UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 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
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(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
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(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
Securities registered pursuant Securities registered pursuant
to Section 12(b) of the Act: to Section 12(b) of the Act:
Title of each class Title of each class
------------------- -------------------
Common Stock Ordinary Shares each represented
($.01 par value) by American Depositary Shares
($1.66 par value), Special
Voting Share, GBP 1.00 par value
and Trust Shares of beneficial interest
in the P&O Princess Special Voting Trust
Name of each exchange on which registered Name of each exchange on which registered
- ----------------------------------------- -----------------------------------------
New York Stock Exchange, Inc. New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrants are well-known seasoned issuers,
as defined in Rule 405 of the Securities Act. Yes|X| No |_|
Indicate by check mark if the registrants are not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes |_| No |X|
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
registrant was 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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrants' knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |_|
Indicate by check mark whether the registrants are large accelerated
filers, accelerated filers, or non-accelerated filers. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Act). Large
Accelerated Filers |X| Accelerated Filers |_| Non-Accelerated Filers |_|
Indicate by check mark whether the registrants are shell companies (as
defined in Rule 12b-2 of the Exchange Act). Yes |_| No |X|
The aggregate market value of the voting and The aggregate market value of the voting
non-voting common equity held by non-affiliates and non-voting common equity held by non-
computed by reference to the price at which the affiliates computed by reference to the price at
common equity was last sold was $21.2 billion which the common equity was last sold was $9.4
as of the last business day of the registrant's billion as of the last business day of the registrant's
most recently completed second fiscal quarter. most recently completed second fiscal quarter.
At February 6, 2006, Carnival Corporation At February 6, 2006, Carnival plc had outstanding
had outstanding 638,496,327 shares of its 212,488,679 Ordinary Shares $1.66 par value, one
Common Stock, $.01 par value. Special Voting Share, GBP 1.00 par value and
638,496,327 Trust Shares of beneficial interest
in the P&O Princess Special Voting Trust.
DOCUMENTS INCORPORATED BY REFERENCE
The information described below and contained in the Registrants' 2005
annual report to shareholders to be furnished to the Commission pursuant to Rule
14a-3(b) of the Exchange Act is shown in Exhibit 13 and is incorporated by
reference into this joint Annual Report on Form 10-K.
Part and Item of the Form 10-K
Part II
Item 5(a) and (c). Market for Registrants' Common Equity, Related
Stockholder Matters and Issuer Purchases of Equity
Securities - Market Information and Holders.
Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.
Item 8. Financial Statements and Supplementary Data.
Portions of the Registrants' 2006 definitive proxy statement, to be filed
with the Commission, are incorporated by reference into this joint Annual Report
on Form 10-K under the items described below.
Part and Item of the Form 10-K
Part III
Item 10. Directors and Executive Officers of the Registrants.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.
Item 13. Certain Relationships and Related Transactions.
Item 14. Principal Accounting Fees and Services.
2
PART I
Item 1. Business.
A. General
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 this joint Annual Report on Form 10-K as
"Carnival Corporation & plc," "our," "us," and "we."
On April 17, 2003, Carnival Corporation and Carnival plc (formerly known
as P&O Princess Cruises plc or "P&O Princess") completed a dual listed company
("DLC") transaction, which implemented Carnival Corporation & plc's DLC
structure. 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. Carnival
Corporation and Carnival plc are both public companies, with separate stock
exchange listings and their own shareholders. The two companies have a single
executive management team and identical boards of directors, and operate as if
they were a single economic enterprise. See Note 3, "DLC Transaction" to our
Consolidated Financial Statements in Exhibit 13 to this joint Annual Report on
Form 10-K.
We are the largest cruise company and one of the largest vacation
companies in the world. We have a portfolio of 12 widely recognized cruise
brands and are a leading provider of cruises to all major vacation destinations
outside the Far East. See Part I, Item 1. Business B. - "Cruise Operations" for
further information.
As of November 30, 2005, a summary of the number of cruise ships we
operate, by brand, their passenger capacity and the primary areas in which they
are marketed is as follows:
Cruise Number Passenger Primary
Brands of Cruise Ships Capacity(a) Market
------ --------------- ----------- ------
Carnival Cruise
Lines 21 47,820 North America
Princess Cruises
("Princess") 14 29,152 North America
Holland America Line 12 16,930 North America
Costa Cruises ("Costa") 10 17,262 Europe
P&O Cruises 5 8,844 United Kingdom
AIDA Cruises ("AIDA") 4 5,378 Germany
Cunard Line ("Cunard") 2 4,410 North America and United Kingdom
P&O Cruises Australia 3 3,680 Australia and New Zealand
Ocean Village 1 1,578 United Kingdom
Swan Hellenic 1 678 United Kingdom
Seabourn Cruise Line
("Seabourn") 3 624 North America
Windstar Cruises ("Windstar") 3 604 North America
-- -------
79 136,960
== =======
(a) In accordance with cruise industry practice, passenger capacity is
calculated based on two passengers per cabin even though some cabins can
accommodate three or more passengers.
As of January 30, 2006, we had signed agreements with two shipyards
providing for the construction of 16 additional cruise ships scheduled for
delivery between January 31, 2006 and September 2009. In addition, in December
2005, we entered into an agreement for the sale of one P&O Cruises Australia
ship, which is expected to leave our fleet in May 2006. These additions and sale
are expected to result in a net increase in our passenger capacity of 41,816
lower berths, or 30.5%, compared to November 30, 2005. It is possible that some
more of our older ships may be sold or retired during the next few years, thus
reducing the size of our fleet over this period. Alternatively, it is also
possible that we could order more ships, which could enter service in 2008 or
2009, thus increasing the size of our fleet over this period. See Note 7,
"Commitments" to our Consolidated Financial Statements in Exhibit 13 to this
joint Annual Report on Form 10-K for additional information regarding our ship
commitments.
3
In addition to our cruise operations, we own the leading cruise/tour
operators in the State of Alaska and the Canadian Yukon, Holland America Tours
and Princess Tours, which primarily complement their respective cruise
operations and own substantially all the assets noted below. These tour
companies currently market and operate:
- - 16 hotels or lodges in Alaska and the Canadian Yukon, with over 3,000 guest
rooms;
- - over 530 motorcoaches used for sightseeing and charters in the States of
Washington and Alaska, in British Columbia, Canada and the Canadian Yukon;
- - 30 domed rail cars, which are run on the Alaska Railroad between Anchorage
and Fairbanks, Whittier and Denali, and Whittier and Talkeetna;
- - two luxury dayboats offering tours to a glacier in Alaska and on the Yukon
River; and
- - sightseeing packages, or individual components of such packages, sold either
separately or as part of our cruise/tour packages to our Alaskan cruise
passengers and to other vacationers.
B. Cruise Operations
The multi-night cruise industry is a small part of the overall global
vacation market. We estimate that the global cruise industry carried
approximately 14 million passengers in 2005. The principal sources for cruise
passengers are North America, Europe, Asia/South Pacific including Australia and
New Zealand, and South America. We source our passengers principally from North
America and Europe. A small percentage of our passengers are sourced from
Asia/South Pacific and South America. See Note 12, "Segment Information" to our
Consolidated Financial Statements in Exhibit 13 to this joint Annual Report on
Form 10-K for additional information regarding our cruise and other segments and
our U.S. and foreign assets and revenues.
I. Industry Background
The cruise industry is still growing and continues to remain only a
relatively small percentage of the wider global vacation market in which cruise
vacation operators compete for disposable income normally spent by consumers on
vacations. Cruise passengers in North America have increased by a compound
annual growth rate of approximately 9.1% between 1999 and 2004, increasingly
drawing consumers from other vacation alternatives. In Europe cruise passengers
have increased by a compound annual growth rate of approximately 8.4% between
1999 and 2004.
Outside North America, the principal sources of passengers for the cruise
industry, excluding the Far East, are the UK, Germany, Italy, Spain, France,
Australia, Switzerland and Brazil. In all of these areas, cruising represents a
smaller proportion of the overall vacation market than it does in North America
and, accordingly, we believe these markets also have considerable growth
potential.
Cruising offers a broad range of products to suit vacationing customers of
many ages, backgrounds and interests. Cruise brands can be broadly characterized
as offering contemporary, premium and luxury cruise experiences. The
contemporary experience typically includes cruises that last seven days or less,
have a more casual ambiance and are less expensive than premium or luxury
cruises. The premium experience typically includes cruises that last from seven
to 14 days. Premium cruises emphasize quality, comfort, style and more
destination-focused itineraries and the average pricing on these cruises is
typically higher than contemporary cruises. The luxury experience is typically
characterized by smaller vessel size, very high standards of accommodation and
service, and generally with higher prices than premium cruises. Notwithstanding
these classifications, there generally is significant overlap and competition
among all cruise products.
We are a provider of cruise vacations in most of the largest vacation
markets in the world, including North America, the UK, Germany, southern Europe
and South America, with significant product offerings in each of the
classifications noted above. Our mission is "to deliver exceptional vacation
experiences through the world's best-known cruise brands that cater to a variety
of different lifestyles and budgets, all at an outstanding value unrivalled on
land or at sea." A brief description of the principal vacation areas where we
source passengers and our brands that market primarily to these vacationers is
as follows:
4
II. North America
The highest number of cruise passengers in the world are sourced from
North America, where cruising has developed into a mainstream alternative to
land-based resort and sightseeing vacations. Approximately 9.1 million North
American-sourced cruise passengers took cruise vacations for two consecutive
nights or more in 2004, and we estimate about 10 million passengers took a
cruise vacation in 2005. This sector has grown significantly in recent years as
new capacity has been introduced.
The principal itineraries visited by North American sourced cruise
passengers in 2005 were the Caribbean, the Bahamas, Mexico and Alaska. In
addition, North American cruise passengers visited Europe, the Mediterranean,
New England and Canada, Bermuda, Hawaii, the Panama Canal and other exotic
locations, including South and Central America, Africa, the South Pacific, the
Orient and India.
At the end of 2005, North America was served by 125 ships, with an
aggregate passenger capacity of approximately 189,000 lower berths. Based on the
number of ships that are currently on order worldwide and scheduled for delivery
between 2006 and 2009, we expect that the net capacity serving North American
consumers will continue to increase. Our projections indicate that by the end of
2006, 2007, 2008 and 2009, North America will be served by 127, 129, 133 and 134
ships, respectively, having an aggregate passenger capacity of approximately
199,000, 208,000, 221,000 and 228,000 lower berths, respectively. These figures
include some ships that were, or are expected to be, marketed in both North
America and elsewhere during different times of the year. Our estimates of
capacity do not include assumptions related to unannounced ship withdrawals due
to factors such as the age of ships or changes in the location from where ships'
passengers are predominantly sourced and, accordingly, could indicate a higher
percentage growth in North American capacity than will actually occur.
Alternatively, our growth estimates for 2008 and 2009 may increase because of
future shipbuilding orders, which have not yet been announced. We expect that
net capacity serving North American-sourced cruise passengers will increase over
the next several years, although at a lower growth rate than what the cruise
industry experienced in recent years.
Carnival Cruise Lines, Princess, Holland America Line, Seabourn and
Windstar source their passengers primarily from North America. Cunard sources
most of its passengers from North America and Europe.
Carnival Cruise Lines operates 21 contemporary ships, with one additional
ship expected to begin service in each of fiscal 2007, 2008 and 2009. Carnival
Cruise Lines is the largest cruise line in the world and offers quality cruise
vacations at affordable prices and is well-known as the "Fun Ships," which we
believe captures the essence of the brand. Carnival is committed to total guest
satisfaction and is continually introducing ways to keep its cruise experience
new and exciting, including expanded dining choices, such as "Signature
Selections" by world-renowned French master chef Georges Blanc, comfort bed
sleep systems, Vegas-style production shows with elaborate sets and costumes and
captivating pyrotechnics, innovative childrens' programming, personalized spa
services, and even the outdoor poolside light emitting diode ("LED") television
screen on its newest ship, the Carnival Liberty. Carnival Cruise Lines carries
the largest number of North American cruise passengers, and has been offering
more new homeport locations to stimulate demand. Multiple home port locations
enable guests to lower the price of their cruise vacation by substantially
reducing or eliminating the cost of travel to and from the port.
All of Carnival Cruise Lines' ships were designed by and built for it,
including seven that are among the world's largest. During all or a portion of
the year, three of the Carnival Cruise Lines ships call on ports on the Mexican
Riviera, and the rest of the fleet operates to destinations in the Bahamas or
the Caribbean. In addition, the Carnival Liberty offers two transatlantic
cruises and 12-day Grand Mediterranean cruises from April to November. Carnival
Cruise Lines ships also offer cruises to Alaska, Canada/New England, the
Hawaiian Islands and the Panama Canal, with most cruises ranging from three to
seven days.
Princess, whose brand name was made famous by the "Love Boat" television
show, recently celebrated its 40th anniversary, and is the world's third largest
cruise line with a fleet of 14 modern ships. Princess is truly a global brand,
offering over 90 unique itineraries to more than 270 destinations. It is a
leading cruise line in exotic regions of the world (Europe, Alaska, Asia,
Australia, the South Pacific and South America) with larger ships and more
available capacity. Substantially all of Princess' ships reflect an innovative
design philosophy called "Big Ship Choice, Small Ship Feel," emphasizing a broad
variety of amenities combined with the more intimate ambience found on smaller
vessels.
5
All Princess ships feature the Personal Choice Dining program, offering guests
flexibility, convenience and quality in an array of traditional, anytime,
specialty and casual dining options. A quality service initiative entitled
C.R.U.I.S.E. (Courtesy, Respect, Unfailing In Service Excellence) has been in
place for nearly ten years, resulting in extremely high standards of service
throughout the fleet.
Princess is widely recognized among travel agents as an innovative,
premium cruise line. The Caribbean Princess, the latest in the evolving Grand
Class series of vessels, debuted in 2004 with its "Movies Under the Stars"
outdoor theater, showing first-run Hollywood hits on a 300 square foot LED
screen. Further Grand Class Ships which will be introduced include the Crown
Princess in 2006, the Emerald Princess in 2007 and one additional ship in 2008.
Each will provide more than 57% of its staterooms with balconies- another
hallmark of Princess ships. Princess attracts consumers with a compelling,
highly integrated brand marketing campaign, utilizing the slogan "Escape
Completely" which appears in magazines, newspapers, direct mail, online, DVD and
point-of-sale materials. The princess.com website now offers comprehensive
marketing and product information and the Princess Captain's Circle loyalty
program is considered one of the industry's best, with a very high retention
rate among past passengers.
Holland America Line operates a premium fleet of 12 ships, with one
additional ship expected to begin service in each of fiscal 2006 and 2008.
Holland America Line will offer nearly 500 sailings from 25 home ports, 17 in
North America. These home ports include departures from New York, Boston,
Montreal, Norfolk, Ft. Lauderdale, Tampa, San Diego, Seattle and Vancouver. This
fleet visits all seven continents in 2006, while increasing the number of
cruises to popular destinations such as Alaska, the Caribbean, Europe and
Canada/New England. Holland America's ships, which tend to be smaller and more
intimate, were designed with airy viewing lounges, wraparound teak decks and
private, roomy verandahs that offer guests the chance to experience wildlife and
scenery. Cruise lengths vary from two to 116 days. Most Holland America Line
sailings in the Caribbean visit a private island destination known as Half Moon
Cay, which is owned by Holland America Line.
Holland America Line expects to complete its $225 million investment to
provide product and service enhancements to its fleet by the fall of 2006. The
comprehensive enhancements, known as the "Signature of Excellence," focus on
five areas vital to Holland America Line's guest experience as follows: (1)
spacious, elegant ships and accommodations, (2) sophisticated dining, (3)
gracious, unobtrusive service, (4) extensive enrichment programs and activities,
and (5) compelling worldwide itineraries.
Windstar operates three motor-sail yachts known for their casually elegant
atmosphere. In 2006, Windstar will offer sailings in the Caribbean, Europe, the
Americas and the Greek Isles. Renowned for offering a luxury cruise experience
that is "180 Degrees from Ordinary," a high-percentage of return guests attests
to the appeal of Windstar's casual ambiance of resort-style attire, exquisite
cuisine and an extensive wine selection, open restaurant-style seating,
attentive service, exotic destinations and complimentary water sports.
The three Seabourn ships (the "Yachts of Seabourn") focus on personalized
service and superb cuisine aboard their intimately sized all-suite ships. The
Yachts of Seabourn offer an ultra-luxury experience. These ships offer
destinations around the world, including Europe, Asia, the South Pacific and the
Americas, with cruises generally in the seven to 14 day range. The Yachts of
Seabourn itineraries include many smaller, off-the-beaten-track ports, that are
inaccessible to larger ships.
III. Europe
We believe that Europe is the largest single leisure travel vacation
market, but cruising in Europe has achieved a much lower penetration rate than
in North America. Approximately 2.8 million European-sourced passengers took
cruise vacations in 2004 compared to approximately 9.1 million North
American-sourced passengers. Additionally, we estimate that about 3 million
European-sourced passengers took a cruise in 2005. The number of European cruise
passengers increased by a compound annual growth rate of approximately 8.4%
between 1999 and 2004. We believe that cruising represents a relatively small
percentage of the European vacation market. Therefore, we believe that the
European market represents a significant growth opportunity for us, and we
expect that a number of new or existing ships will continue to be introduced
into Europe over the next several years.
At the end of 2005, Europe was served by 102 ships, having an aggregate
passenger capacity of approximately 97,000 lower berths. Our projections
indicate that by the end of
6
2006, 2007, 2008 and 2009, Europe will be served by 104, 107, 111 and 114 ships,
respectively, having an aggregate passenger capacity of approximately 103,000,
111,000, 121,000 and 130,000 lower berths, respectively. These figures include
some ships that were, or are expected to be, marketed in both Europe and
elsewhere during different times of the year. Our estimates of European capacity
are based on similar assumptions as discussed previously for our North American
estimates.
A. United Kingdom
The UK is the single largest country from which cruise passengers are
sourced in Europe. Approximately 1.0 million UK passengers took cruises in 2004.
Cruising was relatively underdeveloped as a vacation option for the UK consumers
until the mid-1990s, but since then cruising in the UK has grown significantly.
The number of UK cruise passengers increased by a compound annual growth rate of
approximately 6.6% between 1999 and 2004. The main destination for UK cruise
passengers is the Mediterranean. Other popular destinations for UK cruise
passengers include the Caribbean, the Atlantic Islands, including the Canary
Islands and the Azores, and Scandinavia.
P&O Cruises, Ocean Village, and Swan Hellenic source substantially all of
their passengers from the UK. In addition, our North American brands and Costa
also source passengers from the UK. Finally, Cunard sources customers from North
America, the UK, continental Europe and the rest of the world.
P&O Cruises is the largest cruise operator and best known cruise brand in
the UK, with five premium ships, and one additional ship expected to begin
service in fiscal 2008. These ships cruise to over 200 destinations in more than
90 countries, with most cruises ranging from seven to 14 days, but with some
cruises lasting longer, including three world cruises in each of 2006 and 2007.
These ships, which are relatively new compared to the ships that are more
typically marketed in the UK, have enabled P&O Cruises to continue to offer a
more modern style of cruising to UK cruise passengers and increase their appeal
to younger passengers and families, while retaining older and more traditional
British customers. The Artemis and Arcadia are child-free ships, which generally
appeal to an older guest demographic, while the rest of the fleet is
well-equipped for children's activities. The ships have a wide choice of dining
and entertainment options and offer a welcoming atmosphere, with an emphasis on
the attributes of "Britishness," "professionalism," and "style."
The Arcadia and Oceana offer a more contemporary and innovative
experience; the Aurora and Oriana are particularly focused on P&O's British
experience; and the Artemis offers a more traditional and intimate experience.
Each of these different ambiances appeals to a different type of UK passenger.
P&O Cruises offers cruises from Southampton, England to the Mediterranean, the
Atlantic Islands, the Baltic, and the Norwegian Fjords during the summer, and
primarily operates Caribbean cruises and around the world voyages during the
winter.
Under the Cunard brand, which is one of the most widely recognized brands
in the UK, we operate two premium/luxury ships. They are primarily marketed in
the UK, North America, Germany and Australia. Cunard's flagship, the Queen Mary
2, was delivered in December 2003 and is the largest ocean liner in the world.
She has taken over the northern transatlantic crossing route, which was
previously operated by the Queen Elizabeth 2 ("QE2"), Cunard's former flagship.
The QE2 primarily serves UK-based passengers from Southampton, England and still
offers a world cruise, which has been offered since 1975. Cunard expects to take
delivery of its next ship, the Queen Victoria, in December 2007. Cunard's ships
offer voyages to worldwide destinations, with many of the voyages ranging
generally between six and 31 days, but with some three day "taster" voyages and
the 122-day world cruise.
The Ocean Village brand was launched in spring 2003, and consists of one
contemporary ship serving the UK. This brand targets a young and active customer
base and its cruise product emphasizes informality, health and well-being. The
brand attracts a high proportion of passengers new to cruising. The Ocean
Village ship offers one or two week cruises, together with cruise and stay
holidays, and operates out of Palma, Majorca in the Mediterranean during the
summer season and from Barbados in the Caribbean during the winter season.
In spring 2007, the 1,666 passenger capacity AIDAblu, which is currently
operated by AIDA, is expected to be transferred to Ocean Village. This Ocean
Village ship is also expected to sail in the Mediterranean during the summer
season and the Caribbean during the winter season.
7
Swan Hellenic's Minerva II operates a program of premium discovery
cruises. The product is intended to appeal to passengers seeking to discover
more about the destinations they are visiting through informative onboard talks
delivered by guest speakers, and a choice of tailor-made shore excursions at
each port of call. In the spring/summer season, the itineraries are focused in
the Mediterranean, Northern Europe, Africa and around Great Britain. Winter
cruise destinations include Central and South America, the United States of
America, the Caribbean and the Far East.
B. Southern Europe
The main countries in southern Europe for sourcing cruise passengers are
Italy, France and Spain. Together, these countries generated approximately 1.0
million cruise passengers in 2004. Cruising in Italy, France and Spain had a
compound annual growth rate in the number of passengers carried of approximately
11.8% between 1999 and 2004. We believe that southern Europe is also relatively
underdeveloped for the cruise industry. We intend to increase our penetration in
southern Europe through Costa, one of the most recognized cruise brands marketed
in Europe.
Costa operates 10 contemporary ships, with one additional ship expected to
begin service in each of fiscal 2006, 2007 and 2009. Costa's ships operate in
Europe during the spring to fall and then during the fall to spring, Costa
repositions the majority of its ships to the Caribbean and South America, while
also maintaining a year-round presence with the rest of its fleet in the
Mediterranean and the Atlantic Islands. Costa is the number one cruise line in
continental Europe based on passengers carried and capacity of its ships,
principally serving customers in Italy, France, Germany and Spain. Headquartered
in Italy, Costa offers guests an international and multi-lingual ambiance with
an Italian touch. The Costa ships call on 110 European ports, with 60 different
itineraries, and sail to various other ports in the Caribbean and South America,
with most cruises ranging from seven to 11 days.
C. Germany
Germany is one of the largest sources for cruise passengers in continental
Europe, with approximately 0.6 million cruise passengers in 2004. Germany had a
compound annual growth rate in the number of cruise passengers carried of
approximately 11.0% between 1999 and 2004. We believe that Germany is also a
relatively underdeveloped region for the cruise industry. The main destinations
visited by German cruise passengers are the Mediterranean and the Caribbean.
Other popular destinations for German cruise passengers include Scandinavia and
the Atlantic Islands.
AIDA, which sources substantially all of its passengers from German
speaking countries, operates four contemporary ships, with one additional ship
expected to begin service in each of fiscal 2007, 2008 and 2009. Each of these
new ships has a 22% larger passenger capacity than the largest ship in AIDA's
current fleet. Partially offsetting this capacity increase, the AIDAblu is
expected to be transferred to the Ocean Village brand in 2007. AIDA's product is
especially tailored for the German-speaking market and offers an exceptionally
relaxed, yet active cruising experience with an emphasis on lifestyle,
informality, friendliness and activity. Spa and fitness areas and high quality
but informal dining options characterize the experience onboard the vessels.
AIDA's ships primarily offer seven day trips that allow guests to easily
book back-to-back cruise vacations. AIDA allows for an easy selling and booking
experience by offering only a few cabin categories and two seasons. During the
summer, the AIDA ships sail in the Mediterranean and the North and Baltic Seas,
calling on approximately 50 ports, while itineraries for the winter include the
Caribbean, Central America, the Western Mediterranean and the Atlantic Islands.
IV. Australia and New Zealand
Cruising in Australia is developing. We estimate that approximately
168,000 Australians took cruise vacations in 2004. We expect to serve this
region primarily through P&O Cruises Australia, which is the leading cruise line
in Australia.
P&O Cruises Australia is a cruise brand that caters specifically to
Australians and New Zealanders. Its contemporary ships, the Pacific Sun, the
Pacific Sky and the Pacific Star, which was transferred from Costa in October
2005, offer seven to 14 day cruises from Sydney and Brisbane to Vanuatu, New
Caledonia, Fiji, and New Zealand and for a portion of the year offers a premium
cruise product from Sydney to French New Caledonia and other destinations in the
South Pacific on the Pacific Princess.
8
In late 2007, the Regal Princess is expected to be transferred from
Princess to P&O Cruises Australia. The Pacific Sky is expected to leave the P&O
Cruises Australia fleet in May 2006 pursuant to an agreement for sale entered
into in December 2005.
V. South America
Cruise vacations have been marketed in South America for many years,
although cruising as a vacation alternative remains in an early stage of
development in the region. Cruises from South America typically occur during the
southern hemisphere summer months of November through March, and are primarily
seven to nine days in duration. Our presence is primarily represented through
the Costa brand, which will operate two vessels in 2006 in this region, Costa
Victoria and Costa Romantica, collectively offering 3,272 lower berths.
