard experiences.
In addition, we have voluntarily installed redundant systems on all of our ships that monitor processed bilge water a second time prior to discharge to help ensure that it contains no more than 15 parts per million oil content. This system also provides additional controls to prevent improper bilge water discharges.
In addition, we have voluntarily installed redundant systems on all our ships that monitor processed bilge water a second time prior to discharge to help ensure that it contains no more than 15 parts per million oil content. This system also provides additional controls to prevent improper bilge water discharges.
The SRE Committee reviews the selected risks and opportunities from our qualitative scenario analysis quarterly and considers if any risks or opportunities no longer need monitoring, and if any new climate risks or opportunities should be identified. Each 25 climate risk has been assigned an owner who has responsibility for the day-to-day evaluation and management of the risk.
The SRE Committee reviews the selected risks and opportunities from our qualitative scenario analysis quarterly and considers if any risks or opportunities no longer need monitoring, and if any new climate risks or opportunities should be identified. Each climate risk has been assigned an owner who has responsibility for the day-to-day evaluation and management of the risk.
Our consistency with the TCFD’s four pillars, Governance, Strategy, Risk Management and Metrics and Targets, and the recommendations thereof, are represented in the table below. TCFD Pillar Recommended disclosures Section Reference Governance a) Describe the Boards’ oversight of climate-related risks and opportunities. Governance b) Describe management’s role in assessing and managing climate-related risks and opportunities.
Our consistency with the TCFD’s four pillars, Governance, Strategy, Risk Management and Metrics and Targets, and the recommendations thereof, are represented in the table below. 28 TCFD Pillar Recommended disclosures Section Reference Governance a) Describe the Boards’ oversight of climate-related risks and opportunities. Governance b) Describe management’s role in assessing and managing climate-related risks and opportunities.
The EC has also implemented regulations aimed at reducing GHG emissions from maritime shipping through a Monitoring, Reporting and Verification regulation, which involves collecting emissions data from ships over 5,000 gross tons to monitor and report carbon emissions on all voyages to, from and between European Union ports.
The EC has also implemented regulations aimed at reducing GHG emissions from maritime shipping through a Monitoring, Reporting and Verification regulation, which involves collecting emissions data from ships over 5,000 gross tons to monitor and report GHG emissions on all voyages to, from and between European Union ports.
We value and respect the words and ideas of others, keeping an open mind, and learning from our successes and failures. • Communicate - We openly share our knowledge, skills and information across brands, functions and the entire company to further our collective success. Together we champion our mission, vision, values and company priorities.
We value and respect the words and ideas of others, keeping an open mind, and learning from our successes and failures. • Communicate - We openly share our knowledge, skills and information across brands, functions and the entire company to further our collective success. Together we champion our purpose & mission, vision, values and company priorities.
Insurers make it a condition for insurance coverage that a ship be certified as “in class” by a classification society that is a member of the International Association of Classification Societies (“IACS”). All of our ships are routinely inspected and certified to be in class by an IACS member. d.
Insurers make it a condition for insurance coverage that a ship be certified as “in class” by a classification society that is a member of the International Association of Classification Societies (“IACS”). All of our ships are routinely inspected and certified to be in class by an IACS member. 16 d.
Set the pace with the industry’s smartest solutions that deliver on our sustainability roadmap to 2030. Our earth, ecosystem and environment mean everything to us. Without the incredible communities and scenic spaces we operate in, our mission of inspiring unforgettable happiness would be impossible.
Set the pace with the industry’s smartest solutions that deliver on our sustainability roadmap to 2030. Our earth, ecosystem and environment mean everything to us. Without the incredible communities and scenic spaces we operate in, our purpose & mission of inspiring unforgettable happiness would be impossible.
X. Marketing Activities Guest feedback and research support the development of our overall marketing and business strategies to drive demand for cruises and increase the number of first-time cruisers. Our goal has always been to increase consumer awareness for cruise vacations and further grow our share of their vacation spend.
Marketing Activities Guest feedback and research support the development of our overall marketing and business strategies to drive demand for cruises and increase the number of first-time cruisers. Our goal has always been to increase consumer awareness for cruise vacations and further grow our share of their vacation spend.
Coverage is subject to the P&I clubs’ rules and the limits of coverage are determined by the IG. 28 c. Hull and Machinery Insurance We maintain insurance on the hull and machinery of each of our ships for reasonable amounts as determined by management. The coverage for hull and machinery is provided by large and well-established international marine insurers.
Coverage is subject to the P&I clubs’ rules and the limits of coverage are determined by the IG. c. Hull and Machinery Insurance We maintain insurance on the hull and machinery of each of our ships for reasonable amounts as determined by management. The coverage for hull and machinery is provided by large and well-established international marine insurers.
It also contains restrictions on the use of ozone depleting substances (“ODS”) and requires the recording of ODS use, equipment containing ODS and the emission of ODS. b. Sulfur Emissions The IMO has adopted a global 0.5% sulfur cap for marine fuel which began in January 2020.
It also contains restrictions on the use of ozone depleting substances (“ODS”) and requires the recording of ODS use, equipment containing ODS and the emission of ODS. b. Sulfur Emissions The IMO adopted a global 0.5% sulfur cap for marine fuel which began in January 2020.
National Pollutant Discharge Elimination System was designed to minimize pollution within U.S. territorial waters. For our affected ships, the incidental discharge requirements are set forth in EPA’s Vessel General Permit 33 (“VGP”) for discharges incidental to the normal operations of vessels.
National Pollutant Discharge Elimination System was designed to minimize pollution within U.S. territorial waters. For our affected ships, the incidental discharge requirements are set forth in EPA’s Vessel General Permit (“VGP”) for discharges incidental to the normal operations of vessels.
Industry and Market Data This document includes market share and industry data and forecasts that we obtained from industry publications, third-party surveys and internal company surveys. Industry publications, including those from Cruise Industry News, and surveys and forecasts, generally state that the information contained therein has been obtained from sources believed to be reliable.
Industry and Market Data This document includes market share and industry data and forecasts that we obtained from industry publications, other third-party information and internal company surveys. Industry publications, including those from Cruise Industry News, and surveys and forecasts, generally state that the information contained therein has been obtained from sources believed to be reliable.
Achieving our mission depends on being good corporate citizens and stewards of the environment. Safeguarding the planet we call home, our guests, the communities we serve, and our Carnival family, and complying with the laws and regulations that govern our business, is vital to our success.
Achieving our purpose & mission depends on being good corporate citizens and stewards of the environment. Safeguarding the planet we call home, our guests, the communities we serve, and our Carnival family, and complying with the laws and regulations that govern our business, is vital to our success.
The EU Parliament and Council has also adopted 0.5% sulfur content fuel requirement (the “EU Sulfur Directive”). The options to comply with both the global 0.5% sulfur cap and the EU Sulfur Directive include the installation of Advanced Air Quality Systems, or the use of low sulfur or alternative fuels.
The EU Parliament and Council also adopted 0.5% sulfur content fuel requirement (the “EU Sulfur Directive”). The options to comply with both the global 0.5% sulfur cap and the EU Sulfur Directive include the installation and use of Advanced Air Quality Systems, or the use of low sulfur or alternative fuels.
XX. Taxation A summary of our principal taxes and exemptions in the jurisdictions where our significant operations are located is as follows: a. U.S. Income Tax We are primarily foreign corporations engaged in the business of operating cruise ships in international transportation.
Taxation A summary of our principal taxes and exemptions in the jurisdictions where our significant operations are located is as follows: a. U.S. Income Tax We are primarily foreign corporations engaged in the business of operating cruise ships in international transportation.
Climate Risk and Opportunity Identification, Owner Assignment and Assessment The qualitative scenario analysis is the foundation of our climate risk and opportunities identification and assessment process and began with the evaluation of a long list of climate-related risks and opportunities we may face, to generate an initial list of possible risks and opportunities.
Climate Risk and Opportunity Identification, Owner Assignment and Assessment The qualitative scenario analysis is the foundation of our climate risk and opportunities identification and assessment process and began with the evaluation of a long list of climate-related risks and opportunities we may face, to generate an initial list of 35 possible risks and opportunities.
In 2021, we established goals for 2030 which incorporate six key focus areas listed below that align with elements of the United Nation’s Sustainable Development Goals and build on the momentum of our successful achievement of our 2020 sustainability goals.
In 2021, we established goals for 2030 which incorporate six focus areas listed below that align with elements of the United Nation’s Sustainable Development Goals and build on the momentum of our successful achievement of our 2020 sustainability goals.
Based on the results of this study, we are well placed to respond to the physical risks of climate change at the two planned port locations and that we will have a number of measures in place to address physical climate impacts.
Based on the results of this study, we are well placed to respond to the physical risks of climate change at the two planned port locations and will have a number of measures in place to address physical climate impacts.
In addition, we continue to maintain our ships by meeting, and often exceeding, applicable public health guidelines and requirements, complying with inspections, reporting communicable illnesses and conducting regular crew training and guest education programs. 6.
In addition, we continue to maintain our ships by meeting, and often exceeding, applicable public health guidelines and requirements, complying with inspections, reporting communicable illnesses and conducting regular crew training and guest education programs. 23 6.
Among the activities identified as not incidental are income from the sale of air transportation, transfers, shore excursions and pre- and post-cruise land packages to the extent earned from sources within the U.S. 2.
Among the activities identified as not incidental are income from the sale of air transportation, transfers, shore excursions and pre- and post-cruise land packages to the extent earned from sources within the U.S. 17 2.
Mission (Purpose), Vision, Values and Priorities Mission (Purpose) To deliver unforgettable happiness to our guests by providing extraordinary cruise vacations, while honoring the integrity of every ocean we sail, place we visit and life we touch.
II. Purpose & Mission, Vision, Values and Priorities Purpose & Mission To deliver unforgettable happiness to our guests by providing extraordinary cruise vacations, while honoring the integrity of every ocean we sail, place we visit and life we touch.
These packages are bundled with cruise tickets and sold to guests for a single price rather than as a separate package and may include one or more of the following: • Beverage packages • Internet packages • Shore excursions • Photo packages • Air packages • Onboard spending credits • Specialty restaurants • Service charges Our brands’ payment terms generally require that a guest pay a deposit to confirm their reservation and then pay the balance due before the departure date. 10 VIII.
These packages are bundled with cruise tickets and sold to guests for a single price rather than as a separate package and may include one or more of the following: • Beverage packages • Internet packages • Shore excursions • Photo packages • Air packages • Onboard spending credits • Specialty restaurants • Service charges Our brands’ payment terms generally require that a guest pay a deposit to confirm their reservation and then pay the balance due before the departure date.
However, the state of Alaska imposes an income tax on its allocated portion of the total income of our companies doing business in Alaska and certain of their subsidiaries. 36 b.
However, the state of Alaska imposes an income tax on its allocated portion of the total income of our companies doing business in Alaska and certain of their subsidiaries. b.
Our travel agents relationships are generally not exclusive and travel agents generally receive a base commission, plus the potential of additional commissions, including discounts or complimentary tour conductor cabins, based on the achievement of pre-defined sales volumes. 11 Travel agent partners are an integral part of our long-term cruise distribution network and are critical to our success.
Our travel agents’ relationships are generally not exclusive and travel agents generally receive a base commission, plus the potential of additional commissions, including discounts or complimentary tour conductor cabins, based on the achievement of pre-defined sales volumes. Travel agent partners are an integral part of our long-term cruise distribution network and are critical to our success.
Italian and German Income Tax In 2015, Costa and AIDA re-elected to enter the Italian tonnage tax regime through 2024 and can reapply for an additional ten-year period beginning in early 2025. Companies to which the tonnage tax regime applies pay corporation taxes on shipping profits calculated by reference to the net tonnage of qualifying ships.
Italian and German Income Tax In 2015, Costa and AIDA re-elected to enter the Italian tonnage tax regime through 2024 and can reapply for an additional 10-year period beginning in early 2025. Companies to which the tonnage tax regime applies pay corporation taxes on shipping profits calculated by reference to the net tonnage of qualifying ships.
The Oil Pollution Act of 1990 (“OPA 90”) established a comprehensive federal liability regime, as well as prevention and response requirements, relating to discharges of oil in U.S. waters. The major requirements include demonstrating financial responsibility up to the liability limits set by OPA 90 and having oil spill response plans in place.
Federal and State Regulations The Oil Pollution Act of 1990 (“OPA 90”) established a comprehensive federal liability regime, as well as prevention and response requirements, relating to discharges of oil in U.S. waters. The major requirements include demonstrating financial responsibility up to the liability limits set by OPA 90 and having oil spill response plans in place.
Most of Costa’s and AIDA’s earnings that are not eligible for taxation under the Italian tonnage tax regime will be taxed at an effective tax rate of 4.8% in 2022 and 2021. Substantially all of AIDA’s earnings are exempt from German income taxes by virtue of the Germany/Italy income tax treaty. d.
Most of Costa’s and AIDA’s earnings that are not eligible for taxation under the Italian tonnage tax regime will be taxed at an effective tax rate of 4.8% in 2023 and 2022. Substantially all of AIDA’s earnings are exempt from German income taxes by virtue of the Germany/Italy income tax treaty. d .
Seasonality Our passenger ticket revenues are seasonal. Historically, demand for cruises has been greatest during our third quarter, which includes the Northern Hemisphere summer months. This higher demand during the third quarter typically results in higher ticket prices and occupancy levels and, accordingly, the largest share of our operating income is typically earned during this period.
