UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 2005
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ________________
Commission file number: 1-9610 Commission file number: 1-15136
Carnival Corporation Carnival plc
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)
Republic of Panama England and Wales
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
59-1562976 98-0357772
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
3655 N.W. 87th Avenue Carnival House, 5 Gainsford Street,
Miami, Florida 33178-2428 London SE1 2NE, United Kingdom
(Address of principal (Address of principal
executive offices) executive offices)
(Zip Code) (Zip Code)
(305) 599-2600 011 44 20 7940 5381
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
None None
(Former name, former address (Former name, former address
and former fiscal year, if and former fiscal year, if
changed since last report.) changed since last report.)
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 |X| No |_|
Indicate by check mark whether the registrants are accelerated filers (as
defined in Rule 12b-2 of the Exchange Act). Yes |X| No |_|
At July 5, 2005 Carnival Corporation At July 5, 2005, Carnival plc had
had outstanding 634,702,407 shares of outstanding 212,231,096 Ordinary Shares
Common Stock, $.01 par value. $1.66 stated value, one Special Voting
Share, GBP 1.00 par value and 634,702,407
Trust Shares of beneficial interest in
the P&O Princess Special Voting Trust.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in millions, except per share data)
Six Months Three Months
Ended May 31, Ended May 31,
------------------- -------------------
2005 2004 2005 2004
---- ---- ---- ----
Revenues
Cruise
Passenger tickets $ 3,740 $ 3,218 $ 1,899 $ 1,691
Onboard and other 1,116 973 570 526
Other 59 45 50 36
------- ------- ------- -------
4,915 4,236 2,519 2,253
------- ------- ------- -------
Costs and Expenses
Operating
Cruise
Commissions, transportation
and other 814 760 383 376
Onboard and other 191 178 95 97
Payroll and related 558 486 284 249
Food 305 264 151 137
Other ship operating 972 814 515 434
Other 54 43 42 33
------- ------- ------- -------
Total 2,894 2,545 1,470 1,326
Selling and administrative 675 638 342 322
Depreciation and amortization 446 388 225 200
------- ------- ------- -------
4,015 3,571 2,037 1,848
------- ------- ------- -------
Operating Income 900 665 482 405
------- ------- ------- -------
Nonoperating (Expense) Income
Interest income 9 9 6 4
Interest expense, net of
capitalized interest (168) (136) (82) (70)
Other income (expense), net 10 (7) 3 (7)
------- ------- ------- -------
(149) (134) (73) (73)
------- ------- ------- -------
Income Before Income Taxes 751 531 409 332
Income Tax Benefit, Net 2 4
------- ------- ------- -------
Net Income $ 753 $ 535 $ 409 $ 332
======= ======= ======= =======
Earnings Per Share
Basic $ 0.94 $ 0.67 $ 0.51 $ 0.41
======= ======= ======= =======
Diluted $ 0.91 $ 0.66 $ 0.49 $ 0.40
======= ======= ======= =======
Dividends Per Share $ 0.35 $ 0.25 $ 0.20 $ 0.125
======= ======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
1
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par/stated values)
May 31, November 30,
ASSETS 2005 2004
---- ----
Current Assets
Cash and cash equivalents $ 721 $ 643
Short-term investments 303 17
Accounts receivable, net 418 409
Inventories 253 240
Prepaid expenses and other 404 419
-------- --------
Total current assets 2,099 1,728
-------- --------
Property and Equipment, Net 21,249 20,823
Goodwill 3,259 3,321
Trademarks 1,288 1,306
Other Assets 411 458
-------- --------
$ 28,306 $ 27,636
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 278 $ 381
Current portion of long-term debt 1,169 681
Convertible debt subject to current put option 600
Accounts payable 647 631
Accrued liabilities and other 719 868
Customer deposits 2,585 1,873
-------- --------
Total current liabilities 5,398 5,034
-------- --------
Long-Term Debt 6,305 6,291
Other Long-Term Liabilities and Deferred Income 543 551
Contingencies (Note 4)
Shareholders' Equity
Common stock of Carnival Corporation; $.01 par
value; 1,960 shares authorized; 635 shares at 2005
and 634 shares at 2004 issued 6 6
Ordinary shares of Carnival plc; $1.66 stated value;
226 shares authorized; 212 shares at 2005 and
2004 issued 353 353
Additional paid-in capital 7,356 7,311
Retained earnings 9,092 8,623
Unearned stock compensation (17) (16)
Accumulated other comprehensive income 358 541
Treasury stock; 1 share of Carnival Corporation
at 2005 and 42 shares of Carnival plc at 2005
and 2004 at cost (1,088) (1,058)
-------- --------
Total shareholders' equity 16,060 15,760
-------- --------
$ 28,306 $ 27,636
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
Six Months Ended May 31,
2005 2004
---- ----
OPERATING ACTIVITIES
Net income $ 753 $ 535
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 446 388
Accretion of original issue discount 11 11
Other 10 12
Changes in operating assets and liabilities
Increase in
Receivables (97) (18)
Inventories (15) (42)
Prepaid expenses and other (77) (49)
Increase (decrease) in
Accounts payable 33 64
Accrued and other liabilities (33) 64
Customer deposits 730 742
------- -------
Net cash provided by operating activities 1,761 1,707
------- -------
INVESTING ACTIVITIES
Additions to property and equipment (1,109) (2,648)
Sales of short-term investments 270 749
Purchases of short-term investments (556) (290)
Proceeds from retirement of property and equipment 77
Other, net 2 (12)
------- -------
Net cash used in investing activities (1,393) (2,124)
------- -------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 823 842
Principal repayments of long-term debt (786) (624)
(Payments) proceeds from short-term borrowings, net (89) 153
Dividends paid (241) (199)
Proceeds from exercise of stock options 37 97
Purchase of treasury stock (30)
Other (1) (4)
------- -------
Net cash (used in) provided by financing
activities (287) 265
------- -------
Effect of exchange rate changes on cash and cash
equivalents (3) (15)
------- -------
Net increase (decrease) in cash and
cash equivalents 78 (167)
Cash and cash equivalents at beginning of period 643 610
------- -------
Cash and cash equivalents at end of period $ 721 $ 443
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3
CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - Basis of Presentation
Carnival Corporation is incorporated in Panama, and Carnival plc is
incorporated in England and Wales. 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."
Carnival Corporation and Carnival plc (formerly known as P&O Princess
Cruises plc or "P&O Princess") completed a dual listed company ("DLC")
transaction (the "DLC transaction") in 2003. The DLC transaction combined the
businesses of Carnival Corporation and Carnival plc through a number of
contracts and through amendments to Carnival Corporation's articles of
incorporation and by-laws and to Carnival plc's memorandum of association and
articles of association. The two companies have retained their separate legal
identities, however, they operate as if they were a single economic enterprise.
The accompanying consolidated balance sheet at May 31, 2005, the
consolidated statements of operations for the six and three months ended May 31,
2005 and 2004 and the consolidated statements of cash flows for the six months
ended May 31, 2005 and 2004 are unaudited and, in the opinion of our management,
contain all adjustments, consisting of only normal recurring adjustments,
necessary for a fair presentation. 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 2004 joint
Annual Report on Form 10-K. Our operations are seasonal and results for interim
periods are not necessarily indicative of the results for the entire year.
Reclassifications have been made to prior period amounts to conform to the
current period presentation, including reflecting the gross purchases and sales
of variable rate securities as investing activities in the Consolidated
Statements of Cash Flows in fiscal 2004.
NOTE 2 - Stock-Based Compensation
Pursuant to Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation," as amended, we elected to use the
intrinsic value method of accounting for our employee and director stock-based
compensation awards instead of the fair value method. Accordingly, we have not
recognized compensation expense for our noncompensatory employee and director
stock option awards. Our pro forma net income and pro forma earnings per share,
had we elected to adopt the fair value approach of SFAS No. 123, which charges
earnings for the estimated fair value of stock options, would have been as
follows (in millions, except per share amounts):
4
Six Months Three Months
Ended May 31, Ended May 31,
---------------- ----------------
2005 2004 2005 2004
---- ---- ---- ----
Net income, as reported $ 753 $ 535 $ 409 $ 332
Stock-based compensation
expense included in
net income, as reported 6 6 3 4
Total stock-based compensation
expense determined under
the fair value-based method
for all awards (35) (30) (18) (12)
------- ------- ------- -------
Pro forma net income for basic
earnings per share 724 511 394 324
Interest on dilutive convertible notes 25 25 12 12
------- ------- ------- -------
Pro forma net income for diluted
earnings per share $ 749 $ 536 $ 406 $ 336
======= ======= ======= =======
Earnings per share
Basic
As reported $ 0.94 $ 0.67 $ 0.51 $ 0.41
======= ======= ======= =======
Pro forma $ 0.90 $ 0.64 $ 0.49 $ 0.40
======= ======= ======= =======
Diluted
As reported $ 0.91 $ 0.66 $ 0.49 $ 0.40
======= ======= ======= =======
Pro forma $ 0.88 $ 0.63 $ 0.48 $ 0.40
======= ======= ======= =======
In December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 123 (revised 2004), "Share-Based Payment Statement 123(R)," which will
require us to recognize compensation costs in our financial statements in an
amount equal to the fair value of share-based payments granted to employees and
directors. This statement is effective for us in the first quarter of fiscal
2006. We have not yet determined which of the alternative transition methods we
will use upon adoption of this new statement. However, based on preliminary
estimates, if we were to elect to adopt this statement on December 1, 2005, our
additional full year 2006 share-based compensation expense is estimated to be in
the range of approximately $65 million to $70 million.
NOTE 3 - Debt
In January 2005, we paid the final installment of $110 million on our
capitalized lease obligations and in May 2005, we paid $100 million on our 7.05%
fixed rate notes.
In February 2005, Carnival plc extended its 600 million euro ($751 million
U.S. dollars at the May 31, 2005 exchange rate) unsecured multi-currency
revolving credit facility for 364 days, and reduced this facility's commitment
fee on the undrawn portion from nine basis points ("BPS") to 7.5 BPS.
Accordingly, this facility now expires in March 2006.
In March 2005, Carnival plc entered into a five-year unsecured
multi-currency term loan facility, bearing interest at euribor/libor plus 32.5
BPS. Under this facility, we borrowed 368 million euro ($460 million U.S.
dollars at the May 31, 2005 exchange rate) to repay a 368 million euro note,
which bore interest at euribor plus 60 BPS, prior to its October 2008 maturity
date. We also borrowed 165 million sterling under this facility ($300 million
U.S. dollars at the May 31, 2005 exchange rate), which we used to pay a portion
of P&O Cruises' Arcadia purchase price. Finally, we entered into interest rate
swap agreements to fix the interest rates on these euro and sterling borrowings
at 3.50% and 5.40%, respectively.
At November 30, 2004, our 2% convertible notes were classified as a
current liability, since the noteholders had the right to require us to
repurchase them on April 15, 2005, however, substantially all of the noteholders
did not exercise their rights. Accordingly, at May 31, 2005, we classified our
2% convertible notes as long-term debt, since the next date that the noteholders
can require us to repurchase them is on April 15, 2008.
5
NOTE 4 - Contingencies
Litigation
On March 7, 2005, a lawsuit was filed against Carnival Corporation in the
U.S. District Court for the Southern District of Florida on behalf of some
current and former crew members alleging that Carnival Cruise Lines failed to
pay the plaintiffs for overtime. The suit seeks payment of (i) the overtime
wages alleged to be owed, (ii) penalty wages under U.S. law and (iii) interest.
We are not yet able to estimate the impact of this claim, and the ultimate
outcome of this matter cannot be determined at this time. However, we believe
that we have meritorious defenses and we intend to vigorously defend against
this action.
In 2002, two actions (collectively, the "Facsimile Complaints") were filed
against Carnival Corporation on behalf of purported classes of persons who
received unsolicited advertisements via facsimile, alleging that Carnival
Corporation and other defendants distributed unsolicited advertisements via
facsimile in contravention of the U.S. Telephone Consumer Protection Act. The
plaintiffs seek to enjoin the sending of unsolicited facsimile advertisements
and statutory damages. The advertisements referred to in the Facsimile
Complaints that reference a Carnival Cruise Lines product were not sent by
Carnival Corporation, but rather were distributed by a professional faxing
company at the behest of third party travel agencies. We do not advertise
directly to the traveling public through the use of facsimile transmission. The
ultimate outcomes of the Facsimile Complaints cannot be determined at this time.
However, we believe that we have meritorious defenses and we intend to
vigorously defend against these actions.
Costa Cruises has instituted arbitration proceedings in Italy to confirm
the validity of its decision not to deliver its ship, the Costa Classica, to the
shipyard of Cammell Laird Holdings PLC ("Cammell Laird") under a 79 million euro
denominated contract for the conversion and lengthening of the ship in November
2000. Costa also gave notice of termination of the contract in January 2001. It
is expected that the arbitration tribunal's decision will be made in late 2005
at the earliest. In the event that an award is given in favor of Cammell Laird,
the amount of damages, which Costa would have to pay, if any, is not currently
determinable. The ultimate outcome of this matter cannot be determined at this
time.
In April 2003, Festival Crociere S.p.A. ("Festival") commenced an action
against the European Commission (the "Commission") in the Court of First
Instance of the European Communities in Luxembourg seeking to annul the
Commission's antitrust approval of the DLC transaction (the "Festival Action").
We have been granted leave to intervene in the Festival Action and filed a
Statement in Intervention with the court. Festival was declared bankrupt in May
2004 and Festival did not submit observations on our Statement in Intervention.
A date for an oral hearing will be set in due course, unless Festival withdraws
its action. A successful third party challenge of an unconditional Commission
clearance decision would be unprecedented, and based on a review of the law and
the factual circumstances of the DLC transaction, as well as the Commission's
approval decision in relation to the DLC transaction, we believe that the
Festival Action will not have a material adverse effect on the companies or the
DLC transaction. However, the ultimate outcome of this matter cannot be
determined at this time.
In the normal course of our business, various other claims and lawsuits
have been filed or are pending against us. Most of these claims and lawsuits are
covered by insurance and, accordingly, the maximum amount of our liability, net
of any insurance recoverables, is typically limited to our self-insurance
retention levels. However, the ultimate outcome of these claims and lawsuits
cannot be determined at this time.
Contingent Obligations
At May 31, 2005, Carnival Corporation had contingent obligations totaling
approximately $1.1 billion to participants in lease out and lease back type
6
transactions for three of its ships. At the inception of the leases, the entire
amount of the contingent obligations was paid by Carnival Corporation to major
financial institutions to enable them to directly pay these obligations.
Accordingly, these obligations were considered extinguished, and neither the
funds nor the contingent obligations have been included on our balance sheets.
Carnival Corporation would only be required to make any payments under these
contingent obligations in the remote event of nonperformance by these financial
institutions, all of which have long-term credit ratings of AAA, AA+ or AA. In
addition, Carnival Corporation obtained a direct guarantee from another AA+
rated financial institution for $299 million of the above noted contingent
obligations, thereby further reducing the already remote exposure to this
portion of the contingent obligations. If the major financial institutions'
credit ratings fall below AA-, Carnival Corporation would be required to move a
majority of the funds from these financial institutions to other highly-rated
financial institutions. If Carnival Corporation's credit rating falls below BBB,
it would be required to provide a standby letter of credit for $85 million, or
alternatively provide mortgages in the aggregate amount of $85 million on two of
its ships.
In the unlikely event that Carnival Corporation were to terminate the
three lease agreements early or default on its obligations, it would, as of May
31, 2005, have to pay a total of $171 million in stipulated damages. As of May
31, 2005, $179 million of standby letters of credit have been issued by a major
financial institution in order to provide further security for the payment of
these contingent stipulated damages. Between 2017 and 2022, we have the right to
exercise options that would terminate these transactions at no cost to us.
Some of the debt agreements that we enter into include indemnification
provisions that obligate us to make payments to the counterparty if certain
events occur. These contingencies generally relate to changes in taxes, changes
in laws that increase lender capital costs and other similar costs. The
indemnification clauses are often standard contractual terms and were entered
into in the normal course of business. 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. We have not been required to make any material payments under such
indemnification clauses in the past and, under current circumstances, we do not
believe a request for material future indemnification payments is probable.
NOTE 5 - Comprehensive Income
Comprehensive income was as follows (in millions):
Six Months Three Months
Ended May 31, Ended May 31,
-------------- --------------
2005 2004 2005 2004
---- ---- ---- ----
Net income $ 753 $ 535 $ 409 $ 332
Items included in accumulated
other comprehensive income
Foreign currency translation adjustment (177) 175 (174) (33)
Changes related to cash flow derivative hedges (6) (8) (17) 5
----- ----- ----- -----
Total comprehensive income $ 570 $ 702 $ 218 $ 304
===== ===== ===== =====
NOTE 6 - Segment Information
Our cruise segment included all of our cruise brands, which have been
aggregated as a single reportable segment based on the similarity of their
economic and other characteristics, including products and services they
provide. Our other segment primarily represents the transportation, hotel and
tour operations of Holland America Tours and Princess Tours, and the business to
business travel agency operations of P&O Travel Ltd.