9
VI. Ship Information
Summary information of our ships as of November 30, 2005 is as
follows:
CALENDAR
YEAR PASSENGER
BRAND AND SHIP REGISTRY DELIVERED CAPACITY
-------------- -------- --------- --------
Carnival Cruise Lines
Carnival Liberty Panama 2005 2,968
Carnival Valor Panama 2004 2,968
Carnival Miracle Panama 2004 2,120
Carnival Glory Panama 2003 2,968
Carnival Conquest Panama 2002 2,968
Carnival Legend Panama 2002 2,120
Carnival Pride Panama 2001 2,120
Carnival Spirit Panama 2001 2,120
Carnival Victory Panama 2000 2,750
Carnival Triumph Bahamas 1999 2,750
Paradise Panama 1998 2,050
Elation Panama 1998 2,050
Carnival Destiny Bahamas 1996 2,634
Inspiration Bahamas 1996 2,050
Imagination Bahamas 1995 2,050
Fascination Bahamas 1994 2,050
Sensation Bahamas 1993 2,050
Ecstasy Panama 1991 2,050
Fantasy Panama 1990 2,050
Celebration Panama 1987 1,484
Holiday Bahamas 1985 1,450
------
Total Carnival Cruise Lines 47,820
------
Princess
Sapphire Princess Bermuda 2004 2,674
Caribbean Princess Bermuda 2004 3,100
Diamond Princess Bermuda 2004 2,674
Island Princess Bermuda 2003 1,974
Coral Princess Bermuda 2002 1,974
Star Princess Bermuda 2002 2,598
Golden Princess Bermuda 2001 2,598
Tahitian Princess Gibraltar 2000 668
Pacific Princess(a) Gibraltar 1999 668
Sea Princess(b) Bermuda 1998 2,016
Grand Princess Bermuda 1998 2,592
Dawn Princess Bermuda 1997 1,998
Sun Princess Bermuda 1995 2,022
Regal Princess(c) Bermuda 1991 1,596
------
Total Princess 29,152
------
Holland America Line(d)
Westerdam Netherlands 2004 1,848
Oosterdam Netherlands 2003 1,848
Zuiderdam Netherlands 2002 1,848
Zaandam Netherlands 2000 1,432
Amsterdam Netherlands 2000 1,380
Volendam Netherlands 1999 1,432
Rotterdam Netherlands 1997 1,316
Veendam Bahamas 1996 1,258
Ryndam Netherlands 1994 1,258
Maasdam Netherlands 1993 1,258
Statendam Netherlands 1993 1,258
Prinsendam Netherlands 1988 794
------
Total Holland America Line 16,930
------
10
CALENDAR
YEAR PASSENGER
BRAND AND SHIP REGISTRY DELIVERED CAPACITY
-------------- -------- --------- --------
Costa
Costa Magica Italy 2004 2,702
Costa Fortuna Italy 2003 2,702
Costa Mediterranea Italy 2003 2,114
Costa Atlantica Italy 2000 2,114
Costa Victoria Italy 1996 1,928
Costa Romantica Italy 1993 1,344
Costa Allegra Italy 1992 806
Costa Classica Italy 1991 1,302
Costa Marina Italy 1990 762
Costa Europa Italy 1986 1,488
------
Total Costa 17,262
------
P&O Cruises
Arcadia Bermuda 2005 1,948
Oceana Bermuda 2000 2,016
Aurora UK 2000 1,870
Oriana UK 1995 1,822
Artemis(e) Bermuda 1984 1,188
------
Total P&O Cruises 8,844
------
AIDA
AIDAaura Italy 2003 1,266
AIDAvita Italy 2002 1,266
AIDAcara Italy 1996 1,180
AIDAblu(f) Italy 1990 1,666
------
Total AIDA 5,378
------
Cunard
Queen Mary 2 UK 2003 2,620
QE2 UK 1969 1,790
------
Total Cunard 4,410
------
P&O Cruises Australia
Pacific Sun Bahamas 1986 1,486
Pacific Sky(c) UK 1984 1,200
Pacific Star(g) UK 1982 994
------
Total P&O Cruises Australia 3,680
------
Ocean Village
Ocean Village UK 1989 1,578
Swan Hellenic
Minerva II(h) Marshall Islands 2001 678
Seabourn
Seabourn Legend Bahamas 1992 208
Seabourn Spirit Bahamas 1989 208
Seabourn Pride Bahamas 1988 208
------
Total Seabourn 624
------
Windstar
Wind Surf Bahamas 1990 308
Wind Spirit Bahamas 1988 148
Wind Star Bahamas 1986 148
-------
Total Windstar 604
-------
Total 136,960
=======
(a) The Pacific Princess is only included in Princess' capacity, although it
is time chartered to P&O Cruises Australia and based out of Australia for
one-half of the year.
(b) The Adonia was transferred from P&O Cruises to Princess in the spring of
2005 and was renamed the Sea Princess.
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(c) The Regal Princess is expected to be transferred to P&O Cruises Australia
in late 2007. The Pacific Sky is expected to leave the P&O Cruises
Australia fleet in May 2006 pursuant to an agreement for sale entered into
in December 2005.
(d) Since November 2004, the 1,214 passenger former Noordam is being operated
by an unrelated entity under a long-term bareboat charter agreement and,
accordingly, is excluded from Holland America Lines' capacity.
(e) The Royal Princess was transferred from Princess to P&O Cruises in the
spring of 2005 and was renamed the Artemis.
(f) The AIDAblu is expected to be transferred to Ocean Village in the spring
of 2007.
(g) The Costa Tropicale was transferred from Costa to P&O Cruises Australia in
October 2005 and was renamed the Pacific Star.
(h) The Minerva II is operated by Swan Hellenic pursuant to a bareboat charter
agreement through March 2007. In December 2005, we exercised our right of
first refusal under the charter agreement, and agreed to purchase the
Minerva II.
VII. Characteristics of the Cruise Vacation Industry
A. Strong Growth
Cruise vacations have experienced significant growth in recent years. The
number of new cruise ships currently on order from shipyards indicates that the
growth in cruise capacity is set to continue for a number of years. In order to
fill up this new capacity, continued growth in demand across the industry will
be required. Given the historical growth rate of cruising and the relative low
penetration levels in major vacation regions, we believe that there are
significant opportunities for growth.
In the few years prior to 2004, the cruise industry experienced
significant pressure on cruise pricing, which we believe was ultimately the
result of, among other things, various adverse international geopolitical and
economic conditions and events, such as terrorism, the Iraqi war, and the risk
of other armed conflicts, adverse publicity, increases in new cruise ship
capacity, ship incidents, and competition from cruise ship and other vacation
alternatives. Although the cruise industry has been able to increase cruise
pricing during the last two years, factors such as these could adversely impact
future growth if they or similar events or conditions were to occur or exist in
the future.
B. Wide Appeal of Cruising
Cruising appeals to a broad demographic range. Industry surveys estimate
that there are approximately 128 million potential passengers for cruising in
North America (defined as members of households with a minimum income of
$40,000, that are headed by a person who is at least 25 years old). According to
these surveys, about half of these individuals have expressed an interest in
taking a cruise as a vacation alternative, and over 60% of worldwide cruise
passengers are over the age of 40. The size of the North American population
between ages 45 and 74 is expected to increase 19% between 2006 and 2016. We
believe the cruise industry is well-positioned to take advantage of these
favorable demographic trends, which are impacting its markets.
C. Relatively Low Penetration Levels
North America has the highest cruising penetration rates per capita.
Nevertheless, based upon information obtained from the Cruise Lines
International Association, or CLIA, a leading trade group, we estimate that only
approximately 18% of the U.S. population has ever taken a cruise, and only 8%
have done so in the past three years. In the UK, where there has been
significant expansion in the number of cruise passengers carried over the last
five years, cruising penetration levels per capita are only approximately
three-fifths of those of North America. In the principal vacation regions in
continental Europe, cruising penetration levels per capita are approximately
one-fifth of those in North America. Elsewhere in the world cruising is at an
early stage of development and has far lower penetration rates.
D. Satisfaction Rates
Cruise passengers tend to rate their overall satisfaction with a
cruise-based vacation higher than comparable land-based hotel and resort
vacations. We believe that a substantial number of cruise passengers think the
value of their cruise vacation experience is as good as, or better than, the
value of other comparable vacation alternatives.
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VIII. Passengers, Capacity and Occupancy
Our cruise operations had worldwide cruise passengers, passenger capacity
and occupancy as follows (a):
FISCAL CRUISE PASSENGER
YEAR PASSENGERS CAPACITY OCCUPANCY(b)
---- ---------- --------- ---------
2001 3,385,000 58,346 104.7%
2002 3,549,000 67,282 105.2%
2003 5,038,000 113,296 103.4%
2004 6,306,000 129,108 104.5%
2005 6,848,000 136,960 105.6%
(a) Information presented is as of the end of our fiscal year for passenger
capacity. Carnival plc's information is only included since April 17,
2003, the period subsequent to the completion of the DLC transaction.
(b) In accordance with cruise industry practice, occupancy is calculated using
a denominator of two passengers per cabin even though some cabins can
accommodate three or more passengers. The percentages in excess of 100%
indicate that on average more than two passengers occupied some cabins.
Our passenger capacity has grown from 58,346 berths at November 30, 2001
to 136,960 berths at November 30, 2005, primarily because of the 34,428 berths
added as a result of the DLC transaction with P&O Princess during 2003 and the
deliveries of 19 new cruise ships during this four-year period. See Part I, Item
l. Business, B. - "Cruise Operations-Ship Information" for additional
information.
The occupancy level on our ships during each quarter indicated below was
as follows:
Quarters Ended Occupancy
-------------- ---------
February 29, 2004 102.0%
May 31, 2004 102.8%
August 31, 2004 110.2%
November 30, 2004 102.5%
February 28, 2005 103.8%
May 31, 2005 104.8%
August 31, 2005 110.9%
November 30, 2005 102.7%
IX. Cruise Ship Construction and Cruise Port Facility Development and
Operations
As of January 30, 2006, we had signed agreements with two shipyards
providing for the construction of 16 additional cruise ships scheduled for
delivery between January 31, 2006 and September 2009. See Note 7, "Commitments"
to our Consolidated Financial Statements in Exhibit 13 to this joint Annual
Report on Form 10-K.
Primarily in cooperation with private or public entities, we are engaged
in the development of new or enhanced cruise port facilities. These facilities
are expected to provide our passengers with an improved vacation experience. Our
involvement typically includes providing cruise port facility development and
management expertise. We sometimes assist by providing direct financial support
for port development projects. However, most of the time, our financial
commitment is provided by agreeing to long-term port usage commitments. During
2005, we were involved in the development of cruise port facilities in
Barcelona, Spain, Brooklyn, New York, Miami, Florida, Naples, Italy, and the
Turks & Caicos Islands. In addition, we are in the process of, or have recently
completed negotiating for, the development of several other port facilities to
service our North American and European guests, including, but not limited to,
facilities in Belize City, Belize, Civitavecchia, Italy, Manhattan, New York,
Roatan, Honduras and San Diego, California. In October 2005, our pier facility
in Cozumel, Mexico was destroyed by Hurricane Wilma. This is one of our busiest
transit ports in the world and served over 1.2 million passengers in 2005. We
currently are in the process of negotiating with the port authorities as to the
rebuilding of this pier. No assurance can be given that any of these cruise port
facilities that are being developed will be completed.
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Finally, we currently operate other port facilities in Long Beach,
California, Juneau, Alaska and Savona, Italy pursuant to concession agreements
with the governmental authorities and other third parties. Our Long Beach
terminal is one of the home ports for Carnival Cruise Lines' U.S. West Coast
sailings to Mexico, as well as a transit port for some of our other brands.
Finally, the Savona terminal is the home port for a number of Costa's ships,
which sail in the Mediterranean Sea.
X. Cruise Pricing and Payment Terms
Each of our cruise brands publishes brochures with prices for the upcoming
seasons. Brochure prices vary by cruise line, by category of cabin, by ship, by
season and by itinerary. Brochure prices are regularly discounted through our
early booking discount programs and other promotions. The cruise ticket price
typically includes accommodations, meals, some beverages, and most onboard
entertainment, such as the use of, or admission to, a wide variety of activities
and facilities, including a fully equipped casino, nightclubs, theatrical shows,
movies, parties, a disco, a jogging track, a health club, swimming pools, sun
decks, whirlpools and saunas. Our North American brands' payment terms require
that a passenger pay a deposit to confirm their reservations with the balance
due before the departure date, while some of our European brands provide certain
of their travel agents and tour operators with credit terms, even though these
parties typically require the passenger to pay for the entire cruise before
sailing.
Historically, some of our advance bookings were taken from several months
in advance of the sailing date, for contemporary brands, to more than a year in
advance of sailing, for our luxury brands. This lead-time provided us with more
time to manage our prices, in relation to demand for available cabins, with the
goal of achieving higher overall net revenue yields - see "Key Performance
Indicators and Pro Forma Information" in our Management Discussion and Analysis
of Financial Condition and Results of Operations in Exhibit 13 to this joint
Annual Report on Form 10-K. In addition, some of our fares, such as Carnival
Cruise Lines' Supersaver fares, Costa's Pronto Price Savings fares, Holland
America Line's Early Savings and Mariner Savings fares and Princess's Loveboat
Savers plan, are designed to encourage potential passengers to book cruise
reservations earlier.
Commencing after September 11, 2001, our brands, and others in the travel
and leisure industry, generally experienced a closer-to-vacation booking pattern
than was experienced prior to September 11, 2001. However, since the fall of
2003, this trend reversed itself and bookings have been occurring further in
advance, on average, of sailing date and are now at more normal historical
levels. The wider booking patterns enable us to better optimize our net revenue
yields. However, it is possible that booking trends could revert to closer to
sailing pattern in the future.
When a passenger elects to purchase air transportation from us, both our
cruise revenues and cruise operating expenses generally increase by
approximately the same amount. Air transportation prices can vary by gateway and
destination. Over the last several years, we have generally experienced a lower
number of guests purchasing air transportation from us, which we believe is
partially a result of having opened additional embarkation points closer to our
guests' homes, as well as the availability of frequent flyer programs and lower
priced air tickets.
XI. Onboard and Other Revenues
We earn onboard and other revenues from other onboard activities and
services not included in the cruise ticket price consisting of, but not limited
to, casino gaming, bar and some beverage sales, gift shop sales, entertainment
arcades, shore excursions, art auctions, photo sales, spa services, bingo games
and lottery tickets, video diaries, snorkel equipment rentals, internet and
telephone usage and promotional advertising by merchants located in our ports of
call.
Our casinos, which contain slot machines and gaming tables including
blackjack, and in most cases craps and roulette, are generally open only when
our ships are at sea in international waters. Onboard activities are either
provided directly by us or by independent concessionaires, from which we collect
a percentage of their revenues or a fee.
We receive additional revenues from the sale to our passengers of shore
excursions at each ship's ports of call. These excursions include, among other
things, general sightseeing and adventure outings and local boat and beach
parties. For the Princess and Holland America Line ships and other of our brands
operating to destinations in Alaska, shore excursions are operated by Princess
Tours and Holland America Tours, as well as locally-owned operations. For shore
excursions in other locations, we typically utilize
14
locally-owned operations.
In conjunction with our cruise vacations, all of our cruise brands also
sell pre- and post-cruise land packages. Packages offered in conjunction with
ports of call in the U.S. would generally include one to four-night vacations at
nearby attractions or other vacation destinations, such as Universal Studios and
Walt Disney World in Orlando, Florida, Busch Gardens in Tampa, Florida, or
individual/multiple city tours of Boston, Massachusetts, New York City, New
York, and/or San Diego, California. Packages offered in Europe generally include
up to four-night vacations, including stays in well-known European cities, such
as Athens, Greece, Barcelona, Spain, Copenhagen, Denmark, London, England,
Paris, France and Rome, Italy.
In conjunction with our Alaska cruise vacations, principally on our
Princess, Holland America Line and Carnival Cruise Lines ships, we sell pre- and
post-cruise land packages, utilizing, to a large extent, our transportation and
hotel assets.
XII. Sales Relationships and Marketing Activities
We are a customer service-driven company and continue to invest in our
service organization to assist travel agents and guests. We believe that our
support systems and infrastructure are among the strongest in the vacation
industry.
We sell our cruises mainly through travel agents. Our individual cruise
brands' relationships with their travel agents are generally independent of each
of our other brands, except for certain brands sourcing UK passengers as
discussed below. These travel agent relationships are not exclusive and most
travel agents also sell cruises and other vacations provided by our competitors.
Our policy towards travel agents is to train and motivate them to support our
products with competitive sales and pricing policies and joint marketing
programs. We also use a wide variety of marketing techniques, including
websites, seminars and videos, to familiarize the agents with our cruise brands
and products. As with our brands' travel agent relationships, each of our
brands' marketing programs are generally independent of each of our other
brands. In each of our principal markets, we have familiarized the travel agency
community with our cruise brands and products.
Travel agents generally receive standard commissions of 10%, plus the
potential of additional commissions based on sales volume. During fiscal 2005,
no controlled group of travel agencies accounted for more than 10% of our
revenues.
Our investment in customer service has been focused on the development of
systems and employees. We have improved our systems within the reservations,
quality assurance, and customer relationship management functions, emphasizing
the continued support of the travel agency community, while simultaneously
developing greater contact and interactivity with our customer base. We have
individual websites for each of our brands, which provide access to information
about our products to internet users throughout the world, and substantially all
provide booking engines to our travel partners and to our customers. We also
support booking capabilities through major airline computer reservation systems,
including SABRE, Galileo, Amadeus and Worldspan. Although the vast majority of
our cruises are distributed through travel agents, we also take telephone and
internet bookings direct from customers who choose not to utilize the services
of a travel agent.
We have pursued comprehensive marketing campaigns to market our brands to
vacationers, including direct response marketing. The principal media used are
magazine and newspaper advertisements and promotional campaigns. Certain of our
brands also use significant amounts of television advertising.
In addition, we have formed a sales alliance for substantially all of our
UK cruises brands, known as the "Carnival Complete Cruise Solution," which is
comprised of Cunard, Ocean Village, P&O Cruises and Princess. By leveraging our
UK sales force and back-office operations, we are able to provide our UK
customers with a one-stop shopping destination for their cruise vacation,
regardless of their varying cruise needs, in a cost effective manner.
Finally, we have established the World's Leading Cruise Lines ("WLCL")
alliance for our family of North American cruise brands and Costa in order both
to educate the consumer about the overall breadth of our cruise brands, as well
as to increase the effectiveness and efficiency of marketing our brands. As part
of this alliance, we offer Vacation Interchange Privileges, which is a loyalty
program that provides special considerations to repeat guests aboard the WLCL
brands.
15
XIII. 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.
XIV. Competition
We compete with land-based vacation alternatives throughout the world,
including, among others, hotels, resorts, theme parks and vacation ownership
properties located in Las Vegas, Nevada, Orlando, Florida, various Caribbean,
Mexican, Bahamian and Hawaiian Island destination resorts and numerous other
vacation destinations throughout Europe and the rest of the world.
The primary cruise competitors for our Carnival Cruise Lines, Costa,
Cunard, Holland America Line and Princess brands for North American-sourced
passengers are Royal Caribbean Cruises Ltd., which owns Royal Caribbean
International and Celebrity Cruises, Star Cruises plc, which owns NCL Group,
which is comprised of Norwegian Cruise Line and Orient Lines, Disney Cruise
Line, Mediterranean Shipping Company, which owns MSC Cruises, and Crystal
Cruises.
Our primary cruise competitors for European-sourced passengers in the UK
are Island Cruises, Fred Olsen Cruise Lines, Discovery Cruises, Saga Cruises,
and Thomson Cruises, which is owned by TUI; in Germany they are MSC Cruises,
Hapag-Lloyd, which is owned by TUI, Peter Deilmann, Phoenix Reisen and
Transocean Cruises; and in Southern Europe they are MSC Cruises, Louis Cruise
Line, Globalia, Pullmantur and Spanish Cruise Line. We also compete for
passengers throughout Europe with Norwegian Cruise Line, Orient Lines, Royal
Caribbean International and Celebrity Cruises.
Our primary cruise competitors for our Seabourn and Windstar luxury brands
include Radisson Seven Seas Cruise Line and Silversea Cruises.
Our North American, European and Australian brands also compete among
themselves for passengers.
XV. Governmental Regulations
A. Maritime Regulations
Our ships are regulated by various international, national, state and
local laws, regulations and treaties in force in the jurisdictions in which our
ships operate. In addition, our ships are registered in the Bahamas, Bermuda,
Gibraltar, Italy, the Marshall Islands, the Netherlands, Panama and the UK, as
more fully described under Part I, Item 1. Business, B. - "Cruise Operations -
Ship Information" and, accordingly, are regulated by these jurisdictions and by
the international conventions governing the safety of our ships and guests that
these jurisdictions have ratified or to which they adhere. Each country of
registry conducts periodic inspections to verify compliance with these
regulations as discussed more fully below. In addition, the directives and
regulations of the European Union are applicable to some aspects of our ship
operations.
Specifically, the International Maritime Organization, sometimes referred
to as the "IMO", which operates under the auspices of the United Nations, has
adopted safety standards as part of the International Convention for Safety of
Life at Sea, sometimes referred to as SOLAS, which is applicable to all of our
ships. Among other things, SOLAS establishes vessel design, structural features,
materials, construction, life saving equipment, safe management and operation
and security requirements to improve passenger safety and security. The SOLAS
requirements are revised from time to time, with the most recent modifications
being phased-in through 2010.
In 1993, SOLAS was amended to incorporate the International Safety
Management Code, referred to as the "ISM Code." The ISM Code provides an
international standard for the safe management and operation of ships and for
pollution prevention. The ISM Code is mandatory for passenger vessel operators.
All of our operations and ships have obtained the required certificates
demonstrating compliance with the ISM Code and are regularly inspected and
controlled by the national authorities, as well as the international
16
authorities acting under the provisions of the international agreements related
to Port State Control, the process by which a nation exercises authority over
foreign ships when the ships are in the waters subject to its jurisdiction.
In December 2004, the Maritime Safety Committee approved for adoption
amendments to SOLAS chapter II-I Parts A & B that relate to the damage stability
of new cruise passenger vessels. These regulations were adopted in May 2005, and
are applicable to those vessels whose keels are laid after January 1, 2009.
Although the new standards do not affect our existing fleet or our vessels
currently under contract as those keels will have been laid prior to January 1,
2009, compliance with these standards for future ships will require the
development of new designs, which may increase costs.
Our ships are subject to a program of periodic inspection by ship
classification societies who conduct annual, intermediate, dry-docking and class
renewal surveys. Classification societies conduct these surveys not only to
ensure that our ships are in compliance with international conventions adopted
by their respective country of registry and domestic rules and regulations, but
also to verify that our ships have been maintained in accordance with the rules
of the society and that recommended repairs have been satisfactorily completed.
Our ships that call on U.S. ports are subject to inspection by the U.S.
Coast Guard for compliance with SOLAS, by the U.S. Public Health Service for
sanitary standards, and by other agencies such as the U.S. Customs and Border
Patrol, with regard to customs and immigration. Our ships are also subject to
similar inspections pursuant to the laws and regulations of various other
countries our ships visit.
Finally, our ships that call on U.S. ports are also subject to various
security requirements, including, but not limited to, The Maritime
Transportation Security Act of 2002 ("MTSA"), SOLAS and the International Ship
and Port Facility Security Code ("ISPS Code"). Among other things, these
regulations require certain vessel owners to implement security measures,
conduct vessel security assessments, and develop security plans. Under these
requirements, we have prepared and submitted security plans for all our ships to
their respective country of registry, and International Ship Security
Certificates have been issued demonstrating compliance with the ISPS Code. In
addition, the MTSA regulations establish Area Maritime Security requirements for
geographic port areas that provide authority for the U.S. Coast Guard to
implement operational and physical security measures on a port area basis that
could affect our operation in those areas.
We believe that health, safety and security issues will continue to be an
area of focus by relevant government authorities in the U.S., the European Union
and elsewhere. Resulting legislation or regulations, or changes in existing
legislation or regulations, could impact our operations and would likely subject
us to increasing compliance costs in the future.
B. Permits for Glacier Bay, Alaska
In connection with certain of our Alaska cruise operations, Holland
America Line, Princess Cruises and Carnival Cruise Lines rely on concession
permits from the U.S. National Park Service to operate their cruise ships in
Glacier Bay National Park and Preserve. Such permits must be periodically
renewed and there can be no assurance that they will continue to be renewed or
that regulations relating to the renewal of such permits, including preference
or historical rights, will remain unchanged in the future.
C. Alaska Environmental Regulations
The State of Alaska enacted legislation which prohibits certain discharges
in designated Alaska waters, ports or near shorelines and requires that certain
discharges be monitored to verify compliance with the standards established by
the legislation. Both the state and federal environmental regime in Alaska is
more stringent than the federal regime under the Federal Water Pollution Control
Act with regard to discharge from vessels. The legislation also provides that
repeat violators of the regulations could be prohibited from operating in
Alaskan waters.
D. Other Environmental, Health and Safety Matters
We are subject to various international, national, state and local
environmental protection and health and safety laws, regulations and treaties
that govern, among other things, air emissions, employee health and safety,
waste discharge, water management and disposal, and storage, handling, use and
disposal of hazardous substances, such as
17
chemicals, solvents, paints and asbestos. We are committed to helping to
conserve the natural environment, not only because of the existing regulations,
but because a pristine environment is one of the key elements that bring our
guests on board our ships.
In particular, in the U.S., the Act to Prevent Pollution from Ships,
implementing the International Convention for the Prevention of Pollution from
Ships, provides for severe civil and criminal penalties related to
ship-generated pollution for incidents in U.S. waters within three nautical
miles and in some cases in the 200-mile exclusive economic zone.
Furthermore, in the U.S., the Oil Pollution Act of 1990 (the "OPA")
provides for strict liability for water pollution, such as oil pollution or
threatened oil pollution incidents in the 200-mile exclusive economic zone of
the U.S., subject to monetary limits. These monetary limits do not apply,
however, where the discharge is proximately caused by the gross negligence or
willful misconduct or the violation of an applicable safety, construction, or
operating regulation by a responsible party; or the responsible party fails or
refuses to: report the incident as required by law, provide all reasonable
cooperation and assistance in connection with removal operations, or without
sufficient cause, comply with an order issued by the federal on-scene
coordinator. Pursuant to the OPA, in order for us to operate in U.S. waters, we
are also required to obtain Certificates of Financial Responsibility from the
U.S. Coast Guard for each of our ships. These certificates demonstrate our
ability to meet removal costs and damages related to water pollution, such as
for an oil spill or a release of a hazardous substance, up to our ship's
statutory liability limit.
In addition, most U.S. states that border a navigable waterway or seacoast
have enacted environmental pollution laws that impose strict liability on a
person for removal costs and damages resulting from a discharge of oil or a
release of a hazardous substance. These laws may be more stringent than U.S.
federal law and in some cases have no statutory limits of liability.
Furthermore, many countries have ratified and adopted IMO Conventions
which, among other things, impose liability for pollution damage, subject to
defenses and to monetary limits, which monetary limits do not apply where the
spill is caused by the owner's actual fault or by the owner's intentional or
reckless conduct. In jurisdictions that have not adopted the IMO Conventions,
various national, regional or local laws and regulations have been established
to address oil pollution.
Limitations on the sulphur content of fuel are part of new regulations
approved by the International Convention for the Prevention of Pollution from
Ships Annex VI ("MARPOL Annex VI"). It applies to vessels of 400 gross tons or
above engaged in international voyages. Ships must carry an International Air
Pollution Prevention Certificate issued by its flag state indicating that it is
operating in compliance with MARPOL Annex VI. These certificates are required to
be issued during the three-year period ending in May 2008. Among other things,
MARPOL Annex VI establishes a limit on the sulphur content of fuel oil and calls
on the IMO to monitor the worldwide average sulphur content of fuel oil supplied
for use aboard vessels. In addition, MARPOL Annex VI provides for special "Sox
Emission Control Areas" to be established with more stringent limitations on
sulphur emissions. Compliance with MARPOL and other European Union ("EU")
regulations may increase our operating costs, including the cost of fuel,
beginning in May 2006 for ships operating in the Baltic Sea and August 2007 for
ships operating in the North Sea and the English Channel.
If we violate or fail to comply with environmental laws, regulations or
treaties, we could be fined or otherwise sanctioned by regulators. We have made,
and will continue to make, capital and other expenditures to comply with
environmental laws and regulations.
The International Organization for Standardization ("ISO") is an
international standard-setting body, which produces worldwide industrial and
commercial standards. ISO 14001 is one of the series of ISO 14000 environmental
management standards that were developed to help organizations manage their
processes, products and services to minimize environmental impacts. ISO 14001
presents a structured approach to setting environmental objectives and targets,
and provides a framework for any organization to apply these broad conceptual
tools to their own processes. We are developing and implementing environmental
management systems based on ISO 14001 in each of our cruise lines with the aim
of achieving ISO 14001 certification in 2006. Costa has already successfully
achieved ISO 14001 certification.
