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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             

Commission file number: 001-9610                             Commission file number: 001-15136
Carnival Corporation
ccl-20210228_g1.jpg
Carnival plc
(Exact name of registrant as
specified in its charter)
(Exact name of registrant as
specified in its charter)
Republic of Panama
England and Wales
(State or other jurisdiction of
incorporation or organization)
(State or other jurisdiction of
incorporation or organization)
59-156297698-0357772
(I.R.S. Employer Identification No.)(I.R.S. Employer Identification No.)
3655 N.W. 87th AvenueCarnival House, 100 Harbour Parade
Miami,Florida33178-2428SouthamptonSO15 1STUnited Kingdom
(Address of principal
executive offices)
(Zip Code)
(Address of principal
executive offices)
(Zip Code)

(305)599-260001144 23 8065 5000
(Registrant’s telephone number,
including area code)
(Registrant’s telephone number,
including area code)
NoneNone
(Former name, former address
and former fiscal year, if
changed since last report)
(Former name, former address
and former fiscal year, if
changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock ($0.01 par value)CCL
New York Stock Exchange, Inc.
Ordinary Shares each represented by American Depository Shares ($1.66 par value), Special Voting Share, GBP 1.00 par value and Trust Shares of beneficial interest in the P&O Princess Special Voting TrustCUK
New York Stock Exchange, Inc.
1.875% Senior Notes due 2022CUK22New York Stock Exchange LLC
1.000% Senior Notes due 2029CUK29New York Stock Exchange LLC

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filers
Accelerated filers
Non-accelerated filers
Smaller reporting companies
Emerging growth companies
1


If emerging growth companies, indicate by check mark if the registrants have elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑

At March 31, 2021, Carnival Corporation had outstanding 973,540,516 shares of Common Stock, $0.01 par value.
At March 31, 2021, Carnival plc had outstanding 184,023,036 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 973,540,516 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.


2

Table of Contents
CARNIVAL CORPORATION & PLC
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 6.

2

Table of Contents
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in millions, except per share data)
 
 Three Months Ended February 28/29,
 20212020
Revenues
Passenger ticket$3 $3,234 
Onboard and other23 1,556 
26 4,789 
Operating Costs and Expenses
Commissions, transportation and other15 766 
Onboard and other7 471 
Payroll and related218 610 
Fuel103 396 
Food11 277 
Ship and other impairments 330 
Other operating181 671 
535 3,523 
Selling and administrative462 678 
Depreciation and amortization552 570 
Goodwill impairments 731 
1,549 5,502 
Operating Income (Loss)(1,524)(713)
Nonoperating Income (Expense)
Interest income3 5 
Interest expense, net of capitalized interest(398)(55)
Other income (expense), net(61)(7)
(455)(57)
Income (Loss) Before Income Taxes(1,979)(770)
Income Tax Benefit (Expense), Net6 (11)
Net Income (Loss)$(1,973)$(781)
Earnings Per Share
Basic$(1.80)$(1.14)
Diluted$(1.80)$(1.14)

The accompanying notes are an integral part of these consolidated financial statements.
3

Table of Contents
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in millions)
 
 Three Months Ended February 28/29,
 20212020
Net Income (Loss)$(1,973)$(781)
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment199 25 
Other4 13 
Other Comprehensive Income (Loss)203 38 
Total Comprehensive Income (Loss)$(1,770)$(743)
The accompanying notes are an integral part of these consolidated financial statements.

4

Table of Contents
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
 
 February 28,
2021
November 30, 2020
ASSETS
Current Assets
Cash and cash equivalents$9,674 $9,513 
Short-term investments1,840  
Trade and other receivables, net250 273 
Inventories312 335 
Prepaid expenses and other382 443 
  Total current assets12,459 10,563 
Property and Equipment, Net39,583 38,073 
Operating Lease Right-of-Use Assets 1,354 1,370 
Goodwill814 807 
Other Intangibles 1,195 1,186 
Other Assets1,821 1,594 
$57,226 $53,593 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings$3,083 $3,084 
Current portion of long-term debt1,726 1,742 
Current portion of operating lease liabilities 142 151 
Accounts payable505 624 
Accrued liabilities and other1,336 1,144 
Customer deposits1,826 1,940 
  Total current liabilities8,619 8,686 
Long-Term Debt26,522 22,130 
Long-Term Operating Lease Liabilities
1,256 1,273 
Other Long-Term Liabilities1,017 949 
Contingencies and Commitments
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 1,104 shares at 2021 and 1,060 shares at 2020 issued
11 11 
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2021 and 2020 issued
361 361 
Additional paid-in capital14,977 13,948 
Retained earnings14,102 16,075 
Accumulated other comprehensive income (loss) (“AOCI”)(1,233)(1,436)
Treasury stock, 130 shares at 2021 and 2020 of Carnival Corporation and 59 shares at 2021 and 60 shares at 2020 of Carnival plc, at cost
(8,404)(8,404)
  Total shareholders’ equity19,813 20,555 
$57,226 $53,593 
The accompanying notes are an integral part of these consolidated financial statements.
5

Table of Contents
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
 
 Three Months Ended February 28/29,
 20212020
OPERATING ACTIVITIES
Net income (loss)$(1,973)$(781)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
Depreciation and amortization552 570 
Impairments17 1,062 
Share-based compensation40 20 
Amortization of discounts and debt issue costs42 6 
Noncash lease expense36 42 
(Gain) loss on ship sales and other, net50 (121)
(1,236)798 
Changes in operating assets and liabilities
Receivables6 21 
Inventories(1)(15)
Prepaid expenses and other(263)(120)
Accounts payable(128)148 
Accrued liabilities and other167 120 
Customer deposits(49)(36)
Net cash provided by (used in) operating activities(1,503)916 
INVESTING ACTIVITIES
Purchases of property and equipment(1,774)(1,326)
Proceeds from sales of ships9 226 
Purchase of minority interest (81)
Purchase of short-term investments(1,840) 
Derivative settlements and other, net17 20 
Net cash provided by (used in) investing activities(3,589)(1,161)
FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings, net 779 
Principal repayments of long-term debt(668)(132)
Proceeds from issuance of long-term debt4,980 823 
Dividends paid (344)
Purchases of treasury stock (12)
Issuance of common stock, net997 2 
Debt issue costs and other, net(93)(26)
Net cash provided by (used in) financing activities5,216 1,089 
Effect of exchange rate changes on cash, cash equivalents and restricted cash14 (7)
Net increase (decrease) in cash, cash equivalents and restricted cash138 838 
Cash, cash equivalents and restricted cash at beginning of period9,692 530 
Cash, cash equivalents and restricted cash at end of period$9,829 $1,368 

The accompanying notes are an integral part of these consolidated financial statements.