VIII. Seasonality Our passenger ticket revenues are seasonal. Demand for cruises has been greatest during our third quarter, which includes the Northern Hemisphere summer months. This higher demand during the third quarter results in higher ticket prices and occupancy levels and, accordingly, the largest share of our operating income is typically earned during this period.
We utilize local sales teams to motivate travel agents to support our products and services with competitive pricing, promotional policies and joint marketing and advertising programs. During 2022, no group of travel agencies under common control accounted for 10% or more of our revenues.
We utilize local sales teams to motivate travel agents to support our products and services with competitive pricing, promotional policies and joint marketing and advertising programs. During 2023, no group of travel agencies under common control accounted for 10% or more of our revenues.
We are members of three P&I clubs, Gard, Steamship Mutual and UK Club, which are part of a worldwide group of 13 P&I clubs, known as the International Group of P&I Clubs (the “IG”). The IG insures directly, and through broad and established reinsurance markets, a large portion of the world’s shipping fleets.
We are members of three P&I clubs, Gard, Steamship Mutual and UK Club, which are part of a worldwide group of 12 P&I clubs, known as the International Group of P&I Clubs (the “IG”). The IG insures directly, and through broad and established reinsurance markets, a large portion of the world’s shipping fleets.
Passengers Carried In 2022, we carried 7.7 million passengers, consisting of 5.6 million carried by our NAA segment and 2.1 million carried by our EA segment, which was lower than our historical levels as a result of the pause and subsequent resumption of our guest cruise operations.
In 2022, we carried 7.7 million passengers, consisting of 5.6 million carried by our NAA segment and 2.1 million carried by our Europe segment, which was lower than our historical levels as a result of the pause and subsequent resumption of our guest cruise operations.
The principal function of the HESS Committees is to assist the boards in fulfilling their responsibility to supervise and monitor our health, environment, safety, security and sustainability related policies, programs and initiatives at sea and ashore and compliance with related legal and regulatory requirements.
The principal function of the HESS Committees is to assist the boards in fulfilling their responsibility to supervise and monitor our health, environmental, safety, security and sustainability policies, programs and initiatives at sea and ashore and compliance with related legal and regulatory requirements.
We have Advanced Air Quality Systems on most of our ships, which are aiding in partially mitigating the financial impact from the ECAs and global 0.5% sulfur requirements. We use Advanced Air Quality Systems wherever possible subject to local laws and regulations.
We have Advanced Air Quality Systems on most of our ships, which are aiding in partially mitigating the financial impact from the ECAs and global sulfur requirements. We use Advanced Air Quality Systems wherever possible subject to local laws and regulations.
The state of California also has environmental requirements significantly more stringent than federal requirements for water discharges and air emissions. iii. EU Regulations The EU has adopted a broad range of substantial environmental measures aimed at improving the quality of the environment for European citizens.
The state of California also has environmental requirements significantly more stringent than federal requirements for water discharges and air emissions. iii. EU Regulations The EU has adopted a broad range of substantial environmental measures aimed at improving the quality of the environment.
We do not believe we were a passive foreign investment company (“PFIC”), within the meaning of Section 1297 of the Internal Revenue Code, for the 2022 taxable year and do not currently expect to be a PFIC in the 2023 taxable year. 1.
We do not believe we were a passive foreign investment company (“PFIC”), within the meaning of Section 1297 of the Internal Revenue Code, for the 2023 taxable year and do not currently expect to be a PFIC in the 2024 taxable year. 1.
To fulfill our mission, and in the process achieve outstanding guest satisfaction levels, industry-leading demand and greatly improved pricing, each of our brands must carve out a distinct identity for delivering cruise experiences.
To fulfill our purpose & mission, and in the process achieve outstanding guest satisfaction levels, industry-leading demand and improved pricing, each of our brands must carve out a distinct identity for delivering cruise experiences.
P&O Cruises (UK) is Britain’s biggest cruise line, welcoming guests to extraordinary travel experiences designed in a distinctively British way - through a blend of discovery, relaxation and exceptional service catered towards British tastes.
P&O Cruises (UK) is Britain’s largest cruise line, welcoming guests to extraordinary travel experiences designed in a distinctively British way - through a blend of discovery, relaxation and exceptional service catered towards British tastes.
We own or license the trademarks for the trade names of our cruise brands, each of which we believe is a widely-recognized brand in the cruise industry, as well as our ship names and a wide variety of cruise products and services. XXII.
We own or license the trademarks for the trade names of our cruise brands, each of which we believe is a widely-recognized brand in the cruise industry, as well as our ship names and a wide variety of cruise products and services. V.
Using transition scenario assumptions from the International Energy Agency (“IEA”) and climate and transition scenarios from the Intergovernmental Panel on Climate Change (“IPCC”), we utilised two interlocking types of pathways, the Representative Concentration Pathways (“RCPs”) and Shared Socioeconomic Pathways (“SSPs”) to create three sets of scenarios to understand the relative materiality and possible range of impacts to the business from the selected climate-related risks and opportunities under different potential futures. 22 Scenario 1: Steady Path to Sustainability (average temperature increase limited to 1.5°C above pre-industrial levels by 2100) SSP1 / RCP1.9 Under this scenario, the world takes the rapid and strong policy measures required to meet the ambition of the 2015 Paris Agreement (keep mean annual temperature rise well below 2°C warming above pre-industrial levels by 2100).
Using transition scenario assumptions from the International Energy Agency (“IEA”) and climate and transition scenarios from the Intergovernmental Panel on Climate Change (“IPCC”), we utilised two interlocking types of pathways, the Representative Concentration Pathways (“RCPs”) and Shared Socioeconomic Pathways (“SSPs”) to create three sets of scenarios to understand the relative materiality and possible range of impacts to the business from the selected climate-related risks and opportunities under different potential futures. 32 Scenario 1: Steady Path to Sustainability (average temperature increase limited to 1.5°C above pre-industrial levels by 2100) SSP1 / RCP1.9 Under this scenario, the world takes the rapid and strong policy measures required to meet the ambition of the 2015 Paris Agreement (to keep the mean global annual temperature rise to well below 2 °C warming above pre-industrial levels and pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels ).
We’re determined to lead the way in sustainable cruising by promoting positive climate action, contributing to a circular economy, partnering with the communities we sail to and from and reducing our carbon footprint.
We’re determined to lead the way in sustainable cruising by promoting positive climate action, contributing to a circular economy, partnering with the communities we sail to and from and reducing our environmental footprint.
The analysis does not include: • Forward-looking forecasting of our business operations; or • Potential mitigation or adaptation measures that could be taken either by us, or by other parties over the period considered (e.g., sustainable ship fuel development, governments building flood defenses). 23 Estimations and projections We completed several scenario analyses over three time horizons (2025, 2030, and 2050).
The analysis does not include: • Forward-looking forecasting of our business operations; or • Potential mitigation or adaptation measures that could be taken either by us, or by other parties over the period considered (e.g., sustainable ship fuel development, governments building flood defenses). 33 Estimations and projections In 2022, we completed several scenario analyses over three time horizons (2025, 2030, and 2050).
Our brands must effectively market their uniqueness to existing and potential guests and deliver on their promise across the entire guest journey. 4 Become travel and leisure’s employer of choice.
Our brands must effectively market their uniqueness to existing and potential guests and deliver on their promise across the entire guest journey. 5 Become travel and leisure’s employer of choice.
These upgrades include the following elements designed to reduce both fuel usage and greenhouse gas (“GHG”) emissions while also contributing to cost savings: • Comprehensive upgrades to each ship’s hotel HVAC systems • Technical systems upgrades on each ship • State-of-the-art LED lighting systems • Remote monitoring and optimization of energy usage and performance The Service Power Package upgrades are part of our ongoing energy efficiency investment program and are expected to further improve energy savings and reduce fuel consumption.
These upgrades include the following elements designed to reduce both fuel usage and GHG emissions while also contributing to cost savings: • Comprehensive upgrades to each ship’s hotel HVAC systems • Technical systems upgrades on each ship • State-of-the-art LED lighting systems • Remote monitoring and optimization of energy usage and performance The Service Power Package upgrades are part of our ongoing energy efficiency investment program and are expected to further improve energy savings and reduce fuel consumption.
All of our brands are actively collaborating to maximize the business value of our information technology solutions, standards and processes to eliminate redundancies and drive process efficiencies, while increasingly leveraging our scale and common technologies. In order to achieve our goals, we are focusing on several key factors including applications, compliance, connectivity, cybersecurity, data privacy, infrastructure, modernization and innovation.
All our brands actively collaborate to maximize the business value of our information technology solutions, standards and processes to eliminate redundancies and drive process efficiencies, while increasingly leveraging our scale and common technologies. In order to achieve our goals, we are focusing on several key factors including applications, innovation, connectivity, infrastructure, modernization, cloud migration, cybersecurity, data privacy and compliance.
As discussed above, we considered a high-carbon and a low-carbon scenario. Input from key stakeholders in the business was obtained through facilitated workshops to identify additional climate risks and opportunities and refine the list before prioritizing those identified.
As discussed above, we considered a high-GHG emissions and a low-GHG emissions scenario. Input from key stakeholders in the business was obtained through facilitated workshops to identify additional climate risks and opportunities and refine the list before prioritizing those identified.
The primary regulatory bodies that establish maritime laws and requirements applicable to our ships include: The IMO: All of our ships, and the maritime industry as a whole, are subject to the maritime safety, security and environmental regulations established by the IMO, a specialized agency of the United Nations.
The primary regulatory bodies that establish maritime laws and requirements applicable to our ships include: The International Maritime Organization (“IMO”): All of our ships, and the maritime industry as a whole, are subject to the maritime safety, security and environmental regulations established by the IMO, a specialized agency of the United Nations.
Maritime Safety Regulations The IMO has adopted safety standards as part of SOLAS.
Maritime Safety Regulations The IMO has safety standards as part of SOLAS.
In recent years, travel and leisure has endured volatility unlike anything seen in modern history, including unique obstacles that disproportionally affected the cruise industry. With our operations now approaching full strength and the continued support of our guests, team members, investors and other stakeholders, we are focused on our financial fitness.
In recent years, travel and leisure has endured volatility unlike anything seen in modern history, including unique obstacles that disproportionately affected the cruise industry. With our operations now at full strength and the continued support of our guests, team members, investors and other stakeholders, we are focused on our financial fitness.
Quantitative Scenario Analysis We quantitatively applied three distinct plausible climate scenarios to determine the potential impacts of the risks and opportunities assessed.
Quantitative Scenario Analysis In 2022, we quantitatively applied three distinct plausible climate scenarios to determine the potential impacts of the risks and opportunities assessed.
Our experience with the current supply chain crisis suggests that under this scenario, we would be resilient to these supply chain risks given our ability to adapt to supply chain disruptions. Key assumptions and limitations The results of our quantitative scenario analysis have a high degree of uncertainty as there are assumptions made for all modelling inputs.
Our experience with previous supply chain disruptions suggests that under this scenario, we would be resilient to supply chain risks given our ability to adapt to supply chain disruptions. Key assumptions and limitations The results of our quantitative scenario analysis have a high degree of uncertainty as there are assumptions made for all modelling inputs.
Any assumption made about fuel prices acknowledges the current energy crisis and assumes that by 2025, oil prices will stabilize in line with IEA price projections. We have also projected physical and transition risks at a global level due to the high mobility of our assets.
Any assumption made about fuel prices acknowledges the 2022 energy crisis and assumes that by 2025, oil prices will stabilize in line with IEA price projections, at the time of analysis. We have also projected physical and transition risks at a global level due to the high mobility of our assets.
The EC strategy seeks to implement SOx Emission Control Areas set out in MARPOL, as discussed above via their own Sulphur Directive.
The EC strategy seeks to implement SOx Emission Control Areas set out in MARPOL, as discussed above via their own Sulfur Directive.
As part of our qualitative scenario analysis, a series of workshops with the SRE Committee and a cross-section of management was conducted to identify material climate-related risks and opportunities, based on likelihood and degree of potential financial impact, over the following time horizons: • Present – 2025 (short-term) - consistent with the period we use for our short-term planning • 2025 – 2035 (medium-term) - aligns with our existing sustainability goals • 2035 – 2050 (long-term) - consistent with the useful life of our ships Following the workshops, the SRE Committee selected certain risks and opportunities for further assessment and quantification.
As part of our qualitative scenario analysis, a series of workshops with the SRE Committee and a cross-section of management was conducted to identify material climate-related risks and opportunities, based on likelihood and degree of potential financial impact, over the following time horizons: • Present – 2025 (short-term) - consistent with our internal forecasting • 2025 – 2035 (medium-term) - aligns with our existing sustainability goals • 2035 – 2050 (long-term) - consistent with the useful life of our ships Following the workshops, the SRE Committee selected certain risks and opportunities for further assessment and quantification.
(b) In accordance with cruise industry practice, passenger capacity is calculated based on the assumption of two passengers per cabin even though some cabins can accommodate three or more passengers. (c) Global cruise industry data was obtained from Cruise Industry News. C. Our Global Cruise Business I.
(b) In accordance with cruise industry practice, passenger capacity is calculated based on the assumption of two passengers per cabin even though some cabins can accommodate three or more passengers. (c) Global cruise industry data was obtained from Cruise Industry News. III.
Cruise Brands Carnival Cruise Line is “The World’s Most Popular Cruise Line®” and has provided multi-generational family entertainment at exceptional value to its guests for 50 years.