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From time to time, environmental, health and safety regulators consider
more stringent regulations which may affect our operations and increase our
compliance costs. As evidenced from the preceding paragraphs, the cruise
industry is affected by a substantial amount of environmental rules and
regulations. We believe that the impact of cruise ships on the global
environment will continue to be an area of focus by the relevant authorities
throughout the world and, accordingly, this will likely subject us to increasing
compliance costs in the future.
See Part 1, Item 1A. "Risk Factors" for additional discussion of our
environmental risks.
E. Consumer Regulations
Our ships that call on U.S. ports are regulated by the Federal Maritime
Commission referred to as the "FMC". Public Law 89-777, which is administered by
the FMC, requires most cruise line operators to establish financial
responsibility for their liability to passengers for non-performance of
transportation, as well as casualty and personal injury. The FMC's regulations
require that a cruise line demonstrate its financial responsibility for
non-performance of transportation through a guarantee, escrow arrangement,
surety bond or insurance. Currently, the amount required must equal 110% of the
cruise line's highest amount of customer deposits over a two-year period, up to
a maximum coverage level of $15 million. See Part 1, Item 1. Business, E. -
"Insurance - Other Insurance" for additional discussion.
In the UK, we are required to bond and obtain licenses from various
organizations in connection with the conduct of our business and our ability to
meet liability in the event of non-performance of obligations to consumers.
These organizations include the Passenger Shipping Association and the Civil
Aviation Authority. See Part 1, Item 1. Business, E. - "Insurance-Other
Insurance" for additional discussion.
We are also required by German law to obtain a guarantee from a reputable
insurance company to ensure that, in case of insolvency, our customers will be
refunded any monies they have paid on account of a booking and, in addition,
that they will be repatriated without additional cost if insolvency occurs after
a cruise starts. In addition, in Australia, we are a member of the Travel
Compensation Fund which provides compensation, as a last resort, to consumers
who suffer losses in their dealings with travel agents. Finally, other
jurisdictions, including Argentina and Brazil, require the establishment of
financial responsibility for passengers from their jurisdictions.
We believe we have all material licenses to conduct our business. From
time to time, various other regulatory and legislative changes may be proposed
or adopted that could have an effect on the cruise industry, in general, and our
business, in particular. See Part I, Item 1A. "Risk Factors" for a discussion of
other regulations which impact us.
XVI. Financial Information
For financial information about our cruise reporting segment and
geographic information with respect to each of the three years in the period
ended November 30, 2005, see Note 12, "Segment Information" to our Consolidated
Financial Statements in Exhibit 13 to this joint Annual Report on Form 10-K.
C. Employees
Our shoreside operations have approximately 9,500 full-time and 4,200
part-time/ seasonal employees. We also employ approximately 57,500 officers,
crew and staff onboard our 79 ships at any one time. Due to the highly seasonal
nature of our Alaskan and Canadian operations, Holland America Tours and
Princess Tours increase their work force during the late spring and summer
months in connection with the Alaskan cruise season, employing additional
seasonal personnel, which have been included above. We have entered into
agreements with unions covering certain employees in our hotel, motorcoach and
ship operations. We consider our employee and union relations generally to be
good.
We source our shipboard officers primarily from Italy, the UK, Holland,
Germany and Norway. The remaining crew positions are manned by persons from
around the world. We utilize various manning agencies in many countries and
regions to help secure our shipboard employees.
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D. Suppliers
Our largest purchases are for travel agency services, fuel, advertising,
food and beverages, hotel and restaurant supplies and products, airfare, repairs
and maintenance and dry-docking, port facility utilization, communication
services and for the construction of our ships. Although we utilize a select
number of suppliers for most of our food and beverages and hotel and restaurant
supplies and products, most of these items are available from numerous sources
at competitive prices. The use of a select number of suppliers enables us to,
among other things, obtain volume discounts. We purchase fuel and port facility
services at some of our ports of call from a limited number of suppliers. In
addition, we perform our major dry-dock and ship improvement work at dry-dock
facilities in the Bahamas, British Columbia, Canada, the Caribbean, Europe and
the U.S. Finally, as of January 30, 2006, we have agreements in place for the
construction of 16 cruise ships by two shipyards. We believe there are
sufficient dry-dock and shipbuilding facilities to meet our anticipated
requirements.
E. Insurance
General
We maintain insurance to cover a number of risks associated with owning
and operating vessels in international trade. All such insurance policies are
subject to coverage limits, exclusions and deductible levels. Insurance premium
increases are dependent on our own loss experience and the general premium
requirements of our underwriters. No assurance can be given that affordable and
viable direct and reinsurance markets will be available to us in the future. We
maintain certain levels of self-insurance for the below-mentioned risks, which
may increase in the future to mitigate premium increases. We do not carry
coverage related to loss of earnings or revenues for our ships.
Protection and Indemnity ("P&I") Coverage
Third-party liabilities in connection with our cruise activities are
covered by entry in P&I clubs, which are mutual indemnity associations owned by
ship owners. Our vessels are entered in three P&I clubs as follows: The West of
England Ship Owners Mutual Insurance Association (Luxembourg), The Steamship
Mutual Underwriting Association (Bermuda) Limited and the United Kingdom Mutual
Steam Ship Assurance Association (Bermuda) Limited. The P&I clubs in which we
participate are part of a worldwide group of P&I clubs, known as the
International Group of P&I Clubs (the "IG"). The IG insures directly, and
through reinsurance markets, a large portion of the world's shipping fleets.
Coverage is subject to the P&I clubs' rules and the limit of coverage is
determined by the IG. P&I coverage includes legal, statutory or pre-approved
contract liabilities and other expenses related to crew, passengers and other
third parties. This coverage also includes shipwreck removal, pollution and
damage to third party property.
Hull and Machinery Insurance
We maintain insurance on the hull and machinery of each of our ships in
amounts equal to the estimated market value of each ship. The coverage for hull
and machinery is provided by international marine insurance carriers. Most
insurance underwriters make it a condition for insurance coverage that a ship be
certified as "in class" by a classification society that is a member of the
International Association of Classification Societies ("IACS"). All of our ships
are currently certified as in class with an IACS member. These certifications
have either been issued or endorsed within the last twelve months.
War Risk Insurance
We maintain war risk insurance, subject to coverage limits and exclusions
for claims such as those arising from chemical and biological attacks, on all of
our ships covering our legal liability to crew, passengers and other third
parties arising from war or war-like actions, including terrorist risks. This
coverage is provided by international marine insurance carriers. Due primarily
to its high cost, we only carry war risk insurance coverage for physical damage
to 43 of our 79 ships, which includes terrorist risks. The remaining 36 ships in
the fleet do not have war risk coverage for physical damage. Under the terms of
our war risk insurance coverage, which is typical for war risk policies in the
marine industry, underwriters can give seven days notice to the insured that the
liability and physical damage policies can be cancelled. In addition, the policy
can be reinstated at different premium rates. This gives underwriters the
ability to increase our premiums following events that they determine have
increased their risk. No assurance can be given that affordable and viable
direct and reinsurance markets will be available to us in the
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future for war risk insurance. See Note 8, "Contingencies" to our Consolidated
Financial Statements in Exhibit 13 to this joint Annual Report on Form 10-K.
Other Insurance
As required by the FMC, we maintain performance bonds or bank guarantees
in the aggregate amount of $105 million for ships operated by our brands which
embark passengers in U.S. ports, to cover passenger ticket liabilities in the
event of a cancelled or interrupted cruise. We also maintain other performance
bonds or guarantees as required by various U.S. and foreign authorities that
regulate certain of our operations in their jurisdictions; the most significant
of which are required by the UK Passenger Shipping Association and the UK Civil
Aviation Authority and total approximately 74 million sterling ($128 million
U.S. dollars at November 30, 2005 exchange rate) and 46 million sterling ($80
million U.S. dollars at the November 30, 2005 exchange rate), respectively, to
cover our brands' UK passenger and air ticket deposit liabilities.
We maintain standard property and casualty insurance policies to cover
shoreside assets and liabilities to third parties, including our tour business
and port facility assets, as well as appropriate workers' compensation policies.
We also maintain business interruption insurance for Holland America Tour and
Princess Tour hotel properties and our Cozumel, Mexico port retail facilities,
which are also subject to deductibles.
The Athens Convention
Current conventions generally in force applying to passenger ships are the
Athens Convention relating to the Carriage of Passengers and their Luggage by
Sea (1974), the 1976 Protocol to the Athens Convention and the Convention on
Limitation of Liability for Maritime Claims (1976). The U.S. has not ratified
any Athens Convention Protocol. However, vessels flying the flag of a country
that has ratified it may contractually enforce the 1976 Athens Convention
Protocol for cruises that do not call at a U.S. port.
The IMO Diplomatic Conference agreed to a new protocol to the Athens
Convention on November 1, 2002. The new protocol, which has not yet been
ratified, substantially increases the minimum level of compulsory insurance
which must be maintained by passenger ship operators and provides a direct
action provision, which will allow claimants to proceed directly against
insurers. This new protocol requires passenger ship operators to maintain
insurance or some other form of financial security, such as a guarantee from a
bank, to cover the limits of strict liability under the Athens Convention with
regards to the death or personal injury of passengers. The timing of the
ratification of this new protocol, if obtained at all, is unknown. No assurance
can be given that affordable and viable direct and reinsurance markets will be
available to provide the level of coverage required under the new protocol. If
the new protocol is ratified, we expect insurance costs could increase.
F. Trademarks and Other Intellectual Property
We own and have registered numerous trademarks and have also registered
various domain names, which we believe are widely recognized throughout the
world and have considerable value. These trademarks include the names of our
cruise lines, each of which we believe is a widely-recognized brand name in the
cruise vacation industry, as well as "World's Leading Cruise Lines." We have a
license to use the P&O name, the P&O flag and other relevant trademarks and
domain names in relation to cruises and related activities. Finally, we also
have a license to use the "Love Boat" name and related marks. See Note 2,
"Trademarks" to our Consolidated Financial Statements in Exhibit 13 to this
joint Annual Report on Form 10-K.
G. Taxation
U.S. Federal Income Tax
We are a foreign corporation engaged in a trade or business in the U.S.,
and our ship-owning subsidiaries are foreign corporations that, in many cases,
depending upon the itineraries of their ships, receive income from sources
within the U.S. for U.S. federal income tax purposes. To the best of our
knowledge, we believe that, under Section 883 of the Internal Revenue Code and
applicable income tax treaties, our income and the income of our ship-owning
subsidiaries, in each case derived from or incidental to the international
operation of a ship or ships, is currently exempt from U.S. federal income tax.
This exempt income does not include our U.S. source income, principally from the
transportation,
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hotel and tour businesses of Holland America Tours and Princess Tours, and,
beginning with the year ended November 30, 2005, the items listed in the
regulations under Section 883 that the Internal Revenue Service does not
consider to be incidental to ship operations. Among the items that are
identified in the regulations as not incidental to ship operations are income
from the sale of air transportation, shore excursions and pre- and post cruise
land packages. In addition, during 2005, we chartered three vessels to the
Military Sealift Command in connection with the Hurricane Katrina relief effort.
Income from these charters is not considered to be income from the international
operation of our ships and, accordingly, income taxes will be assessed on the
net earnings of these charters.
The following summary of the application of the principal U.S. federal
income tax laws to us is based upon existing U.S. federal income tax law,
including the Internal Revenue Code, proposed, temporary and final U.S. Treasury
regulations, certain current income tax treaties, administrative pronouncements
and judicial decisions, as currently in effect, all of which are subject to
change, possibly with retroactive effect.
Application of Section 883 of the Internal Revenue Code
In general, under Section 883, certain non-U.S. corporations are not
subject to U.S. federal income tax or branch profits tax on U.S. source income
derived from, or incidental to, the international operation of a ship or ships.
Effective for our year ended November 30, 2005, regulations provide, in general,
that a foreign corporation will qualify for the benefits of Section 883 if, in
relevant part, (i) the foreign country in which the foreign corporation is
organized grants an equivalent exemption to corporations organized in the U.S.
and (ii) the foreign corporation meets the publicly-traded test described below.
In addition, to the extent a foreign corporation's shares are owned by a direct
or indirect parent corporation which itself meets the publicly-traded test, then
in analyzing the stock ownership test with respect to such subsidiary, stock
owned directly or indirectly by such parent corporation will be deemed owned by
individuals resident in the country of incorporation of such parent corporation.
A company whose shares are considered to be "primarily and regularly
traded on an established securities market" in the U.S. or another qualifying
jurisdiction will meet the publicly-traded test (the "publicly-traded test").
Stock will be considered "primarily traded" on one or more established
securities markets if, with respect to each class of stock of the particular
corporation, the number of shares in each such class that are traded during a
taxable year on any such market exceeds the number of shares in each such class
traded during that year on any other established securities market. Stock of a
corporation will generally be considered "regularly traded" on one or more
established securities markets under the regulations if (i) one or more classes
of stock of the corporation that, in the aggregate, represent more than 50% of
the total combined voting power of all classes of stock of such corporation
entitled to vote and of the total value of the stock of such corporation are
listed on such market; and (ii) with respect to each class relied on to meet the
more than 50% requirement in (i) above, (x) trades in each such class are
effected, other than in de minimis quantities, on such market on at least 60
days during the taxable year, and (y) the aggregate number of shares in each
such class of the stock that are traded on such market during the taxable year
is at least 10% of the average number of shares of the stock outstanding in that
class during the taxable year. A class of stock that otherwise meets the
requirements outlined in the preceding sentence is not treated as meeting such
requirements for a taxable year if, at any time during the taxable year, one or
more persons who own, actually or constructively, at least 5% of the vote and
value of the outstanding shares of the class of stock, own, in the aggregate,
50% or more of the vote and value of the outstanding shares of the class of
stock (the "5% Override Rule"). However, the 5% Override Rule does not apply (a)
where the foreign corporation establishes that Qualified Shareholders own
sufficient shares of the closely-held block of stock to preclude non-Qualified
Shareholders of the closely-held block of stock from owning 50% or more of the
total value of the class of stock for more than half of the taxable year; or (b)
to certain investment companies provided that no person owns, directly or
through attribution, both 5% or more of the value of the outstanding interests
in such investment company and 5% or more of the value of the shares of the
class of stock of the foreign corporation.
We believe that Carnival Corporation currently qualifies as a publicly
traded corporation under the regulations and substantially all of its income,
with the exceptions noted above, will continue to be exempt from U.S. federal
income taxes. However, because various members of the Arison family and trusts
established for their benefit currently own approximately 36% of Carnival
Corporation shares, there is the potential that additional shareholders could
acquire 5% or more of its shares, which could result in Carnival Corporation
being considered closely held, and thus jeopardize its qualification as a
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publicly traded corporation. If, in the future, Carnival Corporation were to
fail to qualify as a publicly traded corporation, it and all of its ship-owning
or operating subsidiaries that rely on Section 883 for exempting cruise
operations income would be subject to U.S. federal income tax on their U.S.
source cruise operation income. In such event, the net income of Carnival
Corporation's ship-owning or operating subsidiaries would be materially reduced.
As a precautionary matter, Carnival Corporation amended its articles of
incorporation in fiscal 2000 to ensure that it would continue to qualify as a
publicly traded corporation under these regulations when they were originally
proposed. As applied to Carnival Corporation, the final regulations are
substantially the same as the proposed regulations. This amendment provides that
no one person or group of related persons, other than certain members of the
Arison family and trusts established for their benefit, may own or be deemed to
own by virtue of the attribution provisions of the Internal Revenue Code more
than 4.9% of Carnival Corporation shares, whether measured by vote, value or
number of shares. Any Carnival Corporation shares acquired in violation of this
provision will be transferred to a trust and, at the direction of its board of
directors, sold to a person whose shareholding does not violate that provision.
No profit for the purported transferee may be realized from any such sale. In
addition, under specified circumstances, the trust may transfer the common stock
at a loss to the purported transferee. Because certain of Carnival Corporation
notes are convertible into its shares, the transfer of these notes are subject
to similar restrictions. These transfer restrictions may also have the effect of
delaying or preventing a change in control or other transactions in which the
shareholders might receive a premium for Carnival Corporation shares over the
then prevailing market price or which the shareholders might believe to be
otherwise in their best interest.
Although the above represents our interpretation of this Internal Revenue
Code provision and the U.S. Treasury regulations, the Internal Revenue Service's
interpretation of these provisions could differ materially. In addition, the
provisions of Section 883 are subject to change at any time by legislation.
Moreover, changes could occur in the future with respect to the trading volume
or trading frequency of Carnival Corporation shares or with respect to the
identity, residence, or holdings of Carnival Corporation's direct or indirect
shareholders that could affect Carnival Corporation's and its subsidiaries
eligibility for the Section 883 exemption. Accordingly, although we believe it
is unlikely, it is possible that Carnival Corporation and its ship-owning or
operating subsidiaries' whose tax exemption is based on Section 883 could lose
this exemption. If Carnival Corporation and/or its ship-owning or operating
subsidiaries were not entitled to the benefit of Section 883, Carnival
Corporation and/or its ship-owning or operating subsidiaries would be subject to
U.S. federal income taxation on a portion of our income.
Exemption Under Applicable Income Tax Treaties
We believe that the income of some of Carnival Corporation's ship-owning
subsidiaries and the U.S. source shipping income from Carnival plc and its UK
and Italian resident subsidiaries currently qualify for exemption from U.S.
federal income tax under applicable bilateral U.S. income tax treaties. There
is, however, no authority that directly addresses the effect, if any, of DLC
arrangements on the availability of benefits under the treaties and,
consequently, the matter is not free from doubt. These treaties may be abrogated
by either applicable country, replaced or modified with new agreements that
treat shipping income differently than under the agreements currently in force.
If any of our subsidiaries that currently claim exemption from U.S. income
taxation on their U.S. source shipping income under an applicable treaty do not
qualify for benefits under the existing treaties, or if the existing treaties
are abrogated, replaced or materially modified in a manner adverse to our
interests and, with respect to U.S. federal income tax only, if any such
subsidiary does not qualify for Section 883 exemption, such ship-owning or
operating subsidiary may be subject to U.S. federal income taxation on a portion
of its income, which would reduce our net income.
Taxation in the Absence of an Exemption under Section 883 or any
Applicable U.S. Income Tax Treaty
Shipping income that is attributable to transportation of passengers which
begins or ends in the U.S. is considered to be 50% derived from U.S. sources.
Shipping income that is attributable to transportation of passengers which
begins and ends in foreign countries is considered 100% derived from foreign
sources. Shipping income that is attributable to the transportation of
passengers which begins and ends in the U.S. without stopping at an intermediate
foreign port is considered to be 100% derived from U.S. sources.
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The legislative history of the transportation income source rules suggests
that a cruise that begins and ends in a U.S. port, but that calls on more than
one foreign port, will derive U.S. source income only from the first and last
legs of the cruise. Because there are no regulations or other Internal Revenue
Service interpretations of these rules, the applicability of the transportation
income source rules in the aforesaid manner is not free from doubt.
In the absence of an exemption under Section 883 or any applicable U.S.
income tax treaty, as appropriate, we and/or our subsidiaries would be subject
to either the net income and branch profits tax regimes of Section 882 and
Section 884 of the Internal Revenue Code (the "net tax regime") or the four
percent of gross income tax regime of Section 887 of the Internal Revenue Code
(the "four percent tax regime").
Where the relevant foreign corporation has, or is considered to have, a
fixed place of business in the U.S. that is involved in the earning of U.S.
source shipping income and substantially all of this shipping income is
attributable to regularly scheduled transportation, the net tax regime is
applicable. If the foreign corporation does not have a fixed place of business
in the U.S. or substantially all of its income is not derived from regularly
scheduled transportation, the four percent tax regime will apply.
The net tax regime should be the tax regime applied to Carnival
Corporation in the absence of an exemption under Section 883. Under the net tax
regime, U.S. source shipping income, net of applicable deductions, would be
subject to a corporate tax of up to 35% and the net after-tax income would be
potentially subject to a further branch tax of 30%. In addition, interest paid
by the corporations, if any, would generally be subject to a branch interest
tax.
The four percent tax regime should be the tax regime applicable to our
vessel owning subsidiaries based outside the United States, in the absence of an
exemption under Section 883 or any applicable U.S. income tax treaty. Under the
four percent tax regime, gross U.S. source shipping income would be subject to a
four percent tax, without the benefit of deductions.
UK Income Tax
Cunard, Ocean Village, P&O Cruises, P&O Cruises Australia and Swan
Hellenic are all strategically and commercially managed in the UK and have
elected to enter the UK tonnage tax regime. Companies to which the tonnage tax
regime applies pay corporation tax on profit calculated by reference to the net
tonnage of qualifying vessels. UK corporation tax is not chargeable under normal
UK tax rules on such companies' relevant shipping profits. For a company to be
eligible for the regime, it must be subject to UK corporation tax and, among
other matters, operate qualifying ships that are strategically and commercially
managed in the UK. There is also a seafarer training requirement to which the
tonnage tax companies are subject.
Profits which are excluded from normal corporation tax include income
which is defined as relevant shipping income. Relevant shipping income includes
income from the operation of qualifying ships and broadly from shipping related
activities. It also includes dividends from foreign companies, which are subject
to a tax on profits in their country of residence or elsewhere and the
activities of which broadly would qualify in full for the UK tonnage tax regime
if they were UK resident. In addition, more than 50 percent of the voting power
in the foreign company must be held by one or more companies resident in a EU
member state.
Our UK non-shipping activities that do not qualify under the UK tonnage
tax regime, which are not forecast to be significant, remain subject to normal
UK corporation tax.
Italian and German Income Tax
In November 2004, the German brand of Carnival plc, AIDA, became a
division of Costa. From the date of this change, AIDA's income is subject to
Italian income tax. The majority of the profits earned by our German brands are
exempt from German corporation taxes by virtue of the Italy/Germany double tax
treaty.
During the 2005 third quarter, Costa elected to enter into the Italian
Tonnage Tax regime, effective for its 2005 fiscal year, and for the following
nine years. This regime will tax Costa's and AIDA's shipping profits, as
defined, calculated by reference to the net tonnage of its qualifying vessels.
However, income not considered to be shipping profits for Italian Tonnage Tax
purposes will be taxed under Costa's and AIDA's current tax
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regime for its Italian-registered ships, which results in a tax of approximately
6.6% on these non-tonnage tax profits.
Australian Income Tax
P&O Cruises Australia is a division of Carnival plc, and the income from
this operation, is subject to UK tonnage tax as discussed above. The majority of
this operation's profits are exempt from Australian corporation taxes by virtue
of the UK/Australian double tax treaty.
H. Website Access to Carnival Corporation & plc SEC Reports
We make available, free of charge, access to our joint Annual Report on
Form 10-K, joint Quarterly Reports on Form 10-Q, joint Current Reports on Form
8-K, Section 16 filings and all amendments to those reports as soon as
reasonably practicable after such reports are electronically filed with or
furnished to the SEC through our home pages at www.carnivalcorp.com and
www.carnivalplc.com.
Item 1A. Risk Factors.
You should carefully consider the specific risk factors set forth below,
as well as the other information contained or incorporated by reference in this
joint Annual Report on Form 10-K, as these are important factors, among others,
that could cause our actual results to differ from our expected or historical
results. Some of the statements in this section and elsewhere in this joint
Annual Report on Form 10-K are "forward-looking statements." For a discussion of
those statements and of other factors to consider see the "Cautionary Note
Concerning Factors That May Affect Future Results" section below.
(1) We may lose business to competitors throughout the vacation market.
We face significant competition from other cruise lines, both on the basis
of cruise pricing and also in terms of the types of ships, services and
destinations we offer to cruise passengers. In addition, we may need to enhance
our older ships with current amenities in order for those ships to be more
competitive with other cruise ships. Our principal competitors include the
companies listed in this joint Annual Report on Form 10-K under Part 1, Item 1.
Business, B. - "Cruise Operations - Competition."
However, we operate in the vacation market, and cruising is only one of
many alternatives for people choosing a vacation. We therefore risk losing
business not only to other cruise lines, but also to other vacation operators
that provide other travel and leisure options, including hotels, resorts and
package holidays and tours.
In the event that we do not compete effectively with other cruise
companies and other vacation alternatives, our results of operations and
financial condition could be adversely affected.
(2) The international political and economic climate and other world
events affecting safety and security could adversely affect the
demand for cruises and could harm our future sales and
profitability.
Demand for cruises and other vacation options has been, and is expected to
continue to be, affected by the public's attitude towards the safety of travel,
the international political climate and the political climate of destination
countries. Events such as the terrorist attacks in the U.S. on September 11,
2001 and the threats of additional attacks in the U.S. and elsewhere, concerns
of an outbreak of additional hostilities and national government travel
advisories, together with the resulting political instability and concerns over
safety and security aspects of traveling, have had a significant adverse impact
on demand and pricing in the travel and vacation industry and may continue to do
so in the future. Demand for cruises is also likely to be increasingly dependent
on the underlying economic strength of the countries from which cruise companies
source their passengers. Economic or political changes that reduce disposable
income or consumer confidence in the countries from which we source our
passengers may affect demand for vacations, including cruise vacations, which
are a discretionary purchase. Decreases in demand could lead to price
discounting which, in turn, could reduce the profitability of our business.
(3) Overcapacity within the cruise and land-based vacation industry
could have a negative impact on net revenue yields and increase
operating costs, thus resulting in ship, goodwill and/or trademark
asset impairments, all of which
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could adversely affect profitability.
Cruising capacity has grown in recent years and we expect it to continue
to increase over the next five years as all of the major cruise vacation
companies are expected to introduce new ships. In order to utilize new capacity,
the cruise vacation industry will probably need to increase its share of the
overall vacation market. The overall vacation market is also facing increases in
land-based vacation capacity, which also will impact us. Failure to increase our
share of the overall vacation market is one of a number of factors that could
have a negative impact on our net revenue yields. In some prior years, our net
revenue yields were negatively impacted as a result of a variety of factors,
including capacity increases. Should net revenue yields be negatively impacted,
our results of operations and financial condition could be adversely affected,
including the impairment of the value of our ships, goodwill and/or trademark
assets. In addition, increased cruise capacity could impact our ability to
retain and attract qualified crew at competitive costs and, therefore, increase
our shipboard employee costs.
(4) Our future operating cash flow may not be sufficient to fund future
obligations, and we may not be able to obtain additional financing,
if necessary, at a cost that is favorable or that meets our
expectations.
Our forecasted cash flow from future operations may be adversely affected
by various factors, including, but not limited to, declines in customer demand,
increased competition, overcapacity, the deterioration in general economic and
business conditions, terrorist attacks, ship accidents and other incidents,
adverse publicity and increases in fuel prices, as well as other factors noted
under these "Risk Factors" and under the "Cautionary Note Concerning Factors
That May Affect Future Results" section below. To the extent that we are
required, or choose, to fund future cash requirements, including future
shipbuilding commitments, from sources other than cash flow from operations,
cash on hand and current external sources of liquidity, including committed
financings, we will have to secure such financing from banks or through the
offering of debt and/or equity securities in the public or private markets.
Our access to, and the cost of, financing will depend on, among other
things, the maintenance of strong long-term credit ratings. Carnival Corporation
and Carnival plc's senior, unsecured long-term debt ratings are "A3" by Moody's,
"A-" by Standard & Poor's and "A-" by Fitch Ratings. Carnival Corporation's
short-term corporate credit ratings are "Prime-2" by Moody's, "A-2" by Standard
& Poor's and "F2" by Fitch Ratings.