7
Selected segment information for our cruise and other segments was as
follows (in millions):
Six Months Ended May 31,
-----------------------------------------------------------
Selling Depreciation Operating
Operating and admin- and income
2005 Revenues expenses istrative amortization (loss)
---- -------- -------- --------- ------------ ------
Cruise $4,856 $2,840 $647 $430 $939
Other 74 69 28 16 (39)
Intersegment elimination (15) (15)
------ ------ ---- ---- ----
$4,915 $2,894 $675 $446 $900
====== ====== ==== ==== ====
2004
Cruise $4,191 $2,502 $610 $377 $702
Other 54 52 28 11 (37)
Intersegment elimination (9) (9)
------ ------ ---- ---- ----
$4,236 $2,545 $638 $388 $665
====== ====== ==== ==== ====
Three Months Ended May 31,
-----------------------------------------------------------
Selling Depreciation Operating
Operating and admin- and income
2005 Revenues expenses istrative amortization (loss)
---- -------- -------- --------- ------------ ------
Cruise $2,469 $1,428 $325 $217 $499
Other 61 53 17 8 (17)
Intersegment elimination (11) (11)
------ ------ ---- ---- ----
$2,519 $1,470 $342 $225 $482
====== ====== ==== ==== ====
2004
Cruise $2,217 $1,293 $308 $195 $421
Other 43 40 14 5 (16)
Intersegment elimination (7) (7)
------ ------ ---- ---- ----
$2,253 $1,326 $322 $200 $405
====== ====== ==== ==== ====
Note 7 - Merchant Navy Officers Pension Fund ("MNOPF")
P&O Cruises, Princess Cruises and Cunard Line participate in an
industry-wide British MNOPF, which is a defined benefit multiemployer pension
plan that is available to certain of their shipboard British officers. The MNOPF
is divided into two sections, the "New Section" and the "Old Section," each of
which covers a different group of participants, with the Old Section closed to
further benefit accrual and the New Section only closed to new membership.
As of March 31, 2003, the date of the most recent formal actuarial
valuation prepared by the MNOPF's actuary, the New Section of the MNOPF was
estimated to have a fund deficit of approximately 200 million sterling, or $380
million, assuming a 7.7% discount rate. At November 30, 2004, our external
actuary informally updated the March 31, 2003 valuation and estimated that the
New Section deficit was approximately 760 million sterling, or $1.44 billion,
assuming a 5.2% discount rate. The amount of the fund deficit could vary
considerably if different assumptions and/or estimates were used in its
calculation. Substantially all of any MNOPF fund deficit liability which we may
have relates to P&O Cruises and Princess obligations, which existed prior to the
DLC transaction.
Despite a recent court ruling regarding the allocation of the deficit to
participating employers, there are still a number of uncertainties remaining as
to our portion of the fund's ultimate deficit. Therefore, we will record as
expense our portion of any deficit as amounts are invoiced by the fund's
trustee. We expect to receive the first invoice during the quarter ended August
31, 2005. In accordance with the court ruling and other factors, and assuming
all of the other participating employers are able to pay their share of the
MNOPF deficit, we believe our share of the ultimate deficit could be in the
range of $25 million to $90 million.
8
NOTE 8 - Earnings Per Share
Our basic and diluted earnings per share were computed as follows (in
millions, except per share data):
Six Months Three Months
Ended May 31, Ended May 31,
------------- -------------
2005 2004 2005 2004
---- ---- ---- ----
Net income $ 753 $ 535 $ 409 $ 332
Interest on dilutive convertible notes 25 25 12 12
----- ----- ----- -----
Net income for diluted earnings per share $ 778 $ 560 $ 421 $ 344
===== ===== ===== =====
Weighted-average common and ordinary
shares outstanding 805 801 805 803
Dilutive effect of convertible notes 44 43 44 43
Dilutive effect of stock plans 6 5 5 4
----- ----- ----- -----
Diluted weighted-average shares
outstanding 855 849 854 850
===== ===== ===== =====
Basic earnings per share $0.94 $0.67 $0.51 $0.41
===== ===== ===== =====
Diluted earnings per share $0.91 $0.66 $0.49 $0.40
===== ===== ===== =====
Options to purchase 2.2 million (5.1 million in 2004) and 2.2 million (5.1
million in 2004) shares for the six and three months ended May 31, 2005 and
2004, respectively, were excluded from our diluted earnings per share
computation since the effect of including them was anti-dilutive.
9
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 contained in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
joint Quarterly Report on Form 10-Q are "forward-looking statements" that
involve risks, uncertainties and assumptions with respect to us, including some
statements concerning future results, outlook, plans, goals 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. You can find many,
but not all, of these statements by looking for words like "will," "may,"
"believes," "expects," "anticipates," "forecast," "future," "intends," "plans,"
and "estimates" and for similar expressions.
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 in this joint
Quarterly Report on Form 10-Q. Forward-looking statements include those
statements which may impact the forecasting of our earnings per share, net
revenue yields, booking levels, pricing, occupancy, operating, financing and/or
tax costs, costs per available lower berth day ("ALBD"), estimates of ship
depreciable lives and residual values, outlook or business prospects. These
factors include, but are not limited to, the following:
- - risks associated with the DLC structure, including the uncertainty of its
tax status;
- - general economic and business conditions, which may impact levels of
disposable income of consumers and net revenue yields for our cruise
brands;
- - conditions in the cruise and land-based vacation industries, including
competition from other cruise ship operators and providers of other
vacation alternatives and increases in capacity offered by cruise ship and
land-based vacation alternatives;
- - risks associated with operating internationally;
- - the international political and economic climate, armed conflicts,
terrorist attacks and threats thereof, availability of air service, other
world events and adverse publicity, and their impact on the demand for
cruises;
- - accidents and other incidents affecting the health, safety, security and
vacation satisfaction of passengers, including machinery and equipment
failures, which could cause the alteration of itineraries or cancellation
of a cruise or series of cruises;
- - changing public and consumer tastes and preferences, which may, among
other things, adversely impact the demand for cruises;
- - our ability to implement our shipbuilding programs and brand strategies
and to continue to expand our business worldwide;
- - our ability to attract and retain qualified shipboard crew and maintain
good relations with employee unions;
- - our ability to obtain financing on terms that are favorable or consistent
with our expectations;
- - the impact of changes in operating and financing costs, including changes
in foreign currency and interest rates and fuel, food, payroll, insurance
and security costs;
- - changes in the tax, environmental, health, safety, security and other
regulatory regimes under which we operate;
- - continued availability of attractive port destinations;
- - our ability to successfully implement cost improvement plans and to
integrate business acquisitions;
- - continuing financial viability of our travel agent distribution system and
air service providers; and
- - unusual weather patterns or natural disasters, such as hurricanes and
earthquakes.
In April 2005, the U.S. State Department announced details of the proposed
"Western Hemisphere Travel Initiative." When the proposed rules are enacted,
U.S.
10
citizens will be required to carry a passport for travel to or from certain
countries/areas that were previously exempt. The proposed implementation is as
follows:
- On December 31, 2005, a passport would be required for all air and
sea travel to or from the Caribbean, Bermuda, Central and South
America.
- On December 31, 2006, a passport would be required for all air and
sea travel to or from Mexico and Canada, including Alaska cruises,
which stop in Canada.
- On December 31, 2007, a passport would be required for all air, sea
and land border crossings.
Since many cruise customers visiting these destinations may not currently
have passports, it is likely that this will have some negative effect on our
bookings and net revenue yields when the regulations take effect. There are a
number of factors that could influence the ultimate impact of these regulations,
such as customer travel patterns, customer price sensitivity and the cost and
effectiveness of mitigating programs we and others might establish. However,
although no assurance can be given, we do not believe that these regulations
will ultimately have a material adverse effect on our operating results, as a
significant portion of our revenues are derived from cruises to destinations
other than those mentioned above, a substantial portion of our U.S. citizen
customers already have passports and we expect a large number of U.S. citizen
travelers who do not have passports will obtain them.
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 listing rules, we expressly disclaim any obligation to disseminate,
after the date of this joint Quarterly Report on Form 10-Q, 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.
Key Performance Indicators and Critical Accounting Estimates
We use net cruise revenues per ALBD ("net revenue yields") and net cruise
costs per ALBD as significant non-GAAP financial measures of our cruise segment
financial performance. We believe that net revenue yields are commonly used in
the cruise industry to measure a company's cruise segment revenue performance.
This measure is also used for revenue management purposes. In calculating net
revenue yields, we use "net cruise revenues" rather than "gross cruise
revenues." We believe that net cruise revenues is a more meaningful measure in
determining revenue yield than gross cruise revenues because it reflects the
cruise revenues earned by us net of our most significant variable costs, which
are travel agent commissions, cost of air transportation and certain other
variable direct costs associated with onboard revenues. Substantially all of our
remaining cruise costs are largely fixed once our ship capacity levels have been
determined.
Net cruise costs per ALBD is the most significant measure we use to
monitor our ability to control our cruise segment costs rather than gross cruise
costs per ALBD. In calculating net cruise costs, we exclude the same variable
costs as described above, which are included in the calculation of net cruise
revenues. This is done to avoid duplicating these variable costs in these two
non-GAAP financial measures.
In addition, because a significant portion of our operations utilize the
euro or sterling to measure their results and financial condition, the
translation of those operations to our U.S. dollar reporting currency results in
increases in reported U.S. dollar revenues and expenses if the U.S. dollar
weakens against these foreign currencies, and decreases in reported U.S. dollar
revenues and expenses if the U.S. dollar strengthens against these foreign
currencies. Accordingly, we also monitor our two non-GAAP financial measures
assuming the 2005 exchange rates have remained constant with the 2004 comparable
period rates, or on a "constant dollar basis," in order to remove the impact of
changes in exchange rates on our non-U.S. cruise operations. We believe that
this is a useful measure indicating the actual growth of our operations in a
fluctuating exchange rate environment. On a constant dollar basis, net cruise
revenues and net cruise costs would be $1.96 billion and $1.25
11
billion for the three month period ended May 31, 2005, and $3.80 billion and
$2.44 billion for the six month period ended May 31, 2005, respectively.
For a discussion of our critical accounting estimates, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations," which
is included in Carnival Corporation & plc's 2004 joint Annual Report on Form
10-K.
Outlook for Remainder of Fiscal 2005
On June 16, 2005, we indicated that we expected diluted earnings per share
for the third quarter of 2005 would be in the range of $1.33 to $1.35 and $2.70
for the full year 2005.
We have not changed our June 16 third quarter and full year guidance, as
we have not yet updated our internal operating forecast. However, in our June 16
release, we noted that we based our guidance for the last half of 2005 on
assumed average fuel prices of $270 per ton (derived from the forward fuel
curve) and currency exchange rates of $1.23 to the euro and $1.83 to sterling.
The current forward curve for fuel, as of July 5, 2005, indicates average prices
of approximately $280 per ton for the last half of 2005, which is 35% higher
than average prices for last year's comparable period. In addition, the current
currency exchange rates are approximately $1.19 to the euro and $1.76 to
sterling. If actual fuel prices for the last half of 2005 ultimately turn out to
average $280 per ton and actual currency exchange rates for the last half of
2005 ultimately turn out to be $1.19 to the euro and $1.76 to sterling, then our
diluted earnings per share would be reduced by $0.02 and $0.03 for the third
quarter and full year 2005, respectively.
The year-over-year percentage increase in our ALBD capacity, resulting
from new ships entering service, is 5.5% and 8.9% in the third and fourth
quarters of 2005, respectively, as compared to the same quarters in 2004.
Seasonality
Our revenue from the sale of passenger tickets is seasonal. Historically,
demand for cruises has been greatest during our third fiscal quarter, which
includes the Northern Hemisphere summer months. This higher demand during the
third quarter results in higher net revenue yields and, accordingly, the largest
share of our net income is earned during this period. Substantially all of
Holland America Tours' and Princess Tours' revenues and net income are generated
from May through September in conjunction with the Alaska cruise season.
12
Selected Information and Non-GAAP Financial Measures
Selected information was as follows:
Six Months Three Months
Ended May 31, Ended May 31,
--------------- ----------------
2005 2004 2005 2004
---- ---- ---- ----
Passengers carried (in thousands) 3,306 2,913 1,687 1,566
===== ===== ===== =====
Occupancy percentage 104.3% 102.4% 104.8% 102.8%
===== ===== ===== =====
Gross and net revenue yields were computed by dividing the gross or net
revenues, without rounding, by ALBDs as follows:
Six Months Three Months
Ended May 31, Ended May 31,
------------- -------------
2005 2004 2005 2004
---- ---- ---- ----
(in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets $ 3,740 $ 3,218 $ 1,899 $ 1,691
Onboard and other 1,116 973 570 526
------------ ------------ ------------ ------------
Gross cruise revenues 4,856 4,191 2,469 2,217
Less cruise costs
Commissions, transportation and other (814) (760) (383) (376)
Onboard and other (191) (178) (95) (97)
------------ ------------ ------------ ------------
Net cruise revenues $ 3,851 $ 3,253 $ 1,991 $ 1,744
============ ============ ============ ============
ALBDs 23,298,274 21,183,100 11,711,830 11,120,445
============ ============ ============ ============
Gross revenue yields $ 208.45 $ 197.88 $ 210.82 $ 199.37
============ ============ ============ ============
Net revenue yields $ 165.32 $ 153.60 $ 170.01 $ 156.81
============ ============ ============ ============
Gross and net cruise costs per ALBD were computed by dividing the gross or
net cruise costs, without rounding, by ALBDs as follows:
Six Months Three Months
Ended May 31, Ended May 31,
------------- -------------
2005 2004 2005 2004
---- ---- ---- ----
(in millions, except ALBDs and costs per ALBD)
Cruise operating expenses $ 2,840 $ 2,502 $ 1,428 $ 1,293
Cruise selling and
administrative expenses 647 610 325 308
------------ ------------ ------------ ------------
Gross cruise costs 3,487 3,112 1,753 1,601
Less cruise costs included in net
cruise revenues
Commissions, transportation and other (814) (760) (383) (376)
Onboard and other (191) (178) (95) (97)
------------ ------------ ------------ ------------
Net cruise costs $ 2,482 $ 2,174 $ 1,275 $ 1,128
============ ============ ============ ============
ALBDs 23,298,274 21,183,100 11,711,830 11,120,445
============ ============ ============ ============
Gross cruise costs per ALBD $ 149.67 $ 146.92 $ 149.73 $ 144.03
============ ============ ============ ============
Net cruise costs per ALBD $ 106.54 $ 102.64 $ 108.92 $ 101.47
============ ============ ============ ============
13
Six Months Ended May 31, 2005 ("2005") Compared to the Six Months Ended May 31,
2004 ("2004")
Revenues
Net cruise revenues increased $598 million, or 18.4%, to $3.85 billion in
2005 from $3.25 billion in 2004. The 10.0% increase in ALBDs between 2004 and
2005 accounted for $325 million of the increase, and the remaining $273 million
was from increased net revenue yields, which increased 7.6% in 2005 compared to
2004 (gross revenue yields increased by 5.3%). Net revenue yields increased in
2005 primarily from higher cruise ticket prices, a 1.9% increase in occupancy,
higher onboard revenues and the weaker U.S. dollar relative to the euro and
sterling. Net revenue yields as measured on a constant dollar basis, increased
6.2% in 2005. Gross cruise revenues increased $665 million, or 15.9%, in 2005 to
$4.86 billion from $4.19 billion in 2004 primarily for the same reasons net
cruise revenues increased. Both ALBD and revenue yields were reduced by the
combined impact of the cancellation of P&O Cruises Aurora's 2005 world cruise
and P&O Cruises Australia's Pacific Sky cruises, both caused by mechanical
difficulties.
Onboard and other revenues included concession revenues of $139 million in
2005 and $120 million in 2004. Onboard and other revenues increased in 2005
compared to 2004 primarily because of the 10.0% increase in ALBDs and increased
passenger spending on our ships.
Costs and Expenses
Net cruise costs increased $308 million, or 14.2%, to $2.48 billion in
2005 from $2.17 billion in 2004. The 10.0% increase in ALBDs between 2004 and
2005 accounted for $217 million of the increase, and the remaining $91 million
was from increased net cruise costs per ALBD, which increased 3.8% in 2005
compared to 2004 (gross cruise costs per ALBD increased 1.9%). Net cruise costs
per ALBD increased primarily due to a 23% increase in 2005 fuel prices, higher
dry-dock amortization expense and a weaker U.S. dollar relative to the euro and
the sterling in 2005. This increase was partially offset by the non-recurrence
in 2005 of promotional costs related to the introduction of Cunard's Queen Mary
2 in 2004, reduced costs in 2005 from the relocation of Cunard's shoreside
operations and economies of scale in 2005 associated with the 10.0% ALBD
increase. Net cruise costs per ALBD as measured on a constant dollar basis
compared to 2004 increased 2.2% in 2005, and were flat, excluding fuel costs.
Gross cruise costs increased $375 million, or 12.1%, in 2005 to $3.49 billion
from $3.11 billion in 2004, which was a lower percentage increase than net
cruise costs primarily because of the lower proportion of passengers who
purchased air transportation from us in 2005.
Depreciation and amortization expense increased by $58 million, or 14.9%,
to $446 million in 2005 from $388 million in 2004 largely due to the 10.0%
increase in ALBDs through the addition of new ships, ship improvement
expenditures and the impact of a weaker U.S. dollar.
Nonoperating (Expense) Income
Net interest expense, excluding capitalized interest, increased $25
million to $169 million in 2005 from $144 million in 2004. This increase was
primarily due to higher average borrowing rates.
Other income in 2005 included $7 million from the settlement of litigation
associated with the DLC transaction.