6

Table of Contents
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in millions)

Common
stock
Ordinary
shares
Additional
paid-in
capital
Retained
earnings
AOCITreasury
stock
Total shareholders’ equity
At November 30, 2019$7 $358 $8,807 $26,653 $(2,066)$(8,394)$25,365 
Net income (loss)— — — (781)— — (781)
Other comprehensive income (loss)— — — — 38 — 38 
Cash dividends declared ($0.50 per share)
— — — (344)— — (344)
Purchases of treasury stock under the Repurchase Program and other— — 22 — — (10)12 
At February 29, 2020$7 $359 $8,829 $25,527 $(2,028)$(8,404)$24,290 
At November 30, 2020$11 $361 $13,948 $16,075 $(1,436)$(8,404)$20,555 
Net income (loss)— — — (1,973)— — (1,973)
Other comprehensive income (loss)— — — — 203 — 203 
Issuance of common stock, net
— — 996 — — — 997 
Other— — 32 — — — 32 
At February 28, 2021$11 $361 $14,977 $14,102 $(1,233)$(8,404)$19,813 
The accompanying notes are an integral part of these consolidated financial statements.

7

Table of Contents
CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – General

The consolidated financial statements include the accounts of Carnival Corporation and Carnival plc and their respective subsidiaries. Together with their consolidated subsidiaries, they are referred to collectively in these consolidated financial statements and elsewhere in this joint Quarterly Report on Form 10-Q as “Carnival Corporation & plc,” “our,” “us” and “we.”

Liquidity and Management’s Plans

In the face of the global impact of COVID-19, we paused our guest cruise operations in mid-March 2020. In September 2020 we began the resumption of limited guest cruise operations as part of our phased-in return to service. As of February 28, 2021, none of our ships were operating with guests onboard. Significant events affecting travel, including COVID-19 and our pause in guest cruise operations, have had and continue to have an impact on booking patterns. The full extent of the impact will be determined by our gradual return to service and the length of time COVID-19 influences travel decisions. We believe that the ongoing effects of COVID-19 on our operations and global bookings have had, and will continue to have, a material negative impact on our financial results and liquidity.

The estimation of our future liquidity requirements includes numerous assumptions that are subject to various risks and uncertainties. The principal assumptions used to estimate our future liquidity requirements consist of:

Expected continued gradual resumption of guest cruise operations
Expected lower than comparable historical occupancy levels during the resumption of guest cruise operations
Expected incremental spend for the resumption of guest cruise operations, for bringing our ships out of pause status, returning crew members to our ships and implementing the enhanced health and safety protocols

In addition, we make certain assumptions about new ship deliveries, improvements and disposals, and consider the future export credit financings that are associated with the ship deliveries.

We are complying with the current various heightened governmental regulations required to return to guest cruise operations. We are working with a number of world-leading public health, epidemiological and policy experts to support our ongoing efforts with enhanced health and safety protocols for the return of cruise vacations. These advisors will continue to provide guidance based on the latest scientific evidence and best practices for protection and mitigation. We also believe that there have been positive developments around the availability and widespread distribution of effective COVID-19 vaccines, which we believe will be important to achieving historical occupancy levels over time.

We cannot make assurances that our assumptions used to estimate our liquidity requirements may not change because we have never previously experienced a complete cessation of our guest cruise operations, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude and duration of the global pandemic are uncertain. We have made reasonable estimates and judgments of the impact of COVID-19 within our consolidated financial statements and there may be changes to those estimates in future periods. We continue to expect a net loss on both a U.S. GAAP and adjusted basis for the second quarter of 2021 and the full year ending November 30, 2021. We have taken and continue to take actions to improve our liquidity, including completing various capital market transactions, capital expenditure and operating expense reductions, accelerating the removal of certain ships from our fleet and we will be pursuing refinancing opportunities to reduce interest expense and extend maturities.

Based on these actions and assumptions regarding the impact of COVID-19, and considering our $11.5 billion of cash and short-term investments at February 28, 2021, we have concluded that we have sufficient liquidity to satisfy our obligations for at least the next twelve months.

Basis of Presentation
The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss), the Consolidated Statements of Cash Flows and the Consolidated Statements of Shareholders’ Equity for the three months ended February 28/29, 2021 and 2020, and the Consolidated Balance Sheet at February 28, 2021 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement. Our interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes included in the Carnival Corporation & plc 2020 joint Annual Report on Form 10-K (“Form 10-K”) filed with the U.S. Securities and Exchange Commission on January 26, 2021.
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COVID-19 and the Use of Estimates and Risks and Uncertainty

The preparation of our interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported and disclosed. The full extent to which the effects of COVID-19 will directly or indirectly impact our business, operations, results of operations and financial condition, including our valuation of goodwill and trademarks, impairment of ships, collectability of trade and notes receivables as well as provisions for pending litigation, will depend on future developments that are highly uncertain. We have made reasonable estimates and judgments of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods.

Accounting Pronouncements

The FASB issued guidance, Debt - Debt with Conversion and Other Options and Derivative and Hedging - Contracts in Entity's Own Equity, which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is required to be adopted by us in the first quarter of 2023 and must be applied using either a modified or full retrospective approach. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

NOTE 2 – Revenue and Expense Recognition

Guest cruise deposits are initially included in customer deposit liabilities when received. Customer deposits are subsequently recognized as cruise revenues, together with revenues from onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata basis for voyages in excess of ten nights. The impact of recognizing these shorter duration cruise revenues and costs and expenses on a completed voyage basis versus on a pro rata basis is not material. Certain of our product offerings are bundled and we allocate the value of the bundled services and goods between passenger ticket revenues and onboard and other revenues based upon the estimated standalone selling prices of those goods and services. Guest cancellation fees, when applicable, are recognized in passenger ticket revenues at the time of cancellation.