Descriptions of Cruise Brands Carnival Cruise Line is “The World’s Most Popular Cruise Line®” and has provided multi-generational family entertainment at exceptional value to its guests for over 50 years.
In May 2022, Carnival Cruise Line broke ground on its new Carnival Grand Bahama cruise port destination, expected to open in 2025 and located on the south side of Grand Bahama Island.
In May 2022, Carnival Cruise Line broke ground on its new exclusive cruise port destination, Celebration Key, expected to open in 2025 and located on the south side of Grand Bahama Island.
These sites interface with our brands’ social networks, blogs and other social media sites, which allow them to develop greater contact and interaction with their guests before, during and after their cruise. We also employ vacation planners who support our sales initiatives by offering our guests one-on-one cruise planning expertise and other services. XII.
These sites interface with our brands’ social networks, blogs and other social media sites, which allow them to develop greater contact and interaction with their guests before, during and after their cruise. We also employ vacation planners and onboard future cruise consultants who support our sales initiatives by offering our guests one-on-one cruise planning expertise and other services. XIII.
The International Convention on Standards of Training, Certification and Watchkeeping for Seafarers, as amended, establishes additional minimum standards relating to training, including security training, certification and watchkeeping for our seafarers. b. Other Governmental Regulations Compliance with GHG regulations and the associated potential cost is complicated by the fact that various countries and regions are following different approaches to climate-related regulations.
The STCW, as amended, establishes additional minimum standards relating to training, including security training, certification and watchkeeping for our seafarers. b. Other Governmental Regulations Compliance with GHG regulations and the associated potential cost is complicated by the fact that various countries and regions are following different approaches to climate-related regulations.
The premium experience emphasizes quality, comfort, style and more destination-focused itineraries and appeals to those who are more affluent. The premium experience generally includes cruises that last from seven to 14 days. The luxury experience is usually characterized by very high standards of accommodation and service, smaller vessel size and exotic itineraries to ports that are inaccessible by larger ships.
The premium experience emphasizes quality, comfort, style and more destination-focused itineraries. The premium experience generally includes cruises that last from seven to 14 days. The luxury experience is generally characterized by very high standards of accommodation and service, smaller vessel size and exotic itineraries to ports that are inaccessible by larger ships.
Feasibility was evaluated on the availability of internal and external climate-related data, the estimated number of assumptions required and the magnitude of impact and likelihood of occurrence. 20 Climate-related risks identified through qualitative scenario analysis Our initial selected risks and opportunities for quantification are in bold : TCFD risk categories Risk summary Impact time horizon Markets and Products / Shifting Markets (1) Cruising no longer aligns to consumers’ climate values Medium Term Reduced availability and access to fuel* Long Term Unable to meet climate-related requirements reduces access to capital / insurance Medium Term Policy and Legal (1) Increased costs driven by climate-related regulations* Short-Medium Term Risk is that cruising (as a carbon-intensive industry) is severely restricted or subject to bans Medium Term Reputation (1) Failure to attract and retain talent due to climate credentials Medium Term Increased demand for reducing carbon-intensive practices Short Term Technology (1) Lack of viable low carbon technology to replace fossil fuels Medium Term Physical Chronic climate change impacting supply chain availability and price Medium Term with expected increases in the Long Term Itineraries are not viable due to extreme weather and/or sea level rise Medium Term with expected increases in the Long Term (1) Transition Risks *Due to the similar nature of these risks, we have combined them for the quantitative analysis into a combined risk: “How does a low-carbon transition impact the price of the fuels needed to power our ship engines?” 21 Climate-related opportunities identified through qualitative scenario analysis TCFD opportunity categories Opportunity summary Realisation time horizon Energy Source Support the adaptation of sustainable technological advances for the cruise industry Medium Term Market Access Access to new financing options available for organisations working on decarbonisation Short-Medium Term Access to private destinations or islands with infrastructure built by us Short-Medium Term Attract and retain new customers and improve reputation through sustainable itineraries and activities for changing climate-induced preferences Short-Medium Term Positioning as a sustainability leader Short-Medium Term Products & Services Opportunities for the ship to be the destination Long Term Resilience Engage with more sustainable and economically favourable alternative suppliers Short Term Improve resilience to physical climate risk through adaptation of itinerary routes and investment in port infrastructure Short Term Resource Efficiency Improved operational efficiencies arising from technological advancements Medium Term Increased fuel efficiency through alternative itinerary planning and reduced energy use Short - Medium Term Increased resource efficiency through reduced on-board energy demand and consumption Medium Term We presently consider transition risks to be the most significant in terms of likelihood and impact.
Climate-related risks identified through qualitative scenario analysis Our initial selected risks and opportunities for quantification are in bold : TCFD risk categories Risk summary Impact time horizon Markets and Products / Shifting Markets (1) Cruising no longer aligns to consumers’ climate values Medium Term Reduced availability and access to fuel* Medium Term Unable to meet climate-related requirements reduces access to capital / insurance Medium Term Policy and Legal (1) Increased costs driven by climate-related regulations* Short-Medium Term Risk is that cruising (as a high-GHG emissions industry) is severely restricted or subject to bans Medium Term Reputation (1) Failure to attract and retain talent due to climate credentials Medium Term Increased demand for reducing GHG emission practices Medium Term Technology (1) Lack of viable low GHG emission technology to replace fossil fuels Medium Term Physical Chronic climate change impacting supply chain availability and price Medium Term with expected increases in the Long Term Itineraries are not viable due to extreme weather and/or sea level rise Medium Term with expected increases in the Long Term (1) Transition Risks *Due to the similar nature of these risks, we have combined them for the quantitative analysis into a combined risk: “How does a transition to a low-GHG emissions future impact the price of the fuels needed to power our ship engines?” 31 Climate-related opportunities identified through qualitative scenario analysis TCFD opportunity categories Opportunity summary Realisation time horizon Energy Source Support the adaptation of sustainable technological advances for the cruise industry Medium Term Market Access Access to new financing options available for organisations working on a low-GHG emission future Short-Medium Term Access to private destinations or islands with infrastructure built by us Short-Medium Term Attract and retain new customers and improve reputation through sustainable itineraries and activities for changing climate-induced preferences Short-Medium Term Positioning as a sustainability leader Short-Medium Term Products & Services Opportunities for the ship to be the destination Long Term Resilience Engage with more sustainable and economically favourable alternative suppliers Short Term Improve resilience to physical climate risk through adaptation of itinerary routes and investment in port infrastructure Short Term Resource Efficiency Improved operational efficiencies arising from technological advancements Medium Term Increased fuel efficiency through alternative itinerary planning and reduced energy use Short - Medium Term Increased resource efficiency through reduced on-board energy demand and consumption Medium Term We presently consider transition risks to be the most significant in terms of likelihood and impact.
This means that results should be taken as an indicative "order of risk". Furthermore, the analysis assumes that the future conditions from climate change are shifted to today to contextualize impacts in relation to the current business size.
This means that results should be taken as an indicative “order of risk”. Furthermore, the analysis assumes that the future conditions from climate change are shifted to today to contextualize impacts in relation to the current business size.
We pioneered the use of Advanced Air Quality Systems on board our ships to aid in the reduction of sulfur and lifecycle GHG emissions and are promoting the use of shore power.
We pioneered the use of Advanced Air Quality Systems on board our ships to aid in the reduction of sulfur and are promoting the use of shore power.
These results were reviewed by the SRE Committee and presented to the Boards of Directors for an investment decision. Furthermore, our investments in these ports and destinations will support our efforts to design more energy efficient itineraries based on their strategic locations.
These results were reviewed by the SRE Committee and presented to the Boards of Directors in 2022 for an investment decision, which was approved. Furthermore, our investments in these ports and destinations support our efforts to design more energy efficient itineraries based on their strategic locations.
We have product and service offerings in each of these three broad classifications. 5 II.
We have product and service offerings in each of these three broad classifications. 6 II.
The main responsibilities of the GE&C department are to collaboratively: • Identify, assess, monitor, prevent, detect and report on compliance risk • Ensure compliance accountabilities and responsibilities are clear across the company • Promote a strong culture of ethics and compliance • Drive ethics and compliance continuous improvements To further heighten the focus on ethics and compliance, our Boards of Directors have Compliance Committees, which oversee the GE&C department and maintain regular communications with our Chief Risk and Compliance Officer. 13 XV.
The main responsibilities of the Global E&C department are to collaboratively: • Identify, assess, monitor, prevent, detect and report on compliance risk • Ensure compliance accountabilities and responsibilities are clear across the company • Promote a strong culture of ethics and compliance • Drive ethics and compliance continuous improvements To further heighten the focus on ethics and compliance, our Boards of Directors have Compliance Committees, which oversee the Global E&C department and maintain regular communications with our Chief Risk and Compliance Officer. 15 XVI.
Climate-Related Financial Disclosures Under the UK Listing Rule LR 9.8.6R, Carnival plc is required to report certain climate-related financial disclosures for the year ended November 30, 2022, and with a goal towards transparency and consistent disclosure amongst our filings and stakeholders, we are including the UK required disclosures in our Form 10-K filing.
Climate-Related Financial Disclosures Under the UK Listing Rule LR 9.8.6R, Carnival plc is required to report certain climate-related financial disclosures. With a goal towards transparency and consistent disclosure amongst our filings and stakeholders, we are including the UK required disclosures in our Form 10-K filing.
Further, the state of Alaska requires that certain discharges be reported and monitored to verify compliance with the standards established by the legislation. Environmental regimes in Alaska are more stringent than the U.S. federal requirements with regard to discharges from vessels. The legislation also provides that repeat violators of the regulations could be prohibited from operating in Alaskan waters.
Further, the state of Alaska requires that certain discharges be reported and monitored to verify compliance with standards and repeat violators of 22 the regulations could be prohibited from operating in Alaskan waters. Environmental regimes in Alaska are more stringent than the U.S. federal requirements with regard to discharges from vessels.
The risks with the highest impact and likelihood of occurrence are associated with the transition to a low-carbon emission future, in a scenario where low-carbon technologies do not exist, or where we have not been able to access these technologies and where we have reduced availability and access to fuel.
The risks with the highest impact and likelihood of occurrence are associated with the transition to a low-GHG emission future, in a scenario where low GHG emission technology does not exist, or where we have not been able to access these technologies and where we have reduced availability and access to fuel.
Our existing supply chain management strategies have remained resilient through the more recent supply chain issues experienced globally, demonstrating our ability to mitigate global-scale disruptions. In addition, our Circular Economy 2030 Goals include achieving a 30% food waste reduction per person by 2022 and 50% by 2030. Refer to XV. Sustainability and XVII. Supply Chain.
Our existing supply chain management strategies have remained resilient through the more recent supply chain issues experienced globally, demonstrating our ability to mitigate global-scale disruptions. In addition, our Circular Economy 2030 Goals include achieving a 50% unit food waste reduction per person by 2030. Refer to XIII. Supply Chain and XX. Sustainability.
The Center is home to the Center for Simulator Maritime Training (“CSMART”). The leading-edge CSMART Academy features the most advanced bridge and engine room simulator technology and equipment available, with the capacity to provide annual professional training for all our bridge, engineering and environmental officers.
The leading-edge CSMART Academy features the most advanced bridge and engine room simulator technology and equipment available, with the capacity to provide annual professional training for all our bridge, engineering and environmental officers.
Its direct CO 2 emissions are lower than those of conventional fuels and it emits effectively zero sulfur oxides (only the sulfur in the pilot fuel is present), reducing nitrogen oxides by 85% and particulate matter by 95%-100%.
While LNG is a fossil fuel and generates GHG emissions, its direct CO 2 emissions are lower than those of conventional fuels and it emits effectively zero sulfur oxides (only the sulfur in the pilot fuel is present), reducing nitrogen oxides by 85% and particulate matter by 95%-100%.
Under this scenario, low carbon technologies take over from fossil-fuels, and reduced economic growth is also important for reaching net zero emissions by 2050 We selected this scenario, as it provides us insight into a low-carbon world that would benefit us and our Climate Action Goals.
Under this scenario, low GHG emission technology takes over from fossil-fuels, and reduced economic growth is also important for reaching net zero emissions by 2050 We selected this scenario, as it provides us insight into a low-GHG emissions world that would benefit us and our Climate Action Goals.
Preventing and Minimizing Pollution MARPOL includes six annexes, four of which are applicable to our cruise ships, containing requirements designed to prevent and minimize both accidental and operational pollution by oil, sewage, garbage and air emissions and sets forth specific requirements related to vessel operations, equipment, recordkeeping and reporting that are designed to prevent and minimize pollution.
Preventing and Minimizing Pollution MARPOL includes six annexes, four of which are applicable to our cruise ships, containing requirements designed to prevent and minimize both accidental and operational pollution by oil, sewage, garbage and air emissions and the provision of facilities at ports and terminals for the reception of sewage and sets forth specific requirements related to vessel operations, equipment, recordkeeping and reporting that are designed to prevent and minimize pollution.
Qualitative scenario analysis We qualitatively applied two (and quantitatively applied three) distinct plausible climate scenarios, global warming limited to below 1.5 o C above pre-industrial levels by 2100 “Steady Path to Sustainability” and global warming of 2.8 o C above pre-industrial levels by 2100 “Regional Rivalry.” The scenarios were used to generate the climate-related risks and opportunities listed in the table below.