14
Three Months Ended May 31, 2005 ("2005") Compared to the Three Months Ended May
31, 2004 ("2004")
Revenues
Net cruise revenues increased $247 million, or 14.2%, to $1.99 billion in
2005 from $1.74 billion in 2004. The 5.3% increase in ALBDs between 2004 and
2005 accounted for $93 million of the increase, and the remaining $154 million
was from increased net revenue yields, which increased 8.4% in 2005 compared to
2004 (gross revenue yields increased by 5.7%). Net revenue yields increased in
2005 primarily from higher cruise ticket prices, a 1.9% increase in occupancy
and the weaker U.S. dollar relative to the euro and sterling. Net revenue yields
as measured on a constant dollar basis increased 6.8% in 2005. Gross cruise
revenues increased $252 million, or 11.4%, in 2005 to $2.47 billion from $2.22
billion in 2004 primarily for the same reasons net cruise revenues increased.
Both ALBD and revenue yields were reduced by the combined impact of the
cancellation of P&O Cruises Aurora's 2005 world cruise and P&O Cruises
Australia's Pacific Sky cruises, both caused by mechanical difficulties.
Onboard and other revenues included concession revenues of $70 million in
2005 and $64 million in 2004. Onboard and other revenues increased in 2005
compared to 2004 primarily because of the 5.3% increase in ALBDs and increased
passenger spending on our ships.
Costs and Expenses
Net cruise costs increased $147 million, or 13.0%, to $1.28 billion in
2005 from $1.13 billion in 2004. The 5.3% increase in ALBDs between 2004 and
2005 accounted for $60 million of the increase, and the remaining $87 million
was from increased net cruise costs per ALBD, which increased 7.3% in 2005
compared to 2004 (gross cruise costs per ALBD increased 4.0%). Net cruise costs
per ALBD increased primarily due to a 35% increase in 2005 fuel prices, higher
dry-dock amortization expense and a weaker U.S. dollar relative to the euro and
the sterling in 2005. This increase was partially offset by the reduced costs in
2005 from the relocation of Cunard's shoreside operations and economies of scale
in 2005 associated with the 5.3% ALBD increase. Net cruise costs per ALBD as
measured on a constant dollar basis compared to 2004 increased 5.4% in 2005, but
only increased 2.2%, excluding fuel costs. Gross cruise costs increased $152
million, or 9.5%, in 2005 to $1.75 billion from $1.60 billion in 2004, which was
a lower percentage increase than net cruise costs primarily because of the lower
proportion of passengers who purchased air transportation from us in 2005.
Depreciation and amortization expense increased by $25 million, or 12.5%,
to $225 million in 2005 from $200 million in 2004 largely due to the 5.3%
increase in ALBDs through the addition of new ships, ship improvement
expenditures and the impact of a weaker U.S. dollar.
Nonoperating (Expense) Income
Net interest expense, excluding capitalized interest, increased $8 million
to $81 million in 2005 from $73 million in 2004. The increase was primarily due
to a $12 million increase in interest expense from higher average borrowing
rates and was partially offset by a $4 million decrease in interest expense due
to lower average borrowings that resulted from our debt repayments.
Liquidity and Capital Resources
Sources and Uses of Cash
Our business provided $1.76 billion of net cash from operations during the
six months ended May 31, 2005, an increase of $54 million over $1.71 billion in
2004. We continue to generate substantial cash from operations and remain in a
strong financial position.
15
During the six months ended May 31, 2005, our net expenditures for capital
projects were $1.11 billion, of which $850 million was spent for our ongoing new
shipbuilding program, including the final delivery payments for the Carnival
Valor and P&O Cruises Arcadia. The remaining capital expenditures consisted
primarily of $189 million for ship improvements and refurbishments, and $68
million for Alaska tour assets, cruise port facility developments and
information technology assets. During the six months ended May 31, 2004, our net
expenditures for capital projects were $2.65 billion primarily because we took
delivery of six new ships.
During the six months ended May 31, 2005 we borrowed $823 million, of
which a portion was used to pay a portion of Arcadia's purchase price. During
the same six month period we made $786 million of debt repayments, which
included the final payment on our capitalized lease obligations of $110 million
and the $100 million repayment of our 7.05% fixed rate notes. In addition, we
refinanced $487 million of euro debt to reduce our borrowing rate. We also paid
cash dividends of $241 million in the first six months of fiscal 2005 and
purchased $30 million of treasury stock. Finally, in the second quarter 2005 we
increased our dividends by 33% from $0.15 per share to $0.20 per share.
Future Commitments and Funding Sources
Our contractual cash obligations remained generally unchanged at May 31,
2005 compared to November 30, 2004, except for changes to our debt as noted
above, and changes to our ship construction commitments as follows:
- We made the final payments of approximately $770 million related to
the Carnival Valor and P&O Cruises' Arcadia, which were delivered in
December 2004 and March 2005, respectively.
- In January 2005, Costa Cruises entered into a new ship construction
contract with Fincantieri for a 3,000 passenger ship, which has an
estimated all-in cost of 475 million euros and is expected to enter
service in June 2007.
During 2004, the Boards of Directors authorized the repurchase of up to an
aggregate of $1 billion of Carnival Corporation common stock and/or Carnival plc
ordinary shares commencing in 2005 subject to certain repurchase restrictions on
Carnival plc shares. Through July 5, 2005 $30 million of repurchases had been
made.
At May 31, 2005, we had liquidity of $3.50 billion, which consisted of
$1.02 billion of cash, cash equivalents and short-term investments and $2.48
billion available for borrowing under our revolving credit facilities. Our
revolving credit facilities mature in March 2006 through June 2006. A key to our
access to liquidity is the maintenance of our strong credit ratings.
Based primarily on our historical results, current financial condition and
future forecasts, we believe that our existing liquidity and cash flow from
future operations will be sufficient to fund most of our expected capital
projects, debt service requirements, dividend payments, working capital and
other firm commitments. However, our forecasted cash flow from future
operations, as well as our credit ratings, may be adversely affected by various
factors, including, but not limited to, those factors noted under "Cautionary
Note Concerning Factors That May Affect Future Results." To the extent that we
are required, or choose, to fund future cash requirements, including our future
shipbuilding commitments, from sources other than as discussed above, we believe
that we will be able to secure such financing from banks or through the offering
of debt and/or equity securities in the public or private markets. No assurance
can be given that our future operating cash flow will be sufficient to fund
future obligations or that we will be able to obtain additional financing, if
necessary.
16
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements, including
guarantee contracts, retained or contingent interests, certain derivative
instruments and variable interest entities, that either have, or are reasonably
likely to have, a current or future material effect on our financial statements.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable
assurance that information required to be disclosed by us in the reports that we
file or submit, is recorded, processed, summarized and reported, within the time
periods specified in the Securities and Exchange Commission's rules and forms.
Our Chief Executive Officer, Chief Operating Officer and Chief Financial
and Accounting Officer have evaluated our disclosure controls and procedures and
have concluded, as of May 31, 2005, that they were effective as described above.
Changes in Internal Control over Financial Reporting
In the spring of 2005, Holland America Line, Holland America Tours and
Windstar Cruises began using the reservation system that had been utilized
effectively for a number of years at Princess Cruises, P&O Cruises and P&O
Cruises Australia. Similarly, AIDA Cruises began using the reservation system
that had been utilized effectively for a number of years at Costa Cruises.
Holland America Line, Holland America Tours and Windstar Cruises are using the
system for bookings taken on cruises for April 2006 and thereafter, whereas AIDA
Cruises is using the system for bookings taken on cruises for its winter 2006
season and thereafter. These implementations utilize substantially all of the
same system controls that already exist at the other cruise brands that are
using these reservation systems. The primary processes affected are cash
applications and customer deposits, and the controls within these processes have
not materially changed from the controls in the prior processes, even though
different reservation systems are being used.
There have been no other changes in our internal control over financial
reporting during our quarter ended May 31, 2005 that have materially affected or
are reasonably likely to materially affect our internal control over financial
reporting.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system will be met. In addition, the design of any control
system is based in part upon certain assumptions about the likelihood of future
events. Because of these and other inherent limitations of control systems,
there is only reasonable assurance that our controls will succeed in achieving
their goals under all potential future conditions.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In February 2001, Holland America Line-USA, Inc., our wholly-owned
subsidiary, received a grand jury subpoena requesting that it produce documents
and records relating to the air emissions from Holland America Line ships in
Alaska. Records were produced and no further action has occurred since 2002.
17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the quarter ended May 31, 2005, purchases by Carnival Corporation
of Carnival Corporation's equity securities that are registered by it pursuant
to Section 12 of the Exchange Act were as follows:
Total Number Maximum
of Shares Dollar Value of
Purchased Shares that
as Part of May Yet Be
Total Publicly Purchased
Number of Average Announced Under the
Shares Price Paid Plans or Plans or
Period Purchased per Share Programs Programs(a)
------ --------- --------- -------- -----------
(in millions, except number of shares and price per share)
March 1, 2005 through
March 31, 2005 $ 1,000
April 1, 2005 through
April 30, 2005 $ 1,000
May 1, 2005 through
May 31, 2005 625,500 $48.48 625,500 $ 970
---------- ----------
Total 625,500 $48.48 625,500
========== ==========
(a) Under a share repurchase program authorized by our Boards of Directors in
October 2004, which commenced in 2005, we are authorized to repurchase up to an
aggregate of $1 billion of Carnival Corporation common stock and/or Carnival plc
ordinary shares, subject to certain restrictions on the Carnival plc shares. The
repurchase program does not have an expiration date. All shares were repurchased
pursuant to this publicly announced program.
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meetings of shareholders of Carnival Corporation and Carnival
plc were held on April 13, 2005 (the "Annual Meetings"). On all matters which
came before the Annual Meetings, holders of Carnival Corporation common stock
and Carnival plc ordinary shares were entitled to one vote for each share held.
Proxies for 736,916,937 shares entitled to vote were received in connection with
the Annual Meetings.
The matters which were submitted to Carnival Corporation's and Carnival
plc's shareholders for approval at the Annual Meetings and the tabulation of the
votes with respect to each such matter were as follows:
Director Elections
Resolution/Proposal For Against/ Abstained
Withheld(a)
To re-elect Micky Arison
as a director of
Carnival Corporation
and Carnival plc 712,325,448 19,388,022 5,203,467
To re-elect Ambassador
Richard G. Capen, Jr.
as a director of
Carnival Corporation
and Carnival plc 720,492,255 12,578,150 3,846,532
18
To re-elect Robert H.
Dickinson as a director
of Carnival Corporation
and Carnival plc 723,334,688 13,403,510 178,738
To re-elect Arnold W.
Donald as a director of
Carnival Corporation
and Carnival plc 721,417,466 12,581,658 2,917,813
To re-elect Pier Luigi
Foschi as a director of
Carnival Corporation
and Carnival plc 719,543,575 14,721,511 2,651,851
To re-elect Howard S.
Frank as a director of
Carnival Corporation
and Carnival plc 722,367,155 13,408,775 1,141,006
To elect Richard J. Glasier
as a director of
Carnival Corporation
and Carnival plc 724,935,598 9,076,035 2,905,303
To re-elect Baroness Hogg
as a director of
Carnival Corporation
and Carnival plc 730,823,438 5,776,260 317,239
To re-elect A. Kirk Lanterman
as a director of
Carnival Corporation
and Carnival plc 710,986,424 23,386,233 2,544,279
To re-elect Modesto A.
Maidique as a director
of Carnival Corporation
and Carnival plc 718,812,120 14,382,644 3,722,172
To re-elect John P. McNulty
as a director of
Carnival Corporation
and Carnival plc 723,863,224 10,025,839 3,027,874
To re-elect Sir John Parker
as a director of
Carnival Corporation
and Carnival plc 730,011,547 6,572,682 332,707
To re-elect Peter Ratcliffe
as a director of
Carnival Corporation
and Carnival plc 723,077,125 12,194,579 1,645,233
To re-elect Stuart Subotnick
as a director of
Carnival Corporation
and Carnival plc 719,617,500 13,649,414 3,650,023
To re-elect Uzi Zucker
as a director of
Carnival Corporation
and Carnival plc 714,149,576 18,484,467 4,282,893
19
(a) A vote "Withheld" by a shareholder of Carnival Corporation is deemed to be a
vote against the resolutions electing/re-electing directors.
Other Matters
Resolution/Proposal For Against Abstained/ Broker
Withheld(b) Non-Votes
To approve the Amended
and Restated Carnival
Corporation 2001 Outside
Director Stock Plan 619,195,107 51,443,549 29,612,832 36,665,446
To approve the Carnival
plc 2005 Employee Share
Plan 661,441,167 34,979,661 3,846,950 36,649,156
To approve the Carnival
plc 2005 Employee Stock
Purchase Plan 695,537,508 1,308,349 3,421,921 36,649,156
To appoint the UK firm of
PricewaterhouseCoopers LLP
as independent auditors
of Carnival plc and to
ratify the selection of
the U.S. firm of
PricewaterhouseCoopers LLP
as independent registered
certified public accounting
firm of Carnival Corporation 730,580,228 3,053,216 3,283,490
To authorize the audit
committee of the board
of directors of Carnival
plc to agree the remuneration
of the independent auditors 732,911,815 609,969 3,395,151
To receive the UK accounts
of Carnival plc and the
reports of the directors
and the auditors of Carnival
plc for the financial year
ended November 30, 2004 719,157,867 4,971,858 12,787,210
To approve the director's
remuneration report of
Carnival plc 718,107,402 14,004,890 4,804,004
To approve the limits
on the authority to allot
shares by Carnival plc 726,508,107 6,915,951 3,492,238
To approve the disapplication
of pre-emption rights for
Carnival plc shares 728,066,361 5,278,464 3,555,271
To approve a general authority
for Carnival plc to buy back
Carnival plc ordinary shares 733,204,969 302,200 3,409,765
20
(b) An "Abstained" vote by a shareholder of Carnival Corporation means
"Withheld" for this purpose (a vote neither for or against the resolution).
Item 5. Other Information.
I. Adoption of Carnival Cruise Lines Management Incentive Plan (the "Plan")
On July 5, 2005, the Compensation Committee of Carnival Corporation
approved the Plan effective beginning with the 2005 fiscal year. The Plan is
designed to focus the attention of Carnival Cruise Lines ("CCL") management on
achieving outstanding performance results as reflected in profitability and
other key measures, including return on invested capital.
The President, Senior Vice Presidents and Vice Presidents of CCL are
eligible to participate in the Plan.
The total amount payable under the Plan for each plan year (the "Bonus
Pool") shall be 1.75% (the "Bonus Funding Percentage") of adjusted net income
(the "Earnings"). Earnings will be equal to net income of CCL calculated in
accordance with U.S. generally accepted accounting principles consistently
applied, excluding net interest expense and accrued expenses related to the
Plan, less a capital charge of 10% of CCL's average invested capital (the
"Capital Charge") to incentivize management to improve returns on invested
capital.
Pursuant to the terms of the Plan, the Compensation Committee has the
discretion, to increase the potential Bonus Pool by up to 20% based on
performance in other areas (the "Funding Modifiers"). The Compensation Committee
has approved Funding Modifiers for the 2005 plan year which may increase the
potential Bonus Pool by up to 20% if CCL is successful in reducing its
controllable costs per available lower berth day.
Any changes to the Bonus Funding Percentage and Capital Charge for a plan
year as well as any Funding Modifiers will be determined by the Committee within
90 days of the commencement of each plan year.
Under the terms of the Plan, each participant is assigned a specific
number of points (the "Points"). The Points may be adjusted based on the
participant's evaluated performance for such year (the "Weighted Points") or for
other circumstances. Each participant shall receive a cash award equal to the
product of his or her Weighted Points multiplied by the "Point Value." The Point
Value shall be equal to (i) the amount of the Bonus Pool, divided by (ii) the
aggregate Points awarded to participants for each plan year. The Point Value
will not be known until after the end of each fiscal year.
The Compensation Committee may amend the Plan from time to time in such
respects as the Compensation Committee may deem advisable. The Plan will be
effective until terminated by the Compensation Committee, with the Compensation
Committee reserving the right to modify how the Bonus Pool is calculated.
II. Participation in the Plan by a Named Executive Officer
Robert H. Dickinson, the President and Chief Executive Officer of CCL and
a member of the boards of directors of Carnival Corporation and Carnival plc,
participates in the Plan.
Item 6. Exhibits.
3.1 Third Amended and Restated Articles of Incorporation of Carnival
Corporation, incorporated by reference to Exhibit No. 3.1 to the
joint
21
Current Report on Form 8-K of Carnival Corporation and Carnival plc
filed on April 17, 2003.
3.2 Amended and Restated By-laws of Carnival Corporation, incorporated
by reference to Exhibit No. 3.2 to the joint Current Report on Form
8-K of Carnival Corporation and Carnival plc filed on April 17,
2003.
3.3 Articles of Association of Carnival plc, incorporated by reference
to Exhibit No. 3.3 to the joint Current Report on Form 8-K of
Carnival Corporation and Carnival plc filed on April 17, 2003.
3.4 Memorandum of Association of Carnival plc, incorporated by reference
to Exhibit No. 3.4 to the joint Current Report on Form 8-K of
Carnival Corporation and Carnival plc filed on April 17, 2003.
10.1 Amended and Restated Carnival Corporation 2001 Outside Director
Stock Plan.