(5) Accidents and other incidents, unusual weather conditions or adverse
publicity concerning the cruise industry or us could affect our
reputation and harm our future sales and profitability.
The operation of cruise ships involves the risk of accidents, passenger
and crew illnesses, mechanical failures and other incidents at sea or while in
port, which may bring into question passenger safety, health, security and
vacation satisfaction, and thereby adversely effect future industry performance,
sales and profitability. In addition, our cruises and port facilities may be
impacted by unusual weather patterns or natural disasters, such as hurricanes
and earthquakes. For example, Hurricane Wilma caused the temporary closing of
cruise ports in South Florida and also destroyed our pier facility in Cozumel,
Mexico. It is possible that we could be forced to alter itineraries or cancel a
cruise or a series of cruises due to these factors, which would have an adverse
affect on sales and profitability. In addition, adverse publicity concerning the
vacation industry in general or the cruise industry or us in particular could
affect our reputation and impact demand and, consequently, have an adverse
affect on our profitability.
(6) We are subject to many economic and political factors that are
beyond our control, which could result in increases in our
operating, financing and tax costs.
Some of our operating costs, including fuel, food, insurance, payroll and
security costs, are subject to increases because of market forces, economic or
political instability or decisions beyond our control. In addition, interest
rates, currency fluctuations and our ability to obtain debt or equity financing
are dependent on many economic and political factors. Actions by U.S. and
non-U.S. taxing jurisdictions could also cause an increase in our costs.
Recently, the State of Alaska determined that an Initiative Petition (the
"Initiative") to, among other things, impose a tax on cruise passengers sailing
in Alaskan waters had sufficient signatures to qualify for the August, 2006
statewide primary election ballot. If the Initiative is approved by the voters,
it would
26
likely take effect in 2007. The Initiative would impose a $46 per passenger tax
on cruise passengers aboard vessels with at least 250 berths, an additional fee
of $4 per passenger for an Ocean Ranger program, remove the exemption from
Alaska corporate income taxes for commercial passenger vessels and assess a 33%
tax on income from onboard gambling. The Initiative would also impose a number
of other regulations, reporting and operational requirements on cruise vessel
operators. Some or all of these provisions may be subject to legal challenges if
the Initiative is approved.
Separately, two bills have been introduced for consideration in the Alaska
Legislature. No action was taken on either of these bills. The legislature has
until the end of the 2006 session to consider these bills. One bill would impose
taxes of $50 per cruise passenger and the other bill proposes a tax of $75 per
passenger. Similar legislation has been proposed in Alaska in the past and has
not been approved. Both measures raise legal questions and it is uncertain
whether either bill will be passed in its current form.
It is expected that any proposed passenger taxes, such as the Initiative
discussed above, would be directly charged to and collected from our guests.
However, if any of these taxes are enacted, it is likely that we would consider
reducing the number of our ships that offer Alaskan cruises, in order to reduce
the adverse impact of these taxes on our net income. The ultimate outcomes of
these Alaskan matters cannot be determined at this time.
Increases in operating, financing and tax costs could adversely affect our
results because we may not be able to recover these increased costs through
price increases of our cruise vacations.
(7) Environmental legislation and regulations could affect operations
and increase our operating costs.
Some environmental groups have lobbied for more stringent regulation of
cruise ships. Some groups have also generated negative publicity about the
cruise industry and its environmental impact. The U.S. Congress, the
International Maritime Organization and the U.S. Environmental Protection Agency
periodically consider new laws and regulations to manage cruise ship pollution.
In addition, various other regulatory agencies in the States of Alaska,
California, Florida, Hawaii, Maine, Washington and elsewhere, including European
regulatory organizations, have enacted or are considering new regulations or
policies, which could adversely impact the cruise industry. See Part I, Item 1.
Business, B. - "Cruise Operations - Governmental Regulations" for additional
information.
In addition, pursuant to a settlement with the U.S. government in April
2002, Carnival Corporation pled guilty to certain environmental violations and
was fined. Carnival Corporation was also placed on probation for a term of five
years. Under the terms of the probation, any future violation of environmental
laws by Carnival Corporation may be deemed a violation of probation, which could
result in additional fines and other forms of relief.
Current and future environmental laws and regulations, or liabilities
arising from past or future releases of, or exposure to, hazardous substances or
to vessel discharges, could increase our cost of compliance or otherwise
materially adversely affect our business, results of operations and/or financial
condition.
(8) New regulations of health, safety, security and other regulatory
issues could increase our operating costs or negatively effect our
bookings and future net revenue yields and adversely affect net
income.
We are subject to various international, national, state and local health,
safety and security laws, regulations and treaties. See Part I, Item 1.
Business, B. - "Cruise Operations-Governmental Regulations" for a detailed
discussion of these regulatory issues.
We believe that health, safety, security and other regulatory issues will
continue to be areas of focus by relevant government authorities in the U.S.,
Europe and elsewhere. Resulting legislation or regulations, or changes in
existing legislation or regulations, could impact our operations and would
likely subject us to increasing compliance costs in the future.
Pursuant to the Western Hemisphere Travel Initiative, U.S. citizens will
be required to carry a passport for travel to or from certain countries/areas
that were previously exempt, such as the Caribbean, Canada and Mexico. The
regulations are currently scheduled to require all U.S. citizens that enter the
U.S. from these previously exempt locations by
27
air or sea to have a passport by December 31, 2006, and those citizens entering
at land border crossings will have to have a passport by December 31, 2007.
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 future 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 have
established. However, although we cannot be certain, we do not currently expect
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.
(9) Delays in ship construction and problems encountered at shipyards
could reduce our profitability.
The construction of cruise ships is a complex process and involves risks
similar to those encountered in other sophisticated construction projects,
including delays in completion and delivery. In addition, industrial actions and
insolvency or financial problems of the shipyards building our ships could also
delay or prevent the delivery of our ships under construction. These events
could adversely affect our profitability. However, the impact from a delay in
delivery could be mitigated by contractual provisions and refund guarantees
obtained by us.
In addition, as of November 30, 2005, we had entered into foreign currency
swaps to fix the cost in dollars or sterling of three of our foreign currency
denominated shipbuilding contracts. If the shipyard with which we have
contracted is unable to perform under the related contracts, the foreign
currency swaps related to the shipyard's shipbuilding contracts would still have
to be honored. This might require us to realize a loss on existing foreign
currency swaps without having the ability to have an offsetting gain on our
foreign currency denominated shipbuilding contracts, thus resulting in an
adverse effect on our financial results.
(10) The lack of attractive port destinations for our cruise ships could
reduce our net revenue yields and net income.
We believe that attractive port destinations, including ports that are not
overly congested with tourists, are major reasons why our customers choose a
cruise versus an alternative vacation option. The availability of ports,
including the specific port facility at which our guests will embark and
disembark, is affected by a number of factors including, but not limited to,
existing capacity constraints, security concerns, unusual weather patterns and
natural disasters, financial limitations on port development, political
instability, exclusivity arrangements that ports may have with our competitors,
local governmental regulations and charges and local community concerns about
both port development and other adverse impacts on their communities from
additional tourists. The inability to continue to maintain and increase our
ports of call could adversely affect our net revenue yields and net income.
(11) The structure of the DLC transaction involves risks not associated
with the more common ways of combining the operations of two
companies, and these risks may have an adverse effect on the
economic performance of the companies and/or their respective share
prices.
The DLC structure is a relatively uncommon way of combining the management
and operations of two companies and it involves different issues and risks from
those associated with the other more common ways of effecting a business
combination, such as a merger or exchange offer to create a wholly owned
subsidiary. In the DLC transaction, the combination was effected primarily by
means of contracts between Carnival Corporation and Carnival plc and not by
operation of a statute or court order. The legal effect of these contractual
rights may be different from the legal effect of a merger or amalgamation under
statute or court order, and there may be difficulties in enforcing these
contractual rights. Shareholders and creditors of either company might challenge
the validity of the contracts or their lack of standing to enforce rights under
these contracts, and courts may interpret or enforce these contracts in a manner
inconsistent with the express provisions and intentions we included in such
contracts. In addition, shareholders and creditors of other companies might
successfully challenge other DLC structures and establish legal precedents that
could increase the risk of a successful challenge to the DLC transaction.
28
We are maintaining two separate public companies and comply with both Panamanian
corporate law and English company laws and different securities and other
regulatory and stock exchange requirements in the UK and the U.S. This structure
requires more administrative time and cost than was the case for each company
individually, which may have an adverse effect on our operating efficiency.
(12) Changes under the Internal Revenue Code, applicable U.S. income tax
treaties, and the uncertainty of the DLC structure under the
Internal Revenue Code may adversely affect the U.S. federal income
taxation of our U.S. source shipping income. In addition, changes in
the UK, Italian, German, Australian and other countries income tax
laws, regulations or treaties could also adversely affect our net
income.
We believe that substantially all of the U.S. source shipping income of
each of Carnival Corporation and Carnival plc qualifies for exemption from U.S.
federal income tax, either under (1) Section 883 of the Internal Revenue Code;
(2) U.S.-Italian income tax treaty; or (3) other applicable U.S. income tax
treaties, and should continue to so qualify under the DLC structure. There is,
however, no existing U.S. federal income tax authority that directly addresses
the tax consequences of implementation of a dual listed company structure for
purposes of Section 883 or any other provision of the Internal Revenue Code or
any income tax treaty and, consequently, these matters are not free from doubt.
As discussed above, if we did not qualify for exemption from U.S. federal
income taxes we would have higher income taxes and lower net income. Finally,
changes in the income tax laws affecting our cruise businesses in the UK, Italy,
Germany, Australia and elsewhere could result in higher income taxes being
levied on our cruise operations, thus resulting in lower net income.
See Part I, Item 1. Business, G. - "Taxation" for additional information.
(13) A small group of shareholders collectively owned, as of January 31,
2006, approximately 29% of the total combined voting power of our
outstanding shares and may be able to effectively control the
outcome of shareholder voting.
A group of shareholders, consisting of some members of the Arison family,
including Micky Arison, and trusts established for their benefit, beneficially
owned approximately 36% of the outstanding common stock of Carnival Corporation,
which shares represent sufficient shares entitled to constitute a quorum at
shareholder meetings and to cast approximately 29% of the total combined voting
power of Carnival Corporation & plc. Depending upon the nature and extent of the
shareholder vote, this group of shareholders may have the power to effectively
control, or at least to influence substantially, the outcome of certain
shareholder votes and, therefore, the corporate actions requiring such votes.
(14) Carnival Corporation and Carnival plc are not U.S. corporations, and
our shareholders may be subject to the uncertainties of a foreign
legal system in protecting their interests.
Carnival Corporation's corporate affairs are governed by its third amended
and restated articles of incorporation and amended and restated by-laws and by
the corporate laws of Panama. Carnival plc is governed by its articles of
association and memorandum of association and by the corporate laws of England
and Wales. The corporate laws of Panama and England and Wales may differ in some
respects from the corporate laws in the U.S.
(15) Provisions in Carnival Corporation's and Carnival plc's
constitutional documents may prevent or discourage takeovers and
business combinations that our shareholders might consider to be in
their best interests.
Carnival Corporation's amended articles of incorporation and by-laws and
Carnival plc's articles of association contain provisions that may delay, defer,
prevent or render more difficult a takeover attempt that our shareholders
consider to be in their best interests. For instance, these provisions may
prevent our shareholders from receiving a premium to the market price of our
shares offered by a bidder in a takeover context. Even in the absence of a
takeover attempt, the existence of these provisions may adversely affect the
prevailing market price of our shares if they are viewed as discouraging
takeover attempts in the future.
Specifically, Carnival Corporation's articles of incorporation contain
provisions that prevent third parties, other than the Arison family and trusts
established for their
29
benefit, from acquiring beneficial ownership of more than 4.9% of its
outstanding shares without the consent of Carnival Corporation's board of
directors and provide for the lapse of rights, and sale, of any shares acquired
in excess of that limit. The effect of these provisions may preclude third
parties from seeking to acquire a controlling interest in us in transactions
that shareholders might consider to be in their best interests and may prevent
them from receiving a premium above market price for their shares. For a
description of the reasons for the provisions see Part I, Item 1. Business, G. -
"Taxation- Application of Section 883 of the Internal Revenue Code."
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements contained in this joint Annual Report on Form 10-K
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 U.S. Securities Act of 1933 and Section 21E of
the U.S. 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
Annual Report on Form 10-K. Forward-looking statements include those statements
which may impact the forecasting of our earnings per share, net revenue yields,
booking levels, pricing, occupancy, operating, financing and/or tax costs, fuel
costs, cost per available lower berth day, estimates of ship depreciable lives
and/or residual values, outlook or business prospects.
Certain of our risks are identified in "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Cautionary Note
Concerning Factors That May Affect Future Results" in Exhibit 13 to this joint
Annual Report on Form 10-K and in this Item 1A. "Risk Factors." These sections
contain important cautionary statements and a discussion of many of the factors
that could materially affect the accuracy of our forward-looking statements
and/or adversely affect our business, results of operations and financial
position.
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 Annual Report on Form 10-K, 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.
Item 1B. Unresolved Staff Comments.
None.
30
Item 2. Properties.
The Carnival Corporation and Carnival plc corporate headquarters and our
operating units' principal shoreside operations and headquarters are as follows:
Entity/Brand Location Square Footage Own/Lease
------------ -------- -------------- ---------
Carnival Corporation and
Carnival Cruise Lines Miami, FL U.S.A. 456,000/20,000 Own/Lease
Princess and Cunard Santa Clarita, CA U.S.A. 283,000 Lease
Holland America Line, Holland
America Tours, Princess Tours
and Windstar Seattle, WA U.S.A. 196,000/38,000 Lease/Own
Costa Genoa, Italy 162,000 Own
Art framing and warehouse and
Princess warehouse facilities Dania Beach and
Ft. Lauderdale,
Florida U.S.A. 152,000 Lease
P&O Cruises, Ocean Village,
Swan Hellenic, Cunard,
Carnival Corporation & plc's
Technical Services and UK
sales office Southampton, England 112,000 Lease
AIDA Rostock, Germany 76,000 Lease
Carnival Cruise Lines
sales office Miramar, Florida U.S.A. 63,000 Lease
P&O Cruises Australia Sydney, Australia 35,000 Lease
Costa U.S. sales office Hollywood, Florida U.S.A. 29,000 Lease
Carnival plc and UK sales
offices London, England 8,000 Lease
In addition, we also lease 27,000 square feet of office space in Colorado
Springs, Colorado and 10,000 square feet in Fort Pierce, Florida for additional
Carnival Cruise Lines reservation centers. In Williston, North Dakota, Holland
America Line owns 22,000 square feet of office space that is also a reservation
center. Finally, we own or lease port facilities in Cozumel, Mexico, Juneau,
Alaska, Long Beach, California, Savona, Italy and the Turks & Caicos Islands.
Our cruise ships, shoreside operations, headquarter facilities and Holland
America Tours' and Princess Tours' properties, are all well maintained and in
good condition. We evaluate our needs periodically and obtain additional
facilities when deemed necessary. We believe that our facilities are adequate
for our current needs.
Our cruise ships and Holland America Line's private island, Half Moon Cay,
are briefly described in Part I, Item 1. Business, B. - "Cruise Segment."
Princess also has a small private island called Princess Cay, which is located
in the Bahamas and is used as a transit port for certain of its cruises. The
hotel properties associated with Holland America Tours and Princess Tours
operations, substantially all of which are owned, are briefly described in Part
I, Item 1. Business, A. - "General."
Item 3. Legal Proceedings.
In January 2006, a lawsuit was filed against Carnival Corporation and its
subsidiaries and affiliates, and other non-affiliated cruise lines in the U.S.
District Court for the Southern District of New York on behalf of James Jacobs
and a purported class of owners of intellectual property rights to musical plays
and other works performed in the U.S. The plaintiffs claim infringement of
copyrights to Broadway, off Broadway and other plays. The suit seeks payment of
(i) damages, (ii) disgorgement of alleged profits and (iii) an injunction
against future infringement. We intend to vigorously defend this lawsuit.
On November 28, 2005, a lawsuit was filed against Princess Cruise Lines,
Ltd. in the U.S. District Court for the Southern District of Florida on behalf
of some current and former crewmembers alleging that Princess failed to pay the
plaintiffs for overtime. The suit seeks payment of (i) damages for breach of
contract, (ii) damages under the Seaman's Wage Act and (iii) interest. We
believe we have meritorious defenses to these claims and we intend to vigorously
defend this lawsuit.
On November 16, 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 crewmembers alleging that Carnival Cruise Lines failed to pay
the plaintiffs for overtime. The suit seeks payment of (i) damages for breach of
contract, (ii) damages under the Seaman's Wage Act and (iii) interest. We
believe we have meritorious defenses to these claims and intend to vigorously
defend this lawsuit.
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
31
crew members alleging that Carnival Cruise Lines failed to pay the plaintiffs
for overtime and minimum wages. The suit seeks payment of (i) the wages alleged
to be owed, (ii) damages under the Seaman's Wage Act and (iii) interest. On
August 5, 2005 the court dismissed the lawsuit. The plaintiffs filed an appeal
of their overtime claim to the Eleventh Circuit U.S. Court of Appeals on August
18, 2005, which is currently pending, but have voluntarily dismissed their
minimum wage claim. We believe we have meritorious defenses to this claim and
intend to vigorously defend this lawsuit.
In May 2005, a class action lawsuit was filed against Carnival Corporation
in the United States District Court for the Southern District of Florida
alleging breach of the implied covenant of good faith and fair dealing and a
violation of The Florida Deceptive and Unfair Trade Practices Act for profits
made by Carnival Cruise Lines on shore excursions provided by third party shore
excursion operators. The suit sought certification as a class action on behalf
of all Carnival Cruise Line passengers for damages and injunctive relief. On
November 21, 2005, the United States District Court for the Southern District of
Florida issued an order granting Carnival's motion to dismiss the class action
complaint.
On April 23, 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 on May
27, 2004 and Festival did not submit observations on our Statement in
Intervention. The oral hearing was scheduled to take place on December 15, 2005
but has been postponed while the Court seeks clarification of the status of the
Festival Action with the Italian judge presiding over Festival's bankruptcy
proceedings. 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.
Three 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 in the amount of $500 per facsimile, or in the
alternative, $1,500 per facsimile if the conduct was willful or knowing. The
advertisements referred to in the 2002 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. The faxes involved in the 2004 case were sent to a travel
agency with whom we had conducted business. We do not advertise directly to the
traveling public through the use of facsimile transmission. The status of each
Facsimile Complaint is as follows:
On April 15, 2002, a Facsimile Complaint was filed against us in the
Circuit Court of Greene County, Alabama by Mary Pelt. In January
2006, the matter was settled for a nominal amount, dismissed without
prejudice as to Mary Pelt and without prejudice as to the class
members.
On May 14, 2002, a Facsimile Complaint was filed against Carnival
Corporation and other defendants (including Club Resort
International d/b/a Vacation Getaway Travel, Inc., Dollar Thrifty
Automotive Group, Inc., Thrifty, Inc. and Thrifty Rent-A-Car
Systems, Inc., Choicepoint, Inc., First Western Bank, and Bankcard
USA Merchant Services, Inc.) in the Circuit Court of Jefferson
County, Alabama, Bessemer Division by Clem & Kornis, L.L.C., The
Firm of Compassion, P.C., Collins Chiropractic Center, Forstmann &
Cutchen, L.L.P. and others. On July 26, 2002, Carnival Corporation
filed a motion to dismiss or, in the alternative, to separate
Carnival Corporation as a defendant. This action has been stayed as
to Carnival Corporation.
On September 28, 2004, a Facsimile Complaint was filed against
Carnival Corporation in the United States District Court for the
Eastern District of New York by Sherman Gottlieb ("the plaintiff"),
a Staten Island, New York-based travel agent. On November 19, 2004,
the plaintiff filed an amended complaint. On April 28, 2005, the
action was dismissed by the federal district court for lack of
subject matter jurisdiction, without prejudice to renewal in state
court. In
32
addition, the district court dismissed the plaintiff's state law
claim. The plaintiff filed an appeal, which was orally argued on
December 19, 2005. In February 2006, the appellate court vacated the
dismissal and remanded the matter to the trial court for further
proceedings.
We believe we have meritorious defenses to the Facsimile Complaints and
intend to vigorously defend against these actions.
On November 22, 2000, Costa 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. Cammell Laird joined the arbitration proceeding on
January 9, 2001 to present its counter demands. On January 9, 2001, Costa gave
Cammell Laird notice of termination of the contract and Cammell Laird replied
with its notice of termination of the contract on February 2, 2001. In October
2004 the arbitration tribunal decided to increase the scope of work of the
technical experts by introducing new demands for reply in the experts' report.
It is expected that the arbitration tribunal's decision will be made in 2007 at
the earliest.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Registrants
Pursuant to General Instruction G(3), the information regarding our
executive officers called for by Item 401(b) of Regulation S-K is hereby
included in Part I of this joint Annual Report on Form 10-K.
The following table sets forth the name, age and title of each of our
executive officers. Titles listed relate to positions within Carnival
Corporation and Carnival plc unless otherwise noted. All the Carnival plc
positions were effective as of April 17, 2003, except as noted below.
NAME AGE POSITION
---- --- --------
Richard D. Ames 58 Senior Vice President Audit Services
Micky Arison 56 Chairman of the Board of Directors and Chief
Executive Officer
Alan B. Buckelew 57 President of Princess Cruises
Gerald R. Cahill 54 Executive Vice President and Chief Financial and
Accounting Officer
Pamela C. Conover 49 Senior Vice President Shared Services
Robert H. Dickinson 63 President and Chief Executive Officer of Carnival
Cruise Lines and Director
David K. Dingle 49 Managing Director of Carnival UK and P&O Cruises
Pier Luigi Foschi 59 Chairman and Chief Executive Officer of Costa
Crociere, S.p.A. and Director
Howard S. Frank 64 Vice Chairman of the Board of Directors and Chief
Operating Officer
Ian J. Gaunt 54 Senior Vice President International
Stein Kruse 47 President and Chief Executive Officer of Holland
America Line Inc. ("HAL")
Arnaldo Perez 45 Senior Vice President, General Counsel and
Secretary
Peter G. Ratcliffe 57 Chief Executive Officer of P&O Princess Cruises
International and Director
Business Experience of Executive Officers
Richard D. Ames has been Senior Vice President Audit Services since March
2002. From January 1992 to February 2002 he was Vice President Audit Services.
Mr. Ames has been employed by us for 16 years.
Micky Arison has been Chairman of the Board of Directors since October
1990 and a director since June 1987. He has been Chief Executive Officer since
1979. Mr. Arison has been employed by us for 34 years.
Alan B. Buckelew has been President and Chief Financial Officer of
Princess Cruises since February 2004. In addition, from October 2004 to November
2005 he was Chief
33
Operating Officer of Cunard. From October 2000 to January 2004, he was Executive
Vice President and Chief Financial Officer of Princess. He was Senior Vice
President, Corporate Services of Princess from September 1998 to September 2000.
Mr. Buckelew has been employed by us or Carnival plc predecessor companies for
28 years.
Gerald R. Cahill has been Executive Vice President and Chief Financial and
Accounting Officer since December 2003. From January 1998 to November 2003 he
was Senior Vice President Finance, Chief Financial and Accounting Officer. Mr.
Cahill has been employed by us for 11 years.
Pamela C. Conover has been Senior Vice President Shared Services since
October 2004. From February 2001 to September 2004 she was President and Chief
Operating Officer of Cunard Line Limited. Ms. Conover was Chief Operating
Officer of Cunard Line Limited from June 1998 to January 2001. Ms. Conover has
been employed by us for 11 years.
Robert H. Dickinson has been a director since June 1987. Mr. Dickinson has
been President and Chief Executive Officer of Carnival Cruise Lines since May
2003. He was President and Chief Operating Officer of Carnival Cruise Lines from
May 1993 to May 2003. Mr. Dickinson has been employed by us for 34 years.
David K. Dingle has been Managing Director of Carnival UK and P&O Cruises
since April 2003. From October 2000 to April 2003, he was Managing Director of
P&O Cruises UK. Mr. Dingle has been employed by us or Carnival plc predecessor
companies for 27 years.
Pier Luigi Foschi has been a director since April 2003. He has been Chief
Executive Officer of Costa Crociere, S.p.A. since October 1997 and Chairman of
its Board since January 2000. Mr. Foschi has been employed by us for eight
years.
Howard S. Frank has been Vice Chairman of the Board of Directors since
October 1993, Chief Operating Officer since January 1998 and a director since
April 1992. Mr. Frank has been employed by us for 16 years.
Ian J. Gaunt is an English Solicitor and has been Senior Vice President
International since May 1999. He was a partner of the London-based international
law firm of Sinclair, Roche & Temperley from 1982 through April 1999 where he
represented Carnival Corporation as special external legal counsel since 1981.
Mr. Gaunt has been employed by us for six years.
Stein Kruse has been the President and Chief Executive Officer of HAL since
December 2004. From November 2003 to November 2004, he was the President and
Chief Operating Officer of HAL. From September 1999 to October 2003, he was
Senior Vice President, Fleet Operations for HAL. From June 1997 to August 1999
he was Senior Vice President and Chief Financial Officer for "K" Line America,
Inc. Mr. Kruse has been employed by us for six years.
Arnaldo Perez has been Senior Vice President, General Counsel and
Secretary since March 2002. From August 1995 to February 2002 he was Vice
President, General Counsel and Secretary. Mr. Perez has been employed by us for
13 years.
Peter G. Ratcliffe has been a director since April 2003 and a director of
Carnival plc since October 2000. He is Chief Executive Officer of P&O Princess
Cruises International, and is primarily responsible for the operations of
Cunard, Ocean Village, P&O Cruises, P&O Cruises Australia, Princess and Swan
Hellenic. He was Carnival plc's Chief Executive Officer until April 2003. He was
previously an executive director of The Peninsular and Oriental Steam Navigation
Company and head of its cruise division, having served as President of Princess
since 1993 and its Chief Operating Officer since 1989. Mr. Ratcliffe has been
employed by us or Carnival plc predecessor companies for 32 years.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities.
A. Market Information
The information required by Item 201(a) of Regulation S-K, Market
Information, is shown in Exhibit 13 and is incorporated by reference into this
joint Annual Report on Form 10-K.
34
B. Holders
The information required by Item 201(b) of Regulation S-K, Holders of
Common Stock, is shown in Exhibit 13 and is incorporated by reference into this
joint Annual Report on Form 10-K.
C. Dividends
Carnival Corporation and Carnival plc declared cash dividends on all of
their common stock and ordinary shares, respectively, in the amount of:
Quarters Ended
---------------------------------------------------------
February 28/29 May 31 August 31 November 30
-------------- ------ --------- -----------
2006 $0.25
2005 $0.15 $0.20 $0.20 $0.25
2004 $0.125 $0.125 $0.125 $0.15
All dividends for both Carnival Corporation and Carnival plc are declared
in U.S. dollars. Holders of Carnival Corporation common stock or Carnival plc
American Depository Shares receive a dividend payable in U.S. dollars. The
dividends payable for Carnival plc ordinary shares are payable in sterling,
unless the shareholders elect to receive the dividend in U.S. dollars. Dividends
payable in sterling will be converted from U.S. dollars into sterling at the
dollar/sterling exchange rate quoted by the Bank of England in London at the
12:00 p.m. foreign exchange rate on the next business day that follows the
quarter end.