Our sales to guests of air and other transportation to and from airports near the home ports of our ships are included in passenger ticket revenues, and the related costs of purchasing these services are included in transportation costs. The proceeds that we collect from the sales of third-party shore excursions are included in onboard and other revenues and the related costs are included in onboard and other costs. The amounts collected on behalf of our onboard concessionaires, net of the amounts remitted to them, are included in onboard and other revenues as concession revenues. All of these amounts are recognized on a completed voyage or pro rata basis as discussed above.

Passenger ticket revenues include fees, taxes and charges collected by us from our guests. A portion of these fees, taxes and charges vary with guest head counts and are directly imposed on a revenue-producing arrangement. This portion of the fees, taxes and charges is expensed in commissions, transportation and other costs when the corresponding revenues are recognized. For the three months ended February 28/29, fees, taxes, and charges included in commissions, transportation and other costs were not significant in 2021 and $174 million in 2020. The remaining portion of fees, taxes and charges are expensed in other operating expenses when the corresponding revenues are recognized.

Revenues and expenses from our hotel and transportation operations, which are included in our Tour and Other segment, are recognized at the time the services are performed. Revenues from the long-term leasing of ships, which are also included in our Tour and Other segment, are recognized ratably over the term of the agreement.

Customer Deposits

Our payment terms generally require an initial deposit to confirm a reservation, with the balance due prior to the voyage. Cash received from guests in advance of the cruise is recorded in customer deposits and in other long-term liabilities on our Consolidated Balance Sheets. These amounts include refundable deposits. We are providing flexibility to guests with bookings
on sailings cancelled due to the pause in cruise operations by allowing guests to receive enhanced future cruise credits (“FCC”)
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or elect to receive refunds in cash. We have paid and expect to continue to pay cash refunds of customer deposits with respect to a portion of these cancelled cruises. The amount of cash refunds to be paid may depend on the level of guest acceptance of FCCs and future cruise cancellations. We record a liability for FCCs to the extent we have received cash from guests with bookings on cancelled sailings. Total customer deposits as of February 28, 2021 and November 30, 2020 were $2.2 billion, the majority of which are FCCs. As of February 28, 2021, the current portion of customer deposits was $1.8 billion. This amount includes deposits related to cancelled cruises prior to the election of a cash refund by guests. Refunds payable to guests who have elected cash refunds are recorded in accounts payable. Due to the uncertainty associated with the duration and extent of COVID-19, we are unable to estimate the amount of the February 28, 2021 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel. During the three months ended February 28/29, 2021 and 2020, we recognized revenues of an immaterial amount and $3.0 billion, respectively, related to our customer deposits as of November 30, 2020 and 2019. Historically, our customer deposits balance changes due to the seasonal nature of cash collections, the recognition of revenue, refund of customer deposits and foreign currency translation.

Contract Receivables

Although we generally require full payment from our customers prior to or concurrently with their cruise, we grant credit terms to a relatively small portion of our revenue source. We also have receivables from credit card merchants for cruise ticket purchases and onboard revenue. These receivables are included within trade and other receivables, net.

Contract Assets

Contract assets are amounts paid prior to the start of a voyage, which we record as an asset within prepaid expenses and other and which are subsequently recognized as commissions, transportation and other at the time of revenue recognition or at the time of voyage cancellation. We have contract assets of an immaterial amount as of February 28, 2021 and November 30, 2020.

NOTE 3 – Debt

Export Credit Facility Borrowings

In December 2020, we borrowed $1.5 billion under export credit facilities due in semi-annual installments through 2033.

2027 Senior Unsecured Notes

In February 2021, we issued an aggregate principal amount of $3.5 billion senior unsecured notes that mature on March 1, 2027 (the “2027 Senior Unsecured Notes”). The 2027 Senior Unsecured Notes bear interest at a rate of 5.8% per year. The 2027 Senior Unsecured Notes are guaranteed by Carnival plc and the same subsidiaries of Carnival Corporation & plc that guarantee the 2023 Secured Notes, 2026 Secured Notes, 2027 Senior Secured Notes and 2026 Senior Unsecured Notes, and are unsecured. The indenture governing the 2027 Senior Unsecured Notes contains covenants that are substantially similar to the covenants in the indentures governing the 2026 Senior Unsecured Notes and, except for the unsecured nature of the 2027 Senior Unsecured Notes, the indentures governing the 2023 Secured Notes, 2026 Secured Notes and 2027 Secured Notes and the credit agreement governing the 2025 Secured Term Loan. These covenants are subject to a number of important limitations and exceptions.

Covenant Compliance

Our export credit facilities contain one or more covenants that require us to:

Maintain minimum interest coverage (EBITDA to consolidated net interest charges for the most recently ended four fiscal quarters) (the “Interest Coverage Covenant”) of not less than 3.0 to 1.0 at the end of each fiscal quarter
Maintain minimum shareholders’ equity of $5.0 billion
Limit our debt to capital percentage (the “Debt to Capital Covenant”) to 65% at the end of each fiscal quarter
Limit the amounts of our secured assets as well as secured and other indebtedness

As of February 28, 2021, we entered into supplemental agreements to waive compliance with the Interest Coverage Covenant and the Debt to Capital Covenant under our export credit facilities through August 31, 2022 or November 30, 2022, as applicable. We will be required to comply beginning with the next testing date of November 30, 2022 or February 28, 2023, as applicable.

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During the first quarter of 2021 we entered into supplemental agreements with respect to our $3.1 billion ($1.7 billion, €1.0 billion and £150 million) multi-currency revolving credit facility (the “Revolving Credit Facility”) and many of our bank loans. These agreements now contain one or more covenants that require us to:

Maintain the Interest Coverage Covenant at the end of each fiscal quarter from February 28, 2023, at a ratio of not less than 2.0 to 1.0 for the February 28, 2023 and May 31, 2023 testing dates, 2.5 to 1.0 for the August 31, 2023 and November 30, 2023 testing dates, and 3.0 to 1.0 for the February 28, 2024 testing date onwards, or through their respective maturity dates.
Maintain minimum shareholders’ equity of $5.0 billion.
Maintain the Debt to Capital Covenant at the end of each fiscal quarter before the November 30, 2021 testing date at a percentage not to exceed 65%. From the November 30, 2021 testing date until the May 31, 2023 testing date, the Debt to Capital Covenant is not to exceed 75%, following which it will be tested at levels which decline ratably to 65% from the May 31, 2024 testing date onwards.
Maintain minimum liquidity of $1.0 billion through November 30, 2022.
Adhere to certain restrictive covenants through November 30, 2024.
Restrict the granting of guarantees and security interests for certain of our outstanding debt through November 30, 2024.