10.2 Carnival plc 2005 Employee Share Plan.
12 Ratio of Earnings to Fixed Charges.
31.1 Certification of Chief Executive Officer of Carnival Corporation
pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Operating Officer of Carnival Corporation
pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.3 Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival Corporation pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
31.4 Certification of Chief Executive Officer of Carnival plc pursuant to
Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.5 Certification of Chief Operating Officer of Carnival plc pursuant to
Rule 13a-14(a), as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.6 Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival plc pursuant to Rule 13a-14(a), as
adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer of Carnival Corporation
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Operating Officer of Carnival Corporation
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
32.3 Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival Corporation pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.4 Certification of Chief Executive Officer of Carnival plc pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
22
32.5 Certification of Chief Operating Officer of Carnival plc pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.6 Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival plc pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARNIVAL CORPORATION CARNIVAL PLC
By:/s/ Micky Arison By:/s/ Micky Arison
---------------- ----------------
Micky Arison Micky Arison
Chairman of the Board of Directors Chairman of the Board of Directors
and Chief Executive Officer and Chief Executive Officer
By:/s/ Howard S. Frank By:/s/ Howard S. Frank
------------------- -------------------
Howard S. Frank Howard S. Frank
Vice Chairman of the Board of Vice Chairman of the Board of
Directors and Chief Operating Officer Directors and Chief Operating Officer
By:/s/ Gerald R. Cahill By:/s/ Gerald R. Cahill
-------------------- --------------------
Gerald R. Cahill Gerald R. Cahill
Executive Vice President Executive Vice President
and Chief Financial and and Chief Financial and
Accounting Officer Accounting Officer
Dated: July 7, 2005 Dated: July 7, 2005
24
Exhibit 10.1
CARNIVAL CORPORATION
AMENDED AND RESTATED
2001 OUTSIDE DIRECTOR STOCK PLAN
(Adopted by the Board of Directors on February 16, 2001 and approved by the
shareholders on April 17, 2001, effective as of January 1, 2001, amended by the
Board of Directors on October 8, 2001, further amended by the Board of Directors
on July 19, 2004 and, further amended and restated by the Board of Directors on
January 18, 2005)
1. Purpose.
The purpose of the Plan is to promote the interests of the Combined
Group by strengthening the Combined Group's ability to attract and retain the
services of experienced and knowledgeable non-executive directors and by
encouraging such directors to acquire an increased proprietary interest in the
Combined Group and more closely align the interests of such directors with those
of the Combined Group's shareholders.
The Plan provides for granting of Options, Restricted Stock Awards,
and Restricted Stock Unit Awards.
2. Definitions.
The following definitions shall be applicable throughout the Plan.
(a) "Affiliate" means (i) any entity that directly or indirectly is
controlled by, controls or is under common control with the Company or Carnival
plc, and (ii) to the extent provided by the Committee, any entity in which the
Company or Carnival plc has a significant equity interest.
(b) "Award" means, individually or collectively, any Option,
Restricted Stock Award or Restricted Stock Unit Award.
(c) "Award Agreement" means a Stock Option Agreement, Restricted
Stock agreement or Restricted Stock Unit agreement.
(d) "Board" means the Board of Directors of the Company.
(e) "Carnival plc" means the entity previously known as P&O Princess
Cruises plc, a public limited company incorporated under the laws of England and
Wales, and any successor thereto.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.
(g) "Committee" means the Compensation Committee of the Board.
(h) "Common Stock" means the common stock, par value $0.01 per
share, of the Company and any stock into which such common stock may be
converted or into which it may be exchanged.
(i) "Combined Group" means the Company and Carnival plc and any
successor thereto.
(j) "Company" means Carnival Corporation, a corporation organized
under the laws of the Republic of Panama, and any successor thereto.
(k) "Date of Grant" means the date on which the granting of an Award
is authorized, or such other date as may be specified in such authorization or,
if there is no such date, the date indicated on the applicable Award Agreement.
(l) "Disability" means a condition that would entitle a Participant
to receive benefits under the long-term disability plan of a member of the
Combined Group or an Affiliate, as if such Participant were eligible to
participate in such plan whether or not any such plan is applicable to such
Participant, the existence of such condition to be reasonably determined by the
Board.
(m) "Effective Date" means January 1, 2001.
(n) "Eligible Director" shall have the meaning assigned to it in
Section 6.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(p) "Fair Market Value", on a given date, means (i) if the Shares
are listed on a national securities exchange, the average of the highest and
lowest sale prices reported as having occurred on the primary exchange with
which the Shares are listed and traded on such date, or, if there is no such
sale on that date, then on the last preceding date on which such a sale was
reported; (ii) if the Shares are not listed on any national securities exchange
but is quoted in the Nasdaq National Market ("Nasdaq") on a last sale basis, the
average between the high bid price and low ask price reported on the date prior
to such date, or, if there is no such sale on that date, then on the last
preceding date on which a sale was reported; or (iii) if the Shares are not
listed on a national securities exchange nor quoted in the Nasdaq on a last sale
basis, the amount determined by the Committee to be the fair market value based
upon a good faith attempt to value the Shares accurately and computed in
accordance with applicable regulations of the Internal Revenue Service.
(q) "Mature Shares" means Shares owned by a Participant which are
not subject to any pledge or security interest and have either been held by the
Participant for six months, previously acquired by the Participant on the open
market or meet such other requirements as the Committee may determine are
necessary in order to avoid an accounting earnings charge on account of the use
of such Shares to pay the Option Price or satisfy any applicable withholding
obligation in respect of an Option.
(r) "Option" means an Award granted under Section 8.
(s) "Option Price" means the exercise price for an Option as
described in Section 8(a).
(t) "Pairing Agreement" means the Pairing Agreement, dated April 17,
2003, among the Company, The Law Debenture Trust Corporation (Cayman) Limited,
as trustee of the Carnival plc Special Voting Trust, and Sun Trust Bank, as
transfer agent, as it may be amended from time to time.
(u) "Participant" means each Eligible Director receiving an Award
pursuant to the Plan.
(v) "Plan" means this Carnival Corporation Amended and Restated 2001
Outside Director Stock Plan.
(w) "Restricted Period" means, with respect to any Share of
Restricted Stock or any Restricted Stock Unit, the period of time during which
such Award is subject to restrictions set forth in Section 9 and the applicable
Award Agreement.
(x) "Restricted Stock" means Shares issued or transferred to a
Participant subject to forfeiture and the other restrictions set forth in
Section 9 and the applicable Award Agreement.
(y) "Restricted Stock Award" means an Award of Restricted Stock
granted under Section 9.
(z) "Restricted Stock Unit" means a hypothetical investment
equivalent to one Share granted in connection with an Award made under Section
9.
(aa) "Restricted Stock Unit Award" means an Award of Restricted
Stock Units granted under Section 9.
(bb) "Securities Act" means the Securities Act of 1933, as amended.
(cc) "Share" means the aggregate of one share of Common Stock and
one Trust Share.
(dd) "Stock Option Agreement" means any agreement between the
Company and a Participant who has been granted an Option pursuant to Section 8
which defines the rights and obligations of the parties thereto.
(ee) "Subsidiary" means any subsidiary of the Company as defined in
Section 424(f) of the Code.
(ff) "Trust Share" has the meaning assigned to it in the Pairing
Agreement.
(gg) "Vested Unit" has the meaning assigned to it in Section 9(d).
3. Effective Date, Duration and Shareholder Approval.
(a) The Plan is effective as of the Effective Date, and the Plan was
approved by shareholders at a meeting held on April 17, 2001 in a manner
intended to comply with the shareholder approval requirements of the New York
Stock Exchange. This amendment and restatement shall be effective as of January
18, 2005, subject to approval by the Company's shareholders in a manner intended
to comply with the shareholder approval requirements of the New York Stock
Exchange. The validity of any and all Awards granted after January 18, 2005 to
Participants are contingent upon approval of the January 18, 2005 amendment and
restatement of the Plan by the shareholders of the Company in a manner intended
to comply with the shareholder approval requirements of the New York Stock
Exchange.
(b) The expiration date of the Plan, on and after which no Awards
may be granted hereunder, shall be January 1, 2011; provided, however, that the
administration of the Plan shall continue in effect until all matters relating
to Awards previously granted have been settled.
4. Administration.
(a) The Plan shall be administered by the Committee. A majority of
the Committee will constitute a quorum and the acts of a majority of the members
present at any meeting at which a quorum is present, or acts approved in writing
by all members of the Committee without a meeting, will be acts of the
Committee.
(b) Subject to the express provisions of the Plan, the Committee
shall have plenary authority to interpret the Plan, to prescribe, amend and
rescind the rules and regulations relating to it and to make all other
determinations deemed necessary and advisable for the administration of the
Plan. No member of the Committee shall be liable for anything done or omitted to
be done by him or by any other member of the Committee in connection with the
Plan, except for his own willful misconduct or gross negligence. All decisions
which are made by the Committee with respect to interpretation of the terms of
the Plan and with respect to any questions or disputes arising under the Plan
shall be final and binding on the Company and the participants, their heirs or
beneficiaries. The Committee shall not be empowered to take any action, whether
or not otherwise authorized under the Plan, which would result in any Eligible
Director failing to qualify as a "disinterested person."
5. Shares Subject to Awards.
(a) Subject to the adjustment provisions of Section 10(e), the
aggregate number of Shares in respect of which Awards may be granted under the
Plan shall not exceed 1,000,000.
(b) Shares shall be deemed to have been used in settlement of Awards
whether or not they are actually delivered. In the event any Award shall be
surrendered, terminate, expire, be forfeited or be cancelled for any reason
whatsoever without the Participant having benefited therefrom, the number of
Shares no longer subject thereto shall thereupon be released and shall
thereafter be available for new Awards under the Plan. For purposes of the
foregoing sentence, a Participant shall not be deemed to have received any
"benefit" in the case of
forfeited Restricted Stock Awards by reason of having enjoyed voting rights and
dividend rights prior to the date of forfeiture.
(c) Shares delivered by the Company in settlement of Awards may be
authorized and unissued Shares or Shares held in the treasury of the Company or
purchased on the open market or by private purchase.
(d) There shall be reserved at all times for sale under the Plan a
number of Shares, of either authorized and unissued Shares, Shares held in the
Company's treasury, or both, equal to the maximum number of shares in respect of
which Awards may be granted under the Plan.
6. Participation in Plan. Each member of the Company's Board of Directors
who is not otherwise an employee of the Company or any Affiliate or subsidiary
of the Company within the meaning of the Employee Retirement Income Security Act
of 1974 (an "Eligible Director") shall be eligible to participate in the Plan. A
director who is an employee and who retires or resigns from employment with the
Company and/or its Affiliates, but remains an Eligible Director of the Company,
shall become eligible to participate in the Plan in accordance with Section 7,
effective as of the first annual meeting of shareholders held after his
termination of employment.
7. Annual Award Grants. Each Eligible Director shall receive upon initial
election to office by the shareholders and thereafter annually on the date of
the Company's annual meeting of shareholders at which such Eligible Director is
re-elected to office, or on any other date properly approved pursuant to this
Section 7, an Award representing 10,000 "points." An Option shall represent one
point; and each Share of Restricted Stock or a Restricted Stock Unit shall
represent four points. An Award may be composed of Options, Restricted Stock,
Restricted Stock Units or a combination thereof, at the discretion of the
Committee which discretion shall be exercised not later than the Date of Grant
of such Award. The Board may authorize a Date of Grant other than the date of
the Company's annual meeting of shareholders, provided, that Awards granted to
each Participant do not exceed 10,000 points in any given calendar year.
8. Terms of Options.
(a) Option Price. The Option Price per Share for each Option shall
be the Fair Market Value at the Date of Grant.
(b) Vesting. Subject to Section 8(e), Options shall vest and become
exercisable in five equal annual installments commencing on the first
anniversary of the Date of Grant.
(c) Duration of Options. Subject to Section 8(e), each Option
granted hereunder shall be exercisable for a period of ten years from the Date
of Grant.
(d) Manner of Exercise and Form of Payment.
(i) An Option granted under the Plan shall be deemed exercised
when the person entitled to exercise the Option (a) delivers written notice to
the Company at its principal business office, directed to the attention of its
Secretary, of the decision to exercise, specifying the number of shares with
respect to which the option is exercised and the price per share designated in
the Stock Option Agreement, (b) concurrently tenders to the Company full payment
for the Shares to be purchased pursuant to such exercise, and (c) complies with
such other reasonable requirements as the Committee establishes pursuant to
Section 8 of the Plan.
(ii) Full payment for Shares purchased by the Participant
shall be made at the time of any exercise, in whole or in part, of an Option,
and certificates for such Shares shall be delivered to the Participant as soon
thereafter as is reasonably possible. No Shares shall be transferred to the
Participant until full payment therefor has been made and the Participant shall
have none of the rights of a shareholder with respect to any Shares subject to
an Option until a certificate for such shares shall have been issued and
delivered to the Participant. Such payment shall be made in cash or by check or
by money order payable to the Company, in each case payable in U.S. currency. In
the Committee's discretion, such payment may be made by delivery of Mature
Shares having a Fair Market Value (determined as of the date of the Option is so
exercised in whole or in part), that,
when added to the value of any cash, check or money order satisfying the
foregoing requirements, will equal the aggregate purchase price.
(e) Termination of Board Membership.
(i) Death or Disability. Upon a Participant's ceasing to be a
member of the Board due to death or Disability, all unvested Options shall
immediately vest and become exercisable and all vested Options shall continue to
be exercisable by the Participant or his estate, as applicable, until the
earlier to occur of (i) the original expiration date of such Option, and (ii)
one year from such cessation.
(ii) Other Termination. Except as provided in the proviso to
this Section, upon a Participant's ceasing to be a member of the Board for any
reason other than death or Disability, all unvested Options shall continue to
vest in accordance with their initial terms, and all vested Options shall
continue to be exercisable until the original expiration date of such Option;
provided, however, that if the Participant ceases to be a member of the Board
prior to serving in such capacity for one year, all of such Participant's
Options shall immediately expire upon such termination.
9. Restricted Stock and Restricted Stock Units.
(a) Awards of Restricted Stock and Restricted Stock Units.
(i) Each Participant granted a Restricted Stock Award shall
execute and deliver to the Company a Restricted Stock agreement with respect to
the Restricted Stock setting forth the restrictions and other terms and
conditions applicable to such Restricted Stock including the Restricted Period
set forth in Section 9(c). If the Committee determines that the Restricted Stock
shall be held in escrow rather than delivered to the Participant pending the
release of the applicable restrictions, the Committee may require the
Participant to additionally execute and deliver to the Company (A) an escrow
agreement satisfactory to the Committee and (B) the appropriate blank stock
powers with respect to the Restricted Stock covered by such agreement. If a
Participant shall fail to execute an agreement evidencing an Award of Restricted
Stock and, if applicable, an escrow agreement and stock powers, the Award shall
be null and void. Subject to the restrictions set forth in Section 9(b) and
Section 9(c), the Participant generally shall have the rights and privileges of
a stockholder as to such Restricted Stock, including the right to vote such
Restricted Stock. At the discretion of the Committee, cash dividends and stock
dividends with respect to the Restricted Stock may be either currently paid to
the Participant or withheld by the Company for the Participant's account, and
interest may be credited on the amount of cash dividends withheld at a rate and
subject to such terms as determined by the Committee. To the extent applicable,
the cash dividends or stock dividends so withheld by the Committee and
attributable to any particular share of Restricted Stock (and earnings thereon,
if applicable) shall be distributed to the Participant upon the release of
restrictions on such share and, if such share is forfeited, the Participant
shall have no right to such cash dividends, stock dividends or earnings.
(ii) Upon the grant of an Award of Restricted Stock, the
Committee shall cause a stock certificate registered in the name of the
Participant to be issued and, if it so determines, deposited together with the
stock powers with an escrow agent designated by the Committee. If an escrow
arrangement is used, the Committee may cause the escrow agent to issue to the
Participant a receipt evidencing any stock certificate held by it registered in
the name of the Participant.
(iii) The terms and conditions of a grant of Restricted Stock
Units shall be reflected in a written Restricted Stock Unit agreement. No Shares
shall be issued at the time an Award of Restricted Stock Units is made, and the
Company will not be required to set aside a fund for the payment of any such
Award. At the discretion of the Committee, each Restricted Stock Unit
(representing one Share) awarded to a Participant may be credited with cash and
stock dividends paid by the Company in respect of one Share ("Dividend
Equivalents"). At the discretion of the Committee, Dividend Equivalents may be
either currently paid to the Participant or withheld by the Company for the
Participant's account, and interest may be credited on the amount of cash
Dividend Equivalents withheld at a rate and subject to such terms as determined
by the Committee. Dividend Equivalents credited to a Participant's account and
attributable to any particular Restricted Stock Unit (and earnings thereon, if
applicable) shall be distributed to the Participant upon settlement of such
Restricted Stock Unit and, if such Restricted Stock Unit is forfeited, the
Participant shall have no right to such Dividend Equivalents.
(b) Restrictions; Forfeiture.
(i) Restricted Stock awarded to a Participant shall be subject
to the following restrictions until the expiration of the Restricted Period, and
to such other terms and conditions as may be set forth in the applicable
Restricted Stock agreement: (A) if an escrow arrangement is used, the
Participant shall not be entitled to delivery of the stock certificate; and (B)
the Shares shall be subject to the restrictions on transferability set forth in
the applicable Restricted Stock agreement. Restricted Stock awarded to a
Participant who has not been a member of the Board for at least one year at the
time of such award shall be forfeited, and the applicable stock certificates
returned to the Company, if the Participant ceases to be a member of the Board
for any reason other than death or Disability prior to the one-year anniversary
of his or her initial election to the Board. In the event of such a forfeiture,
all rights of the Participant to such Restricted Stock, and as a shareholder in
respect thereof, shall terminate without further obligation on the part of the
Company.