The qualitative and quantitative scenario analysis were reviewed by the SRE Committee in 2023 and no changes were identified. 30 Qualitative scenario analysis In 2022, we qualitatively applied two (and quantitatively applied three) distinct plausible climate scenarios, global warming limited to below 1.5 o C above pre-industrial levels by 2100 “Steady Path to Sustainability” and global warming of 2.8 o C above pre-industrial levels by 2100 “Regional Rivalry.” The scenarios were used to generate the climate-related risks and opportunities listed in the table below.
How are our profits affected by an increase in commodity prices? Under Scenarios 1 and 2, the impacts on food prices are indistinguishable from the historical commodity market volatility. Under Scenario 3, we could face higher food costs which may impact our value chain and operating profit.
Under Scenarios 1 and 2, the impacts on food prices are indistinguishable from the historical commodity market volatility. Under Scenario 3, we could face higher food costs which may impact our value chain and operating profit.

… 225 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+9 added−49 removed38 unchanged
Biggest changeWe are subject to laws and requirements related to the treatment and protection of personal, sensitive and/or other regulated data in the jurisdictions where we operate. Various governments, agencies and regulatory organizations have enacted or are considering new rules and regulations and we expect to continue to incur costs to comply with these rules and regulations.
Biggest changeVarious governments, agencies and regulatory organizations have enacted or are considering new rules and regulations and we expect to continue to incur costs to comply with these rules and regulations. In the course of doing business, we collect guest, team member, company and other third-party data, including personal and other sensitive data.
We could: • be forced to re-implement a pause of our guest cruise operations • be negatively impacted by travel advisories, restrictions, recommendations and regulations set by various governmental authorities, which could impact our occupancy levels • be subject to enhanced health and hygiene requirements in attempts to counteract future outbreaks, and these requirements may be costly, take a significant amount of time to implement across our global cruise operations and may result in disruptions in guest cruise operations, incremental costs and loss of revenue • be subject to negative publicity, along with the cruise industry, which could have a long-term impact on the appeal of our cruises • be subject to lawsuits, other governmental investigations and other actions • reassess our ship deployment options and our fleet, which could lead to the removal of additional ships from our fleet and may result in incremental ship impairment charges and losses on ship sales • be negatively impacted as a result of the adverse impact on our partners, counterparties and joint ventures • be negatively impacted by the inability to attract and retain the loyalty of our guests and hire and retain our crew c.
We could: • be forced to re-implement a pause of our guest cruise operations • be negatively impacted by travel advisories, restrictions, recommendations and regulations set by various governmental authorities, which could impact our occupancy levels • be subject to enhanced health and hygiene requirements in attempts to counteract future outbreaks, and these requirements may be costly, take a significant amount of time to implement across our global cruise operations and may result in disruptions in guest cruise operations, incremental costs and loss of revenue • be subject to negative publicity, along with the cruise industry, which could have a long-term impact on the appeal of our cruises • be subject to lawsuits, other governmental investigations and other actions • be required to reassess our ship deployment options and our fleet, which could lead to the removal of additional ships from our fleet and may result in incremental ship impairment charges and losses on ship sales • be negatively impacted as a result of the adverse impact on our partners, counterparties and joint ventures • be negatively impacted by the inability to attract and retain the loyalty of our guests and hire and retain our crew c.
Such incidents include, but are not limited to, the improper operation or maintenance of ships, motorcoaches and trains; guest and crew illnesses; mechanical failures, fires and collisions; repair delays, groundings and navigational errors; oil spills and other maritime and environmental issues as well as other incidents at sea, while in port or on land which may generate negative publicity or cause guest and crew discomfort, injury, or death.
Such incidents include, but are not limited to, the improper operation or maintenance of ships, motorcoaches and trains; guest and crew illnesses; mechanical failures, fires and 38 collisions; repair delays, groundings and navigational errors; oil spills and other maritime and environmental issues as well as other incidents at sea, while in port or on land which may generate negative publicity or cause guest and crew discomfort, injury, or death.
Any such interruptions to our supply chain could increase our costs and could limit the availability of products critical to our operations. k. Fluctuations in foreign currency exchange rates may adversely impact our financial results. We earn revenues, pay expenses, purchase and own assets and incur liabilities in currencies other than the U.S. dollar.
Any such interruptions to our supply chain could increase our costs and could limit the availability of products critical to our operations. 41 k. Fluctuations in foreign currency exchange rates may adversely impact our financial results. We earn revenues, pay expenses, purchase and own assets and incur liabilities in currencies other than the U.S. dollar.
We may be impacted by adverse changes in the perceived or actual economic climate, such as inflation, global or regional recessions, higher unemployment and underemployment rates and declines in income levels. 39 b. Pandemics have in the past and may in the future have a significant negative impact on our financial condition and operations.
We may be impacted by adverse changes in the perceived or actual economic climate, such as inflation, global or regional recessions, higher unemployment and underemployment rates and declines in income levels. b. Pandemics have in the past and may in the future have a significant negative impact on our financial condition and operations.
Such activity may also impact us indirectly by increasing our operating costs, including fuel costs. Regulatory developments may also result in the inability to operate ships that do not meet certain standards, the acceleration of the removal of less fuel-efficient ships from our fleet and impact the resale value of our ships in the future.
Such activity may also impact us indirectly by increasing our operating costs, including fuel costs. Regulatory developments may also result in the 39 inability to operate ships that do not meet certain standards, the acceleration of the removal of less fuel-efficient ships from our fleet and impact the resale value of our ships in the future.
In addition, we may be unable to obtain appropriate technology in a timely manner or at all or we may incur significant costs in doing so. A failure to adopt the appropriate technology, or a failure or obsolescence in the technology that we do adopt, could have adverse effects on our business. h.
In addition, we may be unable to obtain appropriate technology in a timely manner or at all or we may incur significant costs in doing so. A failure to adopt the appropriate technology, or a failure, disruption or obsolescence in the technology that we do adopt, could have adverse effects on our business. h.
Our principal offices, information technology operations, system networks and various remote work locations may be impacted by actual or threatened natural disasters (for example, hurricanes, earthquakes, floods, fires, tornadoes, tsunamis and typhoons) or other disruptive events.
Our offices, information technology operations, system networks and various remote work locations may be impacted by actual or threatened natural disasters (for example, hurricanes, earthquakes, floods, fires, tornadoes, tsunamis and typhoons) or other disruptive events.
Incidents involving cruise ships, including disease outbreaks on our ships and increasing demand as a result of the industry’s projected growth could negatively impact our ability to recruit, develop and retain sufficient qualified shipboard team members.
Incidents involving cruise ships, including disease outbreaks on our ships and increasing demand as a result of the industry’s projected growth could negatively impact our ability to recruit, develop and retain sufficient qualified shipboard team members. i.
Growing environmental scrutiny of our operations and the industry from the investment community, other stakeholders, and the media have impacted and may continue to impact how we are perceived, which may have a material impact on our operations and financial results.
Environmental scrutiny of our operations and the industry from the investment community, other stakeholders, and the media have impacted and may continue to impact how we are perceived, which may have a material impact on our operations and financial results.
Our ability to achieve any of our stated sustainability objectives, particularly with respect to environmental emissions, is subject to numerous factors and conditions, many of which are outside of our control.
Our ability to achieve any of our stated sustainability objectives, particularly with respect to our environmental emissions aspirations, is subject to numerous factors and conditions, many of which are outside of our control.
These statements reflect our current plans and do not constitute a guarantee that they will be achieved. Our efforts to research, establish, accomplish, and accurately report on these sustainability objectives expose us to numerous operational, reputational, financial, legal, and other risks, any of which could have a negative impact on our business.
These statements reflect our current plans and do not constitute a guarantee that they will be achieved. With respect to our sustainability objectives, our efforts to research, establish, accomplish, and accurately report on these objectives expose us to numerous operational, reputational, financial, legal, and other risks, any of which could have a negative impact on our business.
Potential restrictions in ports and destinations could limit the itinerary and destination options we can offer our passengers going forward. 43 m. Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests.
Potential restrictions in ports and destinations could limit the itinerary and destination options we can offer our guests going forward. m. Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests.
In addition, certain ports and destinations have faced a surge of both cruise and non-cruise tourism and in certain destinations, countermeasures to limit the number of tourists have been contemplated and/or put into effect, including proposed limits on cruise ships and cruise passengers.
In addition, certain ports and destinations have faced a surge of both cruise and non-cruise tourism and in certain destinations, countermeasures to limit the number of tourists have been contemplated and/or put into effect, including proposed limits on cruise ships and cruise guests.
We may be impacted by unforeseen events, such as work stoppages, supply chain issues, insolvencies, “force majeure” events or other financial difficulties experienced by shipyards, their subcontractors and our suppliers.
In addition, we may be impacted by unforeseen events, such as work stoppages, supply chain issues, insolvencies, “force majeure” events or other financial difficulties experienced by shipyards, their subcontractors and our suppliers.
Our operations subject us to potential liability under anti-corruption laws and regulations. We may also be affected by economic sanctions, trade protection laws, policies and other regulatory requirements affecting trade and investment. 40 We are subject to compliance with tax laws, regulations and treaties in the jurisdictions in which we are incorporated or operate.
Our operations subject us to potential liability under anti-money laundering and anti-corruption laws and regulations. We may also be affected by economic sanctions, trade protection laws, policies and other regulatory requirements affecting trade and investment. We are subject to compliance with tax laws, regulations and treaties in the jurisdictions in which we are incorporated or operate.
We have been and may continue to be impacted, by economic, market and political conditions around the world, such as fuel demand, regulatory requirements including climate-induced regulations, supply disruptions and related infrastructure needs, which make it difficult to predict the future price and availability of fuel.
We have been and may continue to be impacted, by economic, market and political conditions around the world, regulatory requirements including climate-induced regulations, supply disruptions and related infrastructure needs, which make it difficult to predict the future price and availability of fuel.
Inability to meet or achieve our sustainability related goals, aspirations, initiatives, and our public statements and disclosures regarding them, may expose us to risks that may adversely impact our business. We have developed and will continue to establish goals, targets, aspirations, and other objectives (“sustainability objectives”) related to sustainability matters.
Inability to meet or achieve our targets, goals, aspirations, initiatives, and our public statements and disclosures regarding them, including those that are related to sustainability matters, may expose us to risks that may adversely impact our business. We have developed and will continue to establish targets, goals, aspirations, and other objectives, including those related to sustainability matters (“sustainability objectives”).
Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-corruption, economic sanctions, trade protection, labor and employment, and tax have in the past and may, in the future, lead to litigation, enforcement actions, fines, penalties and reputational damage.
Changes in and non-compliance with laws and regulations under which we operate, such as those relating to health, environment, safety and security, data privacy and protection, anti-money laundering, anti-corruption, economic sanctions, trade protection, labor and employment, and tax may be costly and have in the past and may, in the future, lead to litigation, enforcement actions, fines, penalties and reputational damage.
The ordering and lettering of the risk factors set forth below is not intended to reflect any company indication of priority or likelihood. Operating Risk Factors a.
The ordering and lettering of the risk factors set forth below is not intended to reflect any company indication of priority or likelihood. Operational Risk Factors a.
In addition, some environmental focused groups have and may continue to generate negative publicity regarding the environmental impact of the cruise industry and are advocating for more stringent regulation of ship emissions while the ship is docked and at sea.
In addition, some environmental focused groups have and may continue to generate negative publicity regarding the environmental impact of the cruise industry and are advocating for more stringent oversight and regulation of our industry, including of ship emissions while the ship is docked and at sea.
Our success depends, in large part, on the skills and contributions of our team members, and on our ability to recruit, develop and retain high quality, diverse team members. We may not be successful in recruiting, developing or retaining key or other highly qualified team members. In addition, carbon-intensive industries may become a less attractive employment opportunity.
Our success depends, in large part, on the skills and contributions of our team members, and on our ability to recruit, develop and retain high quality, diverse team members. We may not be successful in recruiting, developing or retaining key or other highly qualified team members. In addition, high-GHG emission industries may become a less attractive employment opportunity.
We have been, and may continue to be, impacted by the public’s concerns regarding the health, safety and security of travel, including government travel advisories and travel restrictions, political instability and civil unrest, terrorist attacks, war and military action, most recently the invasion of Ukraine, and other general concerns.
We have been, and may continue to be, impacted by the public’s concerns regarding the health, safety and security of travel, including government travel advisories and travel restrictions, political instability and civil unrest, terrorist attacks, war and military action and other general concerns.
Our substantial debt could: • require us to dedicate a large portion of our cash flow from operations to service debt and fund repayments on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; • increase our vulnerability to adverse general economic or industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; • place us at a disadvantage compared to others that have less debt; • make us more vulnerable to downturns in our business, the economy or the industry in which we operate; • limit our ability to raise additional debt or equity capital in the future to satisfy our requirements relating to working capital, capital expenditures, development projects, strategic initiatives or other purposes; • restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities; • make it difficult for us to satisfy our obligations with respect to our debt; and • expose us to the risk of increased interest rates as certain of our borrowings are (and may be in the future) at a variable rate of interest. c.
Our substantial debt could, among other things: • require us to dedicate a large portion of our cash flow from operations to service debt and fund repayments on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes; • increase our vulnerability to adverse general economic or industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate; • limit our ability to pay dividends or distributions on or redeem or repurchase capital stock and make other restricted payments; • place us at a disadvantage compared to others that have less debt; • make us more vulnerable to downturns in our business, the economy or the industry in which we operate; 42 • limit our ability to raise additional debt or equity capital in the future to satisfy our requirements relating to working capital, capital expenditures, development projects, strategic initiatives or other purposes; • restrict us from introducing new technologies or exploiting business opportunities; • make it difficult for us to satisfy our obligations with respect to our debt; and • expose us to the risk of increased interest rates as certain of our borrowings are (and may be in the future) at a variable rate of interest.