Payment of future dividends on Carnival Corporation common stock and
Carnival plc ordinary shares will depend upon, among other factors, our
earnings, financial condition and capital requirements. Each company may also
declare special dividends to all stockholders in the event that members of the
Arison family and trusts established for their benefit are required to pay
additional income taxes by reason of their ownership of Carnival Corporation's
common stock because of a Carnival Corporation income tax audit. The payment and
amount of any dividend is within the discretion of the Boards of Directors, and
it is possible that the timing and amount of any dividend may vary from the
levels discussed above. No assurance can be given that Carnival Corporation and
Carnival plc will continue to have per share dividend increases as were declared
in 2005 and 2004 or maintain their current levels.
D. Issuer Purchases of Equity Securities
During the quarter ended November 30, 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:
35
Total Number
of Shares
Purchased Maximum
as Part of Dollar Value of
Total Publicly Shares that
Number of Announced May Yet Be
Shares Plans or Purchased
Purchased Average Programs Under the
in Fourth Price Paid in Fourth Plans or
Period Quarter per Share Quarter Programs(a)
------ ------- --------- ------- -----------
(in millions)
September 1, 2005 through
September 30, 2005 1,162,700 $49.03 1,162,700 $ 913
October 1, 2005 through
October 31, 2005 5,707,249 $47.98 5,707,249 $ 639
November 1, 2005 through
November 30, 2005 506,600 $48.78 506,600 $ 614
--------- ---------
Total 7,376,549 $48.20 7,376,549
========= =========
(a) 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 the Carnival plc shares. The repurchase program
does not have an expiration date and may be discontinued by our Boards of
Directors at any time. All shares were repurchased pursuant to this
publicly announced program. At February 6, 2006 the remaining availability
pursuant to our share purchase program was $614 million.
During the year ended November 30, 2005, $297 million of our Zero-Coupon
Notes were converted at their accreted value into 9.0 million shares of Carnival
Corporation common stock, of which 6.2 million were issued from treasury stock.
The issuance was exempt from registration under the Securities Act.
Each share of Carnival Corporation common stock issued is paired with a
trust share of beneficial interest in the P&O Princess Special Voting Trust,
which holds a Special Voting Share issued by Carnival plc in connection with the
DLC transaction.
Item 6. Selected Financial Data.
The information required by Item 6. Selected Financial Data, is shown in
Exhibit 13 and is incorporated by reference into this joint Annual Report on
Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The information required by Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operations, is shown in Exhibit 13 and is
incorporated by reference into this joint Annual Report on Form 10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by Item 7A. Quantitative and Qualitative
Disclosures About Market Risk, is shown in Management's Discussion and Analysis
of Financial Condition and Results of Operations in Exhibit 13 and is
incorporated by reference into this joint Annual Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data.
The financial statements, together with the report thereon of
PricewaterhouseCoopers LLP dated February 8, 2005, and the Selected Quarterly
Financial Data (Unaudited), are shown in Exhibit 13 and are incorporated by
reference into this joint Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
36
Item 9A. 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 U.S. 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 November 30, 2005, that they are effective as described
above.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange
Act Rule 13a-15(f). Under the supervision and with the participation of our
management, including our Chief Executive Officer, Chief Operating Officer and
Chief Financial and Accounting Officer, we conducted an evaluation of the
effectiveness of our internal control over financial reporting based on the
framework in Internal Control - Integrated Framework, issued by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO Framework"). Based on
our evaluation under the COSO Framework, our management concluded that our
internal control over financial reporting was effective as of November 30, 2005.
Our management's assessment of the effectiveness of our internal control
over financial reporting as of November 30, 2005 has been audited by
PricewaterhouseCoopers LLP, an independent registered certified public
accounting firm, as stated in their report which is shown in Exhibit 13 and is
incorporated by reference into this joint Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial
reporting during the quarter ended November 30, 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.
Item 9B. Other Information.
None.
PART III
Items 10, 11, 12, 13 and 14. Directors and Executive Officers of the
Registrants, Executive Compensation, Security Ownership of Certain
Beneficial Owners and Management and Related Stockholder Matters, Certain
Relationships and Related Transactions and Principal Accounting Fees and
Services.
The information required by Items 10, 11, 12, 13 and 14 is incorporated
herein by reference to the Carnival Corporation and Carnival plc joint
definitive proxy statement to be filed with the U.S. Securities and Exchange
Commission not later than 120 days after the close of the fiscal year, except
that the information concerning the Carnival Corporation and Carnival plc
executive officers called for by Item 401(b) of Regulation S-K is included in
Part I of this joint Annual Report on Form 10-K.
We have adopted a code of ethics that applies to our chief executive
officer, chief operating officer and senior financial officers, including the
principal financial and accounting officer, controller and other persons
performing similar functions. This code of ethics is posted on our website,
which is located at www.carnivalcorp.com and www.carnivalplc.com. We intend to
satisfy the disclosure requirement under Item 10 of Form
37
8-K regarding an amendment to, or waiver from, a provision of this code of
ethics by posting such information on our website, at the addresses specified
above. Information contained in our website, whether currently posted or posted
in the future, is not part of this document or the documents incorporated by
reference in this document.
PART IV
Item 15. Exhibits, Financial Statement Schedules.
(a) (1) Financial Statements
The financial statements shown in Exhibit 13 are incorporated herein by
reference into this joint Annual Report on Form 10-K.
(2) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the SEC are not required under the related instruction or are
inapplicable and, therefore, have been omitted.
(3) Exhibits
The exhibits listed on the accompanying Index to Exhibits are filed or
incorporated by reference as part of this joint Annual Report on Form 10-K and
such Index to Exhibits is hereby incorporated herein by reference.
38
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
/s/ Micky Arison /s/ Micky Arison
- ---------------- ----------------
Micky Arison Micky Arison
Chairman of the Board of Chairman of the Board of
Directors and Chief Executive Officer Directors and Chief Executive
February 9, 2006 Officer
February 9, 2006
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrants and in the capacities and on the dates indicated.
CARNIVAL CORPORATION CARNIVAL PLC
/s/ Micky Arison /s/ Micky Arison
- ---------------- ----------------
Micky Arison Micky Arison
Chairman of the Board of Chairman of the Board of
Directors and Chief Executive Officer Directors and Chief Executive
February 9, 2006 Officer
February 9, 2006
/s/ Howard S. Frank /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
February 9, 2006 Officer
February 9, 2006
/s/ Gerald R. Cahill /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
February 9, 2006 February 9, 2006
/s/*Richard G. Capen, Jr. /s/*Richard G. Capen, Jr.
- ------------------------- -------------------------
Richard G. Capen, Jr. Richard G. Capen, Jr.
Director Director
February 9, 2006 February 9, 2006
/s/*Robert H. Dickinson /s/*Robert H. Dickinson
- ----------------------- -----------------------
Robert H. Dickinson Robert H. Dickinson
Director Director
February 9, 2006 February 9, 2006
/s/*Arnold W. Donald /s/*Arnold W. Donald
- -------------------- --------------------
Arnold W. Donald Arnold W. Donald
Director Director
February 9, 2006 February 9, 2006
/s/*Pier Luigi Foschi /s/*Pier Luigi Foschi
Pier Luigi Foschi Pier Luigi Foschi
Director Director
February 9, 2006 February 9, 2006
/s/*Richard J. Glasier /s/*Richard J. Glasier
- ---------------------- ----------------------
Richard J. Glasier Richard J. Glasier
Director Director
February 9, 2006 February 9, 2006
/s/*Baroness Hogg /s/*Baroness Hogg
- ----------------- -----------------
Baroness Hogg Baroness Hogg
Director Director
February 9, 2006 February 9, 2006
39
/s/*A. Kirk Lanterman /s/*A. Kirk Lanterman
- --------------------- ---------------------
A. Kirk Lanterman A. Kirk Lanterman
Director Director
February 9, 2006 February 9, 2006
/s/*Modesto A. Maidique /s/*Modesto A. Maidique
- ----------------------- -----------------------
Modesto A. Maidique Modesto A. Maidique
Director Director
February 9, 2006 February 9, 2006
/s/*Sir John Parker /s/*Sir John Parker
- ------------------- -------------------
Sir John Parker Sir John Parker
Director Director
February 9, 2006 February 9, 2006
/s/*Peter G. Ratcliffe /s/*Peter G. Ratcliffe
- ---------------------- ----------------------
Peter G. Ratcliffe Peter G. Ratcliffe
Director Director
February 9, 2006 February 9, 2006
/s/*Stuart Subotnick /s/*Stuart Subotnick
- -------------------- --------------------
Stuart Subotnick Stuart Subotnick
Director Director
February 9, 2006 February 9, 2006
/s/*Uzi Zucker /s/*Uzi Zucker
- -------------- --------------
Uzi Zucker Uzi Zucker
Director Director
February 9, 2006 February 9, 2006
*By: /s/ Arnaldo Perez *By: /s/ Arnaldo Perez
- ---------------------- ----------------------
(Arnaldo Perez (Arnaldo Perez
Attorney-in-fact) Attorney-in-fact)
40
INDEX TO EXHIBITS
- -----------------
Page No. in
Sequential
Numbering
System
- ------
Exhibits
- --------
3.1-Third Amended and Restated Articles of Incorporation of Carnival
Corporation, incorporated by reference to Exhibit No. 3.1 to the joint 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.
4.1-Agreement of Carnival Corporation and Carnival plc, dated February 6, 2006
to furnish certain debt instruments to the Securities and Exchange Commission.
4.2-Carnival Corporation Deed, dated April 17, 2003, between Carnival
Corporation and P&O Princess Cruises plc for the benefit of the P&O Princess
Shareholders, incorporated by reference to Exhibit No. 4.1 to our joint
Quarterly Report on Form 10-Q for the quarter ended August 31, 2003.
4.3-Equalization and Governance Agreement, dated April 17, 2003, between
Carnival Corporation and P&O Princess Cruises plc, incorporated by reference to
Exhibit No. 4.2 to our joint Quarterly Report on Form 10-Q of Carnival
Corporation and Carnival plc for the quarter ended August 31, 2003.
4.4-Carnival Corporation Deed of Guarantee, dated as of April 17, 2003, between
Carnival Corporation and Carnival plc, incorporated by reference to Exhibit No.
4.3 to the joint registration statement on Form S-4 of Carnival Corporation and
Carnival plc.
4.5-Carnival plc (formerly P&O Princess Cruises plc) Deed of Guarantee, dated
as of April 17, 2003, between Carnival Corporation and Carnival plc,
incorporated by reference to Exhibit No. 4.10 to the joint registration
statement on Form S-3 and F-3 of Carnival Corporation, Carnival plc and P&O
Princess Cruises International Ltd. ("POPCIL").
4.6-Specimen Common Stock Certificate, incorporated by reference to Exhibit No.
4.16 to the joint registration statement on Form S-3 and F-3 of Carnival
Corporation, Carnival plc and POPCIL.
4.7-Pairing Agreement, dated as of April 17, 2003, between Carnival
Corporation, The Law Debenture Trust Corporation (Cayman) Limited, as trustee,
and SunTrust Bank, as transfer agent, incorporated by reference to the joint
Current Report on Form 8-K of Carnival Corporation and Carnival plc filed on
April 17, 2003.
4.8-Voting Trust Deed, dated as of April 17, 2003, between Carnival Corporation
and The Law Debenture Trust Corporation (Cayman) Limited, as trustee,
incorporated by reference to the joint Current Report on Form 8-K of Carnival
Corporation and Carnival plc filed on April 17, 2003.
4.9-SVE Special Voting Deed, dated as of April 17, 2003, between Carnival
Corporation, DLS SVC Limited, P&O Princess Cruises plc, The Law Debenture Trust
Corporation (Cayman) Limited, as trustee, and The Law Debenture Trust
Corporation, P.L.C., incorporated by reference to the joint Current Report on
Form 8-K of Carnival Corporation and Carnival plc filed on April 17, 2003.
4.10-Form of deposit agreement among P&O Princess Cruises plc, Morgan Guaranty
Trust Company of New York, as depositary, and holders and beneficial owners
from time to time of ADRs issued thereunder, incorporated by reference to P&O
Princess' registration statement on Form 20-F.
41
4.11-Indenture, dated as of April 25, 2001, between Carnival Corporation and
U.S. Bank Trust National Association, as trustee, relating to unsecured and
unsubordinated debt securities, incorporated by reference to Exhibit No. 4.5 to
Carnival Corporation registration statement on Form S-3.
4.12-Form of Indenture, dated March 1, 1993, between Carnival Cruise Lines,
Inc. and First Trust National Association, as Trustee, relating to the Debt
Securities, including form of Debt Security, incorporated by reference to
Exhibit No. 4 to Carnival Corporation registration statement on Form S-3.
4.13-Second Supplemental Indenture, dated December 1, 2003, between Carnival
plc and Carnival Corporation to The Bank of New York, as Trustee, relating to
7.30% Notes due 2007 and 7.875% debentures due 2027 incorporated by reference
to Exhibit No. 4.14 to our joint Annual Report on Form 10-K for the year ended
November 30, 2003.
*10.1-Retirement and Consulting Agreement, dated November 28, 2003, between
Alton Kirk Lanterman, Carnival Corporation, Holland America Line Inc., and
others, incorporated by reference to Exhibit No. 10.1 to our joint Annual
Report on Form 10-K for the year ended November 30, 2003.
*10.2-Amendment to the Amended and Restated Carnival Corporation 1992 Stock
Option Plan, incorporated by reference to Exhibit No. 10.2 to our joint Annual
Report on Form 10-K for the year ended November 30, 2003.
10.3-Facilities agreement, dated October 21, 2005, between Carnival
Corporation, Carnival plc, and certain of Carnival Corporation and Carnival plc
subsidiaries, The Royal Bank of Scotland as facilities agent and a syndicate of
financial institutions.
*10.4-Amended and Restated Carnival Corporation 1992 Stock Option Plan,
incorporated by reference to Exhibit No. 10.4 to our Annual Report on Form 10-K
for the year ended November 30, 1997.
*10.5-Carnival Cruise Lines, Inc. 1993 Restricted Stock Plan adopted on January
15, 1993 and as amended January 5, 1998 and December 21, 1998, incorporated by
reference to Exhibit No. 10.5 to our Annual Report on Form 10-K for the year
ended November 30, 1998.
*10.6-Carnival Corporation "Fun Ship" Nonqualified Savings Plan, incorporated by
reference to Exhibit No. 10.6 to our Annual Report on Form 10-K for the year
ended November 30, 1997.
*10.7-Amendments to The Carnival Corporation Nonqualified Retirement Plan for
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.7 to
our Annual Report on Form 10-K for the year ended November 30, 1997.
*10.8-Carnival Cruise Lines, Inc. Non-Qualified Retirement Plan, incorporated by
reference to Exhibit No. 10.4 to our Annual Report on Form 10-K for the year
ended November 30, 1990.
*10.9-Executive Long-term Compensation Agreement, dated as of January 16, 1998,
between Robert H. Dickinson and Carnival Corporation, incorporated by reference
to Exhibit No. 10.2 to our Annual Report on Form 10-K for the year ended
November 30, 1997.
*10.10-Consulting Agreement/Registration Rights Agreement, dated June 14, 1991,
between Carnival Corporation and Ted Arison, incorporated by reference to
Exhibit No. 4.3 to post- effective amendment no. 1 on Form S-3 to Carnival
Corporation's registration statement on Form S-1.
*10.11-First Amendment to Consulting Agreement/Registration Rights Agreement,
incorporated by reference to Exhibit No. 10.40 to Carnival Corporation's Annual
Report on Form 10-K for the year ended November 30, 1992.
*10.12-Director Appointment Letter between Peter G. Ratcliffe and Carnival plc,
incorporated by reference to Exhibit No. 10.23 to our joint Quarterly Report on
Form 10-Q for the quarter ended May 31, 2003.
*10.13-Director Appointment Letter, dated August 19, 2005, between Baroness
Sarah Hogg and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.13 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
42
*10.14-Director's Appointment Letter, dated August 19, 2004, between Richard J.
Glasier and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.14 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.15-Director Appointment Letter, dated August 19, 2005, between Sir John
Parker and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.15 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.16- Amended and Restated Carnival plc 2005 Employee Share Plan, incorporated
by reference to Exhibit No. 10.2 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.17-Executive Long-term Compensation Agreement, dated January 11, 1999,
between Carnival Corporation and Micky Arison, incorporated by reference to
Exhibit No. 10.36 to Carnival Corporation's Annual Report on Form 10-K for the
year ended November 30, 1998.
*10.18-Executive Long-term Compensation Agreement, dated January 11, 1999,
between Carnival Corporation and Howard S. Frank, incorporated by reference to
Exhibit No. 10.37 to Carnival Corporation's Annual Report on Form 10-K for the
year ended November 30, 1998.
*10.19-Carnival Corporation Supplemental Executive Retirement Plan, incorporated
by reference to Exhibit No. 10.32 to Carnival Corporation's Annual Report on
Form 10-K for the year ended November 30, 1999.
*10.20-Amendment to the Carnival Corporation Supplemental Executive Retirement
Plan, incorporated by reference to Exhibit No. 10.31 to Carnival Corporation's
Annual Report on Form 10-K for the year ended November 30, 2000.
*10.21-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.33 to Carnival Corporation's
Annual Report on Form 10-K for the year ended November 30, 1999.
*10.22-Amendment to the Carnival Corporation Nonqualified Retirement Plan for
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.33 to
Carnival Corporation's Annual Report on Form 10-K for the year ended November
30, 2000.
*10.23-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.34 to Carnival Corporation's
Annual Report on Form 10-K for the year ended November 30, 2000.
*10.24-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.37 to Carnival Corporation's
Annual Report on Form 10-K for the year ended November 30, 2001.
*10.25-Amendment to the Carnival Corporation Nonqualified Retirement Plan for
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.38 to
Carnival Corporation's Annual Report on Form 10-K for the year ended November
30, 2001.
*10.26-Amended and Restated Carnival Corporation 2001 Outside Director Stock
Plan, incorporated by reference to Exhibit No. 10.1 to our joint Quarterly
Report on Form 10-Q for the quarter ended May 31, 2005.
*10.27-Amended and Restated Carnival Corporation 2002 Stock Plan, incorporated
by reference to Exhibit No. 10.1 to our joint Quarterly Report on Form 10-Q for
the quarter ended May 31, 2003.
*10.28-Agreement with Pier Luigi Foschi, incorporated by reference to Exhibit
No. 10.4 to our joint Quarterly Report on Form 10-Q for the quarter ended
August 31, 2005.
10.29-Succession Agreement to Registration Rights Agreement, dated June 14,
1991, between Carnival Corporation and Ted Arison, incorporated by reference to
Exhibit No. 10.3 to Carnival Corporation's Quarterly Report on Form 10-Q for
the quarter ended May 31, 2002.
*10.30-Employment Agreement, dated as of April 17, 2003, by and between P&O
Princess Cruises International, Ltd. and Peter Ratcliffe, incorporated by
reference to Exhibit No. 10.2 to our joint Quarterly Report on Form 10-Q for
the quarter ended May 31, 2003.
*10.31-Carnival Corporation & plc Non-Executive Board of Director Cruise Benefit
Policy, incorporated by reference to Exhibit No. 10.1 to our joint Quarterly
Report on Form 10-Q
43
for the quarter ended August 31, 2005.
*10.32-Indemnification Agreement, dated April 17, 2003, between Micky M. Arison
and Carnival Corporation, incorporated by reference to Exhibit No. 10.5 to our
joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.33-Consulting Agreement, dated November 30, 2004, between A. Kirk Lanterman,
Holland America Line Inc. and others, incorporated by reference to our joint
Current Report on Form 8-K, dated December 6, 2004.
*10.34-Indemnification Agreement, dated April 17, 2003, between Robert H.
Dickinson and Carnival Corporation, incorporated by reference to Exhibit No.
10.9 to our joint Quarterly Report on Form 10-Q for the quarter ended May 31,
2003.
*10.35-Employment Agreement, dated December 1, 2004, between A. Kirk Lanterman
and Holland America Line Inc., incorporated by reference to Exhibit No. 10.35
to our joint Annual Report on Form 10-K for the year ended November 30, 2004.
*10.36-Indemnification Agreement, dated April 17, 2003, between Pier Luigi
Foschi and Carnival Corporation, incorporated by reference to Exhibit No. 10.13
to our joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.37-Indemnification Agreement, dated April 17, 2003, between Howard S. Frank
and Carnival Corporation, incorporated by reference to Exhibit No. 10.15 to our
joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.38- Director Appointment Letter, dated December 1, 2004, between A. Kirk
Lanterman and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.38 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.39-Indemnification Agreement, dated April 17, 2003, between Peter G.
Ratcliffe and Carnival Corporation, incorporated by reference to Exhibit No.
10.24 to our joint Quarterly Report on Form 10-Q for the quarter ended May 31,
2003.
*10.40-Director Appointment Letter, dated April 14, 2003, between Micky M.
Arison and Carnival plc, incorporated by reference to Exhibit No. 10.4 to our
joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.41-Director Appointment Letter, dated August 19, 2004, between Richard G.
Capen and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.41 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.42-Director Appointment Letter, dated April 14, 2003, between Robert H.
Dickinson and Carnival plc, incorporated by reference to Exhibit No. 10.8 to
our joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.43-Director Appointment Letter, dated August 19, 2004, between Arnold W.
Donald and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.43 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.44-Director Appointment Letter between Pier Luigi Foschi and Carnival plc,
incorporated by reference to Exhibit No. 10.12 to our joint Quarterly Report on
Form 10-Q for the quarter ended May 31, 2003.
*10.45-Director Appointment Letter, dated April 14, 2003, between Howard S.
Frank and Carnival plc, incorporated by reference to Exhibit No. 10.14 to our
joint Quarterly Report on Form 10-Q for the quarter ended May 31, 2003.
*10.46-Director Appointment Letter, dated August 19, 2004, between Modesto A.
Maidique and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No. 10.46 to our joint Annual Report on Form 10-K for the
year ended November 30, 2004.
*10.47-Amendment No. 1 to the Employment Agreement, dated as of July 19, 2004,
by and between P&O Princess International Ltd. and Peter Ratcliffe incorporated
by reference to Exhibit No. 10.1 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2004.
*10.48-Director Appointment Letter, dated August 19, 2004, between Stuart
Subotnick and each of Carnival Corporation and Carnival plc, incorporated by
reference to Exhibit No.
44
10.48 to our joint Annual Report on Form 10-K for the year ended November 30,
2004.
*10.49-Director Appointment Letter, dated August 19, 2004, between Uzi Zucker
and each of Carnival Corporation and Carnival plc, incorporated by reference to
Exhibit No. 10.49 to our joint Annual Report on Form 10-K for the year ended
November 30, 2004.
*10.50-Amendment of the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.1 to our Quarterly Report on
Form 10-Q for the quarter ended February 28, 2003.
*10.51-Amendment of the Carnival Corporation Nonqualified Retirement Plan For
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.2 to
our Quarterly Report on Form 10-Q for the quarter ended February 28, 2003.
*10.52-The P&O Princess Cruises Executive Share Option Plan, incorporated by
reference to Exhibit No. 4.9 to P&O Princess' Annual Report on Form 20-F for
the year ended December 30, 2001.
*10.53-The P&O Princess Cruises Deferred Bonus and Co-Investment Matching Plan,
incorporated by reference to Exhibit No. 4.10 to P&O Princess' Annual Report on
Form 20-F for the year ended December 30, 2001.
*10.54-Carnival Cruise Lines Management Incentive Plan, incorporated by
reference to Exhibit No. 10.3 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.55-Amendment to the Carnival Corporation Supplemental Executive Retirement
Plan, incorporated by reference to Exhibit No. 10.1 to our joint Quarterly
Report on Form 10-Q for the quarter ended February 29, 2004.
*10.56-Amendment to the Carnival Corporation Nonqualified Retirement Plan for
Highly Compensated Employees, incorporated by reference to Exhibit No. 10.1 to
our joint Quarterly Report on Form 10-Q for the quarter ended February 29,
2004.
*10.57-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, incorporated by reference to Exhibit No. 10.2 to our joint Quarterly
Report on Form 10-Q for the quarter ended February 29, 2004.
*10.58-Amendment to the Carnival Corporation "Fun Ship" Nonqualified Savings
Plan, effective December 31, 2004, incorporated by reference to Exhibit No.
10.1 to our joint Quarterly Report on Form 10-Q for the quarter ended February
28, 2005.
*10.59- Form of Non-qualified Stock Option Agreement for the Amended and
Restated Carnival Corporation 2001 Outside Director Stock Plan, incorporated by
reference to Exhibit No. 10.5 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.60-Form of Restricted Stock Award Agreement for the Amended and Restated
Carnival Corporation 2001 Outside Director Stock Plan, incorporated by
reference to Exhibit No. 10.6 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.61-Form of Restricted Stock Unit Award Agreement for the Amended and
Restated Carnival Corporation 2001 Outside Director Stock Plan, incorporated by
reference to Exhibit No. 10.7 to our joint Quarterly Report on Form 10-Q for
the quarter ended August 31, 2005.
*10.62-Form of Share Option Certificate for the Amended and Restated Carnival
plc 2005 Employee Share Plan, incorporated by reference to Exhibit No. 10.8 to
our joint Quarterly Report on Form 10-Q for the quarter ended August 31, 2005.
10.63-Deed of Guarantee, dated October 21, 2005, between Carnival Corporation
as guarantor and the Royal Bank of Scotland plc as facilities agent.
10.64-Deed of Guarantee, dated October 21, 2005, between Carnival plc as
guarantor and the Royal Bank of Scotland plc as facilities agent.
12-Ratio of Earnings to Fixed Charges.
13-Portions of 2005 Annual Report incorporated by reference into 2005 joint
Annual Report on Form 10-K.
45
21-Significant Subsidiaries of Carnival Corporation and Carnival plc.
23-Consent of PricewaterhouseCoopers LLP.
24-Powers of attorney given by certain Directors of Carnival Corporation and
Carnival plc to Micky Arison, Howard S. Frank, Gerald R. Cahill and Arnaldo
Perez authorizing such persons to sign this 2005 joint Annual Report on Form
10-K and any future amendments on their behalf.
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.
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.
*Indicates a management contract or compensation plan or arrangement.
46
Exhibit 4.1
February 6, 2006
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, DC 20549
RE: Carnival Corporation,
Commission File No. 1-9610, and Carnival plc, Commission File No. 1-15136
Gentlemen:
Pursuant to Item 601(b)(4)(iii) of Regulation S-K promulgated under the
Securities Exchange Act of 1934, as amended, Carnival Corporation and Carnival
plc (the "Companies") hereby agree to furnish copies of certain long-term debt
instruments to the Securities and Exchange Commission upon the request of the
Commission, and, in accordance with such regulation, such instruments are not
being filed as part of the joint Annual Report on Form 10-K of the Companies for
their year ended November 30, 2005.
Very truly yours,
CARNIVAL CORPORATION AND CARNIVAL PLC
/s/ Arnaldo Perez
- --------------------------------------
Senior Vice President, General Counsel
and Secretary
47
Exhibit 10.3
Dated 21 October 2005
----------------------------------
Carnival Corporation
Carnival plc
The companies listed in Part 1 of Schedule 1
Arranged by
Banc of America Securities Limited, Barclays Capital, BNP Paribas, J.P.