(ii) Restricted Stock Units awarded to any Participant who has
not been a member of the Board for at least one year at the time of such award
shall be forfeited, and all rights of the Participant to in respect thereof,
shall terminate without further obligation on the part of the Company if the
Participant ceases to be a member of the Board for any reason other than death
or Disability prior to the one-year anniversary of his or her initial election
to the Board. Restricted Stock Units shall be subject to such other terms and
conditions as may be set forth in the applicable Restricted Stock Unit
agreement.
(iii) The Committee shall have the authority to remove any or
all of the restrictions on the Restricted Stock and Restricted Stock Units
whenever it may determine that, by reason of changes in applicable laws or other
changes in circumstances arising after the date of the Restricted Stock Award or
Restricted Stock Unit Award, such action is appropriate.
(c) Restricted Period. The Restricted Period of Restricted Stock
Awards and Restricted Stock Unit Awards granted to any Participant shall
commence on the Date of Grant and shall expire as to twenty percent (20%) of the
Restricted Stock or Restricted Stock Units, as applicable, subject thereto on
each of the first, second, third, fourth and fifth anniversaries of the Date of
Grant whether or not such Participant continues to be a member of the Board;
provided, however, that upon a Participant's ceasing to be a member of the Board
due to death or Disability, the Restricted Period shall expire as to one hundred
percent (100%) of the Shares subject thereto.
(d) Delivery of Restricted Stock and Settlement of Restricted Stock
Units.
(i) Upon the expiration of the Restricted Period with respect
to any Shares covered by an Award of Restricted Stock which has not been
forfeited in accordance with the second sentence of Section 9(b)(i), the
restrictions set forth in this Section 9 and the Restricted Stock agreement
shall be of no further force or effect with respect to shares of Restricted
Stock which have not then been forfeited. If an escrow arrangement is used, upon
such expiration, the Company shall deliver to the Participant, or his
beneficiary, without charge, the stock certificate evidencing the shares of
Restricted Stock with respect to which the Restricted Period has expired (to the
nearest full share) and any cash dividends or stock dividends credited to the
Participant's account with respect to such Restricted Stock and the interest
thereon, if any.
(ii) Upon the expiration of the Restricted Period with respect
to any Restricted Stock Units covered by a Restricted Stock Unit Award which has
not been forfeited in accordance with Section 9(b)(ii), the Company shall
deliver to the Participant, or his beneficiary, without charge, one Share for
each Restricted Stock Unit with respect to which the Restricted Period has
expired ("Vested Unit") and cash equal to any Dividend Equivalents credited with
respect to each such Vested Unit in accordance with Section 9(a)(iii) hereof and
the interest thereon, if any; provided, however, that, if explicitly provided in
the applicable Restricted Stock Unit agreement, the Committee may, in its sole
discretion, elect to pay cash or part cash and part Shares in lieu of delivering
only Shares for Vested Units. If a cash payment is made in lieu of delivering
Shares, the amount of such payment shall be equal to the Fair Market Value of
the Shares as of the date on which the Restricted Period lapsed with respect to
such Vested Unit.
(e) Stock Restrictions. Each certificate representing Restricted
Stock awarded under the Plan shall bear a legend substantially in the form of
the following until the lapse of all restrictions with respect to the Shares
subject to the Award as well as any other information the Company deems
appropriate:
Transfer of this certificate and the shares represented
hereby is restricted pursuant to the terms of the
Carnival Corporation Amended and Restated 2001 Outside
Director Stock Plan and a Restricted Stock Agreement,
dated as of _____________, between Carnival Corporation
and __________________. Copies of such Plan and
Agreement are on file at the offices of Carnival
Corporation.
Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.
10. General.
(a) Nontransferability of Awards. No Award or any right evidenced
thereby shall be transferable in any manner other than by will or the laws of
descent and distribution, and, during the lifetime of a Participant, only the
Participant (or the Participant's court-appointed legal representative) may
exercise an Option. In the Committee's discretion, an Award may be transferred
pursuant to a "qualified domestic relations order," as defined in section 414(p)
of the Code or any similar domestic relations order enforceable in the
jurisdiction in which such Participant resides.
(b) Rights of Participant. Neither the Participant nor the
Participant's executor or administrator shall have any of the rights of a
shareholder of the Company with respect to the Shares subject to an Option until
certificates for such Shares shall actually have been issued upon the due
exercise of such Option. No adjustment shall be made for any regular cash
dividend for which the record date is prior to the date of such due exercise and
full payment for such Shares has been made therefor.
(c) Right To Terminate Relationship. Nothing in the Plan or in any
Award shall confer upon any Participant the right to continue to serve as a
director of the Company.
(d) Nonalienation of Benefits. No right or benefit under the Plan
shall be subject to anticipation, alienation, sale, assignment, hypothecation,
pledge, exchange, transfer, encumbrance or charge, and any attempt to
anticipate, alienate, sell, assign, hypothecate, pledge, exchange, transfer,
encumber or charge the same shall be void. To the extent permitted by applicable
law, no right or benefit hereunder shall in any manner be liable for or subject
to the debts, contracts, liabilities or torts of the person entitled to such
benefits.
(e) Adjustment Upon Changes in Capitalization, etc.
(i) Awards granted under the Plan, any Award Agreements, and
the maximum number of Shares subject to all Awards stated in Section 5(a) shall
be subject to adjustment or substitution, as determined by the Committee in its
sole discretion, as to the number, price or kind of a share of stock or other
consideration subject to such Awards or as otherwise determined by the Committee
to be equitable in the event of any stock split, stock dividend, stock change,
reclassification, an unpairing of the shares of Common Stock from the Trust
Shares, recapitalization or combination of shares which changes the character or
amount of Shares (x) in the case of Options, prior to exercise of any portion of
an Option theretofore granted under the Plan, such that such option, to the
extent that it shall not have been exercised, shall entitle the Participant (or
the Participant's executor or administrator) upon its exercise to receive in
substitution therefor such number and kind of shares as the Participant would
have been entitled to receive if the Participant had actually owned the Shares
subject to such Option at the time of the occurrence of such change; provided,
however, that if the change is of such a nature that the Participant, upon
exercise of the Option, would receive property other than shares of stock the
Committee shall make an appropriate adjustment in the Option to provide that the
Participant (or the Participant's executor or administrator) shall acquire upon
exercise only shares of stock of such number and kind as the Committee, in its
sole judgment, shall deem equitable; and, provided further, that any such
adjustment shall be made so as to conform to the requirements of section 424(a)
of the Code; and (y) in the case of Restricted Stock and Restricted Stock Units,
occurring after the Date of Grant of any such Awards.
(ii) In the event that any transaction (other than a change
specified in the preceding paragraph) described in section 424(a) of the Code
affects the Shares subject to any unexercised Option or subject to any Award
with respect to which the Restricted Period has not expired, the Board of
Directors of the surviving or acquiring corporation shall make such similar
adjustment as is permissible and appropriate. If any such change or transaction
shall occur, the number and kind of Shares for which Awards may thereafter be
granted under the Plan shall be adjusted to give effect thereto.
(f) Purchase for Investment. Whether or not the Options and Shares
covered by the Plan have been registered under the Securities Act of 1933, each
person exercising an Option under the Plan may be required by the Company to
give a representation in writing that such person is acquiring such Shares for
investment and not with a view to, or for sale in connection with, the
distribution of any part thereof. The Company will endorse any necessary legend
referring to the foregoing restriction upon the certificate or certificates
representing any Shares issued or transferred to the Participant upon the
exercise of any Option granted under the Plan.
(g) Form of Agreements with Participants. Each Award granted
pursuant to the Plan shall be in writing and shall have such form, terms and
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall provide for such Award. Each Participant shall be notified promptly of
such grant, and an Award shall be promptly executed and delivered by the Company
and the Participant.
(h) Termination and Amendment of Plan and Awards.
(i) Unless the Plan shall theretofore have been terminated as
hereinafter provided, Awards may be granted under the Plan at any time, and from
time to time, prior to the tenth anniversary of the Effective Date, on which
date the Plan will expire, except as to Awards then outstanding under the Plan.
Such Awards shall remain in effect until they have been exercised, have expired
or have been canceled.
(ii) The Board, without further approval of the Company's
shareholders, may terminate, modify or amend this Plan at any time and from time
to time in such respects as the Board may deem advisable, subject to any
shareholder or regulatory approval required by law or the New York Stock
Exchange; provided, that any such amendment shall comply with the applicable
requirements for exemption (to the extent necessary) under Rule 16b-3 under the
Exchange Act.
(iii) No termination, modification or amendment of the Plan,
without the consent of the Participant, may adversely affect the rights of such
person with respect to such Award. With the consent of the Participant and
subject to the terms and conditions of the Plan, the Committee may amend
outstanding Award agreements with any Participant.
(iv) Notwithstanding the above, without shareholder approval,
the Committee may not take any action that results in the "repricing" of any
Option granted under the Plan. For purposes of this Section 10(h)(iv), a
"repricing" means any of the following (or any other action that has the same
effect of any of the following): (a) amending or modifying the terms of an
Option after the Date of Grant in a manner that reduces the Option Price of such
Option; (b) any other action that would either (A) be reportable on the
Company's proxy statement as Options which have been "repriced" (as such term is
used in Item 402 of Regulation S-K promulgated under the Exchange Act) or (B)
results in an Option being considered repriced under generally accepted
accounting principles; or (c) canceling an Option at time when its Option Price
is equal to or less than the Fair Market Value of the Shares subject to the
Option, in exchange for another Option, Restricted Stock Award, Restricted Stock
Unit Award, or any other equity-based award. A cancellation and exchange
described in clause (c) of the preceding sentence will be considered a
"repricing" regardless of whether (A) the Option, Restricted Stock Award,
Restricted Stock Unit Award, or other equity-based award is delivered
simultaneously with the cancellation of the Option, (B) it is reportable as a
repricing in the Company's proxy statement or under generally accepted
accounting principles, or (C) the cancellation of the Option was voluntary on
the part of the Participant.
(i) Government and Other Regulations. The obligation of the Company
with respect to Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations and such approvals by any governmental agency as may
be required, including, without limitation, the effectiveness of any
registration statement required under the Securities Act, the rules and
regulations of any securities exchange on which the Shares may be listed.
(j) Withholding. A Participant may be required to pay to a member of
the Combined Group or any Affiliate, and each member of the Combined Group or
any Affiliate shall have the right and is hereby authorized to withhold from any
Shares or other property deliverable under any Award or from any compensation or
other amounts owing to a Participant the amount (in cash, Shares or other
property) of any required tax withholding in respect of an Award, its exercise,
or any payment or transfer under an Award or under the Plan and to take such
other action as may be necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes.
(k) Separability. If any of the terms or provision of the Plan
conflict with the requirements of Rule 16b-3 under the Exchange Act, then such
terms or provisions shall be deemed inoperative to the extent they so conflict
with the requirements of Rule 16b-3.
(l) Governing Law. The Plan shall be governed by and construed in
accordance with the internal laws of the State of Florida without regard to the
principles of conflicts of law thereof, or principles of conflicts of laws of
any other jurisdiction which could cause the application of the laws of any
jurisdiction other than the State of Florida.
Exhibit 10.2
CARNIVAL PLC 2005 EMPLOYEE SHARE PLAN
(As adopted by the board of directors of Carnival plc on 18 January 2005
and to be approved by shareholders of Carnival plc in general meeting on
13 April 2005)
1. PURPOSE
The purpose of the Plan is to provide a means through which each member of the
plc Group may attract able persons to enter and remain in the employ of members
of the plc Group and to provide a means whereby employees and executive
directors of each member of the plc Group can acquire and maintain Share
ownership, or be paid incentive compensation measured by reference to the value
of Shares, thereby strengthening their commitment to the welfare of the members
of the plc Group and promoting an identity of interest between shareholders and
these persons. It is intended that the Plan will be an employees' share scheme
within the meaning of section 743 of the Companies Act 1985.
The Plan provides for the granting of Options (Incentive Share Options,
Nonqualified Share Options, Unapproved Options and Approved Options), Restricted
Shares and Restricted Share Units to eligible employees. Inland Revenue Approved
Options may be granted under an Appendix to the Plan approved by the Inland
Revenue.
2. DEFINITIONS
The following definitions shall be applicable throughout the Plan;
ADRs means American Depositary Receipts evidencing American Depositary Shares
deposited by the Company with a depositary pursuant to a depositary agreement;
Affiliate means:
(a) any entity that directly or indirectly is Controlled by, Controls or is
under common Control with the Company or Carnival Corporation; and
(b) to the extent provided by the Committee, any entity in which the Company or
Carnival Corporation has a significant equity interest.
Approved Option means an Option granted under an Inland Revenue approved share
plan contained in the Appendix to this Plan;
Award means, individually or collectively, any Incentive Share Option,
Nonqualified Share Option, Unapproved Option, Approved Option, Restricted Share
Award or Restricted Share Unit Award;
Award Agreement means a Share Option Agreement, Restricted Share Agreement or
Restricted Share Unit Agreement;
Board means the board of directors of the Company;
Capital Reorganisation means any variation in the share capital or reserves of
the Company (including, without limitation, by way of capitalisation issue,
rights issue, sub-division, consolidation, or reduction);
Carnival Corporation means Carnival Corporation, a corporation organised under
the laws of the Republic of Panama;
Cause means a member of the plc Group having a right to terminate a
Participant's employment summarily either in accordance with the terms of the
Participant's contract of employment with that member or otherwise at common law
including without limitation:
(a) the determination by the Committee that the Participant has ceased to
perform his duties to a member of the plc Group (other than as a result of
his incapacity due to physical or mental illness or injury), which failure
amounts to an intentional and extended neglect of his duties to his
employer;
(b) the Committee's determination that the Participant has engaged or is about
to engage in wilful misconduct or conduct which causes or may reasonably
be expected to cause substantial damage to a member of the plc Group;
(c) the Participant having been convicted of, or pleaded guilty to, an offence
involving as a material element fraud or dishonesty; or
(d) the failure of the Participant to follow the lawful instructions of the
Board or any of his superiors;
Change of Control means the occurrence of any of the following:
(a) a person (either alone or together with any person acting in concert with
him) obtaining Control of the Company as a result of a general offer or
otherwise for the whole of the share capital of the Company (other than
those shares which are already owned by him and/or any person acting in
concert with him);
(b) a person (either alone or together with any person acting in concert with
him) acquiring 50% or more (on a fully diluted basis) of either:
(i) the then outstanding Shares taking into account as outstanding for
this purpose such Shares as are issuable upon the exercise of
options or warrants, the conversion of convertible shares or debt
and the exercise of any similar right to acquire such Shares (the
"Outstanding Shares"); or
(ii) the combined voting power of the then outstanding voting shares or
securities of the Company entitled to vote generally in the election
of directors (the Outstanding Company Voting Securities);
provided, however, that for purposes of this Plan, the following
acquisitions shall not constitute a Change of Control:
(A) any acquisition by the Company or any Affiliate,
(B) any acquisition by any employee benefit plan sponsored or
maintained by the Company or any Affiliate,
(C) any acquisition by Marilyn B. Arison, Micky Arison, Shari
Arison, Michael Arison or their spouses or lineal descendents,
any trust established for the benefit of any of the
aforementioned Arison family members, or any person directly
or indirectly controlling, controlled by or under common
control with any of the aforementioned Arison family members
or any trust established for the benefit of any of the
aforementioned Arison family members or any charitable trust
or non-profit entity established by any person or entity
described in this sub-paragraph (C); or
(D) any acquisition by any person which falls within the proviso
to paragraph (e) below or sub-paragraphs (i), (ii) and (iii)
of paragraph (h) below;
and for the purposes of this Plan an event falling within sub-paragraphs
(a) or (b) of this definition shall be referred to as an Acquisition;
(c) individuals who, on the date this Plan is approved by shareholders in
general meeting, constitute the board of directors of the Company (the
Incumbent Directors) ceasing for any reason to constitute at least a
majority of the board, provided that any person who becomes a director
subsequently and whose election or nomination for election was approved by
a vote of at least two-thirds of the Incumbent Directors then on the board
(either by a specific vote of the directors or by approval of the proxy
statement or annual report and accounts of the Company in which such
person is nominated for election by shareholders, without written
objection to such nomination) shall be an Incumbent Director; and for the
purposes of this Plan an event falling within this sub-paragraph (c) shall
be referred to as a Board Change;
(d) a person becoming bound or entitled to give notice under sections 428 to
430F of the Companies Act 1985 to acquire Shares (a Compulsory Acquisition
Procedure);
(e) a Court directing that a meeting of the holders of Shares be convened
pursuant to section 425 of the Companies Act 1985 for the purposes of
considering a scheme of arrangement of the Company or its amalgamation
with any other company or companies and the scheme of arrangement being
approved by the shareholders' meeting or sanctioned by the Court (as the
Committee may determine) (the Relevant Condition) provided, however, that
the Committee may determine that the scheme of arrangement shall not
constitute a Change of Control if the purpose and effect of the scheme of
arrangement is to create a new holding company for the Company, such
company having substantially the same shareholders with the same
proportionate shareholdings as the Company had immediately prior to the
scheme of arrangement, and for the purposes of this Plan an event falling
within this sub- paragraph (e) shall be referred to as a Scheme of
Arrangement;
(f) notice being duly given of a resolution for the voluntary winding-up of
the Company (a Voluntary Winding Up);
(g) the sale, transfer or other disposition of all or substantially all of the
business or assets of the Company (a Sale); or
(h) the completion of a reorganization, recapitalization, merger,
consolidation, share exchange or similar form of corporate transaction
involving the Company that requires the approval of the Company's
shareholders, whether for such transaction or the issuance of securities
in the transaction (a Business Combination), unless immediately following
such Business Combination:
(i) more than 50% of the total voting power of:
(A) the company or body corporate resulting from such Business
Combination (the Surviving Company); or
(B) if applicable, the ultimate parent company or body corporate
that directly or indirectly has beneficial ownership of
sufficient voting securities eligible to elect a majority of
the directors of the Surviving Company (the Parent Company),
is represented by the Outstanding Company Voting Securities
that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into
which the Outstanding Company Voting Securities were converted
pursuant to such Business Combination), and such voting power
among the holders thereof is in substantially the same
proportion as the voting power of the Company's Voting
Securities among the holders thereof immediately prior to the
Business Combination,
(ii) no person, is or becomes the beneficial owner, directly or
indirectly, of 50% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the
Parent Company (or, if there is no Parent Company, the Surviving
Company); and
(iii) at least a majority of the members of the board of directors of the
Parent Company (or, if there is no Parent Company, the Surviving
Company) following the completion of the Business
Combination were members of the board of directors of the Company at
the time of the board's approval of the execution of the initial
agreement providing for such Business Combination
and for the purposes of this Plan a transaction falling within this
sub-paragraph (h) shall be referred to as a Corporate Transaction;
Code means the United States Internal Revenue Code of 1986, as amended.