The invasion of Ukraine and its resulting impacts, including supply chain disruptions, increased fuel prices, impact on demand for cruises to neighboring regions and international sanctions and other measures that have been imposed, have adversely affected, and may continue to adversely affect, our business.
The resulting impacts of these events, including supply chain disruptions, increased fuel prices, impact on demand for cruises to neighboring regions and international sanctions and other measures that have been imposed, have adversely affected, and may continue to adversely affect, our business.
Breach or circumvention of our systems or the systems of third parties, including by ransomware or malware, through vulnerabilities in licensed software or hardware, or as a result of other attacks, results in disruptions to our business operations; unauthorized access to (or the loss of company access to) competitively sensitive, confidential or other critical data (including sensitive financial, medical or other personal or business information) or systems; loss of customers; financial losses; regulatory investigations, enforcement actions and fines; litigation and misuse or corruption of critical data and proprietary information, any of which could be material.
Breach or circumvention of our 40 systems or the systems of third parties, including by ransomware or malware, through vulnerabilities in licensed software or hardware, or as a result of other attacks, has led to and may continue to lead to disruptions in our business operations; unauthorized access to (or the loss of company access to) competitively sensitive, confidential or other critical data (including sensitive financial, medical or other personal or business information) or systems; loss of customers; financial losses; regulatory investigations, enforcement actions and fines; litigation; reputational damage; and misuse or corruption of critical data and proprietary information, any of which could be material.
Similarly, our failure or perceived failure to pursue or fulfill our sustainability objectives within the timelines we announce, or at all, could have the same negative impacts as well as expose us to government enforcement actions and private litigation. g.
Similarly, our failure or perceived failure to pursue, meet or fulfill our targets, goals, aspirations, and other objectives (including sustainability objectives) within the timelines we announce, or at all, could have the same negative impacts as well as expose us to government enforcement actions and private litigation. g.
Events and conditions around the world, including war and other military actions, such as the invasion of Ukraine, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel have led, and may in the future lead, to a decline in demand for cruises, impacting our operating costs and profitability.
Events and conditions around the world, including geopolitical uncertainty, war and other military actions, inflation, higher fuel prices, higher interest rates and other general concerns impacting the ability or desire of people to travel have led, and may in the future lead, to a decline in demand for cruises as well as negative impacts to our operating costs and profitability.
Examples of such factors include the availability 41 and costs of low- or non-carbon-based energy sources, evolving regulatory requirements affecting sustainability standards or disclosures, the availability of future financing and the availability of suppliers that can meet our sustainability standards.
Examples of such factors include the availability and costs of low- or non-GHG emission energy sources and technology, evolving regulatory requirements affecting sustainability standards or disclosures, the availability of future financing and the availability of suppliers that can meet our sustainability standards.
In addition, the effects from COVID-19 and other global events have resulted in widespread global supply chain disruptions to vendors including critical supply chain shortages, labor shortages, significant material cost inflation and extended lead times for items that are required for our operations.
In addition, global events in recent years have resulted in widespread global supply chain disruptions to vendors including critical supply chain shortages, labor shortages, significant material cost inflation and extended lead times for items that are required for our operations.
Regulatory efforts, both internationally and in the U.S., are evolving, including the international alignment of such efforts, and we cannot determine what final regulations will be enacted or their ultimate impact on our business.
In addition, regulatory developments may restrict or limit our access to certain destinations and/or countries or impact our freedom to operate. Regulatory efforts, both internationally and in the U.S., are evolving, including the international alignment of such efforts, and we cannot determine what final regulations will be enacted or their ultimate impact on our business.
In addition, the prices of various commodities that are used in the construction of ships and for repair, maintenance and refurbishment of existing ships, such as steel, are subject to volatility which may increase our costs. Debt Related Risk Factors a.
Additionally, the prices of various commodities that are used in the construction of ships and for repair, maintenance and refurbishment of existing ships, such as steel, are subject to volatility which may increase our costs. Financial Risk Factors a. We require a significant amount of cash to service our debt and sustain our operations.
If we cannot generate sufficient cash to meet our debt service obligations or fund our other business needs, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing, delay planned capital expenditures or sell assets.
If we cannot generate sufficient cash to meet our debt service obligations or fund our other business needs, we may, among other things, need to refinance our debt, obtain additional financing, delay planned capital expenditures or sell assets. We cannot make assurances that we will be able to generate sufficient cash through any of the foregoing.
Refer to Operating Risk Factor “e.” for additional discussion on the impact of climate change and regulation changes on fuel costs. j. We rely on supply chain vendors who are integral to the operations of our businesses.
Refer to Operational Risk Factor “e.” for additional discussion on the impact of climate change and regulation changes on fuel costs. j. We rely on supply chain vendors who are integral to the operations of our businesses. These vendors and service providers may be unable to deliver on their commitments, which could negatively impact our business.
If we breach any of these covenants or restrictions and are not able to receive waivers for these covenants, we could be in default under the terms of certain of our debt facilities and the relevant lenders would have the right to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable (or cancel any unfunded commitments, if applicable) and proceed against any collateral, if any, securing that debt.
If we breach the covenants or restrictions in our debt instruments, we could be in default under the terms of certain of our debt instruments and may be required to seek covenant amendments or the relevant creditors could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable (or cancel any unfunded commitments, if applicable) and proceed against the collateral, if any, securing that debt.
We may be impacted by increases in capacity in the cruise and land-based vacation industry, which may result in capacity growth beyond demand, either globally or for a region, or for a particular itinerary. For example, Asia, specifically China, remains closed to the cruise industry and it is uncertain when or if we will resume operations in the region.
We may be impacted by increases in capacity in the cruise and land-based vacation industry, which may result in capacity growth beyond demand, either globally or for a region, or for a particular itinerary.
In addition, regulatory developments may restrict or limit our access to certain destinations and/or countries or curtail our freedom to operate. Growing recognition among consumers globally of the negative effects of climate change and the impact of GHG and other emissions may lead to material changes in consumer preferences.
Growing recognition among consumers globally of the negative effects of climate change and the impact of GHG and other emissions may lead to material changes in consumer preferences.
Any event impacting a vendor’s ability to deliver quality goods at the location and time needed could negatively impact our ability to operate our business.
We rely on supply chain vendors to deliver key products to the operations of our businesses around the world. Any event impacting a vendor’s ability to deliver quality goods at the location and time needed could negatively impact our ability to operate our business.
In addition, we hire a significant number of qualified shipboard team members each year and, thus, our ability to adequately recruit, develop and retain these individuals is critical to our success.
At times we have and may in the future experience difficulty in hiring sufficient qualified team members, due to general macroeconomic factors and/or increasingly competitive labor markets. In addition, we hire a significant number of qualified shipboard team members each year and, thus, our ability to adequately recruit, develop and retain these individuals is critical to our success.
Growing concerns regarding climate change have resulted in increased global regulatory focus on GHG and other emissions which may have material impacts on our business.
Growing concerns regarding climate change have resulted in increased global regulatory focus on GHG and other emissions which may have material impacts on our business. Refer to XIX. Governmental Regulations for additional discussion of recent developments related to Maritime Regulations, Greenhouse Gas Emissions and EU Regulations.
In addition to the effects of the COVID-19 pandemic and resulting global disruptions on our business and operations discussed in Item 7 of this Form 10-K and in the risk factors below, additional or unforeseen effects from our substantial debt balance as a result of the pause of our guest cruise operations could give rise to or amplify many of the risks discussed below.
In addition to the risk factors below, additional or unforeseen effects from our substantial debt balance incurred during the pause of our guest cruise operations could give rise to or amplify many of the risks discussed below.
If the debt under certain of our debt instruments that we enter into were to be accelerated, our assets may be insufficient to repay our debt in full. Borrowings under other debt instruments that contain cross-default provisions may also be accelerated or become payable on demand.
Borrowings under our other debt instruments that contain cross-default provisions may also be accelerated or become payable on demand, and our assets may not be sufficient to repay such indebtedness in full. Item 1B. Unresolved Staff Comments . None.
Climate change-related regulatory activity and developments that require us to reduce our emissions, which includes both the EU and IMO proposals discussed above, may adversely affect our business and financial results by requiring us to make capital investments in new equipment or technologies, pay for carbon emissions, purchase carbon offset credits, or otherwise incur additional costs or take additional actions related to our emissions.
Governmental Regulations), may individually or collectively have a material impact on our business and financial results by requiring us to make capital investments in new equipment or technologies, pay for emissions, purchase carbon offset credits, or otherwise incur additional costs or take additional actions related to our emissions.
We cannot make assurances that we will be able to generate sufficient cash through any of the foregoing. If we are not able to refinance any of our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our obligations with respect to our debt.
If we are not able to refinance our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our obligations with respect to our debt. Refer to Liquidity, Financial Condition and Capital Resources. b. Our substantial debt could adversely affect our financial health and operating flexibility.
Refer to “Liquidity, Financial Condition and Capital Resources”. b. Our substantial debt could adversely affect our financial health and operating flexibility. We have a substantial amount of debt and significant debt service obligations. Our substantial debt has had and could continue to have important negative consequences for us.
We have a substantial amount of debt, significant debt service obligations and related covenant restrictions. Despite our leverage, we may incur more debt, subject to certain restrictions, in the future. Our substantial debt has had and could continue to have important negative consequences for us.
These tax laws, regulations and treaties are subject to change at any time, which may result in substantially higher tax expense. For example, the Organization for Economic Co-operation and Development (“OECD”) has proposed a multi-jurisdictional inclusive framework to address base erosion and profit sharing that, if enacted by relevant jurisdictions, may result in increased tax expense. e.
These tax laws, regulations and treaties are subject to change at any time, which may result in substantially higher tax expense. For example, the OECD’s multi-jurisdictional inclusive framework is intended to address the tax challenges arising from globalization, which includes the establishment of a minimum 15% tax rate for multinational enterprises.
This will be affected by our ability to successfully implement our business strategy, which if unsuccessful, would negatively impact the occupancy levels and pricing of our cruises, as well as general macroeconomic, financial, geopolitical, competitive, regulatory and other factors beyond our control, such as the disruption caused by the COVID-19 pandemic, the invasion of Ukraine, inflation, higher fuel prices and higher interest rates.
This will be affected by our ability to successfully continue to execute on our business strategy, which if unsuccessful, would negatively impact the occupancy levels and pricing of our cruises.
Borrowings under certain of our facilities are at variable rates of interest and expose us to interest rate volatility.
Certain of our indebtedness accrues interest at variable rates, which subjects us to interest rate volatility with respect to such instruments and could cause our debt service obligations to increase significantly.
Removed
Refer to Operating Risk Factor “e.” below for additional discussion on climate change regulation risks. We were subject to a court-ordered environmental compliance plan supervised by the U.S. District Court for the Southern District of Florida, which was operative until April 2022 and subjected our operations to additional review and other obligations.
Added
Refer to Operational Risk Factor “e.” below for additional discussion on climate change regulation risks. We are subject to laws and requirements related to the treatment and protection of personal, sensitive and/or other regulated data in the jurisdictions where we operate.
Removed
In the course of doing business, we collect guest, team member, company and other third-party data, including personally identifiable information and other sensitive data. We have incurred legal and other costs in connection with cyber incidents relating to such sensitive data. Refer to Operating Risk Factor “g.” below for additional discussion of data security risks.
Added
A number of countries, including the UK and EU member states, have agreed to adopt the OECD’s minimum tax rules and several countries, including the UK, have already implemented these rules. The phased implementation of these rules is expected to begin for our fiscal year 2025, with limited impact for us before 2026.
Removed
For example, the EU’s Fit for 55 package, which includes recently agreed updates to the ETS relating to the need to acquire carbon emission allowances for maritime shipping related emissions inside EU waters, proposed reforms to the EU’s ETD, which imposes taxes on fuel purchased in the EU, as well as a new regulatory proposal, the FuelEU Maritime initiative, which sets out a long-term framework to reduce emissions by increasing the use of sustainable alternative fuels and shore power.
Added
The application of these rules continues to evolve, and its outcome may alter our tax obligations in certain countries in which we operate. Other changes in domestic and international tax rules and regulations and their application could also alter our tax obligations. e.
Removed
In addition, the IMO is currently considering various other proposals which aim to reduce emissions within the global shipping industry. If finalized and enacted, these regulations and reforms may individually or collectively have a material impact on our operating costs and profitability.
Added
Fossil fuels are currently the only viable option for our industry and it is not clear when alternative fuels or other technologies will be commercially viable. To provide a path to net zero emissions, alternative low GHG emission fuels will be necessary for the maritime industry; however, there are significant supply challenges that must be resolved before viability is reached.
Removed
We have been subject to past attacks which resulted in unauthorized access to systems and/or data and regulatory investigations regarding such incidents. We have incurred legal, settlement and other costs in connection with cyber incidents that have impacted us.
Added
Climate change-related regulatory activity and developments that require us to reduce our emissions, which includes both the EU regulations and IMO Strategy (refer to XIX.
Removed
While these incidents did not have a material adverse effect on our business, operations or financial results, no assurances can be given about future incidents, attacks and related litigation or regulatory investigations that could have such a material adverse effect.
Added
In addition, governments may restrict or limit our access to ports and destinations for which there is high guest demand.