Morgan plc, SANPAOLO IMI S.p.A. and The Royal Bank of Scotland plc
With
The Royal Bank of Scotland plc
as Facilities Agent
----------------------------------
FACILITIES AGREEMENT
for
US$1,200,000,000
(euro)400,000,000
(pounds)200,000,000
Multicurrency Revolving Facilities
----------------------------------
[LOGO] NORTON ROSE
Contents
Clause Page
1 Definitions and interpretation ........................................ 4
2 The Facilities ........................................................ 25
3 Purpose ............................................................... 26
4 Conditions of Utilisation ............................................. 26
5 Utilisation - Loan .................................................... 28
6 Utilisation - Bonds ................................................... 31
7 Bonds ................................................................. 34
8 Utilisation - Swingline Loan .......................................... 36
9 Swingline Loans ....................................................... 40
10 Optional Currencies ................................................... 44
11 Repayment ............................................................. 45
12 Prepayment and cancellation ........................................... 45
13 Interest .............................................................. 49
14 Interest Periods ...................................................... 51
15 Changes to the calculation of interest ................................ 52
16 Fees .................................................................. 53
17 Taxes ................................................................. 55
18 Increased Costs ....................................................... 69
19 Other indemnities ..................................................... 70
20 Mitigation by the Finance Parties ..................................... 71
21 Costs and expenses .................................................... 72
22 Guarantee and indemnity ............................................... 73
23 Representations ....................................................... 76
24 Information undertakings .............................................. 79
25 Financial covenants ................................................... 82
26 General undertakings .................................................. 87
27 Events of Default ..................................................... 88
28 Changes to the Lenders ................................................ 92
29 Changes to the Obligors ............................................... 99
30 Role of the Facilities Agent, the Arrangers and the Fronting Banks .... 101
31 Conduct of business by the Finance Parties ............................ 106
32 Sharing among the Finance Parties ..................................... 106
33 Payment mechanics ..................................................... 108
34 Set-off ............................................................... 110
35 Notices ............................................................... 111
36 Calculations and certificates ......................................... 115
37 Partial invalidity .................................................... 116
38 Remedies and waivers .................................................. 116
39 Amendments and waivers ................................................ 116
40 Counterparts .......................................................... 117
41 Governing law ......................................................... 117
42 Enforcement ........................................................... 117
43 USA PATRIOT Act ....................................................... 118
44 Summary Document ...................................................... 118
Schedule 1 The Original Parties .......................................... 119
Schedule 2 Conditions Precedent .......................................... 128
Schedule 3 Utilisation Request ........................................... 132
Schedule 4 Mandatory Cost Formulae ....................................... 135
Schedule 5 Form of Transfer Certificate .................................. 139
Schedule 6 Form of Accession Letter ...................................... 141
Schedule 7 Form of Resignation Letter .................................... 142
Schedule 8 Form of Compliance Certificate ................................ 143
Schedule 9 Form of Confidentiality Undertaking ........................... 144
Schedule 10 Timetables ................................................... 148
Schedule 11 Pre-Approved Bonds ........................................... 151
Schedule 12 Summary Document ............................................. 152
THIS AGREEMENT is dated 21 October 2005 and made BETWEEN:
(1) CARNIVAL CORPORATION (a Panamanian corporation having its principal
place of business at Carnival Place, 3655 N.W. 87th Avenue, Miami,
Florida, 33178-2428) (the "Company");
(2) CARNIVAL PLC (a company incorporated under the laws of England and
Wales with registered number 04039524) ("Carnival plc");
(3) THE SUBSIDIARIES OF THE COMPANY and of CARNIVAL PLC listed in Part 1
of Schedule 1 as original borrowers (in this capacity and together
with the Company and Carnival plc, the "Original Borrowers");
(4) CARNIVAL CORPORATION and CARNIVAL PLC as guarantors of their
respective Subsidiaries (each a "Guarantor");
(5) BANC OF AMERICA SECURITIES LIMITED, BARCLAYS CAPITAL, BNP PARIBAS,
J.P. MORGAN PLC, SANPAOLO IMI S.p.A. and THE ROYAL BANK OF SCOTLAND
PLC as mandated lead arrangers (in this capacity the "Arrangers");
(6) THE FINANCIAL INSTITUTIONS listed in Parts 2 and 4 of Schedule 1 as
lenders (the "Original Lenders");
(7) THE ROYAL BANK OF SCOTLAND PLC as facilities agent of the other
Finance Parties (the "Facilities Agent"); and
(8) THE FINANCIAL INSTITUTIONS listed in Part 5 of Schedule 1 as
fronting banks for the Bonds (the "Original Fronting Banks").
IT IS AGREED as follows:
1 Definitions and interpretation
1.1 Definitions
In this Agreement:
"Accession Letter" means a document substantially in the form set
out in Schedule 6 (Form of Accession Letter).
"Account Party" means a Bond Borrower or any member of the Carnival
Corporation & plc Group who has requested a Bond Borrower to
request, a Bond.
"Additional Borrower" means a company which becomes an Additional
Borrower in accordance with clause 29 (Changes to the Obligors).
"Additional Cost Rate" has the meaning given to it in Schedule 4
(Mandatory Cost formulae).
4
"Affiliate" means, in relation to any person, a Subsidiary of that
person or a Holding Company of that person or any other Subsidiary
of that Holding Company.
"Approved Jurisdiction" means:
(a) Italy;
(b) Panama;
(c) United Kingdom;
(d) United States; or
(e) any other country or jurisdiction agreed in writing by the
Company and the Facilities Agent (acting on the instruction of
all the Lenders).
"Australian Dollar", "AUD" and "$A" means the lawful currency of
Australia from time to time.
"Availability Period" means the period from and including the
Signing Date to and including the Termination Date.
"Available Bond Facility" means an amount equal to US$700,000,000
minus:
(a) the Base Currency Amount for Tranche A of any outstanding
Bonds; and
(b) in relation to any proposed Bond Utilisation, the Base
Currency Amount for Tranche A of any Bonds which are due to be
made under the Bonding Facility on or before the proposed
Utilisation Date,
other than any Bond Utilisations that are due to be repaid or
prepaid on or before the proposed Utilisation Date.
"Available Swingline Tranche A Commitment" of a Swingline Lender
under Tranche A means (but without limiting clause 8.6 (Relationship
with the Facilities)) that Lender's Swingline Tranche A Commitment
minus:
(a) the Base Currency Amount of its participation in any
outstanding Swingline Loans under Tranche A; and
(b) in relation to any proposed Swingline Utilisation under
Tranche A, the Base Currency Amount of its participation in
any Swingline Loans that are due to be made under Tranche A on
or before the proposed Utilisation Date,
other than that Lender's participation in any Swingline Loans under
Tranche A that are due to be repaid or prepaid on or before the
proposed Utilisation Date.
"Available Swingline Tranche A Facility" means the aggregate for the
time being of each Swingline Lender's Available Swingline Tranche A
Commitment.
5
"Available Swingline Tranche B Commitment" of a Swingline Lender
under Tranche B means (but without limiting clause 8.6 (Relationship
with the Facilities)) that Lender's Swingline Tranche B Commitment
minus:
(a) the Base Currency Amount of its participation in any
outstanding Swingline Loans under Tranche B; and
(b) in relation to any proposed Swingline Utilisation under
Tranche B, the Base Currency Amount of its participation in
any Swingline Loans that are due to be made under Tranche B on
or before the proposed Utilisation Date,
other than that Lender's participation in any Swingline Loans under
Tranche B that are due to be repaid or prepaid on or before the
proposed Utilisation Date.
"Available Swingline Tranche B Facility" means the aggregate for the
time being of each Swingline Lender's Available Swingline Tranche B
Commitment.
"Available Swingline Tranche C Commitment" of a Swingline Lender
under Tranche C means (but without limiting clause 8.6 (Relationship
with the Facilities)) that Lender's Swingline Tranche C Commitment
minus:
(a) the Base Currency Amount of its participation in any
outstanding Swingline Loans under Tranche C; and
(b) in relation to any proposed Swingline Utilisation under
Tranche C, the Base Currency Amount of its participation in
any Swingline Loans that are due to be made under Tranche C on
or before the proposed Utilisation Date,
other than that Lender's participation in any Swingline Loans under
Tranche C that are due to be repaid or prepaid on or before the
proposed Utilisation Date.
"Available Swingline Tranche C Facility" means the aggregate for the
time being of each Swingline Lender's Available Swingline Tranche C
Commitment.
"Available Tranche A Commitment" of a Lender means that Lender's
Tranche A Commitment minus:
(a) the Base Currency Amount of its participation in any
outstanding Utilisations under Tranche A; and
(b) in relation to any proposed Utilisation under Tranche A, the
Base Currency Amount of its participation in any Utilisations
under Tranche A that are due to be made on or before the
proposed Utilisation Date,
other than that Lender's participation in any Utilisations under
Tranche A that are due to be repaid or prepaid on or before the
proposed Utilisation Date.
6
"Available Tranche B Commitment" of a Lender means that Lender's
Tranche B Commitment minus:
(a) the Base Currency Amount of its participation in any
outstanding Utilisations under Tranche B; and
(b) in relation to any proposed Utilisation under Tranche B, the
Base Currency Amount of its participation in any Utilisations
under Tranche B that are due to be made on or before the
proposed Utilisation Date,
other than that Lender's participation in any Utilisations under
Tranche B that are due to be repaid or prepaid on or before the
proposed Utilisation Date.
"Available Tranche C Commitment" of a Lender means that Lender's
Tranche C Commitment minus:
(a) the Base Currency Amount of its participation in any
outstanding Utilisations under Tranche C; and
(b) in relation to any proposed Utilisation under Tranche C, the
Base Currency Amount of its participation in any Utilisations
under Tranche C that are due to be made on or before the
proposed Utilisation Date,
other than that Lender's participation in any Utilisations under
Tranche C that are due to be repaid or prepaid on or before the
proposed Utilisation Date.
"Available Tranche A Facility" means the aggregate for the time
being of each Lender's Available Tranche A Commitment.
"Available Tranche B Facility" means the aggregate for the time
being of each Lender's Available Tranche B Commitment.
"Available Tranche C Facility" means the aggregate for the time
being of each Lender's Available Tranche C Commitment.
"Base Currency" means:
(a) in relation to Tranche A, US Dollars;
(b) in relation to Tranche B, euro; and
(c) in relation to Tranche C, Sterling.
"Base Currency Amount" means, in relation to a Utilisation, the
amount specified in the relevant Utilisation Request delivered by a
Borrower for that Utilisation or (if the amount requested is not
denominated in the Base Currency for the relevant Tranche requested
in that Utilisation Request) that amount converted into the Base
Currency for the relevant Tranche at the Facilities Agent's Spot
Rate of Exchange on the date which is three Business Days before the
Utilisation Date or, if later, on the date the Facilities Agent
receives the relevant Utilisation Request adjusted to reflect any
repayment
7
(other than a repayment arising from a change of currency),
prepayment, consolidation or division of the Utilisation, and in
addition in the case of a Bond, as adjusted under clause 6.9
(Revaluation of Bonds).
"Bond" means any bond (including but not limited to surety bonds and
performance bonds), guarantee (including but not limited to
financial guarantees and performance guarantees), letter of credit
(including but not limited to financial letters of credit and
performance letters of credit), indemnity or other deed of
obligation issued or to be issued by a Fronting Bank.
"Bond Borrower" means a Borrower who has requested a Bond
Utilisation.
"Bond Proportion" means, in relation to a Lender in respect of any
Bond, the proportion (expressed as a percentage) borne by that
Lender's Available Tranche A Commitment to the Available Tranche A
Facility immediately prior to the issue of that Bond, adjusted to
reflect any assignment or transfer under this Agreement to or by
that Lender.
"Bond Utilisation" means a utilisation of a Bond under the Bonding
Facility (including a renewal of a Bond in accordance with clause
6.8 (Renewal of a Bond)).
"Bond Utilisation Request" means a notice substantially in the form
set out in Part 2 of Schedule 3 (Utilisation Request - Bonds).
"Bonding Facility" means the bonding facility made available under
Tranche A of this Agreement as described in clause 6 (Utilisation -
Bonds) in a maximum amount of US$700,000,000.
"Borrower" means an Original Borrower or an Additional Borrower
unless it has ceased to be a Borrower in accordance with clause 29
(Changes to the Obligors).
"Break Costs" means the amount (if any) by which:
(a) the interest (excluding amounts in respect of Margin) which a
Lender should have received for the period from the date of
receipt of all or any part of its participation in a Loan or
Unpaid Sum to the last day of the current Interest Period in
respect of that Loan or Unpaid Sum, had the principal amount
or Unpaid Sum received been paid on the last day of that
Interest Period,
exceeds:
(b) the amount which that Lender would be able to obtain by
placing an amount equal to the principal amount or Unpaid Sum
received by it on deposit with a leading bank in the Relevant
Interbank Market for a period starting on the Business Day
following receipt or recovery and ending on the last day of
the current Interest Period.
"Business Day" means a day (other than a Saturday or Sunday) on
which banks are open for general business in London and New York
and:
8
(a) if on that day a payment in, or a purchase of, a currency
(other than euro) is to be made, the principal financial
centre of the country of that currency; or
(b) if on that day a payment in, or a purchase of, euro is to be
made, which is also a TARGET Day.
"Carnival Corporation & plc Group" means the Carnival Corporation
Group and the Carnival plc Group.
"Carnival Corporation Group" means the Company and all its
Subsidiaries from time to time.
"Carnival Material Group Member" means the Company, Carnival plc,
each other Obligor or any Material Subsidiary.
"Carnival plc Group" means Carnival plc and all its Subsidiaries
from time to time.
"Commitment" means, at any time, in respect of a Lender, the
aggregate of that Lender's:
(a) Tranche A Commitment;
(b) Tranche B Commitment (for the purpose only of calculating the
utilisation fee pursuant to clause 16.4 converted into US
Dollars at the Facilities Agent's Spot Rate of Exchange at
that time); and
(c) Tranche C Commitment (for the purpose only of calculating the
utilisation fee pursuant to clause 16.4 converted into US
Dollars at the Facilities Agent's Spot Rate of Exchange at
that time).
"Compliance Certificate" means a certificate substantially in the
form set out in Schedule 8 (Form of Compliance Certificate).
"Confidentiality Undertaking" means a confidentiality undertaking
substantially in the form set out in Schedule 9 (Confidentiality
Undertaking).
"CP Programme" means:
(a) any US Dollar, euro or Sterling commercial paper programme; or
(b) any other short term borrowings having a term of not more than
364 days,
of a member of the Carnival Corporation & plc Group.
"Deeds of Guarantee" means:
(a) the deed of guarantee issued by the Company in favour of the
Facilities Agent on behalf of the Finance Parties in respect
of Carnival plc dated on or about the Signing Date; and
9
(b) the deed of guarantee issued by Carnival plc in favour of the
Facilities Agent on behalf of the Finance Parties in respect
of the Company dated on or about the Signing Date.
"Default" means:
(a) an Event of Default; or
(b) any event or circumstance specified in clause 27 (Events of
Default) which would (with the expiry of a grace period, or
the giving of notice, or any combination of them), be an Event
of Default.
"DLC Documents" means the agreements, deeds, instruments and
constituent documents related to the Company and Carnival plc, as
amended from time to time, establishing the dual listed company
structure between the Company and Carnival plc entered into as
contemplated by the Offer and Implementation Agreement between the
Company and Carnival plc dated 8th January, 2003 namely the SVE
Special Voting Deed, Carnival Corporation's Articles and By-Laws,
Carnival plc's Memorandum and Articles, the Carnival Corporation
Deed of Guarantee, the P&O Princess Guarantee (as each such
expression is defined in the Equalisation and Governance Agreement),
the deed between the Company and P&O Princess Cruises plc dated 17th
April, 2003, the pairing agreement between the Company, The Law
Debenture Trust Corporation (Cayman) Limited and SunTrust Bank dated
17th April, 2003, the P&O Princess special voting trust deed made
between the Company and the Law Debenture Trust Corporation (Cayman)
Limited dated 17th April, 2003 and the Equalisation and Governance
Agreement.
"Equalisation and Governance Agreement" means the equalisation and
governance agreement dated 17 April 2003 between the Company and
Carnival plc.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"EURIBOR" means, in relation to any Loan in euro:
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for the Interest Period of
that Loan) the arithmetic mean of the rates (rounded upwards
to four decimal places) as supplied to the Facilities Agent at
its request quoted by the Reference Banks to leading banks in
the European interbank market,
as of the Specified Time on the Quotation Day for the offering of
deposits in euro for a period comparable to the Interest Period of
the relevant Loan.
"euro", "EUR" and "(euro)" means the single currency of the
Participating Member States.
"Event of Default" means any event or circumstance specified as such
in clause 27 (Events of Default).
10
"Excluded Assets" means any assets sold or otherwise disposed of by
any person, provided such person, directly or indirectly has the
right to possession or use of such assets notwithstanding such
transfer or other disposition.
"Expiry Date" means, in respect of a Bond, the last day of the Term
of that Bond.
"Facilities" means the multicurrency revolving facilities made
available under this Agreement as described in clause 2 (The
Facilities).
"Facilities Agent's Spot Rate of Exchange" means the Facilities
Agent's spot rate of exchange for the purchase of a relevant
currency with US Dollars, euro or Sterling, as the case may be, in
the London foreign exchange market at or about 11:00 a.m. on a
particular day.
"Facility Office" means the office or offices notified by a Lender
to the Facilities Agent in writing on or before the date it becomes
a Lender (or, following that date, by not less than five Business
Days' written notice) as the office or offices through which it will
perform its obligations under this Agreement.
"Federal Funds Rate" means, in relation to any day, the rate per
annum equal to:
(a) the weighted average of the rates on overnight Federal funds
transactions with members of the US Federal Reserve System
arranged by Federal funds brokers, as published for that day
(or, if that day is not a Business Day, for the immediately
preceding Business Day) by the Federal Reserve Bank of New
York; or
(b) if a rate is not so published for any day which is a Business
Day, the average of the quotations for that day on such
transactions received by the Facilities Agent from three
Federal funds brokers of recognised standing selected by the
Facilities Agent.
"Fee Letter" means any letter or letters dated on or about the
Signing Date between the Arrangers and the Company, the Facilities
Agent and the Company or the Original Fronting Banks and the
Company, setting out any of the fees referred to in clause 16
(Fees).
"Finance Document" means:
(a) this Agreement;
(b) each Fee Letter;
(c) each of the Deeds of Guarantee;
(d) each Utilisation Request;
(e) a Transfer Certificate (if any);
(f) any Accession Letter;
(g) any Resignation Letter; and
(h) any other document designated as such by the Facilities Agent
and the Company.
11
"Finance Party" means the Facilities Agent, an Arranger, a Lender or
a Fronting Bank.
"Fronting Bank" means:
(a) any Original Fronting Bank;
(b) any Lender appointed by the Company in the capacity of a
Fronting Bank under clause 28.1.4; and
(c) any bank, financial institution, trust, fund or other entity
which has become a Party in accordance with clause 28 (Changes
to the Lenders) in the capacity of Fronting Bank,
which in each case has not ceased to be a Fronting Bank or a Party
in accordance with the terms of this Agreement.
"Holding Company" means, in relation to a company or corporation,
any other company or corporation in respect of which it is a
Subsidiary.
"Increased Cost" means:
(a) a reduction in the rate of return from the Facilities or on a
Finance Party's (or its Affiliate's) overall capital;
(b) an additional or increased cost; or
(c) a reduction of any amount due and payable under any Finance
Document,
which is incurred or suffered by a Finance Party or any of its
Affiliates but only to the extent that it is attributable to that
Finance Party having entered into its Tranche A Commitment, Tranche
B Commitment and/or Tranche C Commitment or funding or performing
its obligations under any Finance Document.
"Interest Period" means:
(a) in relation to a Loan (other than a Swingline Loan), each
period determined in accordance with clause 14 (Interest
Periods);
(b) in relation to a Swingline Loan, each period determined in
accordance with clause 9.7 (Interest Period); and
(c) in relation to an Unpaid Sum, each period determined in
accordance with clause 13.3 (Interest on overdue amounts).
"Italian Insolvency Law" means Royal Decree no. 267 of 16 May 1942
as amended and supplemented by Law Decree no. 35 of 14 March 2005 as
converted by Law no. 80 of 14 May 2005.
"Lender" means:
12
(a) any Original Lender; and
(b) any bank, financial institution, trust, fund or other entity
which has become a Party in accordance with clause 28 (Changes
to the Lenders) in the capacity of Lender,
which in each case has not ceased to be a Party in accordance with
the terms of this Agreement.
"LIBOR" means, in relation to any Loan in any currency (other than
euro):
(a) the applicable Screen Rate; or
(b) (if no Screen Rate is available for the currency or Interest
Period of that Loan) the arithmetic mean of the rates (rounded
upwards to four decimal places) as supplied to the Facilities
Agent at its request quoted by the Reference Banks to leading
banks in the London interbank market,
as of the Specified Time on the Quotation Day for the offering of
deposits in the currency of that Loan and for a period comparable to
the Interest Period for that Loan.
"Loan" means a Loan Utilisation or a Swingline Loan or the principal
amount outstanding for the time being of that Loan Utilisation or
Swingline Loan, as the case may be.
"Loan Utilisation" means a loan made or to be made under clause 5,
including any loan deemed to have been requested under clauses 7.1.2
and 9.3.2.
"Loan Utilisation Request" means a notice substantially in the form
set out in Part 1 of Schedule 3 (Utilisation Request - Loans).
"Majority Lenders" means, at any time, a Lender or Lenders whose
Commitments aggregate more than 66.666% of the Total Commitments
(or, if the Total Commitments have been reduced to zero and there
are no Utilisations then outstanding, aggregated more than 66.666%
of the Total Commitments immediately prior to the reduction).
"Mandatory Cost" means the percentage rate per annum calculated by
the Facilities Agent in accordance with Schedule 4 (Mandatory Cost
formulae).
"Margin" means at any time the percentage rate per annum determined
at such time to be the margin in accordance with clause 13.5
(Margin).
"Material Adverse Effect" means a material and adverse effect on:
(a) the ability of any Obligor to perform and observe its payment
obligations under any Finance Document; and
(b) the financial condition of the Carnival Corporation & plc
Group as a whole.
13
"Material Subsidiary" means, at any time, a Subsidiary of the
Company or Carnival plc whose gross assets, pre-tax profits or
turnover then equal or exceed 10 per cent. of the gross assets,
pre-tax profits or turnover of the Carnival Corporation & plc Group.
For this purpose:
(a) the gross assets, pre-tax profits or turnover of a Subsidiary
of the Company or Carnival plc will be determined from its
financial statements (consolidated if it has Subsidiaries)
upon which the latest audited financial statements of the
Carnival Corporation & plc Group have been based;
(b) if a Subsidiary of the Company or Carnival plc becomes a
member of the Carnival Corporation & plc Group after the date
on which the latest audited financial statements of the
Carnival Corporation & plc Group have been prepared, the gross
assets, pre-tax profits or turnover of that Subsidiary will be
determined from its latest financial statements;
(c) the gross assets, pre-tax profits or turnover of the Carnival
Corporation & plc Group will be determined from its latest
audited financial statements, adjusted (where appropriate) to
reflect the gross assets, pre-tax profits or turnover of any
company or business subsequently acquired or disposed of; and
(d) if a Material Subsidiary disposes of all or substantially all
of its assets to another member of the Carnival Corporation &
plc Group, it will immediately cease to be a Material
Subsidiary and the other Subsidiary (if it is not already)
will immediately become a Material Subsidiary; the subsequent
financial statements of those Subsidiaries and the Carnival
Corporation & plc Group will be used to determine whether
those Subsidiaries are Material Subsidiaries or not.
If there is a dispute as to whether or not a company is a Material
Subsidiary, a certificate of the auditors of the Company or Carnival
plc will be, in the absence of manifest error, conclusive.
"Moody's" means Moody's Investor Services, Inc.
"Non-Recourse Financing Arrangement" means a non-recourse financing
arrangement under which (in the case of Borrowed Money) the lender's
right of recourse is limited to a specific asset of the relevant
member of the Carnival Corporation & plc Group or in the case of an
asset or property, the asset or property is collateral for the
financing and there is no further recourse by the relevant creditor
against the general assets of any member of the Carnival Corporation
& plc Group.
"Obligor" means a Borrower or a Guarantor.
"Optional Currency" means a currency (other than the Base Currency
for the relevant Tranche) which complies with the conditions set out
in clause 10.3 (Conditions relating to Optional Currencies).
"Original Financial Statements" means the audited consolidated
financial statements of the Carnival Corporation & plc Group for the
financial year ended 30 November 2004.
"Original Obligor" means an Original Borrower or a Guarantor.
14
"Overall Tranche A Commitment" of a Lender means:
(a) its Tranche A Commitment; or
(b) in the case of a Swingline Lender which does not have a
Tranche A Commitment, the Tranche A Commitment of a Lender
which is its Affiliate.
"Overall Tranche B Commitment" of a Lender means:
(a) its Tranche B Commitment; or
(b) in the case of a Swingline Lender which does not have a
Tranche B Commitment, the Tranche B Commitment of a Lender
which is its Affiliate.
"Overall Tranche C Commitment" of a Lender means:
(a) its Tranche C Commitment; or
(b) in the case of a Swingline Lender which does not have a
Tranche C Commitment, the Tranche C Commitment of a Lender
which is its Affiliate.
"Participating Member State" means any member state of the European
Communities that adopts or has adopted the euro as its lawful
currency in accordance with legislation of the European Community
relating to Economic and Monetary Union.
"Party" means a party to this Agreement.
"Pre-Approved Bond" means the form and type of Bond set out in
Schedule 11 (form of Pre-Approved Bonds).
"Quotation Day" means, in relation to any Interest Period for which
an interest rate is to be determined:
(a) (if the currency is Sterling) the first day of that Interest
Period;
(b) (if the currency is euro) two TARGET Days before the first day
of that Interest Period; or
(c) (for any other currency) two Business Days before the first
day of that Interest Period,
unless market practice differs in the Relevant Interbank Market for
a currency, in which case the Quotation Day for that currency will
be determined by the Facilities Agent in accordance with market
practice in the Relevant Interbank Market (and if quotations would
normally be given by leading banks in the Relevant Interbank Market
on more than one day, the Quotation Day will be the last of those
days).
"Rating Requirements" means, at any time, in relation to any Lender
a long term unsubordinated credit rating of:
(a) at least Baa1 by Moody's; or
15
(b) at least BBB+ by S&P.
"Reference Banks" means JPMorgan Chase Bank, N.A., The Royal Bank of
Scotland plc, Barclays Bank PLC and/or such other banks or financial
institutions agreed to by the Company and the Facilities Agent.
"Relevant Interbank Market" means in relation to euro, the European
interbank market and, in relation to any other currency, the London
interbank market.
"Renewal Request" means a Bond Utilisation Request identified as
being a "Renewal Request" and otherwise complying with clause 6.8.2.
"Repeating Representations" means the representations which are
deemed to be repeated under clause 23.10 (Times for making
representations).
"Resignation Letter" means a letter substantially in the form set
out in Schedule 7 (Form of Resignation Letter).
"Rollover Loan" means one or more Loans under a Facility in respect
of the same Tranche:
(a) made or to be made on the same day that a maturing Loan is due
to be repaid;
(b) the aggregate amount of which is equal to or less than the
maturing Loan;
(c) in the same currency as the maturing Loan (unless it arose as
a result of the operation of clause 10.2 (Unavailability of a
currency)); and
(d) made or to be made to the same Borrower for the purpose of
refinancing a maturing Loan.