At February 28, 2021, we were in compliance with the applicable covenants under our debt agreements.

Generally, if an event of default under any debt agreement occurs, then, pursuant to cross default acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated. Any financial covenant amendment may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable.

As of February 28, 2021, the scheduled maturities of our debt are as follows:

(in millions)
YearPrincipal Payments
2Q 2021$352 
3Q 2021 (a)488 
4Q 2021327 
20222,851 
20236,393 
2024 (b)4,548 
20253,974 
Thereafter13,133 
Total$32,065 

(a)Includes $231 million of principal that was prepaid in March 2021.
(b)Includes the $3.1 billion Revolving Credit Facility. The Revolving Credit Facility was fully drawn in 2020 for six month terms. The maturities for these borrowings are currently extended through September 2021. We may re-borrow such amounts through August 2024 subject to satisfaction of the conditions in the facility. The Revolving Credit Facility also includes an emissions linked margin adjustment whereby, after the initial applicable margin is set per the margin pricing grid, the margin may be adjusted based on performance in achieving certain agreed annual carbon emissions goals. We are required to pay a commitment fee on any undrawn portion.

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NOTE 4 – Contingencies and Commitments
Litigation

We are routinely involved in legal proceedings, claims, disputes, regulatory matters and governmental inspections or investigations arising in the ordinary course of or incidental to our business, including those noted below. Additionally, as a result of the impact of COVID-19, litigation claims, enforcement actions, regulatory actions and investigations, including, but not limited to, those arising from personal injury and loss of life, have been and may, in the future, be asserted against us. We expect many of these claims and actions, or any settlement of these claims and actions, to be covered by insurance and historically the maximum amount of our liability, net of any insurance recoverables, has been limited to our self-insurance retention levels.

We record provisions in the consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated.

Legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other events could occur. Unfavorable resolutions could involve substantial monetary damages. In addition, in matters for which conduct remedies are sought, unfavorable resolutions could include an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies. An unfavorable outcome might result in a material adverse impact on our business, results of operations, financial position or liquidity.

As previously disclosed, on May 2, 2019, two lawsuits were filed against Carnival Corporation in the U.S. District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act, alleging that Carnival “trafficked” in confiscated Cuban property when certain ships docked at certain ports in Cuba, and that this alleged “trafficking” entitles the plaintiffs to treble damages. On January 21, 2021, the court continued the trial date in the Havana Docks matter to October 25, 2021. We continue to believe we have a meritorious defense to these actions and we believe that any liability which may arise as a result of these actions will not have a material impact on our consolidated financial statements.

Contingent Obligations – Indemnifications
Some of the debt contracts we enter into include indemnification provisions obligating us to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes or changes in laws which increase the lender’s costs. There are no stated or notional amounts included in the indemnification clauses, and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses.
Other Contingencies
We have agreements with a number of credit card processors that transact customer deposits related to our cruise vacations. Certain of these agreements allow the credit card processors to request under certain circumstances that we provide a reserve fund in cash. Although the agreements vary, these requirements may generally be satisfied either through a withheld percentage of customer payments or providing cash funds directly to the card processor. As of February 28, 2021, we had $629 million in reserve funds relating to our customer deposits to satisfy these requirements which are included within other assets. We expect a portion of new customer deposits to be withheld under these agreements. Additionally, as of February 28, 2021, we placed $172 million of cash collateral in escrow, of which $142 million is included within prepaid expenses and other.

We detected ransomware attacks in August 2020 and December 2020, which resulted in unauthorized access to our information technology systems. We engaged a major cybersecurity firm to investigate these matters and notified law enforcement and applicable regulators of these incidents. For the August 2020 event, the investigation phase is complete, as are the communication and reporting phases. We determined that the unauthorized third-party gained access to certain personal information relating to some guests, employees and crew for some of our operations. For the December 2020 event, the investigation and remediation phases are in process and regulators have been notified. There is currently no indication of any misuse of information potentially accessed or acquired and we continue to work with regulators to bring these matters and other reportable incidents to conclusion. We have incurred legal and other costs in connection with these and other cyber incidents, and while at this time we do not believe that these incidents will have a material adverse effect on our business, operations or financial results, no assurances can be given and we may be subject to future attacks or incidents that could have such a material adverse effect.

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COVID-19 Actions

Private Actions

We have been named in a number of individual actions related to COVID-19. Private parties have brought approximately 70 lawsuits as of April 1, 2021 in several U.S. federal courts as well as in France, Italy and Brazil. These actions include tort claims based on a variety of theories, including negligence and failure to warn. The plaintiffs in these actions allege a variety of injuries: some plaintiffs allege only emotional distress, while others allege injuries arising from testing positive for COVID-19. A smaller number of actions include wrongful death claims. All individual actions seek monetary and punitive damages but do not specify exact amounts.

Additionally, as of April 1, 2021, ten purported class actions have been brought by former guests from Ruby Princess, Diamond Princess, Grand Princess, Coral Princess, Costa Luminosa or Zaandam in several U.S. federal courts and in the Federal Court of Australia. These actions seek compensation based on a variety of tort claims, including, but not limited to, negligence, gross negligence and failure to warn, physical injuries and severe emotional distress associated with being exposed and/or contracting COVID-19 onboard.

As previously disclosed, on April 8, 2020, numerous former guests from Grand Princess filed a purported class action against Carnival Corporation and Carnival plc and two of our subsidiaries, Princess Cruise Lines, Ltd. and Fairline Shipping International Corporation, Ltd. (“Fairline Shipping”). On May 5, 2020, this case was transferred to the U.S. District Court for the Central District of California and on June 2, 2020, the plaintiffs removed Fairline Shipping from the case. On October 20, 2020, the court denied the plaintiffs’ motion for class certification, and the plaintiffs filed a petition for leave to appeal this ruling to the U.S. Court of Appeals for the Ninth Circuit on November 3, 2020. On February 17, 2021, the Ninth Circuit Court of Appeals denied that petition.

As previously disclosed, on July 23, 2020, Susan Karpik, a former guest from Ruby Princess filed a purported class action against Carnival plc and Princess Cruises in the Federal Court of Australia. On March 24, 2021 the plaintiffs filed a second amended complaint.