Removed
As a result of the reduction in our workforce during our pause in guest cruise operations, general macroeconomic factors and an increasingly competitive labor market, at times we may experience difficulty in hiring sufficient qualified team members.
Added
Additionally, we may rely on third parties in helping us to implement and manage our cyber security risk management processes. Any measures that we take and such third parties take to avoid, detect, mitigate or recover from material cyber security threats or incidents can be expensive, and may be insufficient, circumvented, or may become ineffective.
Removed
For example, there is particularly high competition for recruiting and retaining qualified team members needed to support our information technology systems and infrastructure which is critical to our successful operations.
Added
There are a limited number of shipyards with the capability and capacity to build, repair, maintain and/or upgrade our ships, which may limit our ability to meet our capacity growth objectives.
Removed
A prolonged shortage of qualified shoreside and shipboard team members and/or increased turnover rates has in the past inhibited, and in the future could inhibit, our ability to operate our business in an optimal manner.
Added
Our future performance is also impacted by general macroeconomic, financial, geopolitical, competitive, regulatory and other factors beyond our control such as inflation, higher fuel prices, higher taxes and higher interest rates.
Removed
The competitive labor market is resulting in increased costs from the need to hire temporary personnel and we are often required to increase wages and/or benefits in order to attract and retain team members, all of which may negatively impact our results of operations.
Removed
In connection 42 with our resumption of guest cruise operations, we have hired and intend to continue hiring a significant number of qualified team members for the foreseeable future, and we expect to continue to face these challenges. i.
Removed
Many of our vessels have exhaust gas cleaning systems that allow them to operate on high sulfur fuel oil that is less expensive than low sulfur fuel; however, the significant drop in demand for higher sulfur fuel directly related to the pause in guest cruise operations has made it more difficult to source going forward which may result in higher operating costs.
Removed
Additionally, certain of our ships are designed to use LNG as their primary fuel source. The price of LNG in certain markets has been and may continue to be unattractive compared to other alternatives, and as such, at times we have used and may continue to use conventional fuels to power our LNG ships.
Removed
These vendors and service providers are also affected by COVID-19 and may be unable to deliver on their commitments which could negatively impact our business. We rely on supply chain vendors to deliver key products to the operations of our businesses around the world.
Removed
As a result, we along with other cruise operators, have had to find itineraries in alternative regions for the ships that were previously serving the Asia market, which could lead to overcapacity in other regions.
Removed
Failure to successfully implement our business strategy following our resumption of guest cruise operations would negatively impact the occupancy levels and pricing of our cruises and could have a material adverse effect on our business. We require a significant amount of cash to service our debt and sustain our operations.
Removed
Despite our leverage, we may incur more debt, subject to certain restrictions, which could adversely affect our business and prevent us from fulfilling our obligations with respect to our debt. We may incur additional debt in the future.
Removed
Although the instruments governing our existing indebtedness contain restrictions on the incurrence of additional debt, including certain additional restrictions which went into effect in 2023, these restrictions are subject to a number of significant qualifications and exceptions, and under certain circumstances, the amount of debt that could be incurred in compliance with these restrictions could be substantial and a portion of such debt currently is, and may in the future be, secured.
Removed
The instruments governing our existing indebtedness do not prevent us from incurring liabilities that do not constitute “Indebtedness” as defined therein. If new debt is added to our existing debt levels, our business could be adversely affected, which may prevent us from fulfilling our obligations with respect to our debt. 44 d.
Removed
We are subject to maintenance covenants, as well as restrictive debt covenants, that may limit our ability to finance future operations and capital needs and pursue business opportunities and activities. We are also subject to financial covenants that could lead to an acceleration of the indebtedness of our debt facilities if we fail to comply.
Removed
If we fail to comply with any of these covenants, it could have a material adverse effect on our business. Certain of our debt instruments limit our flexibility in operating our business.
Removed
For example, some of our debt instruments limit the ability of Carnival Corporation, Carnival plc and certain of their respective subsidiaries to, among other things: • incur or guarantee additional indebtedness; • pay dividends or distributions on or redeem or repurchase capital stock and make other restricted payments; • make certain investments; • consummate certain asset sales; • engage in certain transactions with affiliates; • grant or assume certain liens; and • consolidate, merge or transfer all or substantially all of our assets.
Removed
All of these limitations are subject to significant exceptions and qualifications. Despite these exceptions and qualifications, we cannot provide assurance that the operating and financial restrictions and covenants in certain of our debt instruments will not adversely affect our ability to finance our future operations or capital needs or engage in other business activities that may be in our interest.

… 26 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeAs of November 30, 2022, the Carnival Corporation and Carnival plc headquarters and our larger shoreside locations are as follows: Location Square Footage (in thousands) Own/Lease Principal Operations Miami, FL, U.S.A. 463/18 Own/Lease Carnival Corporation & plc and Carnival Cruise Line Genoa, Italy 229/46 Own/Lease Costa and AIDA Almere, Netherlands 253 Own Arison Maritime Center Rostock, Germany 224 Own Costa and AIDA Seattle, WA, U.S.A. 175 Lease Princess Cruises, Holland America Line and Seabourn Southampton, England 150 Lease Carnival plc, P&O Cruises (UK) and Cunard Santa Clarita, CA, U.S.A. 134 Lease Princess Cruises, Holland America Line and Seabourn Hamburg, Germany 108 Lease Costa and AIDA Fort Lauderdale, FL, U.S.A. 61 Lease Princess Cruises Sydney, NSW, Australia 37 Lease Princess Cruises and P&O Cruises (Australia) Information about our cruise ships, including the number each of our cruise brands operate, as well as information regarding our cruise ships under construction may be found under Part I.
Biggest changeAs of November 30, 2023, the Carnival Corporation and Carnival plc headquarters and our larger shoreside locations are as follows: Location Square Footage (in thousands) Own/Lease Principal Operations Miami, FL, U.S.A. 463/18 Own/Lease Carnival Corporation & plc and Carnival Cruise Line Almere, Netherlands 253 Own Arison Maritime Center Rostock, Germany 224 Own AIDA Genoa, Italy 204/46 Own/Lease Costa Seattle, WA, U.S.A. 175 Lease Holland America Line and Seabourn Southampton, England 150 Lease Carnival plc, Cunard and P&O Cruises (UK) Santa Clarita, CA, U.S.A. 113 Lease Princess Cruises Hamburg, Germany 70 Lease AIDA Fort Lauderdale, FL, U.S.A. 61 Lease Princess Cruises Sydney, NSW, Australia 26 Lease P&O Cruises (Australia) Information about our cruise ships, including the number each of our cruise brands operate, as well as information regarding our cruise ships under construction may be found under Part I, Item 1.
Item 1. Business. C. “Our Global Cruise Business.” In addition, we own, lease or have controlling interests in port destinations, private islands, hotels, and lodges.
Business. C. “Our Global Cruise Business.” In addition, we own, lease or have controlling interests in port destinations, exclusive islands, hotels, and lodges.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

3 edited+1 added−0 removed1 unchanged
Biggest changeOn June 23, 2022, the UK P&I Club N.V. provided a letter of undertaking for approximately $1.9 million (being the estimated maximum combined penalty). We believe the ultimate outcome will not have a material impact on our consolidated financial statements. Item 4. Mine Safety Disclosures . None. 47 PART II
Biggest changeWe believe the ultimate outcome will not have a material impact on our consolidated financial statements. 43 Item 4. Mine Safety Disclosures . None. PART II
On June 20, 2022, Princess Cruises notified the Australian Maritime Safety Authorization (“AMSA”) and the flag state, Bermuda, regarding approximately six cubic meters of comminuted food waste (liquid biodigester effluent) inadvertently discharged by Coral Princess inside the Great Barrier Reef Marine Park.
On June 20, 2022, Princess Cruises notified the Australian Maritime Safety Authorization (“AMSA”) and the flag state, Bermuda, regarding approximately six cubic meters of comminuted food waste (liquid biodigester effluent) inadvertently released by Coral Princess inside the Great Barrier Reef Marine Park.
Item 3. Legal Proceedings . The legal proceedings described in Note 7 – “Contingencies”, including those described under “COVID-19 Actions,” are shown in Exhibit 13 and are incorporated by reference into this Form 10-K.
Item 3. Legal Proceedings . The legal proceedings described in Note 6 – “Contingencies”, including those described under “COVID-19 Actions,” are shown in Part II, Item 8. Financial Statements and Supplementary Data, in this Form 10-K.
Added
On June 23, 2022, the UK P&I Club N.V. provided a letter of undertaking for approximately $1.9 million (being the estimated maximum combined penalty). On May 31, 2023, we received a summons from the Australia Federal Prosecution Service indicating that formal charges are being pursued against Princess Cruises and the Captain of the vessel.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+10 added−3 removed2 unchanged
Biggest changeSecurities Authorized for Issuance under Equity Compensation Plans The information required by Item 201(d) of Regulation S-K is incorporated by reference to Part III. Item 12 of this Form 10-K. E. Performance Graph The information required by Item 201(e) of Regulation S-K, Performance Graph, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K. F.
Biggest changeDividends We do not expect to pay dividends on Carnival Corporation common stock and Carnival plc ordinary shares for at least the next few years. D. Securities Authorized for Issuance under Equity Compensation Plans The information required by Item 201(d) of Regulation S-K is shown in Part III, Item 12.
Issuer Purchases of Equity Securities; Use of Proceeds from Registered Securities I. Stock Swap Program We have a program that allows us to realize a net cash benefit when Carnival Corporation common stock is trading at a premium to the price of Carnival plc ordinary shares.
Issuer Purchases of Equity Securities; Use of Proceeds from Registered Securities I. Stock Swap Program Our Stock Swap Program allows us to realize a net cash benefit when Carnival Corporation common stock is trading at a premium to the price of Carnival plc ordinary shares.
Under the Stock Swap Program effective June 2021, the Boards of Directors authorized the sale of up to $500 million of shares of Carnival Corporation common stock in the U.S. market and the repurchase of an equivalent number of Carnival plc ordinary shares.
Under the Stock Swap Program effective June 2021, the Boards of Directors authorized the sale of up to $500 million of shares of Carnival Corporation common stock in the U.S. market and the repurchase of an equivalent number of Carnival plc ordinary shares. 46 We may in the future implement a program to allow us to realize a net cash benefit when Carnival plc ordinary shares are trading at a premium to the price of Carnival Corporation common stock.
II. Carnival plc Shareholder Approvals Carnival plc ordinary share repurchases under the Stock Swap Program require annual shareholder approval. The existing shareholder approval was limited to a maximum of 18.5 million ordinary shares and is valid until the earlier of the conclusion of the Carnival plc 2023 annual general meeting or October 7, 2023. Item 6. Reserved .
Carnival plc Shareholder Approvals Annual shareholder approval is required for Carnival plc to buy back its ordinary shares. The existing shareholder approval is limited to a maximum of 18.6 million ordinary shares of Carnival plc and expires at the conclusion of the Carnival plc 2024 Annual General Meeting or July 20, 2024, whichever is earlier.
Item 5. Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . A. Market Information The information required by Item 201(a) of Regulation S-K, Market Information, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K. B.
Item 5. Market for Registrants’ Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities . A.
During the three months ended November 30, 2022, under the Stock Swap Program, we sold 0.8 million shares of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $0.4 million which were used for general corporate purposes.
Since the beginning of the Stock Swap Program, first authorized in June 2021, we have sold 17.2 million shares of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $29 million.
Removed
Holders The information required by Item 201(b) of Regulation S-K, Holders, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K. C. Dividends On March 30, 2020, we suspended the payment of dividends on Carnival Corporation common stock and Carnival plc ordinary shares. D.
Added
Market Information Carnival Corporation common stock, together with paired trust shares of beneficial interest in the P&O Princess Special Voting Trust, which holds a Special Voting Share of Carnival plc, is traded on the NYSE under the symbol “CCL.” Carnival plc ordinary shares trade on the London Stock Exchange under the symbol “CCL.” Carnival plc American Depositary Shares (“ADSs”), each one of which represents one Carnival plc ordinary share, are traded on the NYSE under the symbol “CUK.” The depositary for the ADSs is JPMorgan Chase Bank, N.A.
Removed
We may in the future implement a program to allow us to realize a net cash benefit when Carnival plc ordinary shares are trading at a premium to the price of Carnival Corporation common stock.
Added
B. Holders As of January 11, 2024, there were 2,699 holders of record of Carnival Corporation common stock and 28,977 holders of record of Carnival plc ordinary shares and 414 holders of record of Carnival plc ADSs. C.
Removed
Since the beginning of the Stock Swap Program, first authorized in June 2021, we have sold 14.9 million shares of Carnival Corporation common stock and repurchased the same amount of Carnival plc ordinary shares, resulting in net proceeds of $27 million. 48 Period Total Number of Shares of Carnival plc Ordinary Shares Purchased (a) (in millions) Average Price Paid per Share of Carnival plc Ordinary Share Maximum Number of Carnival plc Ordinary Shares That May Yet Be Purchased (in millions) September 1, 2022 through September 30, 2022 — $ — 4.4 October 1, 2022 through October 31, 2022 0.8 $ 6.42 3.6 November 1, 2022 through November 30, 2022 — $ — 3.6 0.8 $ 6.42 (a) No ordinary shares of Carnival plc were purchased outside of publicly announced plans or programs.
Added
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters, in this Form 10-K. 44 E. Performance Graph Carnival Corporation The following graph compares the Price Performance of $100 if invested in Carnival Corporation common stock with the Price Performance of $100 if invested in each of the Dow Jones U.S.