Reference in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section;
Combined Group means the plc Group and Carnival Corporation and any subsidiary
of Carnival Corporation as that term is defined in section 736 of the Companies
Act 1985;
Committee means the Compensation Committee of the board of directors. Unless the
Board determines otherwise, each member of the Committee shall, at the time he
takes any action with respect to an Award under the Plan, be an Eligible
Director. However, the mere fact that a Committee member shall fail to qualify
as an Eligible Director shall not invalidate any Award which is otherwise
validly granted under the Plan;
Company means Carnival plc, a company incorporated under the laws of England and
Wales;
Control has the meaning given to it by section 840 of ICTA;
Date of Grant means the date on which the granting of an Award is authorized, or
such other date as may be specified in such authorization or, if there is no
such date, the date indicated on the applicable Award Agreement;
Dealing Day means any day on which the London Stock Exchange is open for the
transaction of business;
Effective Date means the date on which the Plan is approved by the Company's
shareholders in general meeting;
Eligible Director means a person who is a "non-employee director" within the
meaning of Rule 16b-3 under the Exchange Act, or a person meeting any similar
requirement under any successor rule or regulation;
Employee means any employee (including an executive director) of a member of the
plc Group whose terms of service require him to devote substantially the whole
of his working time to the affairs of a member of the Combined Group;
Employee Share Plan means any share option plan or other employees' share
incentive plan established by the Company including the P&O Princess Cruises
Deferred Bonus & Co-Investment Matching Plan;
Exchange Act means the U.S. Securities Exchange Act of 1934, as amended;
Fair Market Value means, on a given date:
(a) for so long as the Shares are traded on the London Stock Exchange, the
closing middle market quotation for a Share as derived from the Daily
Official List of the London Stock Exchange for that day; or
(b) subject to (a) above, its market value determined in accordance with Part
VIII of the Taxation of Chargeable Gains Act 1992 and in the case of any
Award under which Shares are to be issued, the nominal value of a Share;
ICTA means the United Kingdom Income and Corporation Taxes Act 1988;
ITEPA means the United Kingdom Income Tax (Earnings and Pensions) Act 2003;
Incentive Share Option means an Option granted by the Committee to a US
Participant under the Plan which is designated by the Committee as an incentive
stock option as described in Section 422 of the Code and which otherwise meets
the requirements set forth herein;
the London Stock Exchange means London Stock Exchange plc or any successor body
thereto;
Nonqualified Share Option means an Option granted by the Committee to a US
Participant under the Plan, which is not designated by the Committee as an
Incentive Share Option;
Option means an Award granted under Section 7 being either an Incentive Share
Option, a Nonqualified Share Option, an Unapproved Option or an Approved Option;
Option Holder means any individual who holds a subsisting Option (including,
where the context permits, the legal personal representatives of a deceased
Option Holder);
Option Period means such period commencing on the Date of Grant and not
exceeding ten years, as the Committee may be determine under Section 7.6 in
respect of an Option or portions of an Option;
Option Price means the exercise price of an Option as described in Section 7.3;
Participant means an Employee who has been selected by the Committee to
participate in the Plan and to receive an Award;
Performance Goals means the performance objectives which may be established by
the Committee for the purpose of determining whether, and to what extent, Awards
will vest or be subject to a Restricted Period.
Plan means this Carnival plc 2005 Employee Share Plan, as amended from time to
time;
the plc Group means the Company and the Subsidiaries and member of the Group
shall be construed accordingly;
Registered Holder means any person or persons nominated by the Committee to hold
Restricted Shares on behalf of a Participant;
Relevant Period means in the case of:
(a) an Acquisition, the period of three months from the date of completion of
the acquisitions and if the acquisitions occur as a result of an offer
which is made subject to conditions, the period of three months from the
date when the offer becomes or is declared unconditional in all respects;
(b) a Board Change, the period of three months from the date that the relevant
majority no longer subsists;
(c) a Compulsory Acquisition Procedure, the period of 30 days from the date on
which a notice of compulsory acquisition is first issued;
(d) a Scheme of Arrangement, the period between the date of the Court's
direction and twelve noon on the day immediately preceding the date for
which the shareholders' meeting is convened or such longer period up to
the date on which the Court sanctions the Scheme of Arrangement as the
Committee may determine;
(e) a Voluntary Winding Up, the period of two months from the date the
resolution;
(f) a Sale, the period of three months from the date of completion of the
relevant transaction; and
(g) a Corporate Transaction, the period of three months from the date of
completion of the relevant transaction;
Restricted Period means, with respect to any Restricted Shares or any Restricted
Share Unit, the period of time determined by the Committee during which such
Award is subject to the restrictions set forth in Section 9 (unless
foreshortened pursuant to the rules of this Plan);
Restricted Shares means Shares issued or transferred to a Participant subject to
forfeiture and the other restrictions set forth in Section 9;
Restricted Share Award means an Award of Restricted Shares granted under Section
9;
Restricted Share Unit means a hypothetical investment equivalent to one Share
granted in connection with an Award made under Section 9;
Restricted Share Unit Award means an Award of Restricted Share Units granted
under Section 9;
Retirement means the cessation of a Participant's employment with a member of
the plc Group on or after the earlier of:
(a) age 65 with at least five years of service with a member of the plc Group;
or
(b) age 55 with at least 15 years of service with a member of the plc Group;
Retirement Age means age 55 for the purposes of paragraph 35A of Schedule 4 to
ITEPA;
Securities Act means the Securities Act of 1933, as amended;
Shares means fully paid and irredeemable ordinary shares in the capital of the
Company or shares representing those shares following any Capital
Reorganisation;
Share Option Agreement means any agreement between the Company and a Participant
who has been granted an Option pursuant to Section 7 which evidences the grant
of an Option and in the case of an Option granted by way of a share option
certificate, shall mean the share option certificate;
Subsidiary means any subsidiary of the Company, as defined in Section 736 of the
Companies Act 1985, of which the Company has Control;
UKLA means the United Kingdom Listing Authority;
Unapproved Option means an Option granted to a Participant other than a US
Participant under the Plan which is not designated by the Committee as an
Approved Option; and
Vested Unit shall have the meaning assigned to it in Section 9.12.
3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL
3.1 The Plan is effective as of the Effective Date , and the Plan was approved
by shareholders at a general meeting held on 13 April 2005 in a manner intended
to comply with the shareholder approval requirements of Sections 422(b)(1) of
the Code and the New York Stock Exchange.
3.2 The expiration date of the Plan, on and after which no Awards may be granted
hereunder, shall be the tenth anniversary of the Effective Date; provided,
however, that the administration of the Plan shall continue in effect until all
matters relating to Awards previously granted have been settled.
4. ADMINISTRATION
4.1 The Committee shall administer the Plan.
4.2 Subject to the provisions of the Plan and applicable law, the Committee
shall have the power, in addition to other express powers and authorizations
conferred on the Committee by the Plan, to:
(a) designate Participants;
(b) determine the type or types of Awards to be granted to a Participant;
(c) determine the number of Shares to be covered by, or with respect to which
payments, rights, or other matters are to be calculated in connection
with, Awards;
(d) determine the terms and conditions of any Awards;
(e) determine whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other Awards or
other property, or cancelled, forfeited or suspended and the method or
methods by which Awards may be settled, exercised, cancelled, forfeited or
suspended;
(f) determine whether, to what extent, and under what circumstances the
delivery of cash, Shares, other securities, other Awards, other property
and other amounts payable with respect to an Award shall be deferred
either automatically or at the election of the holder thereof or of the
Committee;
(g) interpret, administer, reconcile any inconsistency, correct any defect
and/or supply any omission in the Plan and any instrument or agreement
relating to, or Award granted under, the Plan;
(h) establish, amend, suspend, or waive such rules and regulations and appoint
such agents as it shall deem appropriate for the proper administration of
the Plan; and
(i) make any other determination and take any other action specified under the
Plan or that the Committee deems necessary or desirable for the
administration of the Plan.
4.3 Unless otherwise expressly provided in the Plan, all designations,
determinations, interpretations and other decisions under or with respect to the
Plan or any Award or any documents evidencing Awards shall be within the sole
discretion of the Committee, may be made at any time and shall be final,
conclusive and binding upon all parties, including, without limitation, each
member of the Combined Group, any Participant, any holder or beneficiary of any
Award, and any shareholder.
5. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN
5.1 The Committee may, from time to time, grant Awards of Options, Restricted
Shares or Restricted Share Units to one or more Employees provided that no Award
to subscribe for Shares shall be granted to the extent that the aggregate number
of Shares that could be issued pursuant to that Award and any other Awards
granted at the same time when added to the number of Shares that:
(a) could be issued on the exercise of any other subsisting share options or
awards granted during the preceding ten years under the Plan or any other
Employee Share Plan; and
(b) have been issued on the exercise of any share options or awards granted
during the preceding ten years under the Plan or any other Employee Share
Plan; and
(c) have been issued during the preceding ten years under any Employee Share
Plan or any profit sharing or other employee share incentive plan
established by the Company;
would exceed 10% of the ordinary share capital of the Company for the time being
in issue.
5.2 Shares delivered by or on behalf of the Company in settlement of Awards may
be authorized and unissued Shares or Shares held in the treasury of the Company
or purchased on the open market or by private purchase.
5.3 Any member of the plc Group may provide money to the trustees of any trust
or any other person to enable them or him to acquire Shares to be held for the
purposes of the Plan, or enter into any guarantee or indemnity for those
purposes, to the extent not prohibited by section 151 of the Companies Act 1985.
6. ELIGIBILITY
Participation shall be limited to Employees who have received written
notification from the Committee, or from a person designated by the Committee,
that they have been selected to participate in the Plan.
7. TERMS OF OPTIONS
7.1 The Committee is authorized to grant one or more Approved Options,
Unapproved Options, Incentive Share Options or Nonqualified Share Options to any
Employee. Each Option so granted shall be subject to the conditions set forth in
this Section 7, or to such other conditions consistent with this Plan as may be
reflected in the applicable Share Option Agreement.
Option Price
7.2 The Option Price per Share for each Option shall be set by the Committee at
the Date of Grant but shall not be less than the Fair Market Value of a Share on
the Date of Grant and, if the Shares are to be issued, the nominal value of a
Share.
Manner of Exercise and Form of Payment
7.3 No Shares shall be delivered pursuant to any exercise of an Option until
payment in full of the Option Price therefor is received by the Company or the
Participant has made arrangements acceptable to the Company for the payment of
the Option Price. Options which have become exercisable may be exercised by
delivery of written notice of exercise to the Company accompanied by payment of,
or an undertaking to pay, the aggregate Option Price. The Option Price shall be
payable in cash.
Conditions of Grant
7.4 An Option may be granted subject to such conditions for payment of taxation,
employees' National Insurance contributions and employer's National Insurance
contributions liability as the Committee may determine (including without
limitation the right to sell on an Option Holder's behalf sufficient Shares to
satisfy any taxation or National Insurance contributions) and if any condition
is imposed relating to the assumption, payment or reimbursement by the Option
Holder of employer's National Insurance contributions liability, such conditions
shall comply with any applicable legislation or regulations and the Company
shall be entitled to waive in whole or in part the Option Holder's obligation in
respect of such liability.
Vesting, Option Period and Expiration
7.5 Subject to Sections 8 and 13, Options shall vest and become exercisable in
such manner and on such date or dates as the Committee may determine at the Date
of Grant and set out in a vesting schedule (a Vesting Schedule) in the
applicable Share Option Agreement or share option certificate. The Committee may
determine that an Option may vest in full on one date only or may vest partially
as to different portions on different dates so that an Option may have one
Option Period or a number of Option Periods applying to determine when each
portion shall vest. Subject to Sections 8 and 13 Options shall lapse on the
earlier of:
(a) the expiry of the Option Period; and
(b) the Option Holder being declared bankrupt or entering into any general
composition with or for the benefit of his creditors including a voluntary
arrangement under the Insolvency Act 1986;
provided, however, that notwithstanding any vesting dates set by the Committee,
the Committee may, in its sole discretion, accelerate the exercisability of any
Option, which acceleration shall not affect the terms and conditions of such
Option provided for in this Plan other than with respect to exercisability. If
an Option is exercisable in instalments, such instalments or portions thereof
which vest and become exercisable shall remain exercisable until the Option
lapses but subject to any earlier lapse provisions under Sections 8 and 13.
Performance Goals
7.6 The Committee shall determine prior to the Date of Grant whether any
Performance Goals shall apply to the vesting of an Option and if so these shall
be set out in the applicable Share Option Agreement or share option certificate.
Other Terms and Conditions
7.7 Each Option granted under the Plan shall be evidenced by a Share Option
Agreement or a share option certificate. Immediately prior to the granting of
any Options, the Committee may, in its absolute discretion, enter into a deed
poll recording its intention to be bound by the share option certificates to be
issued to the Option Holder in respect of such Option. Except as specifically
provided otherwise in a Share Option Agreement or a share option certificate,
each Option granted under the Plan shall be subject to the following terms and
conditions:
(a) each Option or portion thereof that is exercisable shall be exercisable
for the full amount or for any part thereof;
(b) each Share acquired through the exercise of an Option shall be treated as
fully paid up at the time of issue or transfer. Each Option shall cease to
be exercisable, as to any Share, when the Participant acquires the Share
or when the Option lapses;
(c) subject to Sections 11.9 and 11.10, Options shall not be transferable by
the Participant except by will or the laws of inheritance and shall be
exercisable during the Participant's lifetime only by him;
(d) each Option shall vest and become exercisable by the Participant in
accordance with the Vesting Schedule established by the Committee and set
forth in the Share Option Agreement;
(e) at the time of any exercise of an Option, a Participant must take whatever
action is reasonably required by the Committee to ensure compliance with
applicable securities laws; and
(f) each Participant awarded an Incentive Share Option under the Plan shall
notify the Company in writing immediately after the date he makes a
disqualifying disposition of any Shares acquired pursuant to the exercise
of such Incentive Share Option. A disqualifying disposition is any
disposition (including any sale) of such Shares before the later of (i)
two years after the Date of Grant of the Incentive Share Option or (ii)
one year after the date the Participant acquired the Shares by exercising
the Incentive Share Option.
Incentive Share Option Grants to 10% Shareholders
7.8 Notwithstanding anything to the contrary in this Section 7, if an Incentive
Share Option is granted to a Participant who owns shares representing more than
ten percent of the voting power of all classes of shares of the Company or of a
Subsidiary or a parent of the Company, the Option Period shall not exceed five
years from the Date of Grant of such Option and the Option Price shall be at
least 110 percent of the Fair Market Value (on the Date of Grant) of the Shares
subject to the Option.
Time of Grant
7.9 The Committee shall not grant Options at any time when it would be
prohibited from doing so by the Model Code for Securities Transactions by
Directors of Listed Companies (or the Company's dealing code).
$100,000 Per Year Limitation for Incentive Share Options
7.10 To the extent the aggregate Fair Market Value (determined as of the Date of
Grant) of Shares for which Incentive Share Options are exercisable for the first
time by any Participant during any calendar year (under all plans of the
Company) exceeds $100,000, such excess Incentive Share Options shall be treated
as Nonqualified Share Options.
8. EXERCISE AND LAPSE OF OPTIONS - CESSATION OF EMPLOYMENT
8.1 Save as otherwise provided in these rules, an Option shall lapse
automatically on the Option Holder ceasing to be an employee of the plc Group
(whether lawfully or unlawfully).
8.2 Where an Option Holder ceases to be an employee of the plc Group before the
end of the Option Period by reason of his employment with a member of the plc
Group being terminated by a member of the plc Group without Cause or by the
Participant for any reason other than Retirement, the Option shall lapse on the
earlier of:
(a) the last day of the Option Period; and
(b) the date that is three months after the date of such termination;
provided, however, that any Participant whose employment with a member of the
plc Group is terminated and who is subsequently re-hired or re-engaged by a
member of the plc Group prior to the lapse of the Option shall not be treated as
if his employment had terminated.
In the event of a termination described in this Section 8.2, the Option shall
remain exercisable by the Participant until its lapse only to the extent the
Option was exercisable at the time of such termination.