As previously disclosed, two purported class actions were filed on behalf of certain purchasers of Carnival Corporation securities alleging violations of Sections 10(b) and 20(a) of the U.S. Securities and Exchange Act of 1934. Following the filing of a third purported class action on behalf of certain options investors, alleging the same set of factual theories, the three actions were consolidated with new lead plaintiffs, the New England Carpenters Pension and Guaranteed Annuity Fund and the Massachusetts Laborers’ Pension and Annuity Fund. A consolidated class action complaint was filed on December 15, 2020 on behalf of all purchasers of Carnival Corporation common stock and/or Carnival plc American Depositary Shares, and sellers of put options and purchasers of call options on those securities, between September 16, 2019 and March 31, 2020. The consolidated complaint alleges that defendants Carnival Corporation, Carnival plc, and Arnold W. Donald violated Sections 10(b) and 20(a) of the U.S. Securities and Exchange Act of 1934 by making misrepresentations and omissions related to Carnival Corporation’s COVID-19 knowledge and response. Plaintiffs seek to recover unspecified damages and equitable relief for the alleged misstatements and omissions. A motion to dismiss was filed on January 18, 2021 and was fully briefed as of March 8, 2021.

We continue to take proper actions to defend against the above claims.

Governmental Inquiries and Investigations

Federal and non-U.S. governmental agencies and officials are investigating or otherwise seeking information, testimony and/or documents, regarding COVID-19 incidents and related matters. We are investigating these matters internally and are cooperating with all requests. The investigations could result in the imposition of civil and criminal penalties in the future.

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Ship Commitments

As of February 28, 2021, we expect the timing of our new ship growth capital commitments to be as follows:

(in millions)
Year
Remainder of 2021$1,449 
20224,734 
20232,328 
20241,874 
20251,073 
Thereafter 
$11,459 

NOTE 5 – Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks
Fair Value Measurements
Fair value is defined as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and is measured using inputs in one of the following three categories:
Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.
Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.
Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.
Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, certain estimates of fair value presented herein are not necessarily indicative of the amounts that could be realized in a current or future market exchange.

Financial Instruments that are not Measured at Fair Value on a Recurring Basis 
 February 28, 2021November 30, 2020
 Carrying
Value
Fair ValueCarrying
Value
Fair Value
(in millions)Level 1Level 2Level 3Level 1Level 2Level 3
Assets
Long-term other assets (a)$47 $ $25 $19 $45 $ $17 $18 
Total$47 $ $25 $19 $45 $ $17 $18 
Liabilities
Fixed rate debt (b)$19,198 $ $20,313 $ $15,547 $ $16,258 $ 
Floating rate debt (b)12,868  12,213  12,034  11,412  
Total$32,065 $ $32,526 $ $27,581 $ $27,670 $ 
 
(a)Long-term other assets are comprised of notes receivable. The fair values of our Level 2 notes receivable were based on estimated future cash flows discounted at appropriate market interest rates. The fair values of our Level 3 notes receivable were estimated using risk-adjusted discount rates.
(b)The debt amounts above do not include the impact of interest rate swaps or debt issuance costs. The fair values of our publicly-traded notes were based on their unadjusted quoted market prices in markets that are not sufficiently active to be Level 1 and, accordingly, are considered Level 2. The fair values of our other debt were estimated based on current market interest rates being applied to this debt.
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Financial Instruments that are Measured at Fair Value on a Recurring Basis
 February 28, 2021November 30, 2020
(in millions)Level 1Level 2Level 3Level 1Level 2Level 3
Assets
Cash and cash equivalents$9,674 $— $— $9,513 $— $— 
Restricted cash155 — — 179 — — 
Short-term investments (a)1,840 — — — — — 
Total$11,670 $— $— $9,692 $— $— 
Liabilities
Derivative financial instruments$— $9 $— $— $10 $— 
Total$— $9 $— $— $10 $— 

(a)Short term investments consist of marketable securities with original maturities of between three and twelve months.
Nonfinancial Instruments that are Measured at Fair Value on a Nonrecurring Basis
Valuation of Goodwill and Trademarks 

Goodwill
(in millions)NAA
Segment
EA
Segment
Total
November 30, 2020$579 $228 $807 
Foreign currency translation adjustment 8 7 
February 28, 2021$579 $235 $814 

Trademarks
(in millions)NAA
Segment
EA
Segment
Total
November 30, 2020$927 $253 $1,180 
Foreign currency translation adjustment 8 8 
February 28, 2021$927 $261 $1,188 

The determination of the fair value of our reporting units’ and trademarks includes numerous assumptions that are subject to various risks and uncertainties. The effect of COVID-19, the pause in guest cruise operations and the possibility of further extensions have created some uncertainty in forecasting the operating results and future cash flows used in our impairment analyses. For the three months ended February 29, 2020, we recognized goodwill impairment charges of $731 million. We believe that we have made reasonable estimates and judgments. A change in the principal assumptions, which influences the determination of fair value, may result in a need to recognize an additional impairment charge. The principal assumptions, all of which are considered Level 3 inputs, used in our cash flow analyses for the three months ended February 29, 2020 consisted of:

The timing of our return to service, changes in market conditions and port or other restrictions
Forecasted revenues net of our most significant variable costs, which are travel agent commissions, costs of air and other transportation, and certain other costs that are directly associated with onboard and other revenues including credit and debit card fees
The allocation of new ships and the timing of the transfer or sale of ships amongst brands, as well as the estimated proceeds from ship sales
Weighted-average cost of capital of market participants, adjusted for the risk attributable to the geographic regions in which these cruise brands operate

Refer to Note 1 - General, COVID-19 and the Use of Estimates and Risks and Uncertainty for additional discussion.
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Impairments of Ships 

We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment. In 2020, as a result of the effect of COVID-19 on our expected future operating cash flows and our decisions to dispose of certain ships, we determined certain impairment triggers had occurred. Accordingly, we performed undiscounted cash flow analyses on certain ships in our fleet throughout 2020. Based on these undiscounted cash flow analyses, we determined that certain ships, specifically those being disposed of, had net carrying values that exceeded their estimated undiscounted future cash flows. We determined the fair values of these ships based on their estimated selling value. We believe that we have made reasonable estimates and judgments. A change in the principal assumptions, which influences the determination of fair value, may result in a need to perform additional impairment reviews. The principal assumptions, all of which are considered Level 3 inputs, used in our cash flow analyses consisted of:

Timing of the respective ship’s return to service, changes in market conditions and port or other restrictions
Forecasted ship revenues net of our most significant variable costs, which are travel agent commissions, costs of air and other transportation and certain other costs that are directly associated with onboard and other revenues, including credit and debit card fees
Timing of the sale of ships and estimated proceeds

For the three months ended February 29, 2020, we recognized $172 million and $158 million of ship impairment charges in the North America & Australia (NAA) and Europe & Asia (EA) segments, respectively, included in other operating expenses of our Consolidated Statements of Income (Loss).