"S&P" means Standard & Poor's Rating Services.
"Screen Rate" means:
(a) in relation to LIBOR, the British Bankers Association Interest
Settlement Rate for the relevant currency and period; and
(b) in relation to EURIBOR, the percentage rate per annum
determined by the Banking Federation of the European Union for
the relevant period,
displayed on the appropriate page of the Telerate screen. If the
relevant page is replaced or the service ceases to be available, the
Facilities Agent may, after consultation with the Company and the
Lenders, specify another page or service displaying the appropriate
rate.
"SEC" means the United States Securities Exchange Commission.
"Security Interest" means a mortgage, pledge, lien, charge,
assignment, hypothecation or security interest or any other
agreement or arrangement having a similar effect.
16
"Signing Date" means the date of this Agreement.
"Specified Time" means, for any purpose, a time determined for that
purpose in accordance with Schedule 10 (Timetables).
"Sterling", "GBP" and "(pounds)" means the lawful currency of the
United Kingdom from time to time.
"Subsidiary" means a subsidiary within the meaning of section 736 of
the Companies Act 1985.
"Summary Document" means the summary document (documento di sintesi)
set out in Schedule 12 (Summary Document), drafted pursuant to the
Bank of Italy's instructions on the transparency of banking
transactions and services (Istruzioni di Vigilanza per le banche,
Titolo X, Capitolo 1).
"Swingline Facilities" means the swingline loan facilities made
available under this Agreement as described in clause 9 (Swingline
loans).
"Swingline Lender" means:
(a) an Original Lender listed in Part 4 of Schedule 1 (The
Original Parties) as a swingline lender; or
(b) any other person that becomes a swingline lender after the
Signing Date in accordance with clause 28 (Changes to
Lenders),
which in each case has not ceased to be a Party in accordance with
the terms of this Agreement.
"Swingline Loan" means a loan made or to be made under any Swingline
Facilities.
"Swingline Loan Utilisation Request" means a notice substantially in
the form set out in Part 3 of Schedule 3 (Utilisation Request -
Swingline Loans).
"Swingline Tranche A Commitment" means:
(a) in relation to a Swingline Lender under Tranche A on the
Signing Date, the amount in the Base Currency for Tranche A
set opposite its name under the heading Swingline Tranche A
Commitment in Part 4 of Schedule 1 (The Original Parties) and
the amount of any other Swingline Tranche A Commitment
transferred to it under this Agreement; and
(b) in relation to any other Swingline Lender under Tranche A, the
amount in the Base Currency for Tranche A of any Swingline
Tranche A Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"Swingline Tranche B Commitment" means:
17
(a) in relation to a Swingline Lender under Tranche B on the
Signing Date, the amount in the Base Currency for Tranche B
set opposite its name under the heading Swingline Tranche B
Commitment in Part 4 of Schedule 1 (The Original Parties) and
the amount of any other Swingline Tranche B Commitment
transferred to it under this Agreement; and
(b) in relation to any other Swingline Lender under Tranche B, the
amount in the Base Currency for Tranche B of any Swingline
Tranche B Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"Swingline Tranche C Commitment" means:
(a) in relation to a Swingline Lender under Tranche C on the
Signing Date, the amount in the Base Currency for Tranche C
set opposite its name under the heading Swingline Tranche C
Commitment in Part 4 of Schedule 1 (The Original Parties) and
the amount of any other Swingline Tranche C Commitment
transferred to it under this Agreement; and
(b) in relation to any other Swingline Lender under Tranche C, the
amount in the Base Currency for Tranche C of any Swingline
Tranche C Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"TARGET" means Trans-European Automated Real-time Gross Settlement
Express Transfer payment system.
"TARGET Day" means a day on which TARGET is open for the settlement
of payments in euro.
"Taxes" means any and all present and future taxes, levies, imposts,
duties, fees or charges of whatever nature or withholding of a
similar nature together with interest thereon and penalties in
respect thereof and "Tax" means any one of them.
"Tax Deduction" means a deduction or withholding for or on account
of Tax from a payment under a Finance Document.
"Tax Payment" means a payment made by an Obligor to a Finance Party
in any way relating to a Tax Deduction or under any indemnity given
by that Obligor in respect of Tax under any Finance Document.
"Term" means, in respect of a Bond, the period for which a Fronting
Bank is under a liability under that Bond.
"Termination Date" means, in relation to each Tranche, the date
which falls five (5) years after the Signing Date as may be extended
under clause 4.2.
18
"Test Date - Bonds" means each date falling at six month intervals
after the Signing Date.
"Test Total - Bonds" means, at any time, the aggregate in US Dollars
of each Bond Utilisation outstanding at that time, where each Bond
Utilisation not denominated in US Dollars is converted into US
Dollars at the Facilities Agent's Spot Rate of Exchange at that
time.
"Total Bond Commitments" means US$700,000,000 at the date of this
Agreement.
"Total Commitments" means, at any time, the aggregate of:
(a) the Total Tranche A Commitments;
(b) the Total Tranche B Commitments (converted into US Dollars at
the Facilities Agent's Spot Rate of Exchange at that time);
and
(c) the Total Tranche C Commitments (converted into US Dollars at
the Facilities Agent's Spot Rate of Exchange at that time).
"Total Swingline Tranche A Commitments" means, at any time, the
aggregate of the Swingline Tranche A Commitments of all the
Swingline Lenders under Tranche A at that time.
"Total Swingline Tranche B Commitments" means, at any time, the
aggregate of the Swingline Tranche B Commitments of all the
Swingline Lenders under Tranche B at that time.
"Total Swingline Tranche C Commitments" means, at any time, the
aggregate of the Swingline Tranche C Commitments of all the
Swingline Lenders under Tranche C at that time.
"Total Tranche A Commitments" means, at any time, the aggregate of
the Tranche A Commitments of all the Lenders at that time.
"Total Tranche B Commitments" means, at any time, the aggregate of
the Tranche B Commitments of all the Lenders at that time.
"Total Tranche C Commitments" means, at any time, the aggregate of
the Tranche C Commitments of all the Lenders at that time.
"Tranche" means:
(a) Tranche A;
(b) Tranche B; or
(c) Tranche C.
"Tranche A" means the facility made available by the Lenders to the
Borrowers under clause 2.1.1(a).
"Tranche B" means the facility made available by the Lenders to the
Borrowers under clause 2.1.1(b).
19
"Tranche C" means the facility made available by the Lenders to the
Borrowers under clause 2.1.1(c).
"Tranche A Commitment" means:
(a) in relation to an Original Lender, the amount in the Base
Currency for Tranche A set opposite its name under the heading
Tranche A Commitment in Part 2 of Schedule 1 (The Original
Parties) and the amount of any other Tranche A Commitment
transferred to it under this Agreement; and
(b) in relation to any other Lender, the amount in the Base
Currency for Tranche A of any Tranche A Commitment transferred
to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"Tranche A Indemnified Proportion" means, in relation to a Lender,
the proportion (expressed as a percentage) borne by that Lender's
Available Tranche A Commitment to the Available Tranche A Facility,
adjusted to reflect any assignment or transfer under this Agreement
to or by that Lender.
"Tranche B Commitment" means:
(a) in relation to an Original Lender, the amount in the Base
Currency for Tranche B set opposite its name under the heading
Tranche B Commitment in Part 2 of Schedule 1 (The Original
Parties) and the amount of any other Tranche B Commitment
transferred to it under this Agreement; and
(b) in relation to any other Lender, the amount in the Base
Currency for Tranche B of any Tranche B Commitment transferred
to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
"Tranche B Indemnified Proportion" means, in relation to a Lender,
the proportion (expressed as a percentage) borne by that Lender's
Available Tranche B Commitment to the Available Tranche B Facility,
adjusted to reflect any assignment or transfer under this Agreement
to or by that Lender.
"Tranche C Commitment" means:
(a) in relation to an Original Lender, the amount in the Base
Currency for Tranche C set opposite its name under the heading
Tranche C Commitment in Part 2 of Schedule 1 (The Original
Parties) and the amount of any other Tranche C Commitment
transferred to it under this Agreement; and
(b) in relation to any other Lender, the amount in the Base
Currency for Tranche C of any Tranche C Commitment transferred
by it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this
Agreement.
20
"Tranche C Indemnified Proportion" means, in relation to a Lender,
the proportion (expressed as a percentage) borne by that Lender's
Available Tranche C Commitment to the Available Tranche C Facility,
adjusted to reflect any assignment or transfer under this Agreement
to or by that Lender.
"Transfer Certificate" means a certificate substantially in the form
set out in Schedule 5 (Form of Transfer Certificate) or any other
form agreed between the Facilities Agent and the Company.
"Transfer Date" means, in relation to a transfer, the later of:
(a) the proposed Transfer Date specified in the Transfer
Certificate; and
(b) the date on which the Facilities Agent executes the Transfer
Certificate.
"U.K." means the United Kingdom of Great Britain and Northern
Ireland.
"Unpaid Sum" means any sum due and payable but unpaid by an Obligor
under the Finance Documents.
"US Borrower" means a Borrower whose jurisdiction of organisation is
a state of the United States of America or the District of Columbia.
"US Dollar", "USD" and "$US" means the lawful currency of the United
States of America from time to time.
"Utilisation" means a Loan Utilisation, a Bond Utilisation and a
Swingline Loan, as the case may be.
"Utilisation Date" means the date on which a Utilisation is made.
"Utilisation Request" means a Loan Utilisation Request, a Bond
Utilisation Request or a Swingline Loan Utilisation Request, as the
case may be.
"VAT" means value added tax as provided for in the Value Added Tax
Act 1994 and any other tax of a similar nature.
1.2 Construction
1.2.1 The following definitions have the meanings given to them in clause
25.1 (Definitions):
(a) Borrowed Money;
(b) Capital Lease;
(c) Consolidated Capital;
(d) Consolidated Net Interest Charges;
(e) EBITDA;
21
(f) Excluded Indebtedness;
(g) GAAP;
(h) Indebtedness;
(i) Interest;
(j) Interest Payable;
(k) Interest Receivable;
(l) Issued Capital and Consolidated Reserves;
(m) Measurement Period; and
(n) Testing Date.
1.2.2 In this Agreement, unless the contrary intention appears, a
reference to:
(a) an amendment includes a supplement, novation, restatement or
re-enactment and amended will be construed accordingly;
(b) assets includes present and future properties, revenues and
rights of every description;
(c) an authorisation includes an authorisation, consent, approval,
resolution, licence, exemption, filing, registration or
notarization;
(d) Barclays Capital is a reference to Barclays Capital, the
investment banking division of Barclays Bank PLC (and all such
references shall include Barclays Bank PLC);
(e) consolidation in relation to the Carnival Corporation & plc
Group means a combination of the relevant financial items of
the Carnival Corporation Group and the Carnival plc Group and
consolidated will be construed accordingly;
(f) disposal means a sale, transfer, grant, lease or other
disposal, whether voluntary or involuntary, and dispose will
be construed accordingly;
(g) indebtedness includes any obligation (whether incurred as
principal or as surety) for the payment or repayment of money
whether present or future, actual or contingent;
(h) a person includes any individual, company, corporation,
partnership, business trust, joint venture, association, joint
stock company, trust or other unincorporated organization
whether or not a legal entity, or any governmental or agency
or political subdivision thereof;
(i) a regulation includes any regulation, rule, official
directive, request or guideline (whether or not having the
force of law but, if not having the force of law, being of a
type with which any Party to which it applies is accustomed to
comply) of any governmental, inter-governmental or
22
supranational body, agency, department or regulatory,
self-regulatory or other authority or organization with
authority to regulate the business of any affected Party;
(j) a currency is a reference to the lawful currency for the time
being of the relevant country;
(k) a Default being outstanding means that it has not been
remedied or waived;
(l) a provision of law is a reference to that provision as
extended, applied, amended or re-enacted and includes any
subordinate legislation;
(m) a clause, a subclause or a schedule is a reference to a clause
or subclause of, or a schedule to, this Agreement;
(n) a Party or any other person includes its successors in title,
permitted assigns and permitted transferees;
(o) a Finance Document or another document is a reference to that
Finance Document or other document as amended including any
amendment providing for an increase in the amount of a
facility or any additional facility; and
(p) a time of day is a reference to London time.
1.2.3 Unless the contrary intention appears, a reference to a month or
months is a reference to a period starting on one day in a calendar
month and ending on the numerically corresponding day in the next
calendar month or the calendar month in which it is to end, except
that:
(a) if the numerically corresponding day is not a Business Day,
the period will end on the next Business Day in that month (if
there is one) or the preceding Business Day (if there is not);
(b) if there is no numerically corresponding day in that month,
that period will end on the last Business Day in that month;
and
(c) notwithstanding sub-paragraph (a) above, a period which
commences on the last Business Day of a month will end on the
last Business Day in the next month or the calendar month in
which it is to end, as appropriate.
1.2.4 Unless expressly provided to the contrary in a Finance Document, a
person who is not a party to a Finance Document may not enforce any
of its terms under the Contracts (Rights of Third Parties) Act 1999
(the Third Parties Act) and, notwithstanding any term of any Finance
Document, no consent of any third party is required for any
variation (including any release or compromise of any liability) or
termination of that Finance Document.
1.2.5 Unless the contrary intention appears:
(a) a reference to a party will not include that Party if it has
ceased to be a Party under this Agreement;
23
(b) a word or expression used in any other Finance Document or in
any notice given in connection with any Finance Document has
the same meaning in that Finance Document or notice as in this
Agreement; and
(c) any obligation of an Obligor under the Finance Documents which
is not a payment obligation remains in force for so long as
any payment obligation of an Obligor is or may be outstanding
under the Finance Documents.
1.2.6 The headings in this Agreement do not affect its interpretation.
1.2.7 Any reference in this Agreement to:
(a) the Interest Period of a Bond will be construed,
notwithstanding clause 14.1.2, as a reference to the Term of
that Bond;
(b) a Utilisation made or to be made to a Bond Borrower includes a
Bond issued on its behalf;
(c) an outstanding amount of a Bond at any time is the maximum
amount that is or may be payable by the Bond Borrower in
respect of that Bond at that time;
(d) amounts outstanding under this Agreement includes amounts
outstanding under or in respect of a Bond;
(e) a Borrower "repaying" or "prepaying" a Bond means:
(i) that Borrower providing cash cover for that Bond;
(ii) the maximum amount payable under that Bond being reduced
in accordance with its terms; or
(iii) the relevant Fronting Bank being satisfied that it has
no further liability under that Bond,
and the amount by which a Bond is repaid or prepaid under
clauses 1.2.7(e)(i) and 1.2.7(e)(ii) above is the amount of
the relevant cash cover or reduction; and
(f) a Bond Borrower providing "cash cover" for a Bond means a Bond
Borrower (or another Obligor on its behalf) paying an amount
in the currency of the Bond or, in relation to cash cover
provided under clause 6.9.2(b), US Dollars, into an
interest-bearing account in the name of the Bond Borrower and
the following conditions being met:
(i) the account is with the Facilities Agent or the relevant
Fronting Bank (if the cash cover is to be provided for
all the Lenders) or with a Lender (if the cash cover is
to be provided for that Lender);
(ii) withdrawals from the account may only be made to pay a
Finance Party amounts due and payable to it under this
Agreement in respect of that Bond until no amount is or
may be outstanding under that Bond; and
24
(iii) the Bond Borrower (or relevant Obligor) has executed a
security document over that account, in form and
substance satisfactory to the Facilities Agent or the
Fronting Bank or the Lender with which that account is
held, creating a first ranking security interest over
that account.
1.2.8 Any reference in this Agreement to:
(a) an "Interest Period" includes each period determined under
this Agreement by reference to which interest on a Swingline
Loan is calculated; and
(b) a "Lender" includes a Swingline Lender unless the context
otherwise requires.
2 The Facilities
2.1 The Facilities
2.1.1 Subject to the terms of this Agreement, the Lenders make available
to the Borrowers multicurrency revolving facilities in three (3)
tranches being:
(a) a US Dollar facility in an aggregate amount equal to the Total
Tranche A Commitments;
(b) a euro facility in an aggregate amount equal to the Total
Tranche B Commitments; and
(c) a Sterling facility in an aggregate amount equal to the Total
Tranche C Commitments.
2.1.2 Each Lender under Tranche B which lends to Borrowers resident in
Italy must be a Qualifying Lender (as defined in clause 17.10).
2.1.3 If a Borrower is resident in Italy, that Borrower may only request a
Loan under Tranche B.
2.2 Finance Parties' rights and obligations
2.2.1 The obligations of each Finance Party under the Finance Documents
are several. Failure by a Finance Party to perform its obligations
under the Finance Documents does not affect the obligations of any
other Party under the Finance Documents. No Finance Party is
responsible for the obligations of any other Finance Party under the
Finance Documents.
2.2.2 The rights of each Finance Party under or in connection with the
Finance Documents are separate and independent rights and any debt
arising under the Finance Documents to a Finance Party from an
Obligor shall be a separate and independent debt.
2.2.3 A Finance Party may, except as otherwise stated in the Finance
Documents, separately enforce its rights under the Finance
Documents.
25
3 Purpose
3.1 Purpose
Each Borrower shall apply all amounts utilised by it under the
Facilities:
(a) by way of Loan Utilisations or Swingline Loans towards general
liquidity and/or working capital purposes of the Carnival
Corporation & plc Group including but not limited to, (in the
case of Swingline Loans) support for any CP Programme; and
(b) by way of Bond Utilisations, for the purposes of securing the
commercial obligations specified in the Bond.
3.2 Monitoring
No Finance Party is bound to monitor or verify the utilisation of
the Facilities pursuant to this Agreement.
4 Conditions of Utilisation
4.1 Initial conditions precedent
No Borrower may deliver a Utilisation Request unless the Facilities
Agent has received all of the documents and other evidence listed in
Part 1 of Schedule 2 (Conditions precedent) in form and substance
satisfactory to the Facilities Agent. The Facilities Agent shall
notify the Company and the Lenders promptly upon being so satisfied.
4.2 Extension of Termination Date
4.2.1 Subject to clause 4.2.7 below:
(a) not more than 90 days nor less than 45 days prior to the first
anniversary of the Signing Date, the Company may, by written
notice to the Facilities Agent, request that the Termination
Date in respect of some or all of each Lender's Tranche A
Commitments, Tranche B Commitments and/or Tranche C
Commitments be extended to a date falling on or before the
date which is 365 days after the original Termination Date;
and
(b) if the Termination Date in respect of some or all of the
Commitments is extended under this clause 4.2 pursuant to a
request under clause 4.2.1(a) above then, not more than 90
days nor less than 45 days prior to the second anniversary of
the Signing Date, the Company may, by written notice to the
Facilities Agent, request that the Termination Date in respect
of some or all of each remaining Lender's Tranche A
Commitments, Tranche B Commitments and/or Tranche C
Commitments be extended to a date falling on or before the
date which is 365 days after the original Termination Date (as
extended under clause 4.2.1(a)); and
26
(c) if the Termination Date in respect of some or all of the
Tranche A Commitments, Tranche B Commitments and/or Tranche C
Commitments is not extended under this clause 4.2 pursuant to
a request under clause 4.2.1(a) above then, not more than 90
days nor less than 45 days prior to the second anniversary of
the Signing Date, the Company may, by written notice to the
Facilities Agent, request that the Termination Date in respect
of some or all of each Lender's Tranche A Commitments, Tranche
B Commitments and/or Tranche C Commitments be extended to a
date falling on or before the date which is 730 days after the
original Termination Date.
Any notice under this clause 4.2 is irrevocable.
4.2.2 The Company may make a request under clause 4.2.1(c) notwithstanding
it did not make a request under clause 4.2.1(a).
4.2.3 The Facilities Agent shall promptly notify each of the Lenders of
receipt of such request from the Company.
4.2.4 Each Lender shall notify the Facilities Agent not later than 20 days
prior to the first anniversary of the Signing Date (in the case of
notification of a request under clause 4.2.1(a) above) or the second
anniversary of the Signing Date (in the case of notification of a
request under clause 4.2.1(b) or clause 4.2.1(c) above) (in each
case the "Notification Date"), whether it accepts or rejects the
request by the Company.
4.2.5 As soon as practicable and in any event within two (2) Business Days
after the Notification Date, the Facilities Agent shall, by notice
to the Company and each Lender, confirm those Lenders which have
agreed to extend the relevant Termination Date and those which have
not. Upon receipt by the Company of such notification the
Termination Date will be extended as requested in respect of those
Lenders which have consented fully to the extension as requested.
4.2.6 If a Lender rejects a request by the Company, does not agree fully
to extend its Tranche A Commitments, Tranche B Commitments and/or
Tranche C Commitments as requested or does not respond prior to the
Notification Date (which shall be deemed a rejection):
(a) the Termination Date for that Lender shall be the relevant
Termination Date before the relevant extension provided always
that in respect of any Lender which has agreed to extend the
Termination Date in respect of its Tranche A Commitment,
Tranche B Commitment or Tranche C Commitment in an amount less
than that requested by the Company under clause 4.2.1(a) or
(b) above (a "Part Extension"), the Company shall be at
liberty to accept that Part Extension by notice to the
Facilities Agent given within two (2) Business Days of receipt
of the Facilities Agent's notice under clause 4.2.5, whereupon
the Termination Date in respect of the Part Extension of the
relevant Lender will be extended as so notified; and
(b) notwithstanding any provision to the contrary, the Company
may, at any time following a rejection or deemed rejection by
a Lender of any request to extend under clause 4.2.1, replace
that Lender with one or more new Lenders or existing Lenders
by requiring that Lender to
27
transfer its Tranche A Commitment, Tranche B Commitment and/or
Tranche C Commitment (or, if the Company has accepted a Part
Extension, any part of that Lender's Tranche A Commitment,
Tranche B Commitment and/or Tranche C Commitment not so
extended) and participation at par to such replacement Lender
or Lenders (which are willing to accept such transfer on the
basis set out in this clause) and without any premium or
payment of fees or of costs or expenses to or by such
replacement Lender(s) or any Obligor; and
(c) any Lender replaced under clause 4.2.6(b) shall be entitled to
all accrued interest, fees and other amounts payable to it at
the time of the transfer.
4.2.7 No Lender is under any obligation to extend the Termination Date
applicable to its Tranche A Commitment, Tranche B Commitment and/or
Tranche C Commitment. No Termination Date may be extended more than
twice or beyond the seventh (7th) anniversary of the Signing Date.
5 Utilisation - Loan
5.1 Delivery of a Loan Utilisation Request
5.1.1 A Borrower may utilise the Facilities for Loan Utilisations by
delivery to the Facilities Agent of a duly completed Loan
Utilisation Request.
5.1.2 Unless the Facilities Agent otherwise agrees, the latest time for
receipt by the Facilities Agent of a duly completed Loan Utilisation
Request is the Specified Time one (1) Business Day before the
Quotation Day for the proposed Loan Utilisation.
5.2 Completion of a Loan Utilisation Request
5.2.1 Each Loan Utilisation Request is irrevocable and will not be
regarded as having been duly completed unless:
(a) it identifies the Tranche to be utilised;
(b) the proposed Utilisation Date is a Business Day falling within
the Availability Period;
(c) the currency and amount of the Loan Utilisation comply with
clause 5.3 (Currency and amount); and
(d) the proposed Interest Period complies with clause 14 (Interest
Periods).
5.2.2 Only one Loan Utilisation may be requested in each Loan Utilisation
Request.
5.2.3 Subject to clause 5.2.4, a Borrower may not deliver a Loan
Utilisation Request for a Loan Utilisation if as a result of the
proposed Loan Utilisation more than twelve (12) Loan Utilisations
would be outstanding.
5.2.4 For the purposes of clause 5.2.3, the following shall not be taken
into account:
28
(a) a Loan Utilisation made pursuant to clause 7.1.2 to repay a
Bond Utilisation or any amount outstanding under a Bond;
(b) a Loan Utilisation made pursuant to clause 9.3.2 to repay a
Swingline Loan that has become due and payable; and
(c) any Utilisation made by a single Lender under clause 10.2
(Unavailability of a currency).
5.3 Currency and amount
5.3.1 The currency specified in a Loan Utilisation Request given under
clause 5.1 must be the Base Currency for the Tranche requested or an
Optional Currency.
5.3.2 The amount of the proposed Loan Utilisation must be:
(a) if the currency selected is the Base Currency:
(i) in respect of Tranche A, a minimum of $US20,000,000 or,
if less, the Available Tranche A Facility;
(ii) in respect of Tranche B, a minimum of (euro)15,000,000
or, if less, the Available Tranche B Facility; or
(iii) in respect of Tranche C, a minimum of (pounds)10,000,000
or, if less, the Available Tranche C Facility;
(b) if the currency selected is an Optional Currency and does not
require the approval of the Facilities Agent under clause
10.3.1(a):
(i) in respect of Tranche A, a minimum of $US20,000,000 or,
if less, the Available Tranche A Facility (where the
amount of the proposed Loan Utilisation is converted
into US Dollars at the Facilities Agent's Spot Rate of
Exchange on the date of the Loan Utilisation Request);
(ii) in respect of Tranche B, a minimum of (euro)15,000,000
or, if less, the Available Tranche B Facility (where the
amount of the proposed Loan Utilisation is converted
into euro at the Facilities Agent's Spot Rate of
Exchange on the date of the Loan Utilisation Request);
or
(iii) in respect of Tranche C, a minimum of (pounds)10,000,000
or, if less, the Available Tranche C Facility (where the
amount of the proposed Loan Utilisation is converted
into Sterling at the Facilities Agent's Spot Rate of
Exchange on the date of the Loan Utilisation Request);
and
(c) if the currency selected is an Optional Currency and it has
been approved by the Facilities Agent under clause 10.3.1(a),
the minimum amount (and, if required, integral multiple)
29
specified by the Facilities Agent pursuant to clause 10.3.2
(Conditions relating to Optional Currencies).
5.4 Lenders' participation
5.4.1 Subject to clause 5.4.2, the Lenders will only be obliged to comply
with this clause 5.4 (Lenders' participation) if on the proposed
Utilisation Date:
(a) in the case of a Rollover Loan no Event of Default is
outstanding or would result from the proposed Rollover Loan
and, in the case of any other Loan Utilisation, no Default is
outstanding or would result from the proposed Loan
Utilisation; and
(b) the Repeating Representations to be made by each Obligor are
correct in all material respects.
5.4.2 The Lenders shall be obliged to comply with this clause 5.4 in
relation to any Loan Utilisation made pursuant to clause 7.1.2 or
clause 9.3.2 provided that clause 5.4.1 shall not apply to any such
Loan Utilisation, and the conditions referred to in clauses 5.4.5
and 5.4.6 shall be deemed satisfied in relation to any such Loan
Utilisation.
5.4.3 The Facilities Agent must promptly notify each Lender of the details
of the requested Loan Utilisation (including the amount, currency
and Base Currency Amount) and the amount of each Lender's share in
that Loan Utilisation, in each case by the Specified Time.
5.4.4 The amount of each Lender's share in:
(a) each Loan Utilisation under Tranche A will be equal to the
proportion which its Available Tranche A Commitment bears to
the Available Tranche A Facility immediately prior to making
the Loan Utilisation;
(b) each Loan Utilisation under Tranche B will be equal to the
proportion which its Available Tranche B Commitment bears to
the Available Tranche B Facility immediately prior to making
the Loan Utilisation; and
(c) each Loan Utilisation under Tranche C will be equal to the
proportion which its Available Tranche C Commitment bears to
the Available Tranche C Facility immediately prior to making
the Loan Utilisation.