8.3 Where an Option Holder ceases to be an employee of the plc Group before the
end of the Option Period by reason of his death or his disability (as determined
by the Committee) while still in the employment of a member of the plc Group, or
he dies following a cessation of employment described in this Section 8.2, the
Option shall lapse on the earlier of:
(a) the last day of the Option Period; and
(b) the date that is one year after the date of such death or cessation on
account of disability of the Participant, as applicable.
In such event, the Option shall remain exercisable by the Participant or his or
her personal representatives or beneficiaries determined in accordance with
Section 11, as applicable, until its lapse only to the extent the Option was
exercisable by the Participant at the time of such event.
8.4 Where the Participant ceases to be an employee of a member of the plc Group
by reason of Retirement prior to the end of the Option Period, the Option shall:
(a) lapse at the end of the Option Period; and
(b) continue vesting in accordance with the Vesting Schedule set forth in the
share option certificate or Share Option Agreement (as applicable),
without regard to any requirement that the Participant remain employed
with a member of the plc Group as a condition to vesting.
8.5 For the avoidance of doubt, an Option exercisable under Sections 8.2 to 8.4
may lapse at an earlier date by virtue of Section 13 and may not be exercised
after the expiry of the Option Period.
8.6 For the purposes of Sections 8.1 to 8.5 a female Option Holder shall not be
treated as ceasing to be an employee of a member of the plc Group if absent from
work wholly or partly because of pregnancy or confinement until she ceases to be
entitled to exercise any statutory or contractual right to return to work.
8.7 Where any exercise of an Option under Sections 8.2 to 8.5 would be
prohibited by law or the Model Code for Securities Transactions by Directors of
Listed Companies (or the Company's dealing rules) the period during which the
Option Holder may exercise his Options shall be extended by an additional period
equal to the length of the period of prohibition but not beyond the expiry of
the Option Period.
9. RESTRICTED SHARE AWARDS AND RESTRICTED SHARE UNIT AWARDS
Awards of Restricted Shares and Restricted Share Unit Awards
9.1 The Committee shall have the authority:
(a) to grant Restricted Share Awards and Restricted Share Unit Awards to
Employees;
(b) to issue or transfer Restricted Shares to Registered Holders on behalf of
Participants; and
(c) to establish terms, conditions and restrictions applicable to such
Restricted Shares and Restricted Share Units, including the Restricted
Period, which may differ with respect to each Participant, the time or
times at which Restricted Shares or Restricted Share Units shall become
vested and the number of Shares or units to be covered by each grant and
whether the Award shall be subject to Performance Goals.
No Restricted Share Awards or Restricted Share Unit Awards shall be granted at
any time when the Committee is prohibited from doing so by the Model Code for
Securities Transactions by Directors of Listed Companies (or the Company's
dealing rules).
9.2 The Committee may require a Participant granted a Restricted Share Award to
execute and deliver to the Company a Restricted Share Agreement with respect to
the Restricted Shares setting forth the restrictions applicable to such
Restricted Shares. The Committee shall determine whether:
(a) the Restricted Shares shall be held in escrow rather than delivered to the
Participant pending the release of the applicable restrictions, in which
case the Committee may require the Participant to additionally execute and
deliver to the Company an escrow agreement satisfactory to the Company; or
(b) the Restricted Shares shall be registered in the name of the nominated
Registered Holder during the Restricted Period; or
(c) other arrangements shall apply to the holding of Restricted Shares during
the Restricted Period, the terms of such arrangements being consistent
with the terms of this Plan.
9.3 If an escrow arrangement is used, the Committee shall cause a share
certificate registered in the name of the Participant to be issued and, if it so
determines, deposited together with the share powers with any escrow agent
designated by the Committee. The Committee may cause the escrow agent to issue
to a Participant a receipt evidencing any share certificate held by it
registered in the name of the Participant.
9.4 If a nominated Registered Holder is used, the Committee shall cause a share
certificate registered in the name of the Participant to be issued and, if it so
determines, deposited together with the share powers with any Registered Holder
nominated by the Committee. The Participant shall not be entitled to delivery of
the share certificate until the Restricted Period has expired and the Registered
Holder shall retain custody of such shares during the Restricted Period.
9.5 Subject to the restrictions set forth in Section 9.7 to 9.9, the Participant
generally shall have the rights and privileges of a beneficial owner as to such
Restricted Shares, including the right to direct the Registered Holder how
to vote such Restricted Shares. At the discretion of the Committee, cash
dividends and share dividends with respect to the Restricted Shares may be
either currently paid to the Participant or withheld by the Company or the
Registered Holder for the Participant's account, and interest may be credited on
the amount of cash dividends withheld at a rate and subject to such terms as
determined by the Committee. The cash dividends or share dividends so withheld
by the Committee and attributable to any particular Restricted Shares (and
earnings thereon, if applicable) shall be distributed to the Participant upon
the release of restrictions on such Restricted Shares and, if such Restricted
Share is forfeited, the Participant shall have no right to such cash or share
dividends.
9.6 The terms and conditions of a grant of a Restricted Share Unit Award will be
reflected in a written Restricted Share Unit Award Agreement. The Committee may
determine that a Restricted Share Unit Award be granted in the form of a nil
cost option or a conditional or contingent right to acquire shares. Where a
Restricted Share Unit Award is granted in the form of a nil cost option, any
reference to the Restricted Period expiring in respect of Restricted Share Units
shall be construed as meaning that a Participant may call for the Restricted
Share Units within the period determined by the Committee. A Participant shall
not have any beneficial interest in any Shares during the Restricted Period as a
result of being granted a Restricted Stock Unit Award. The Company will not be
required to set aside a fund for the payment of any such Award. At the
discretion of the Committee, each Restricted Share Unit (representing one Share)
awarded to a Participant may be credited with cash and share dividends paid in
respect of one Share (Dividend Equivalents). At the discretion of the Committee,
Dividend Equivalents may be either currently paid to the Participant or withheld
by the Company for the Participant's account, and interest may be credited on
the amount of cash Dividend Equivalents withheld at a rate and subject to such
terms as determined by the Committee. Dividend Equivalents credited to a
Participant's account and attributable to any particular Restricted Share Unit
(and earnings thereon, if applicable) shall be distributed to the Participant
upon settlement of such Restricted Share Unit and, if such Restricted Share Unit
is forfeited, the Participant shall have no right to such Dividend Equivalents.
Restrictions
9.7 Restricted Shares comprised in a Restricted Share Award granted to a
Participant shall be subject to the following restrictions until the expiration
of the Restricted Period and the attainment of any other vesting criteria
established by the Committee, and to such other terms and conditions as may be
set forth in the applicable Restricted Share Award Agreement:
(a) the Participant shall not be entitled to delivery of the share
certificate;
(b) the Restricted Shares shall be subject to the restrictions on
transferability set forth in the Restricted Share Award Agreement; and
(c) the Restricted Shares shall be subject to forfeiture to the extent
provided in the Rules and the applicable Restricted Share Agreement and,
to the extent such Restricted Shares are forfeited, the share certificates
shall be returned to the Company, and all rights of the Participant to
such Restricted Shares and as a shareholder shall terminate without
further obligation on the part of the Company.
9.8 Restricted Share Units awarded to any Participant shall be subject to:
(a) forfeiture until the expiration of the Restricted Period and the
attainment of any other vesting criteria established by the Committee, to
the extent provided in these Rules and the applicable Restricted Share
Unit Agreement, and to the extent such Restricted Share Units are
forfeited, all rights of the Participant to such Restricted Share Units
shall terminate without further obligation on the part of the Company; and
(b) such other terms and conditions as may be set forth in the applicable
Restricted Share Unit Agreement.
9.9 The Committee shall have the authority to remove any or all of the
restrictions on the Restricted Shares and Restricted Share Units whenever it may
determine that, by reason of changes in applicable laws or other changes in
circumstances arising after the date of the Restricted Share Award or Restricted
Share Unit Award, such action is appropriate.
Restricted Period
9.10 The Restricted Period applicable to Restricted Shares and Restricted Share
Units comprised in an Award shall commence on the Date of Grant and shall expire
from time to time as to that part of the Restricted Shares and Restricted Share
Units indicated in a schedule (the Vesting Schedule) established by the
Committee in the applicable Restricted Share Agreement or Restricted Share Unit
Agreement.
Delivery of Restricted Shares and Settlement of Restricted Share Units
9.11 Upon the expiration of the Restricted Period with respect to any Restricted
Shares covered by a Restricted Share Award and the attainment of any other
vesting criteria established by the Committee, the restrictions set forth in
Section 9.7 to 9.9 and the Restricted Share Agreement shall be of no further
force or effect with respect to the Restricted Shares which have not then been
forfeited. The Company shall deliver or procure the delivery to the Participant,
or his beneficiary, without charge, the share certificate evidencing the
Restricted Shares which have not then been forfeited and with respect to which
the Restricted Period has expired and any other vesting criteria established by
the Committee has been attained (to the nearest full share) and any cash
dividends or share dividends credited to the Participant's account with respect
to such Restricted Shares and the interest thereon, if any.
9.12 Upon the expiration of the Restricted Period and the attainment of any
other vesting criteria established by the Committee, with respect to any
Restricted Share Units covered by a Restricted Share Unit Award, the Company
shall determine whether the Award shall be settled in Shares or cash. If the
Committee determines that the Award shall be settled in Shares, the Company
shall procure the delivery to the Participant, or his beneficiary, without
charge, one Share for each Restricted Share Unit which has not then been
forfeited and with respect to which the Restricted Period has expired and any
other such vesting criteria are attained (Vested Unit). If the Committee has
elected to pay cash (or part cash and part Shares) for Vested Units, the amount
of such payment shall be equal to the Fair Market Value of the Shares as of the
date on which the Restricted Period lapsed with respect to such Vested Unit.
Conditions of Grant
9.13 Restricted Share Awards and Restricted Share Unit Awards may be granted
subject to such conditions for payment of tax and employees' National Insurance
contributions and employer's National Insurance contributions as the Committee
may determine, including that, with respect to Awards of Restricted Shares which
qualify as employment related restricted securities under Chapter 2 of Part VII
of ITEPA, any member of the plc Group may require a Participant to enter into an
election under section 430 or section 431 of ITEPA.
10. FORFEITURE
Restricted Shares
10.1 Save as otherwise provided in these rules and unless otherwise stated in
the applicable Restricted Share Award Agreement, Restricted Shares shall be
forfeited automatically on the Participant ceasing to be an employee of the plc
Group (whether lawfully or unlawfully) before the end of the Restricted Period.
10.2 Where a Participant ceases to be an employee of the plc Group before the
end of the Restricted Period by reason of Retirement, the Restricted Shares
shall not be forfeited and the restrictions attaching to the Restricted Shares
shall continue and shall lapse in accordance with the terms of the Restricted
Share Award provided, however, that the Committee may in its discretion
determine that some or all of the Restricted Shares may be released early.
10.3 Where a Participant ceases to be an employee of the plc Group before the
end of the Restricted Period by reason of his death while still in the
employment of a member of the plc Group, or he dies following a cessation of
employment described in Section 10.2 the Restricted Shares shall not be
forfeited and the Restricted Period shall expire forthwith and the restrictions
shall lapse.
Restricted Share Units
10.4 Save as otherwise provided in these rules and unless otherwise stated in
the applicable Restricted Share Unit Award Agreement, Restricted Share Units
shall be forfeited automatically on the Participant ceasing to be an employee of
the plc Group (whether lawfully or unlawfully) before the end of the Restricted
Period.
10.5 Where a Participant ceases to be an employee of the plc Group before the
end of the Restricted Period by reason of Retirement, the Restricted Share Units
shall not be forfeited and the restrictions attaching to the Restricted Share
Units shall continue and shall lapse in accordance with the terms of the
Restricted Share Unit Award provided, however, that the Committee may in its
discretion determine that some or all of the Restricted Share Units may be
released early.
10.6 Where a Participant ceases to be an employee of the plc Group before the
end of the Restricted Period by reason of his death while still in the
employment of a member of the plc Group, or he dies following a cessation of
employment described in Section 10.2 the Restricted Share Units shall not be
forfeited and the Restricted Period shall expire forthwith and the restrictions
shall lapse.
10.7 For the avoidance of doubt, an Award that is retained under this Section 10
may lapse at an earlier date by virtue of Section 13.
10.8 For the purposes of Sections 10.1 to 10.6 a female Participant shall not be
treated as ceasing to be an employee of a member of the plc Group if absent from
work wholly or partly because of pregnancy or confinement until she ceases to be
entitled to exercise any statutory or contractual right to return to work.
10.9 Where any release or exercise of an Award under this Section 10 would be
prohibited by law or the Model Code for Securities Transactions by Directors of
Listed Companies (or the Company's dealing rules) the period during which the
Restricted Shares or Restricted Share Units may be released to a Participant
shall be extended by an additional period equal to the length of the period of
prohibition.
11. GENERAL
Additional Provisions of an Award
11.1 Awards granted to a Participant under the Plan also may be subject to such
other provisions (whether or not applicable to Awards granted to any other
Participant) as the Committee determines appropriate including, without
limitation, provisions to assist the Participant in financing the acquisition of
Shares upon the exercise of Options (provided that the Committee determines that
providing such financing does not violate the Sarbanes-Oxley Act of 2002 and
applicable UK law), provisions for the forfeiture of or restrictions on resale
or other disposition of Shares acquired under any Award, provisions giving the
Company the right to repurchase Shares acquired under any Award in the event the
Participant elects to dispose of such Shares, provisions allowing the
Participant to elect to defer the receipt of Shares upon the exercise of Awards
for a specified period or until a specified event, and provisions to comply with
US Federal and state securities laws and US Federal and state tax withholding
requirements. Any such provisions shall be reflected in the applicable Award
Agreement.
Privileges of Share Ownership
11.2 Except as otherwise specifically provided in the Plan, no person shall be
entitled to the privileges of ownership in respect of Shares which are subject
to Awards hereunder until such Shares have been issued or transferred to that
person.
Government and Other Regulations
11.3 The obligation of the Company to issue Shares upon the exercise of Options
or otherwise settle Awards in Shares shall be subject to all applicable laws,
rules, and regulations, and to such approvals by governmental agencies as may be
required.
Tax Withholding
11.4 A Participant may be required to pay to a member of the Combined Group, and
each member of the Combined Group shall have the right and is hereby authorized
to withhold from any Shares or other property deliverable under any Award or
from any compensation or other amounts owing to a Participant the amount (in
cash, Shares or other property) of any required tax withholding and payroll
taxes in respect of an Award, its exercise, or any payment or transfer under an
Award or under the Plan and to take such other action as may be necessary in the
opinion of the Company to satisfy all obligations for the payment of such taxes.
11.5 Without limiting the generality of clause 11.4 above, the Committee may, in
its sole discretion, permit a Participant to satisfy, in whole or in part, the
foregoing withholding liability (but no more than the minimum required
withholding liability if using method (b) or (c) of this subsection) by:
(a) payment in cash;
(b) delivery of Shares owned by the Participant with a Fair Market Value equal
to such withholding liability;
(c) having the Company withhold from the number of Shares otherwise issuable
pursuant to the exercise of the Award a number of Shares with a Fair
Market Value equal to such withholding liability; or
(d) authorising the Company to arrange the sale of sufficient Shares to
generate proceeds sufficient to discharge any withholding liability.
Claim to Awards and Employment Rights
11.6 The rights and obligations of an Employee under the terms and conditions of
his office or employment shall not be affected by his participation in the Plan
or any right he may have to participate in the Plan. An individual who
participates in the Plan waives all and any rights to compensation and damages
in consequence of the termination of his office or employment with any company
for any reason whatsoever (whether lawfully or unlawfully) insofar as those
rights arise, or may arise, from his ceasing to have rights under or his
entitlement to an Award under the Plan as a result of such termination or from
the loss or diminution in value of such rights or entitlements. In the event of
conflict between the terms of this Section 11.6 and the Employee's terms of
employment, this Section will take precedence.
Governing Law
11.7 The Plan shall be governed by, and construed in accordance with, the laws
of England. All disputes arising out of or in connection with the rules shall be
subject to the exclusive jurisdiction of the courts of England and Wales.
Funding
11.8 No provision of the Plan shall require the Company, for the purpose of
satisfying any obligations under the Plan, to purchase assets or place any
assets in a trust or other entity to which contributions are made or otherwise
to segregate any assets, nor shall the Company maintain separate bank accounts,
books, records or other evidence of the existence of a segregated or separately
maintained or administered fund for such purposes. Participants shall have no
rights under the Plan other than as unsecured general creditors of the Company,
except that insofar as they may have become entitled to payment of additional
compensation by performance of services, they shall have the same rights as
other employees under general law.
Nontransferability
11.9 Each Award shall be exercisable only by a Participant during the
Participant's lifetime, or, if permissible under applicable law, by the
Participant's legal guardian or personal representative. No Award may be
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by a Participant otherwise than by will or
by the laws of inheritance and any such purported assignment, alienation,
pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against each member of the plc Group.
11.10 Notwithstanding the foregoing, the Committee may, in its sole discretion,
permit Awards other than Incentive Share Options to be transferred by a
Participant, without consideration, subject to such rules as the Committee may
adopt consistent with any applicable Award Agreement to preserve the purposes of
the Plan, to:
(a) any person who is a spouse or child or step child under the age of 18 of
the Participant (an Immediate Family Member);
(b) a trust solely for the benefit of the Participant and his or her Immediate
Family Members;
(c) a partnership or limited liability company whose only partners or
shareholders are the Participant and his Immediate Family Members;
(each transferee described in clauses (a), (b) and (c) above is hereinafter
referred to as a Permitted Transferee); provided that the Participant gives the
Committee advance written notice describing the terms and conditions of the
proposed transfer and the Committee notifies the Participant in writing that
such a transfer would comply with the requirements of the Plan.