Refer to Note 1 - General, COVID-19 and the Use of Estimates and Risks and Uncertainty for additional discussion.

Derivative Instruments and Hedging Activities
(in millions)Balance Sheet LocationFebruary 28, 2021November 30, 2020
Derivative liabilities
Derivatives designated as hedging instruments
Interest rate swaps (a)Accrued liabilities and other$5 $5 
Other long-term liabilities5 5 
Total derivative liabilities$9 $10 
 
(a)We have interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments. These interest rate swap agreements effectively changed $237 million at February 28, 2021 and $248 million at November 30, 2020 of EURIBOR-based floating rate euro debt to fixed rate euro debt. At February 28, 2021, these interest rate swaps settle through 2025.

Our derivative contracts include rights of offset with our counterparties. We have elected to net certain of our derivative assets and liabilities within counterparties.

February 28, 2021
(in millions)Gross Amounts Gross Amounts Offset in the Balance SheetTotal Net Amounts Presented in the Balance SheetGross Amounts not Offset in the Balance SheetNet Amounts
Assets$ $ $ $ $ 
Liabilities$9 $ $9 $ $9 
November 30, 2020
(in millions)Gross AmountsGross Amounts Offset in the Balance SheetTotal Net Amounts Presented in the Balance SheetGross Amounts not Offset in the Balance SheetNet Amounts
Assets$ $ $ $ $ 
Liabilities$10 $ $10 $ $10 
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The effect of our derivatives qualifying and designated as hedging instruments recognized in other comprehensive income (loss) and in net income (loss) was as follows:
 Three Months Ended February 28/29,
(in millions)20212020
Gains (losses) recognized in AOCI:
Cross currency swaps - net investment hedges - included component$ $(2)
Cross currency swaps - net investment hedges - excluded component$ $42 
Foreign currency zero cost collars - cash flow hedges$ $(1)
Foreign currency forwards - cash flow hedges$ $14 
Interest rate swaps - cash flow hedges$1 $1 
Gains (losses) reclassified from AOCI - cash flow hedges:
Interest rate swaps - Interest expense, net of capitalized interest$(1)$(2)
Foreign currency zero cost collars - Depreciation and amortization$1 $ 
Gains (losses) recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges)
Cross currency swaps - Interest expense, net of capitalized interest$ $10 

The amount of estimated cash flow hedges’ unrealized gains and losses that are expected to be reclassified to earnings in the next twelve months is not material.

Financial Risks
Fuel Price Risks
We manage our exposure to fuel price risk by managing our consumption of fuel. Substantially all of our exposure to market risk for changes in fuel prices relates to the consumption of fuel on our ships. We manage fuel consumption through ship maintenance practices, modifying our itineraries and implementing innovative technologies.
Foreign Currency Exchange Rate Risks
Overall Strategy
We manage our exposure to fluctuations in foreign currency exchange rates through our normal operating and financing activities, including netting certain exposures to take advantage of any natural offsets and, when considered appropriate, through the use of derivative and non-derivative financial instruments. Our primary focus is to monitor our exposure to, and manage, the economic foreign currency exchange risks faced by our operations and realized if we exchange one currency for another. We currently only hedge certain of our ship commitments and net investments in foreign operations. The financial impacts of the hedging instruments we do employ generally offset the changes in the underlying exposures being hedged.
Operational Currency Risks
Our operations primarily utilize the U.S. dollar, Australian dollar, euro or sterling as their functional currencies. Our operations also have revenue and expenses denominated in non-functional currencies. Movements in foreign currency exchange rates affect our financial statements.
Investment Currency Risks
We consider our investments in foreign operations to be denominated in stable currencies and of a long-term nature. We partially mitigate the currency exposure of our investments in foreign operations by designating a portion of our foreign currency debt and derivatives as hedges of these investments. As of February 28, 2021, we have designated $718 million of our sterling-denominated debt as non-derivative hedges of our net investments in foreign operations. For the three months ended February 28, 2021, we recognized $42 million of losses on these non-derivative net investment hedges in the cumulative translation adjustment section of other comprehensive income (loss). We also have $9.6 billion of euro-denominated debt, which provides an economic offset for our operations with euro functional currency.
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Newbuild Currency Risks

Our shipbuilding contracts are typically denominated in euros. Our decision to hedge a non-functional currency ship commitment for our cruise brands is made on a case-by-case basis, considering the amount and duration of the exposure, market volatility, economic trends, our overall expected net cash flows by currency and other offsetting risks. We use foreign currency derivative contracts to manage foreign currency exchange rate risk for some of our ship construction payments.
At February 28, 2021, our remaining newbuild currency exchange rate risk primarily relates to euro-denominated newbuild contract payments to non-euro functional currency brands, which represent a total unhedged commitment of $7.0 billion for newbuilds scheduled to be delivered through 2025.
The cost of shipbuilding orders that we may place in the future that is denominated in a different currency than our cruise brands’ will be affected by foreign currency exchange rate fluctuations. These foreign currency exchange rate fluctuations may affect our decision to order new cruise ships.
Interest Rate Risks
We manage our exposure to fluctuations in interest rates through our debt portfolio management and investment strategies. We evaluate our debt portfolio to determine whether to make periodic adjustments to the mix of fixed and floating rate debt through the use of interest rate swaps and the issuance of new debt.