Added
Recreational Services Index (the “Dow Jones Recreational Index”), the FTSE 100 Index and the S&P 500 Index. The Price Performance, as used in the Performance Graph, is calculated by assuming $100 is invested at the beginning of the period in Carnival Corporation common stock at a price equal to the market value.
Added
At the end of each year, the total value of the investment is computed by taking the number of shares owned, assuming Carnival Corporation dividends are reinvested, multiplied by the market price of the shares.
Added
Assumes $100 Invested on November 30, 2018 Assumes Dividends Reinvested Years Ended November 30, 2018 2019 2020 2021 2022 2023 Carnival Corporation Common Stock $ 100 $ 78 $ 35 $ 31 $ 17 $ 26 Dow Jones Recreational Index $ 100 $ 98 $ 62 $ 64 $ 50 $ 64 FTSE 100 Index $ 100 $ 112 $ 98 $ 115 $ 128 $ 131 S&P 500 Index $ 100 $ 116 $ 136 $ 174 $ 158 $ 180 45 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 of $100 invested in each of the indexes noted below.
Added
The Price Performance is calculated in the same manner as previously discussed.
Added
Assumes $100 Invested on November 30, 2018 Assumes Dividends Reinvested Years Ended November 30, 2018 2019 2020 2021 2022 2023 Carnival plc ADS $ 100 $ 75 $ 31 $ 29 $ 16 $ 24 Dow Jones Recreational Index $ 100 $ 98 $ 62 $ 64 $ 50 $ 64 FTSE 100 Index $ 100 $ 112 $ 98 $ 115 $ 128 $ 131 S&P 500 Index $ 100 $ 116 $ 136 $ 174 $ 158 $ 180 F.
Added
During the three months ended November 30, 2023, there were no sales or repurchases under the Stock Swap Program . During the three months ended November 30, 2023, no shares of Carnival Corporation common stock or Carnival plc ordinary shares were repurchased. II.
Added
We also treat purchases of Carnival plc ordinary shares by Carnival Corporation or Carnival Investments Limited under the Stock Swap Program as if they were made by Carnival plc under the Carnival plc share buyback authority. Item 6. Reserved . 47

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

0 edited+117 added−1 removed0 unchanged
Removed
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . The information required by Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, is shown in Exhibit 13 and is incorporated by reference into this Form 10-K.
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations . 2023 Executive Overview We consistently set records and achieved other significant milestones during this past year, including: • Full year revenues hit an all-time high of $21.6 billion. • For the first time since the resumption of guest cruise operations, net income was positive during the third quarter, generating $1.07 billion. • We entered 2024 with our best booked position on record, for both price and occupancy. • Total customer deposits for each quarter throughout 2023 consistently surpassed the previous quarterly records. • We reduced our debt balance by $4.6 billion from its peak in the first quarter of 2023 and ended the year with $5.4 billion of liquidity.
Added
The strengthening demand environment across all our brands contributed to our revenue growth as we drove improvements in ticket prices while closing the double-digit occupancy gap from the start of the year and reaching historical occupancy levels for the second half of 2023.
Added
We believe our advertising investments and other demand generation efforts during the past 18 months have successfully elevated awareness and consideration for our brands, leading to record booking levels and revenue results. In addition, these efforts enabled us to attract more new-to cruise and more new-to brand guests compared to 2019.
Added
We are building momentum in closing the value gap to land-based alternatives, capturing over 3.5 million new-to cruise guests in 2023 and remain well-positioned to take share from land-based alternatives. We continue to take actions to further stimulate demand and maintain our momentum through 2024 and beyond.
Added
We are focused on ongoing improvements across the commercial space as we further rollout advancements to our yield management tools and lead generation techniques, continue to invest in sales and sales support, and build on already strong relationships with our trade partners.
Added
This is complemented by our strategy to pull forward the sale of onboard items through bundled product offerings and pre-cruise sales. We are also not losing sight of our expense base, as we have worked to mitigate the impacts of a high inflation environment by leveraging our scale through cost optimization initiatives.
Added
We have made investments that we expect to increase our cost efficiencies in the future, including successfully installing SpaceX's Starlink, next generation internet across our fleet, which is expected to drive more than a 20% reduction in cost per megabit in 2024.
Added
In addition, we expect it will increase our bandwidth pipeline, resulting in both improved guest experience and higher onboard revenues. We also launched Maritime Asset Strategy Transformation (“MAST”), a centralized system developed to optimize equipment and machinery management across our brands and our fleet. During 2023, we continued to work aggressively to reduce our environmental footprint and fuel consumption.
Added
Our deep commitment resulted in industry-leading fuel efficiency and a more than 10% reduction in absolute GHG emissions compared to our peak year of 2011, despite capacity growth of 30% over the same period.
Added
We also exceeded our shore power capability goal and our fleet now has twice as many ships ready to plug into shore power as there are ports currently able to provide it. As a result of our fleet optimization efforts, our fleet is now one year younger than prior to pausing our guest cruise operations four years ago.
Added
During 2023 alone we benefited from the introduction of three fantastic new ships including Carnival Celebration and Arvia, leveraging the scale of our popular and exceptionally efficient series of excel-class ships, and Seabourn Pursuit , our second luxury expedition ship.
Added
In addition, Carnival Cruise Line welcomed Carnival Venezia, which was transferred from Costa, becoming the first ship as part of Carnival’s Fun Italian Style™ platform. We will continue to optimize our brand portfolio by transferring Costa Firenze to Carnival Cruise Line in 2024. We also made meaningful progress in other strategic asset projects.
Added
We began construction on Celebration Key in Grand Bahama, which will be the largest and closest exclusive destination in our portfolio. While not expected to open until summer 2025, we have begun generating consumer awareness and excitement around this fantastic upcoming destination.
Added
We also started the process for a significant upsize in guest traffic at Half Moon Cay, our exclusive and beautiful pristine island destination in The Bahamas, with the creation of a pier-side berth that can accommodate our largest vessels.
Added
In addition, we commenced work with our Grand Bahama Shipyard partners on the construction of two floating docks, one of which will have the largest lifting capacity in the world. Together, these strategic investments are expected to significantly benefit us by helping to reduce travel time, further reducing our fuel consumption and preserving ship revenue days.
Added
Our significantly improved 2023 cash from operations enabled us to notably reduce the substantial debt balance incurred during the pause of guest cruise operations. In 2023, we made sizeable debt prepayments and ended the year with over $5 billion of liquidity.
Added
Looking forward, we expect to continue to strategically refinance and prepay debt, leveraging our improving operating cash flow and the return of substantially all of the remaining credit card reserves during the first quarter of 2024. 48 In addition, with nearly two-thirds of 2024 on the books already, we are well positioned to achieve another year of record revenues.
Added
This, combined with excess liquidity, is expected to enable us to continue actively managing down debt and reducing interest expense, leaving us on our path back to achieving investment grade credit ratings and higher return on invested capital. This has been a truly remarkable year, and we have come a long way in an incredibly short amount of time.
Added
We delivered unforgettable happiness to over 12 million guests this year and look forward to continuing to provide our guests with extraordinary cruise vacations in 2024, while honoring the integrity of every ocean we sail, place we visit and life we touch. New Accounting Pronouncements Refer to our consolidated financial statements for further information on Accounting Pronouncements .
Added
Critical Accounting Estimates Our critical accounting estimates are those we believe require our most significant judgments about the effect of matters that are inherently uncertain.
Added
A discussion of our critical accounting estimates, the underlying judgments and uncertainties used to make them and the likelihood that materially different estimates would be reported under different conditions or using different assumptions is as follows: Liquidity and Other Uncertainties We make several critical accounting estimates with respect to our liquidity.
Added
As part of our liquidity management, we rely on estimates of our future liquidity, which includes numerous assumptions that are subject to various risks and uncertainties.
Added
The principal assumptions used to estimate our future liquidity consist of: • Expected increases in revenue in 2024 as compared to 2023 • Expected prepayment of debt • Continued stabilization of inflationary pressures on costs compared to 2023 • Fuel prices at or around November 2023 year-end prices In addition, we make certain assumptions about new ship deliveries, improvements on existing ships as well as other capital expenditures, removals of existing ships, and consider the future export credit financings that are associated with the new ship deliveries.
Added
We have a substantial debt balance incurred during the pause in guest cruise operations and require a significant amount of liquidity or cash provided by operating activities to service our debt. We will continue to pursue various opportunities to refinance future debt maturities to extend maturity dates and reduce interest expense by repaying some of our existing indebtedness .
Added
Ship Accounting We make several critical accounting estimates with respect to our ship accounting including ship improvement costs, estimated useful lives and residual values.
Added
We account for ship improvement costs, including replacements of certain significant components and parts, by capitalizing those costs that we believe add value to our ships and have a useful life greater than one year and depreciating those improvements over their estimated remaining useful life.
Added
The costs of repairs and maintenance, including those incurred when a ship is taken out-of-service for scheduled maintenance, and minor improvement costs and expenses, are charged to expense as incurred.
Added
If we change our assumptions in making our determinations as to whether improvements to a ship add value, the amounts we expense each year as repair and maintenance expense could increase, which would be partially offset by a decrease in depreciation expense, resulting from a reduction in capitalized costs.
Added
In addition, the specifically identified or estimated cost and accumulated depreciation of previously capitalized ship components are written-off upon retirement, which may result in a loss on disposal that is also included in other operating expenses. We do not have cost segregation studies performed to specifically componentize our ships.
Added
In addition, since we do not separately componentize our ships, we do not identify and track depreciation of original ship components. Therefore, we typically have to estimate the net book value of components that are retired, based primarily upon their replacement cost, their age and their original estimated useful lives.
Added
Given the large size and complexity of our ships, ship accounting estimates require considerable judgment and are inherently uncertain. 49 In order to compute our ships’ depreciation expense, we apply judgment to determine their useful lives as well as their residual values.
Added
We have estimated our ships’ useful lives at 30 years and residual values at 15% of our original ship cost. Our ships’ useful life and residual value estimates take into consideration the estimated weighted-average useful lives of the ships’ major component systems, such as hull, superstructure, main electric, engines and cabins.
Added
We also take into consideration the impact of technological changes, historical useful lives of similarly-built ships, long-term cruise and vacation market conditions and regulatory changes, including those related to the environment and climate change.
Added
We determine the residual value of our ships based on our long-term estimates of their resale value at the end of their useful lives to us but before the end of their physical and economic lives to others, historical resale values of our and other cruise ships as well as our expectations of the long-term viability of the secondary cruise ship market.
Added
We review estimated useful lives and residual values for reasonableness whenever events or circumstances significantly change. Since the pause of our guest cruise operations, we have disposed of ships for amounts significantly below their book values. Management has estimated that this trend will normalize in the coming years.
Added
The IMO recently adopted its 2023 Strategy on Reduction of GHG Emissions from Ships that would require international shipping to reduce total GHG emissions on a well-to-wake basis to net zero by or around 2050.
Added
In addition, the framework introduces checkpoints in 2030 and 2040 that seek reductions in the total GHG emissions from international shipping by at least 20% and 70%, respectively, compared to 2008.
Added
The EU has also proposed several regulations that will likely impact the cost of fossil fuels and has recently adopted the inclusion of maritime shipping in the EU’s Emission Trading System. We have established Climate Action Goals, which include a GHG intensity reduction goal of 20% by 2030 from the 2019 baseline and pursuing net zero emissions by 2050 .
Added
Given a 30-year estimated useful life for our ships, our most recently delivered vessels’ lives will extend beyond this 2050 date. Fossil fuels are currently the only viable option for our industry and it is not clear when alternative fuels or other technologies will be commercially viable.
Added
To provide a path to net zero emissions, alternative low GHG emission fuels will be necessary for the maritime industry; however, there are significant supply challenges that must be resolved before viability is reached. We are closely monitoring technology developments and partnering with key organizations on research and development to support our sustainability goals and aspirations.
Added
Our fleet’s engines are capable of being modified for use with certain alternative fuels and we have completed tests on the use of marine biofuel blends on certain ships in our fleet.
Added
In addition, and in support of our Climate Action Goals, we invest in technologies, including the use of LNG powered cruise ships, the installation of Advanced Air Quality Systems on board our ships to aid in the reduction of sulfur emissions, the use of shore power, enabling ships to use shoreside electric power where available while in port and various other efficiency related upgrades intended to reduce our emissions.
Added
It is uncertain how recently adopted, proposed and possible future regulatory changes related to the environment and climate change and our pursuit of net zero emissions by 2050, may impact our ships’ useful lives and residual values and the impact is dependent on future regulatory actions and technological advances.
Added
As of November 30, 2023, management concluded that there were no changes in our ship useful lives and residual value estimates.
Added
If materially different conditions existed, or if we materially changed our assumptions of ship useful lives and residual values, then our depreciation expense, loss on retirement of ship components and net book value of our ships would be materially different.
Added
Our 2023 ship depreciation expense would have increased by approximately: • $49 million assuming we had reduced our estimated 30-year ship useful life estimate by one year at the time we took delivery or acquired each of our ships • $245 million assuming we had estimated our ships to have no residual value We believe that the estimates we made for ship accounting purposes are reasonable and our methods are consistently applied in all material respects and result in depreciation expense that is based on a rational and systematic method to equitably allocate the costs of our ships to the periods during which we use them.
Added
Valuation of Ships Impairment reviews of our ships require us to make significant estimates. We evaluate ship asset impairments at the individual ship level which is the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.