11.11 The terms of any Award transferred in accordance with Section 11.10 shall
apply to the Permitted Transferee and any reference in the Plan, or in any
applicable Award Agreement or share option certificate, to a Participant shall
be deemed to refer to the Permitted Transferee, except that:
(a) Permitted Transferees shall not be entitled to transfer any Award, other
than by will or the laws of inheritance;
(b) Permitted Transferees shall not be entitled to exercise a transferred
Nonqualified Share Option unless there shall be in effect a registration
statement on an appropriate form covering the Shares to be acquired
pursuant to the exercise of such Nonqualified Share Option if the
Committee determines, consistent with any applicable Share Option
Agreement, that such a registration statement is necessary or appropriate,
(c) the Committee or any member of the plc Group shall not be required to
provide any notice to a Permitted Transferee, whether or not such notice
is or would otherwise have been required to be given to the Participant
under the Plan or otherwise; and
(d) the consequences of a Participant no longer being employed by, or in the
services of, a member of the plc Group under the terms of the Plan and the
applicable Award Agreement or share option certificate shall continue to
be applied with respect to the Participant, including, without limitation,
that a Nonqualified Share Option shall be exercisable by the Permitted
Transferee only to the extent, and for the periods, specified in the Plan
and the applicable Share Option Agreement.
Relationship to Other Benefits
11.12 No payment under the Plan shall be taken into account in determining any
benefits under any pension, retirement, profit sharing, group insurance or other
benefit plan of a member of the Combined Group except as otherwise specifically
provided in such other plan.
Expenses
11.13 The expenses of administering the Plan shall be borne by the plc Group.
Gender and Number
11.14 Where the context admits, masculine pronouns and other words of masculine
gender shall refer to both men and women, words in the singular shall include
the plural and words in the plural shall include the singular.
Termination of Employment
11.15 For all purposes herein, a person who transfers from employment with a
member of the plc Group to employment or service with a member of the Combined
Group shall not be deemed to have terminated employment or service with a member
of the plc Group.
Titles and Headings
11.16 The titles and headings of the sections in the Plan are for convenience of
reference only, and in the event of any conflict, the text of the Plan, rather
than such titles or headings shall control.
Severability
11.17 If any provision of the Plan or any Award Agreement is or becomes or is
deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any
person or Award, or would disqualify the Plan or any Award under any law deemed
applicable by the Committee, such provision shall be construed or deemed amended
to conform to the applicable laws, or if it cannot be construed or deemed
amended without, in the determination of the Committee, materially altering the
intent of the Plan or Award, such provision shall be stricken as to such
jurisdiction, person or Award and the remainder of the Plan and any such Award
shall remain in full force and effect.
12. CHANGES IN CAPITAL STRUCTURE
12.1 In the event of any:
(a) Capital Reorganisation;
(b) Corporate Transaction; or
(c) the implementation by the Company of a demerger, or the payment by the
Company of a dividend in specie or a super dividend or other transaction
or any change in applicable laws or any change in circumstances which in
the opinion of the Committee (acting fairly and reasonably and taking into
account any criteria it may consider to be relevant) would materially
affect (whether by increasing or reducing) the current or future value of
an Award
the number or type of shares subject to an Award and the Option Price per Share
may be adjusted or the Awards may be subject to substitution in such manner as
the Committee may determine is fair and reasonable, PROVIDED THAT:
(i) in respect of an Award under which Shares are to be transferred,
prior notification shall be given to the person holding the Shares
to which the Award relates;
(ii) no adjustment shall be made pursuant to this Section which would
decrease the aggregate Option Price of any Option; and
(iii) except as provided in this sub-paragraph (iii), no adjustment may
have the effect of reducing the Option Price of any Option to less
than the nominal value of a Share. Where an Option subsists over
both issued and unissued Shares, any such adjustment may only be
made if the reduction of the Option Price of Options over both
issued and unissued Shares can be made to the same extent. Any
adjustment to the Option Price of Options over unissued Shares shall
only be made if and to the extent that the Committee shall be
authorised to capitalise from the reserves of the Company a
sum equal to the amount by which the nominal value of the Shares in
respect of which the Option is exercisable exceeds the adjusted
Option Price. The Company may apply such sum in paying up such
amount on such Shares and so that, on exercise of any Option in
respect of which such reduction shall have been made, the Company
shall capitalise such sum (if any) and apply the same in paying up
such amount as aforesaid; and
(iv) any adjustment in Incentive Stock Options under this Section 12
shall be made only to the extent not constituting a "modification"
within the meaning of Section 424(h)(3) of the Code, and any
adjustments under this Section 12 shall be made in a manner which
does not adversely affect the exemption provided pursuant to Rule
16b-3 under the Exchange Act.
12.2 Notwithstanding the above, in the event of any of the following:
(a) the Company is merged or consolidated with another company or body
corporate and, in connection therewith, consideration is received by
shareholders of the Company in a form other than shares or other equity
interests of the surviving entity;
(b) a Sale;
(c) the reorganization or liquidation of the Company; or
(d) the Company enters into a written agreement to undergo an event described
in sub-paragraphs (a), (b) or (c) above,
then the Committee may, in its discretion and upon at least 10 days advance
notice to the affected persons, cancel any outstanding Awards and cause the
holders thereof to be paid, in cash or shares, or any combination thereof, the
value of such Awards based upon the price per share of the shares or other
consideration received or to be received by shareholders of the Company in the
event.
12.3 The Company shall give each Participant notice of an adjustment hereunder
and, upon notice, such adjustment shall be conclusive and binding for all
purposes.
13. EFFECT OF CHANGE OF CONTROL
13.1 In the event of a Change of Control which is not a Scheme of Arrangement,
notwithstanding any provision of the Plan to the contrary and notwithstanding
that the Option Period may not have commenced nor the Performance Goals been
satisfied, an Option shall forthwith vest and become exercisable with respect to
100 per cent of the Shares subject to such Option. An Option Holder may exercise
his Options during the Relevant Period. Failing any permitted exercise the
Options shall without prejudice to the operation of Section 13.7, cease to be
exercisable and shall automatically lapse upon the expiry of the Relevant
Period, and if more than one Relevant Period is running concurrently, the Option
shall cease to be exercisable and lapse upon the expiry of whichever of those
periods is the first to expire.
13.2 In the event of a Change of Control which is a Scheme of Arrangement,
notwithstanding any provision of the Plan to the contrary and notwithstanding
that the Option Period may not have commenced nor the Performance Goals been
satisfied, an Option shall forthwith vest and become exercisable with respect to
100 per cent of the Shares subject to such Option conditionally upon
satisfaction of the Relevant Condition. An Option Holder may exercise his
Options during the Relevant Period. Failing any permitted exercise the Options
shall cease to be exercisable between the last date upon which permitted
exercises may occur and the first date when it can be determined whether or not
the Relevant Condition is satisfied. If the Relevant Condition is not satisfied
the Options shall continue subject to the terms of this Plan. If the Relevant
Condition is satisfied the Options shall, without prejudice to the operation of
Section 13.7, lapse automatically on the date upon which the scheme of
arrangement is sanctioned by the Court.
13.3 In the event of a Change of Control which is not a Scheme of Arrangement,
notwithstanding any provision of the Plan to the contrary and notwithstanding
that the Restricted Period may not have expired nor any Performance Goals been
satisfied, the Restricted Period shall forthwith expire with respect to 100 per
cent of the Shares comprised in a Restricted Stock Award or a Restricted Stock
Unit Award. The Restricted Period shall expire immediately upon the commencement
of the Relevant Period and the Company shall satisfy its obligations under
Section 9.11 and 9.12 of this Plan in respect of the Restricted Share Awards and
Restricted Share Unit Awards within 30 days thereof at the end of which period,
without prejudice to the operation of Section 13.7, the Awards shall lapse.
13.4 In the event of a Change of Control which is a Scheme of Arrangement,
notwithstanding any provision of the Plan to the contrary and notwithstanding
that the Restricted Period may not have expired nor any Performance Goals been
satisfied, the Restricted Period shall expire with respect to 100 per cent of
the Shares comprised in a Restricted Stock Award or a Restricted Stock Unit
Award conditionally upon satisfaction of the Relevant Condition. If the Relevant
Condition is not satisfied the Restricted Period shall not expire and the
Restricted Share Awards and Restricted Share Unit Awards shall continue subject
to the terms of this Plan. If the Relevant Condition is satisfied the Restricted
Period shall expire on the date upon which the scheme of arrangement is
sanctioned by the Court and the Company shall satisfy its obligations under
Section 9.11 and 9.12 of this Plan in respect of the Restricted Share Awards and
Restricted Share Unit Awards within 30 days thereof at the end of which period,
without prejudice to the operation of Section 13.7, the Awards shall lapse.
Cancellation of Awards
13.5 In the event of a Change of Control, the Committee may in its discretion
and upon at least 10 days' advance notice to the affected persons, cancel any
outstanding Award and pay to the holders thereof, in cash or shares, or any
combination thereof, the value of such Awards based upon the price per Share
received or to be received by other shareholders of the Company in the event.
Demerger
13.6 If the Committee becomes aware that the Company is or is expected to be
affected by any demerger, dividend in specie, super-dividend or other
transaction which, in the opinion of the Committee, would materially affect
(whether by increasing or reducing) the current or future value of any Awards,
the Committee (acting fairly and reasonably and taking into account criteria it
may consider to be relevant) may, in its absolute discretion, allow Options to
be exercised (whether or not the Option Period has commenced) and the Restricted
Period to expire in respect of Restricted Shares and Restricted Share Units, in
each case in respect of such number of Shares as the Committee may determine in
its discretion. The Committee shall specify the period in which such Options
shall be exercisable and whether such Options shall lapse at the end of the
specified period. The Committee shall notify any Participant who is affected by
the discretion exercised under this Section.
Roll-over of Awards
13.7 In the event of a Change of Control the Committee may, in its absolute
discretion, with the consent of any acquiring company determine that:
(a) Options shall not be exercisable and that the Restricted Period shall not
expire in respect of Restricted Shares and Restricted Share Units but that
Participants shall be required within the Relevant Period to release any
outstanding Awards (whether vested or unvested) in consideration for the
grant of equivalent Awards over shares or restricted shares or restricted
share units in the capital of the acquiring company or any company which
Controls such acquiring company, on such terms as the Committee may
determine; or
(b) Participants may at any time within the Relevant Period by agreement with
the acquiring company, release any outstanding Awards (whether vested or
unvested) in consideration for the grant of equivalent Awards over shares
or restricted shares or restricted share units in the capital of the
acquiring company or any company which Controls such acquiring company, on
such terms as the Committee may determine.
14. NON EXCLUSIVITY OF THE PLAN
Neither the adoption of this Plan by the Committee nor the submission of this
Plan to the shareholders of the Company for approval shall be construed as
creating any limitations on the power of the Committee to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of share options otherwise than under this Plan, and such
arrangements may be either applicable generally or only in specific cases.
15. AMENDMENTS AND TERMINATION
15.1 The Committee may at any time discontinue the grant of further Awards.
15.2 The Committee may amend any of the provisions of the Plan in any way it
thinks fit, provided that:
(a) the Committee shall not make any amendment that would materially prejudice
the interests of existing Participants except with the prior consent or
sanction of Participants who, if they exercised their Options in full or
the Restricted Period in respect of their Award expired, would thereby
become entitled to not less than three-quarters of all the Shares which
would fall to be allotted, transferred or released upon exercise in full
of all outstanding Options and expiry of the Restricted Period; and
(b) no amendment to the advantage of Employees or may be made to:
(i) the definition of Employee in Section 2;
(ii) the limitations on the number of Shares subject to the Plan;
(iii) the basis for determining an Executive's entitlement to Shares under
the Plan;
(iv) the terms of Shares to be provided under the Plan;
(v) the adjustment provisions of Section 12 of the Plan;
without the prior approval of the Company in general meeting except in the
case of minor amendments to benefit the administration of the Plan, to
take account of a change in legislation or to obtain or maintain
favourable tax, exchange control or regulatory treatment for Employees or
any member of the Combined Group; and
(c) without prejudice to any provision of the Plan which provides for the
lapse of an Option, the Committee may not cancel an Option unless the
Option Holder agrees in writing to such cancellation.
15.3 Notwithstanding any other provision of the Plan, the Committee may
establish appendices to the Plan for the purpose of granting Approved Options to
Employees who are primarily liable to tax in the United Kingdom and Awards to
Employees who are or may become primarily liable to tax outside the United
Kingdom on their remuneration, subject to such modifications as may be necessary
or desirable to take account of overseas tax, exchange control or securities
laws provided that any shares made available under such appendices shall count
towards the limit set out in Section 5.1.
15.4 Benefits under the Plan shall not be pensionable.
APPENDIX 1
United States Part of the Plan
For any Employee whose remuneration is (or, at the time of Option exercise, is
expected wholly to be) subject to taxation in the United States of America and
to whom the Committee wishes to grant Options under this Plan which will be
treated as Incentive Stock Options, the following provisions shall apply:
(A) All the provisions of the Plan shall apply to the grant of Options subject
to the modifications contained in the following paragraphs.
(B) The number of Shares issued or transferred pursuant to the exercise of
Incentive Share Options shall not, in aggregate, exceed 3.5 million
Shares. The number of Shares available for issuance pursuant to the
preceding sentence shall not exceed the limit in Section 5.1 and shall be
subject to appropriate adjustment on the occurrence of any event described
in Section 12.
(C) The term "disability" in Section 8.3 shall have the meaning given by
Section 22(e)(3) of the Code.
Exhibit 12
CARNIVAL CORPORATION & PLC
Ratio of Earnings to Fixed Charges
(in millions, except ratios)
Six Months
Ended May 31,
----------------
2005 2004
---- ----
Net income $ 753 $ 535
Income tax benefit, net (2) (4)
----- -----
Income before income taxes 751 531
----- -----
Fixed charges
Interest expense, net 168 136
Interest portion of rent expense(a) 8 9
Capitalized interest 10 17
----- -----
Total fixed charges 186 162
----- -----
Fixed charges not affecting earnings
Capitalized interest (10) (17)
----- -----
Earnings before fixed charges $ 927 $ 676
===== =====
Ratio of earnings to fixed charges 5.0x 4.2x
===== =====
(a) Represents one-third of rent expense, which we believe to be
representative of the interest portion of rent expense.
25
Exhibit 31.1
I, Micky Arison, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: July 7, 2005
By: /s/ Micky Arison
----------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
26
Exhibit 31.2
I, Howard S. Frank, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: July 7, 2005
By: /s/ Howard S. Frank
-----------------------------------
Howard S. Frank
Vice Chairman of the Board of
Directors and Chief Operating Officer
27
Exhibit 31.3
I, Gerald R. Cahill, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: July 7, 2005
By: /s/ Gerald R. Cahill
--------------------------------
Gerald R. Cahill
Executive Vice President and Chief
Financial and Accounting Officer
28
Exhibit 31.4
I, Micky Arison, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: July 7, 2005
By: /s/ Micky Arison
---------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
29
Exhibit 31.5
I, Howard S. Frank, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: July 7, 2005
By: /s/ Howard S. Frank
----------------------------------
Howard S. Frank
Vice Chairman of the Board of
Directors and Chief Operating Officer
30
Exhibit 31.6
I, Gerald R. Cahill, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: July 7, 2005
By: /s/ Gerald R. Cahill
-------------------------------
Gerald R. Cahill
Executive Vice President and Chief
Financial and Accounting Officer
31
y
Exhibit 32.1
In connection with the Quarterly Report on Form 10-Q for the quarter ended
May 31, 2005 as filed by Carnival Corporation with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
Corporation.
Date: July 7, 2005
By: /s/ Micky Arison
--------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
32
Exhibit 32.2
In connection with the Quarterly Report on Form 10-Q for the quarter ended
May 31, 2005 as filed by Carnival Corporation with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
Corporation.
Date: July 7, 2005
By: /s/ Howard S. Frank
-------------------------------------
Howard S. Frank
Vice Chairman of the Board of Directors
and Chief Operating Officer
33
Exhibit 32.3
In connection with the Quarterly Report on Form 10-Q for the quarter ended
May 31, 2005 as filed by Carnival Corporation with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
Corporation.
Date: July 7, 2005
By: /s/ Gerald R. Cahill
--------------------------------
Gerald R. Cahill
Executive Vice President and Chief
Financial and Accounting Officer
34
Exhibit 32.4
In connection with the Quarterly Report on Form 10-Q for the quarter ended
May 31, 2005 as filed by Carnival plc with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
plc.
Date: July 7, 2005
By: /s/ Micky Arison
--------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
35
Exhibit 32.5
In connection with the Quarterly Report on Form 10-Q for the quarter ended
May 31, 2005 as filed by Carnival plc with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
plc.
Date: July 7, 2005
By: /s/ Howard S. Frank
-------------------------------------
Howard S. Frank
Vice Chairman of the Board of Directors
and Chief Operating Officer
36
Exhibit 32.6
In connection with the Quarterly Report on Form 10-Q for the quarter ended
May 31, 2005 as filed by Carnival plc with the Securities and Exchange
Commission on the date hereof (the "Report"), I certify pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of Carnival
plc.
Date: July 7, 2005
By: /s/ Gerald R. Cahill
--------------------------------
Gerald R. Cahill
Executive Vice President and Chief
Financial and Accounting Officer
37