Concentrations of Credit Risk

As part of our ongoing control procedures, we monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. We seek to manage these credit risk exposures, including counterparty nonperformance primarily associated with our cash equivalents, investments, notes receivables, future financing facilities, contingent obligations, derivative instruments, insurance contracts, long-term ship charters and new ship progress payment guarantees, by:

Conducting business with well-established financial institutions, insurance companies and export credit agencies
Diversifying our counterparties 
Having guidelines regarding credit ratings and investment maturities that we follow to help safeguard liquidity and minimize risk
Generally requiring collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship charters and new ship progress payments to shipyards 

At February 28, 2021, our exposures under derivative instruments were not material. We also monitor the creditworthiness of travel agencies and tour operators in Asia, Australia and Europe, which includes charter-hire agreements in Asia and credit and debit card providers to which we extend credit in the normal course of our business. Concentrations of credit risk associated with trade receivables and other receivables, charter-hire agreements and contingent obligations are not considered to be material, principally due to the large number of unrelated accounts, the nature of these contingent obligations and their short maturities. Normally, we have not required collateral or other security to support normal credit sales. Historically, we have not experienced significant credit losses, including counterparty nonperformance, however, because of the impact COVID-19 is having on economies, we have experienced, and may continue to experience, an increase in credit losses.

Our credit exposure also includes contingent obligations related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales in Australia and most of Europe where we are obligated to honor our guests’ cruise payments made by them to their travel agents and tour operators regardless of whether we have received these payments.

NOTE 6 – Segment Information

Our operating segments are reported on the same basis as the internally reported information that is provided to our chief operating decision maker (“CODM”), who is the President and Chief Executive Officer of Carnival Corporation and Carnival plc. The CODM assesses performance and makes decisions to allocate resources for Carnival Corporation & plc based upon review of the results across all of our segments. Our four reportable segments are comprised of (1) NAA cruise operations, (2) EA cruise operations, (3) Cruise Support and (4) Tour and Other.

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The operating segments within each of our NAA and EA reportable segments have been aggregated based on the similarity of their economic and other characteristics, including geographic guest sourcing. Our Cruise Support segment includes our portfolio of leading port destinations and other services, all of which are operated for the benefit of our cruise brands. Our Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours and other operations.
Three Months Ended February 28/29,
(in millions)RevenuesOperating costs and
expenses
Selling
and
administrative
Depreciation
and
amortization
Operating
income (loss)
2021
NAA$10 $316 $220 $334 $(859)
EA8 198 108 184 (482)
Cruise Support 8 129 28 (164)
Tour and Other7 13 6 6 (18)
$26 $535 $462 $552 $(1,524)
2020
NAA$3,140 $2,274 $400 $364 $(197)(a)
EA1,552 1,317 207 166 (569)(b)
Cruise Support44 (87)65 32 35 
Tour and Other52 19 7 8 18 
$4,789 $3,523 $678 $570 $(713)

(a)    Includes $300 million of goodwill impairment charges.
(b)    Includes $431 million of goodwill impairment charges.

Revenue by geographic areas, which are based on where our guests are sourced, were as follows:
(in millions)Three Months Ended
February 29, 2020
North America$2,647 
Europe1,367 
Australia and Asia615 
Other161 
$4,789 

As a result of the pause in our guest cruise operations, we have experienced essentially no revenue for the three months ended February 28, 2021 and as a result current year data is not meaningful and is not included in the table.

NOTE 7 – Earnings Per Share 
 Three Months Ended February 28/29,
(in millions, except per share data)20212020
Net income (loss) for basic and diluted earnings per share$(1,973)$(781)
Weighted-average shares outstanding1,095 684 
Dilutive effect of equity plans  
Diluted weighted-average shares outstanding1,095 684 
Basic earnings per share$(1.80)$(1.14)
Diluted earnings per share$(1.80)$(1.14)

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Antidilutive shares excluded from diluted earnings per share computations were as follows:

Three Months Ended February 28/29,
(in millions)20212020
Equity awards3 1 
Convertible Notes54  
Total antidilutive securities56 1 

Equity Offering

In February 2021, we completed a public offering of 40.5 million shares of Carnival Corporation’s common stock at a price per share of $25.10, resulting in net proceeds of $996 million.

NOTE 8 – Supplemental Cash Flow Information
(in millions)February 28, 2021November 30, 2020
Cash and cash equivalents (Consolidated Balance Sheets)$9,674 $9,513 
Restricted cash included in prepaid expenses and other and other assets155 179 
Total cash, cash equivalents and restricted cash (Consolidated Statements of Cash Flows)$9,829 $9,692 

NOTE 9 – Other Assets

We have a minority interest in the White Pass & Yukon Route (“White Pass”) that includes port, railroad and retail operations
in Skagway, Alaska. As a result of the effects of COVID-19 on the 2021 Alaska season, we evaluated whether our investment in White Pass was other than temporarily impaired and performed an impairment assessment during the quarter ended February 28, 2021. As a result of our assessment, we recognized an impairment charge of $17 million for our investment in White Pass in other income (expense), net. As of February 28, 2021, our investment in White Pass was $76 million, consisting of $57 million in equity and a loan of $19 million. As of November 30, 2020, our investment in White Pass was $94 million, consisting of $75 million in equity and a loan of $19 million.

We have a minority interest in CSSC Carnival Cruise Shipping Limited (“CSSC-Carnival”), a China-based cruise company which will operate its own fleet designed to serve the Chinese market. Our investment in CSSC-Carnival was $139 million as of February 28, 2021 and $140 million as of November 30, 2020. In December 2019, we sold to CSSC-Carnival a controlling interest in an entity with full ownership of two EA segment ships and recognized a related gain of $107 million, included in other operating expenses in our Consolidated Statements of Income (Loss). As of February 28, 2021 and November 30, 2020, our investment in the minority interest of this entity was $283 million.

NOTE 10 – Property and Equipment

Ship Sales

Since the pause in guest cruise operations, we have accelerated the removal of ships which were previously expected to be sold over the ensuing years. During the first quarter of 2021, we completed the sale of one NAA segment ship, which represents a passenger-capacity reduction of 670 for our NAA segment.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Note Concerning Factors That May Affect Future Results