Added
We review our ships for impairment whenever events or circumstances indicate that the carrying value of a ship may not be recoverable. If estimated future cash flows are less than the carrying value of a ship, an impairment charge is recognized to the extent its carrying value exceeds its estimated fair value.
Added
Where estimated future cash flows are used to estimate the recoverable value of a ship, the cash flows include estimated regulatory costs, including those related to proposed regulations, which are likely to impact costs and capital expenditures, including those expected to meet our 2030 Climate Action Goals.
Added
The estimation of a ship’s fair value includes numerous assumptions that are subject to various risks and uncertainties. The principal assumption used in determining the fair value of these ships was the estimated sales proceeds.
Added
We determined the fair value of these ships based on their respective estimated selling values, for those ships expected to be disposed of, or estimated discounted future cash flows and comparable market transactions.
Added
Refer to our consolidated financial statements for additional discussion of our property and equipment policy and ship impairment reviews. 50 We believe that we have made reasonable estimates.
Added
Contingencies We periodically assess the potential liabilities related to any lawsuits or claims brought against us, as well as for other known unasserted claims, including environmental, legal, regulatory and guest and crew matters.
Added
While it is typically very difficult to determine the timing and ultimate outcome of these matters, we use our best judgment to determine the appropriate amounts to record in our consolidated financial statements. We accrue a liability and establish a reserve when we believe a loss is probable and the amount of the loss can be reasonably estimated.
Added
In assessing probable losses, we make estimates of the amount of probable insurance recoveries, if any, which are recorded as assets where appropriate.
Added
Such accruals and reserves are typically based on developments to date, management’s estimates of the outcomes of these matters, our experience in contesting, litigating and settling other similar matters, historical claims experience, actuarially determined estimates of liabilities and any related insurance coverage.
Added
Given the inherent uncertainty related to the eventual outcome of these matters and potential insurance recoveries, it is possible that all or some of these matters may be resolved for amounts materially different from any provisions or disclosures that we may have made.
Added
In addition, as new information becomes available, we may need to reassess the amount of asset or liability that needs to be accrued related to our contingencies. All such changes in our estimates could materially impact our results of operations and financial position. Refer to our consolidated financial statements for additional discussion of contingencies.
Added
Known Trends and Uncertainties • We believe the volatility in the cost of fuel and increases in other related costs are reasonably likely to continue to impact our profitability in both the short and long-term. • We believe inflation and interest rates are reasonably likely to continue to impact our profitability. • We believe a global minimum tax could affect us in 2026, with the potential for a one-year deferral.
Added
Prior to any mitigating actions, we believe the annual impact could be approximately $200 million. We continue to evaluate the impact of these rules and are currently evaluating a variety of mitigating actions to minimize the impact.
Added
The application of the rules continues to evolve, and its outcome may alter our tax obligations in certain countries in which we operate. • We believe the increasing global focus on climate change, including the reduction of GHG emissions and new and evolving regulatory requirements, is reasonably likely to have a material negative impact on our future financial results.
Added
We became subject to the EU Emission Trading Scheme (“ETS”) on January 1, 2024, which includes a three-year phase-in period. We estimate the impact in 2024 to be approximately $51 million based on a European Union Allowance cost of $75 per metric ton of emissions. Refer to XIX.
Added
Governmental Regulations. • We believe that the instability in the Red Sea region currently impacting shipping could have an impact on our results of operations.
Added
Results of Operations We have historically earned substantially all of our cruise revenues from the following: • Sales of passenger cruise tickets and, in some cases, the sale of air and other transportation to and from airports near our ships’ home ports and cancellation fees. We also collect fees, taxes and other charges from our guests.
Added
The cruise ticket price typically includes the following: • Accommodations • Most meals, including snacks at numerous venues • Access to amenities such as swimming pools, water slides, water parks, whirlpools, a health club and sun decks • Child care and supervised youth programs • Entertainment, such as theatrical and comedy shows, live music and nightclubs • Visits to multiple destinations 51 • Sales of onboard goods and services not included in the cruise ticket price.
Added
This generally includes the following: • Beverage sales • Internet and communication services • Casino gaming • Full service spas • Shore excursions • Specialty restaurants • Retail sales • Art sales • Photo sales • Laundry and dry cleaning services These goods and services are provided either directly by us or by independent concessionaires, from which we receive either a percentage of their revenues or a fee.
Added
Concession revenues do not have direct expenses because the costs and services incurred for concession revenues are borne by our concessionaires. In 2023, we earned 34% of our cruise revenues from onboard and other revenue goods and services. We earn our tour and other revenues from our hotel and transportation operations and other revenues.
Added
We incur cruise operating expenses for the following: • The costs of passenger cruise bookings, which include travel agent commissions, cost of air and other transportation, port fees, taxes, and charges that directly vary with guest head counts and credit and debit card fees • Onboard and other cruise costs, which include the costs of beverage sales, costs of shore excursions, costs of retail sales, internet and communication costs, credit and debit card fees, other onboard costs, costs of cruise vacation protection programs and pre- and post-cruise land packages • Payroll and related costs, which include the costs of officers and crew in bridge, engineering and hotel operations.
Added
Substantially all costs associated with our shoreside personnel are included in selling and administrative expenses • Fuel costs, which include fuel delivery costs • Food costs, which include both our guest and crew food costs • Other ship operating expenses, which include port costs that do not vary with guest head counts; repairs and maintenance, including minor improvements and dry-dock expenses; hotel costs; entertainment; gains and losses on ship sales; ship impairments; freight and logistics; insurance premiums and all other ship operating expenses We incur tour and other costs and expenses for our hotel and transportation operations and other expenses. 52 Statistical Information Years Ended November 30, 2023 2022 2021 Passenger Cruise Days (“PCDs”) (in millions) (a) 91.4 54.6 8.2 Available Lower Berth Days (“ALBDs”) (in millions) (b) 91.3 72.5 14.6 Occupancy percentage (c) 100 % 75 % 56 % Passengers carried (in millions) 12.5 7.7 1.2 Fuel consumption in metric tons (in millions) 2.9 2.6 1.3 Fuel consumption in metric tons per thousand ALBDs 32.1 36.1 (d) Fuel cost per metric ton consumed $ 701 $ 830 $ 515 Currencies (USD to 1) AUD $ 0.66 $ 0.70 $ 0.75 CAD $ 0.74 $ 0.77 $ 0.80 EUR $ 1.08 $ 1.06 $ 1.19 GBP $ 1.24 $ 1.25 $ 1.38 Notes to Statistical Information (a) PCD represents the number of cruise passengers on a voyage multiplied by the number of revenue-producing ship operating days for that voyage.
Added
(b) ALBD is a standard measure of passenger capacity for the period that we use to approximate rate and capacity variances, based on consistently applied formulas that we use to perform analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary.
Added
ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.
Added
(c) Occupancy, in accordance with cruise industry practice, is calculated using a numerator of PCDs and a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.
Added
(d) Fuel consumption in metric tons per thousand ALBDs for 2021 is not meaningful. 2023 Compared to 2022 The discussion below compares the results of operations for the year ended November 30, 2023 to the year ended November 30, 2022.
Added
You should read this discussion in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this annual report.
Added
For a comparison of the Company’s results of operations for the year ended November 30, 2022 to the year ended November 30, 2021, see “Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended November 30, 2022, which was filed with the U.S.
Added
Securities and Exchange Commission on January 27, 2023. 53 Results of Operations Consolidated Years Ended November 30, (in millions) 2023 2022 Change Revenues Passenger ticket $ 14,067 $ 7,022 $ 7,045 Onboard and other 7,526 5,147 2,380 21,593 12,168 9,425 Operating Expenses Commissions, transportation and other 2,761 1,630 1,131 Onboard and other 2,375 1,528 847 Payroll and related 2,373 2,181 192 Fuel 2,047 2,157 (110) Food 1,335 863 472 Ship and other impairments — 440 (440) Other operating 3,426 2,958 467 Cruise and tour operating expenses 14,317 11,757 2,560 Selling and administrative 2,950 2,515 435 Depreciation and amortization 2,370 2,275 95 19,637 16,547 3,090 Operating Income (Loss) 1,956 (4,379) 6,335 Nonoperating Income (Expense) Interest income 233 74 159 Interest expense, net of capitalized interest (2,066) (1,609) (457) Gains (losses) on debt extinguishment, net (111) (1) (110) Other income (expense), net (75) (165) 90 (2,018) (1,701) (317) Income (Loss) Before Income Taxes $ (62) $ (6,080) $ 6,018 NAA Years Ended November 30, (in millions) 2023 2022 Change Revenues Passenger ticket $ 9,122 $ 4,692 $ 4,430 Onboard and other 5,466 3,589 1,877 14,588 8,281 6,307 Operating Expenses 9,587 7,526 2,061 Selling and administrative 1,753 1,517 236 Depreciation and amortization 1,495 1,408 88 12,836 10,451 2,385 Operating Income (Loss) $ 1,752 $ (2,170) $ 3,922 54 Europe Years Ended November 30, (in millions) 2023 2022 Change Revenues Passenger ticket $ 5,004 $ 2,660 $ 2,344 Onboard and other 1,531 872 659 6,535 3,531 3,003 Operating Expenses 4,398 3,925 474 Selling and administrative 876 745 131 Depreciation and amortization 668 692 (24) 5,942 5,361 581 Operating Income (Loss) $ 593 $ (1,830) $ 2,423 During the pause in our guest cruise operations, we incurred substantial debt and require a significant amount of cash to service our debt.
Added
Our ability to generate cash will be affected by general macroeconomic, financial, geopolitical, competitive, regulatory and other factors beyond our control. The full extent of these impacts is uncertain and may be amplified by our substantial debt balance.
Added
Revenues Consolidated Cruise passenger ticket revenues made up 65% of our total revenues in 2023 while onboard and other revenues made up 35%.
Added
Revenues for the year ended November 30, 2023 increased by $9.4 billion to $21.6 billion from $12.2 billion in 2022 due to the significant increase of ships in service and considerably higher occupancy levels in 2023 as compared to 2022. ALBDs increased to 91.3 million in 2023 as compared to 72.5 million in 2022.

… 38 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

0 edited+11 added−2 removed0 unchanged
Removed
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . The information required by Item 7A. Quantitative and Qualitative Disclosures About Market Risk, is shown in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Exhibit 13 and is incorporated by reference into this Form 10-K. Item 8. Financial Statements and Supplementary Data .
Added
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . For a discussion of our hedging strategies and market risks, see the discussion below and the consolidated financial statements. Fuel Price Risks Substantially all our exposure to market risk for changes in fuel prices relates to the consumption of fuel on our ships.
Removed
The financial statements, together with the report thereon of PricewaterhouseCoopers LLP (PCAOB ID 238), dated January 27, 2023, are shown in Exhibit 13 and are incorporated by reference into this Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure . None.
Added
Foreign Currency Exchange Rate Risks Operational Currency Risks Our operations primarily utilize the U.S. dollar, Euro, Sterling or the Australian dollar as their functional currencies. Our operations also have revenue and expenses denominated in non-functional currencies. Movements in foreign currency exchange rates will affect our financial statements.
Added
Investment Currency Risks The foreign currency exchange rates were as follows: November 30, USD to 1: 2023 2022 AUD $ 0.66 $ 0.66 CAD $ 0.74 $ 0.74 EUR $ 1.10 $ 1.03 GBP $ 1.27 $ 1.20 If the November 30, 2022 currency exchange rates had been used to translate our November 30, 2023 non-U.S. dollar functional currency operations’ assets and liabilities (instead of the November 30, 2023 U.S. dollar exchange rates), our total assets would have been lower by $1.0 billion and our total liabilities would have been lower by $0.5 billion.
Added
As of November 30, 2023, we have a cross currency swap totaling $670 million which settles through 2024. This cross-currency swap is designated as a hedge of our net investments in foreign operations, which has a euro-denominated functional currency, thus partially offsetting the foreign currency exchange rate risk.
Added
Based on a 10% change in the U.S. dollar to euro exchange rate as of November 30, 2023, we estimate that the fair value of this cross-currency swap and offsetting change in U.S. dollar value of our net investments would change by $66 million.
Added
Newbuild Currency Risks At November 30, 2023, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild contract payments, which represent a total unhedged commitment of $3.0 billion and relate to newbuilds scheduled to be delivered through 2025 to non-euro functional currency brands.
Added
The functional currency cost of each of these ships will increase or decrease based on changes in the exchange rates until the unhedged payments are made under the shipbuilding contract. We may enter into additional foreign currency derivatives to mitigate some of this foreign currency exchange rate risk.
Added
Based on a 1% change in euro to U.S. dollar exchange rates as of November 30, 2023, the remaining unhedged cost of these ships would have a corresponding change of $30 million.
Added
Interest Rate Risks The composition of our debt, interest rate swaps and cross currency swaps was as follows: November 30, 2023 Fixed rate 62 % EUR fixed rate 18 % Floating rate 5 % EUR floating rate 15 % 60 At November 30, 2023, we had interest rate swaps that have effectively changed $46 million of EURIBOR-based floating rate euro debt to fixed rate euro debt.
Added
We also had interest rate swap agreements which effectively changed $2.5 billion at November 30, 2023 of SOFR-based floating rate USD debt to fixed rate USD debt.
Added
Based on a 100 basis point change in the market interest rates, our annual interest expense on floating rate debt, including the effect of our interest rate swaps, will change by approximately $60 million. 61

Other CCL 10-K year-over-year comparisons