Some of the statements, estimates or projections contained in this document are “forward-looking statements” that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, operations, outlooks, plans, goals, reputation, cash flows, liquidity and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking. These statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like “will,” “may,” “could,” “should,” “would,” “believe,” “depends,” “expect,” “goal,” “anticipate,” “forecast,” “project,” “future,” “intend,” “plan,” “estimate,” “target,” “indicate,” “outlook,” and similar expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that relate to our outlook and financial position including, but not limited to, statements regarding:
Pricing
Estimates of ship depreciable lives and residual values
Booking levels
Goodwill, ship and trademark fair values
Occupancy
Liquidity and credit ratings
Interest, tax and fuel expenses
Adjusted earnings per share
Currency exchange rates
Impact of the COVID-19 coronavirus global pandemic on our financial condition and results of operations
Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied by our forward-looking statements. This note contains important cautionary statements of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position. Additionally, many of these risks and uncertainties are currently amplified by and will continue to be amplified by, or in the future may be amplified by, the COVID-19 outbreak. It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial or which are unknown. These factors include, but are not limited to, the following:
COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund resulting reductions in cash from operations. The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlooks, plans, goals, reputation, litigation, cash flows, liquidity, and stock price.
As a result of the COVID-19 outbreak, we may be out of compliance with one or more maintenance covenants in certain of our debt facilities, with the next testing date of November 30, 2022.
World events impacting the ability or desire of people to travel have and may continue to lead to a decline in demand for cruises.
Incidents concerning our ships, guests or the cruise vacation industry as well as adverse weather conditions and other natural disasters have in the past and may, in the future, impact the satisfaction of our guests and crew and lead to 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-corruption, economic sanctions, trade protection and tax have in the past and may, in the future, lead to litigation, enforcement actions, fines, penalties and reputational damage.
Breaches in data security and lapses in data privacy as well as disruptions and other damages to our principal offices, information technology operations and system networks, including the recent ransomware incidents, and failure to keep pace with developments in technology may adversely impact our business operations, the satisfaction of our guests and crew and may lead to reputational damage.
Ability to recruit, develop and retain qualified shipboard personnel who live away from home for extended periods of time may adversely impact our business operations, guest services and satisfaction.
Increases in fuel prices, changes in the types of fuel consumed and availability of fuel supply may adversely impact our scheduled itineraries and costs.
Fluctuations in foreign currency exchange rates may adversely impact our financial results.
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Overcapacity and competition in the cruise and land-based vacation industry may lead to a decline in our cruise sales, pricing and destination options.
Inability to implement our shipbuilding programs and ship repairs, maintenance and refurbishments may adversely impact our business operations and the satisfaction of our guests.

The ordering of the risk factors set forth above is not intended to reflect our indication of priority or likelihood.
Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this document, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.

Recent Developments

Resumption of Guest Operations

The company is uniquely positioned for a phased resumption in cruise travel given its multiple brands which can each be restarted independently and tailored to the environment of their respective source market. AIDA Cruises (“AIDA”) resumed guest cruise operations in late March sailing in the Canary Islands. Costa Cruises (“Costa”) expects to resume operations in May sailing to Italian ports. P&O Cruises (UK), Cunard and Princess Cruises will each offer a series of cruises this summer sailing around UK coastal waters with P&O Cruises (UK) kicking off the season in June followed by Cunard and Princess Cruises in July. Seabourn also expects to resume guest cruise operations this summer sailing from Greece. In addition, this summer Holland America Line and Princess Cruises expect to offer land-based vacation options for travelers to experience Alaska through a combination of tours, lodging and sightseeing.

Health and Safety Protocols

Initial cruises are taking place with adjusted passenger capacity and enhanced health protocols developed with government and health authorities, and guidance from the company's roster of medical and scientific experts. The company has been working with a number of world-leading public health, epidemiological and policy experts to support its ongoing efforts with enhanced health and safety protocols to help protect against and mitigate the impact of COVID-19 during cruise vacations. The company's brands have a comprehensive set of health and hygiene protocols that facilitate a safe and healthy return to cruise vacations. These enhanced protocols are modeled after shoreside health and mitigation guidelines as provided by each brand's respective country, and approved by all relevant regulatory authorities. Protocols will be updated based on evolving scientific and medical knowledge related to mitigation strategies. In addition to the jurisdictions associated with the restart plans noted above, the company continues to work closely with governments and health authorities in other parts of the world to ensure that its health and safety protocols will also comply with the requirements of each location.

Update on Liquidity

Refer to “Liquidity, Financial Condition and Capital Resources.”

Refer to “Risk Factors” - “COVID-19 has had, and is expected to continue to have, a significant impact on our financial condition and operations, which impacts our ability to obtain acceptable financing to fund resulting reductions in cash from operations. The current, and uncertain future, impact of the COVID-19 outbreak, including its effect on the ability or desire of people to travel (including on cruises), is expected to continue to impact our results, operations, outlooks, plans, goals, reputation, litigation, cash flows, liquidity, and stock price.

New Accounting Pronouncements

Refer to Note 1 - General, Accounting Pronouncements of the consolidated financial statements for additional discussion regarding accounting pronouncements.

Critical Accounting Estimates

For a discussion of our critical accounting estimates, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” that is included in the Form 10-K.

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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, although 2021 will continue to be adversely impacted by COVID-19. 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 earned during this period. This historical trend has been disrupted by the pause in global cruise operations. In addition, substantially all of Holland America Princess Alaska Tours’ revenue and net income (loss) is generated from May through September in conjunction with Alaska's cruise season. During 2021, the Alaska cruise season will continue to be adversely impacted by the effects of COVID-19.

Statistical Information
Three Months Ended February 28/29,
20212020
Fuel consumption in metric tons (in thousands)262 831 
Fuel cost per metric ton consumed$392 $477 
Currencies (USD to 1)
AUD$0.77 $0.68 
CAD$0.78 $0.76 
EUR$1.21 $1.10 
GBP$1.36 $1.31 
RMB$0.15 $0.14 

We paused our guest cruise operations in mid-March 2020 and have been in a pause for a majority of 2020 and the first quarter of 2021. The pause in guest cruise operations is continuing to have material negative impacts on all aspects of our business, including the above statistical information.

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Results of Operations

Consolidated
Three Months Ended February 28/29,% increase (decrease)
(in millions)20212020Change
Revenues
    Passenger ticket$$3,234 $(3,231)(100)%
    Onboard and other23 1,556 (1,533)(99)%
26 4,789 (4,764)(99)%
Operating Costs and Expenses
    Commissions, transportation and other15 766 (752)(98)%
    Onboard and other471 (464)(99)%
    Payroll and related218 610 (392)(64)%
    Fuel103 396 (294)(74)%
    Food11 277 (266)(96)%
    Ship and other impairments— 330 (330)(100)%
    Other operating181 671 (490)(73)%
535 3,523 (2,988)(85)%
    Selling and administrative462 678 (216)(32)%
    Depreciation and amortization552 570 (18)(3)%
    Goodwill impairment— 731 (731)(100)%
1,549 5,502 (3,953)(72)