5.4.5 If the conditions set out in this Agreement have been satisfied or
waived, each Lender must make its share in each Loan Utilisation
available to the Facilities Agent for the relevant Borrower through
its Facility Office on the proposed Utilisation Date.
5.4.6 If, on the proposed Utilisation Date, the Facilities Agent is
satisfied that all conditions precedent have been satisfied or
waived it shall pay the proceeds of each Loan Utilisation received
pursuant to clause 5.4.5 above in accordance with the payment
directions set out in the relevant Loan Utilisation Request (or, if
relevant, in accordance with clause 7.1.2 or clause 9.3.2).
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6 Utilisation - Bonds
6.1 General
6.1.1 In determining the amount of the Available Bond Facility and a
Lender's Bond Proportion of a proposed Bond for the purposes of this
Agreement, the Lender's Available Tranche A Commitment will be
calculated ignoring any cash cover provided for outstanding Bonds.
6.2 Tranche A
A Bond Utilisation may only be made under Tranche A.
6.3 Delivery of a Bond Utilisation Request
A Bond Borrower may request a Bond to be issued by delivery to the
Facilities Agent of a duly completed Bond Utilisation Request not
later than the Specified Time (unless a shorter period is agreed by
the Facilities Agent (and the relevant Fronting Bank)).
6.4 Completion of a Bond Utilisation Request
Each Bond Utilisation Request is irrevocable and will not be
regarded as having been duly completed unless:
6.4.1 it specifies the Account Party;
6.4.2 it specifies the Fronting Bank;
6.4.3 it specifies the identity of the beneficiary of the Bond and the
relevant Fronting Bank is not prevented by reason of legal or
regulatory restrictions imposed upon it from issuing a Bond in
favour of that beneficiary;
6.4.4 the proposed Utilisation Date is a Business Day within the
Availability Period;
6.4.5 the currency and amount of the Bond comply with clause 6.5 (Currency
and amount);
6.4.6 the form of the Bond is attached and it complies with clause 6.6
(Form and Type of Bond);
6.4.7 the Expiry Date of the Bond falls on or before the Termination Date;
and
6.4.8 the delivery instructions for the Bond are specified.
6.5 Currency and amount
6.5.1 The currency specified in a Bond Utilisation Request given under
clause 6.3 must be the Base Currency for Tranche A or an Optional
Currency.
6.5.2 The amount of the proposed Bond must be an amount whose Base
Currency Amount for Tranche A is not more than the lesser of the
Available Tranche A Facility and the Available Bond Facility.
31
6.6 Form and Type of Bond
6.6.1 The form and type of instrument of the proposed Bond must be either:
(a) substantially in the form of and a type of instrument
consistent with one of the Pre-Approved Bonds; or
(b) in any other form and of such other type of instrument as
requested by a Bond Borrower (to the extent required by the
relevant beneficiary) and approved by the relevant Fronting
Bank (such approval not to be unreasonably withheld, delayed
or conditioned) prior to the date of the Bond Utilisation
Request in respect of that Bond.
6.7 Issue of Bonds
6.7.1 If the conditions set out in clause 6.4 have been met, the relevant
Fronting Bank shall issue the Bond on the proposed Utilisation Date.
6.7.2 The relevant Fronting Bank will only be obliged to comply with
clause 6.7.1 above if on the date of the Bond Utilisation Request
or, as the case may be, Renewal Request and on the proposed
Utilisation Date:
(a) in the case of a Bond renewed in accordance with clause 6.8
(Renewal of a Bond), no Event of Default is continuing or
would result from the proposed Bond Utilisation and, in the
case of any other Bond Utilisation, no Default is continuing
or would result from the proposed Bond Utilisation; and
(b) the Repeating Representations to be made by each Obligor are
true in all material respects.
6.7.3 The amount of each Lender's participation in each Bond will be equal
to the proportion borne by its Lender's Available Tranche A
Commitment to the Available Tranche A Facility immediately prior to
the issue of the Bond.
6.7.4 The Facilities Agent shall determine the Base Currency Amount of
each Bond which is to be issued in an Optional Currency and shall
notify the relevant Fronting Bank and each Lender of the details of
the requested Bond and its participation in that Bond by the
Specified Time.
6.8 Renewal of a Bond
6.8.1 A Bond Borrower may request any Bond issued on its behalf be renewed
by delivery to the Facilities Agent of a Renewal Request by the
Specified Time.
6.8.2 The Finance Parties shall treat any Renewal Request in the same way
as a Bond Utilisation Request except that the condition set out in
clauses 6.4.1, 6.4.2 and 6.4.6 (Completion of a Bond Utilisation
Request) shall not apply.
32
6.8.3 The terms of each renewed Bond shall be the same as those of the
relevant Bond immediately prior to its renewal, except that:
(a) its amount may be less than the amount of the Bond immediately
prior to its renewal; and
(b) its Term shall start on the date which was the Expiry Date of
the Bond immediately prior to its renewal, and shall end on
the proposed Expiry Date specified in the Renewal Request.
6.8.4 If the conditions set out in this clause 6.8 have been met, the
relevant Fronting Bank shall amend and re-issue any Bond pursuant to
a Renewal Request.
6.9 Revaluation of Bonds
6.9.1 If any outstanding Bond is denominated in an Optional Currency, the
Facilities Agent shall on each Test Date - Bonds recalculate the
Base Currency Amount for Tranche A of that Bond by notionally
converting into US Dollars the outstanding amount of that Bond on
the basis of the Facilities Agent's Spot Rate of Exchange on the
date of calculation.
6.9.2 If on any Test Date - Bonds (i) the Test Total - Bonds exceeds (ii)
the Total Bond Commitments, each of the Bond Borrowers will, if
requested by the Facilities Agent within three Business Days of the
Test Date - Bonds, ensure that within three Business Days of receipt
of such request either (at the discretion of the Bond Borrowers):
(a) sufficient Bonds are cancelled so that the Test Total - Bonds
does not exceed the Total Bond Commitments; and/or
(b) the Facilities Agent receives cash cover in US Dollars which
when aggregated with all other amounts then held by the
Facilities Agent as cash cover under this Agreement, will
result in the Facilities Agent holding cash cover in an amount
not less than the amount by which the Test Total - Bonds
exceeds the Total Bond Commitments.
6.9.3 If on any Test Date - Bonds (i) the Total Bond Commitments exceed
(ii) the Test Total - Bonds, the Facilities Agent shall to the
extent that it holds cash cover as a result of the operation of
clause 6.9.2(b) repay to the Bond Borrowers (or other relevant
Obligors) an amount equal to the lesser of the amount of such excess
and the amount of such cash cover held by it.
6.9.4 All cash cover held by the Facilities Agent under this clause 6.9
shall be repaid to the Bond Borrowers (or other relevant Obligors)
on the Expiry Date of any Bond if upon that expiry no other Bond is
then outstanding.
33
7 Bonds
7.1 Immediately payable
7.1.1 If a claim is made under a Bond, the Bond Borrower which requested
that Bond shall pay to the Facilities Agent for the account of the
relevant Fronting Bank the amount of that claim within five Business
Days of demand.
7.1.2 If the relevant Bond Borrower does not repay such amount in full
within five Business Days of demand by the relevant Fronting Bank:
(a) subject to sub-clause (d) below, the Bond Borrower will on the
immediately following Business Day be deemed to have delivered
a Loan Utilisation Request under Tranche A for a Loan
Utilisation in an amount equal to, and in the same currency
as, the amount demanded under clause 7.1.1 with an Interest
Period of two weeks and a Utilisation Date of the Business Day
following the deemed date of the Loan Utilisation Request;
(b) the amount of each Lender's share in the Loan Utilisation
shall be determined in accordance with clause 5.4;
(c) the Facilities Agent will pay to the relevant Fronting Bank
the amount deemed requested by the Bond Borrower under
paragraph (a) above in full satisfaction of the Bond
Borrower's obligations under clause 7.1.1 and a pro tanto
discharge of the Bond Borrower's obligations under clause
7.3.1; and
(d) in any case where the Bond Borrower is not permitted under
this Agreement to utilise Tranche A by way of Loan, the Loan
Utilisation shall be deemed requested under Tranche B,
provided that if the amount of the Utilisation would exceed
the Available Tranche B Facility, then the amount of such
excess shall constitute a Loan Utilisation by Carnival plc
under Tranche A (and then Tranche C to the extent that Loan
Utilisation under Tranche A exceeds the Available Tranche A
Facility) in each case with an Interest Period of two weeks.
7.2 Claims under a Bond
7.2.1 The Bond Borrower irrevocably and unconditionally authorises the
relevant Fronting Bank to pay any claim made or purported to be made
under a Bond requested by it and which appears on its face to be in
order (a "claim").
7.2.2 The relevant Fronting Bank shall examine the claim made under any
Bond in accordance with the criteria set out in the Uniform Customs
and Practices for Documentary Credits, International Chamber of
Commerce, publication No. 500 (or any subsequent revision thereof)
("UCP 500"), whether or not the Bond is or is stated to be governed
by UCP 500, and accordingly the responsibility of the relevant
Fronting Bank shall be limited to ascertaining that the documents
constituting the claim appear on their face to be in accordance with
the relevant Bond, properly completed and in compliance with the
requirements of this Agreement and, subject to the terms of the
Bond, the UCP 500.
34
7.2.3 Each Bond Borrower acknowledges that the relevant Fronting Bank:
(a) is not obliged to carry out any investigation or seek any
confirmation from any other person before paying a claim other
than set out in clause 7.2.2; and
(b) deals in documents only and will not be concerned with the
legality of a claim or any underlying transaction or any
available set-off, counterclaim or other defence of any
person.
7.2.4 Without prejudice to the limits on the liability of the Borrower
under clause 7.3.1 or against any Fronting Bank at law, the
obligations of a Bond Borrower under this clause 7 will not be
affected by:
(a) the sufficiency, accuracy or genuineness of any claim or any
other document; or
(b) any incapacity of, or limitation on the powers of, any person
signing a claim or other document.
7.3 Indemnities
7.3.1 Each Bond Borrower shall immediately on demand indemnify the
relevant Fronting Bank against any cost, loss or liability incurred
by that Fronting Bank (otherwise than by reason of that Fronting
Bank's breach of this Agreement, gross negligence or wilful
misconduct) as a direct consequence of, or in the performance of its
obligations or the exercise of its rights under, any Bond requested
by that Bond Borrower.
7.3.2 Each Lender shall (according to its Bond Proportion) immediately on
demand (such demand to be made no earlier than seven Business Days
following a demand on the Bond Borrower under clause 7.3.1)
indemnify the relevant Fronting Bank against any cost, loss or
liability incurred by that Fronting Bank (otherwise than by reason
of that Fronting Bank's gross negligence or wilful misconduct) in
acting as the relevant Fronting Bank under any Bond (unless that
Fronting Bank has been reimbursed by an Obligor pursuant to a
Finance Document).
7.3.3 If any Lender is not permitted (by its constitutional documents or
any applicable law) to comply with clause 7.3.2 above, then that
Lender will not be obliged to comply with clause 7.3.2 and shall
instead be deemed to have taken, on the date the Bond is issued (or
if later, on the date the Lender's participation in the Bond is
transferred or assigned to the Lender in accordance with the terms
of this Agreement), an undivided interest and participation in the
Bond in an amount equal to its Bond Proportion of that Bond. On
receipt of demand from the Facilities Agent, that Lender shall pay
to the Facilities Agent (for the account of the relevant Fronting
Bank) an amount equal to its Bond Proportion of the amount demanded
under clause 7.3.2 above.
7.3.4 The relevant Bond Borrower shall immediately on demand reimburse any
Lender for any payment it makes to the relevant Fronting Bank under
this clause 7.3 (Indemnities) in respect of that Bond.
35
7.3.5 The obligations of each Lender under this clause are continuing
obligations and will extend to the ultimate balance of sums payable
by that Lender in respect of any Bond, regardless of any
intermediate payment or discharge in whole or in part.
7.3.6 The obligations of any Lender under this clause will not be affected
by any act, omission, matter or thing which, but for this clause,
would reduce, release or prejudice any of its obligations under this
clause (without limitation and whether or not known to it or any
other person) including:
(a) any time, waiver or consent granted to, or composition with,
any Obligor, any beneficiary under a Bond or other person;
(b) the release of any other Obligor or any other person under the
terms of any composition or arrangement;
(c) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, any
Obligor, any beneficiary under a Bond or other person or any
non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to
realise the full value of any security;
(d) any incapacity or lack of power, authority or legal
personality of or dissolution or change in the members or
status of an Obligor, any beneficiary under a Bond or any
other person;
(e) any amendment (however fundamental) or replacement of a
Finance Document, any Bond or any other document or security;
(f) any unenforceability, illegality or invalidity of any
obligation of any person under any Finance Document, any Bond
or any other document or security; or
(g) any insolvency or similar proceedings.
7.4 Rights of contribution
No Obligor will be entitled to any right of contribution or
indemnity from any Finance Party in respect of any payment it may
make under this clause 7.
8 Utilisation - Swingline Loan
8.1 General
8.1.1 The following provisions do not apply to Swingline Loans:
(a) clause 5 (Utilisation);
(b) clause 10 (Optional currencies);
36
(c) clause 13 (Interest) as it applies to the calculation of
interest on a Loan Utilisation but not default interest on an
overdue amount;
(d) clause 14 (Interest Periods); and
(e) in respect of Swingline Loans under Tranche A, clause 15
(Changes to the calculation of interest).
8.2 Delivery of a Swingline Loan Utilisation Request
8.2.1 A Borrower may utilise the Swingline Facilities by delivery to the
Facilities Agent of a duly completed Swingline Loan Utilisation
Request not later than the Specified Time (unless a shorter period
is agreed by the Facilities Agent).
8.2.2 Each Swingline Loan Utilisation Request must be sent to the
Facilities Agent to:
(a) the address in New York City notified by the Facilities Agent
for this purpose (in the case of Tranche A);
(b) the address in London notified by the Facilities Agent for
this purpose (in the case of Tranche B); or
(c) the address in London notified by the Facilities Agent for
this purpose (in the case of Tranche C),
in each case with a copy to its address referred to in clause 35
(Notices).
8.3 Completion of a Swingline Loan Utilisation Request
8.3.1 Each Swingline Loan Utilisation Request is irrevocable and will not
be regarded as having been duly completed unless:
(a) it identifies the Borrower;
(b) it specifies that it is for a Swingline Loan;
(c) the proposed Utilisation Date is a Business Day within the
Availability Period;
(d) it identifies the relevant Tranche;
(e) the currency and amount of the Swingline Loan comply with
clause 8.4 (Currency and amount); and
(f) the proposed Interest Period:
(i) does not overrun the Termination Date;
(ii) is a period of not more than five Business Days; and
(iii) ends on a Business Day.
37
8.3.2 Only one Swingline Loan may be requested in each Swingline Loan
Utilisation Request.
8.4 Currency and amount
8.4.1 The currency specified in a Swingline Loan Utilisation Request given
under clause 8.3 must be the Base Currency for the Tranche
requested.
8.4.2 The amount of the proposed Swingline Loan must be in respect of:
(a) Tranche A, a minimum of $US10,000,000 or, if less, the
Available Swingline Tranche A Facility and not more than the
lesser of the Available Swingline Tranche A Facility and the
Available Tranche A Facility;
(b) Tranche B, a minimum of (euro)10,000,000 or, if less, the
Available Swingline Tranche B Facility and not more than the
lesser of the Available Swingline Tranche B Facility and the
Available Tranche B Facility; or
(c) Tranche C, a minimum of (pounds)10,000,000 or, if less, the
Available Swingline Tranche C Facility and not more than the
lesser of the Available Swingline Tranche C Facility and the
Available Tranche C Facility.
8.5 Swingline Lenders' participation
8.5.1 If the conditions set out in this Agreement have been met, each
Swingline Lender shall make its participation in each Swingline Loan
available through its Facility Office in New York City, in the case
of Tranche A, London or Milan, in the case of Tranche B, and London,
in the case of Tranche C.
8.5.2 The Swingline Lenders will only be obliged to comply with clause
8.5.1 above if on the date of the Swingline Loan Utilisation Request
and on the proposed Utilisation Date:
(a) no Default is continuing or would result from the proposed
Swingline Loan; and
(b) the Repeating Representations to be made by each Obligor are
true in all material respects.
8.5.3 The amount of each Swingline Lender's participation in:
(a) each Swingline Loan under Tranche A will be equal to the
proportion which its Available Swingline Tranche A Commitment
bears to the Available Swingline Tranche A Facility
immediately prior to making the Swingline Loan;
(b) each Swingline Loan under Tranche B will be equal to the
proportion which its Available Swingline Tranche B Commitment
bears to the Available Swingline Tranche B Facility
immediately prior to making the Swingline Loan; and
(c) each Swingline Loan under Tranche C will be equal to the
proportion which its Available Swingline Tranche C Commitment
bears to the Available Swingline Tranche C Facility
immediately prior to making the Swingline Loan,
38
in each case, adjusted to take account of any limit applying under
clause 8.6 (Relationship with the Facilities).
8.5.4 The Facilities Agent shall notify each Lender for a particular
Tranche of the amount of each Swingline Loan under that Tranche, and
in addition shall notify each Swingline Lender under that Tranche of
the amount of its participation in that Swingline Loan, in each case
by the Specified Time.
8.6 Relationship with the Facilities
8.6.1 This clause applies when a Swingline Loan is outstanding or is to be
borrowed following the issue of a Swingline Loan Utilisation
Request.
8.6.2 The Facilities may be used by way of Swingline Loans. The Swingline
Facilities are not independent of Tranche A, Tranche B and Tranche
C.
8.6.3 Notwithstanding any other term of this Agreement a Lender is only
obliged to participate in a:
(a) Loan under Tranche A to the extent that it would not result in
the Base Currency Amount of its participation and that of a
Lender which is its Affiliate in Loans under Tranche A
exceeding its Overall Tranche A Commitment;
(b) Loan under Tranche B to the extent that it would not result in
the Base Currency Amount of its participation and that of a
Lender which is its Affiliate in Loans under Tranche B
exceeding its Overall Tranche B Commitment; and
(c) Loan under Tranche C to the extent that it would not result in
the Base Currency Amount of its participation and that of a
Lender which is its Affiliate in Loans under Tranche C
exceeding its Overall Tranche C Commitment.
8.6.4 Where, but for the operation of clause 8.6.3, the Base Currency
Amount of a Lender's participation in Loans and that of a Lender
which is its Affiliate:
(a) under Tranche A would have exceeded its Overall Tranche A
Commitment, the excess will be apportioned among the other
Lenders participating in the relevant Loan under Tranche A pro
rata according to their Tranche A Commitments;
(b) under Tranche B would have exceeded its Overall Tranche B
Commitment, the excess will be apportioned among the other
Lenders participating in the relevant Loan under Tranche B pro
rata according to their Tranche B Commitments; and
(c) under Tranche C would have exceeded its Overall Tranche C
Commitment, the excess will be apportioned among the other
Lenders participating in the relevant Loan under Tranche C pro
rata according to their Tranche C Commitments.
The calculations under this clause 8.6.4 will be applied as often as
necessary until the Loan is apportioned among the relevant Lenders
in a manner consistent with clause 8.6.3 above.
39
9 Swingline Loans
9.1 Swingline Facilities
Subject to the terms of this Agreement:
(a) the Swingline Lenders under Tranche A make available to the
Borrowers a US Dollar swingline loan facility in an aggregate
amount equal to the Total Swingline Tranche A Commitments;
(b) the Swingline Lenders under Tranche B make available to the
Borrowers a euro swingline loan facility in an aggregate
amount equal to the Total Swingline Tranche B Commitments; and
(c) the Swingline Lenders under Tranche C make available to the
Borrowers a Sterling swingline loan facility in an aggregate
amount equal to the Total Swingline Tranche C Commitments.
9.2 Purpose
9.2.1 Each Borrower shall apply all amounts borrowed by it under the
Swingline Facilities towards refinancing any note, instrument,
facility or borrowing maturing under a CP Programme.
9.2.2 A Swingline Loan may not be applied in repayment or prepayment of
another Swingline Loan.
9.3 Repayment
9.3.1 Each Borrower that has drawn a Swingline Loan shall repay that
Swingline Loan on the last day of its Interest Period.
9.3.2 If the Borrower does not comply with clause 9.3.1:
(a) the Borrower will be deemed to have delivered a Loan
Utilisation Request (without the need to satisfy any
conditions precedent as otherwise required under this
Agreement) under the relevant Tranche to which the Swingline
Loan relates for a Loan Utilisation in an amount equal to, and
in the same currency as, the amount payable under clause 9.3.1
with an Interest Period of two weeks;
(b) the amount of each Lender's share in the Loan Utilisation
shall be determined in accordance with clause 5.4; and
(c) the Facilities Agent will pay to the relevant Swingline
Lenders the amount requested by the Borrower under paragraph
(a) above in full satisfaction of its obligations under clause
9.3.1.
9.4 Indemnities
9.4.1 Where a Swingline Loan cannot by reason of applicable law be
refinanced with a Loan Utilisation under clause 9.3.2:
40
(a) each Lender under Tranche A shall (according to its Tranche A
Indemnified Proportion) immediately on demand indemnify each
Swingline Lender under Tranche A against any cost, loss or
liability incurred by that Swingline Lender (otherwise than by
reason of that Swingline Lender's gross negligence or wilful
misconduct) in acting as a Swingline Lender of a Swingline
Loan under Tranche A (unless that Swingline Lender has been
reimbursed by an Obligor pursuant to a Finance Document);
(b) each Lender under Tranche B shall (according to its Tranche B
Indemnified Proportion) immediately on demand indemnify each
Swingline Lender under Tranche B against any cost, loss or
liability incurred by that Swingline Lender (otherwise than by
reason of that Swingline Lender's gross negligence or wilful
misconduct) in acting as a Swingline Lender of a Swingline
Loan under Tranche B (unless that Swingline Lender has been
reimbursed by an Obligor pursuant to a Finance Document); and
(c) each Lender under Tranche C shall (according to its Tranche C
Indemnified Proportion) immediately on demand indemnify each
Swingline Lender under Tranche C against any cost, loss or
liability incurred by that Swingline Lender (otherwise than by
reason of that Swingline Lender's gross negligence or wilful
misconduct) in acting as a Swingline Lender of a Swingline
Loan under Tranche C (unless that Swingline Lender has been
reimbursed by an Obligor pursuant to a Finance Document).
9.4.2 The relevant Borrower shall immediately on demand reimburse any
Lender for any payment it makes to a Swingline Lender under this
clause 9.4 (Indemnities) in respect of that Swingline Loan.
9.4.3 The obligations of each Lender under this clause are continuing
obligations and will extend to the ultimate balance of sums payable
by that Lender in respect of any Swingline Loan, regardless of any
intermediate payment or discharge in whole or in part.
9.4.4 The obligations of any Lender under this clause will not be affected
by any act, omission, matter or thing which, but for this clause,
would reduce, release or prejudice any of its obligations under this
clause (without limitation and whether or not known to it or any
other person) including:
(a) any time, waiver or consent granted to, or composition with,
any Obligor or other person;
(b) the release of any other Obligor or any other person under the
terms of any composition or arrangement;
(c) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, any
Obligor or other person or any non-presentation or
non-observance of any formality or other requirement in
respect of any instrument or any failure to realise the full
value of any security;
(d) any incapacity or lack of power, authority or legal
personality of or dissolution or change in the members or
status of an Obligor or any other person;
41
(e) any amendment (however fundamental) or replacement of a
Finance Document or any other document or security;
(f) any unenforceability, illegality or invalidity of any
obligation of any person under any Finance Document or any
other document or security; or
(g) any insolvency or similar proceedings.
9.4.5 No Obligor will be entitled to any right of contribution or
indemnity from any Finance Party in respect of any payment it may
make under this clause 9.4.
9.5 Voluntary Prepayment of Swingline Loans
9.5.1 The Borrower to which a Swingline Loan has been made may prepay at
any time the whole of that Swingline Loan.
9.5.2 Any prepayment shall be made with accrued interest and without
premium or penalty.
9.5.3 Unless a contrary indication appears in this Agreement, any part of
the Swingline Facilities which is prepaid may be reborrowed in
accordance with the terms of this Agreement.
9.6 Interest
9.6.1 The rate of interest on each Swingline Loan for any day during its
Interest Period is:
(a) for Swingline Loans under Tranche A, the higher of:
(i) the prime commercial lending rate in US Dollars
announced by the Facilities Agent at the Specified Time
and in force on that day; and
(ii) 0.50 per cent. per annum over the rate per annum
determined by the Facilities Agent to be the Federal
Funds Rate (as published by the Federal Reserve Bank of
New York) for that day;
(b) for Swingline Loans under Tranche B, the percentage rate per
annum equal to the aggregate of:
(i) the applicable Margin;
(ii) the arithmetic mean of the rates (rounded up to four
decimal places) as supplied to the Facilities Agent at
its request by the Reference Banks to leading banks in
the European Interbank Market as of 11:00am (Brussels
time) on the Utilisation Date for that Swingline Loan
for the offering of deposits in euro for a period
comparable to the Interest Period for the relevant
Swingline Loan and for settlement on that day; and
(iii) Mandatory Cost (if any);
(c) for Swingline Loans under Tranche C the percentage rate per
annum equal to the aggregate of:
42
(i) the applicable Margin;
(ii) LIBOR; and
(iii) Mandatory Cost, if any;
9.6.2 The Facilities Agent shall promptly notify the Swingline Lenders and
the relevant Borrower of the determination of the rate of interest
under clause 9.6.1 above.
9.6.3 Each Borrower shall pay accrued interest on each Swingline Loan made
to it on the last day of its Interest Period.
9.7 Interest Period
9.7.1 Each Swingline Loan has one Interest Period only.
9.7.2 The Interest Period for a Swingline Loan must be selected in the
relevant Swingline Loan Utilisation Request.
9.8 Facilities Agent
9.8.1 The Facilities Agent may perform its duties in respect of the
Swingline Facilities through an Affiliate acting as its agent.
9.8.2 Notwithstanding any other term of this Agreement and without
limiting the liability of any Obligor under the Finance Documents,
each Lender shall (in proportion to its share of the Total
Commitments or, if the Total Commitments are then zero, to its share
of the Total Commitments immediately prior to their reduction to
zero) pay to or indemnify the Facilities Agent, within three
Business Days of demand, for or against any cost, loss or liability
incurred by any Affiliate of the Facilities Agent (other than by
reason of such Affiliate's gross negligence or wilful misconduct) in
acting as Facilities Agent for the Swingline Facilities under the
Finance Documents (unless such Affiliate has been reimbursed by an
Obligor pursuant to a Finance Document).
9.9 Conditions of assignment or transfer
9.9.1 Notwithstanding any other term of this Agreement, each Lender shall
ensure that at all times its Overall Tranche A Commitment is not
less than:
(a) its Swingline Tranche A Commitment; or
(b) if it does not have a Swingline Tranche A Commitment, the
Swingline Tranche A Commitment of a Lender which is its
Affiliate.
9.9.2 Notwithstanding any other term of this Agreement, each Lender shall
ensure that at all times its Overall Tranche B Commitment is not
less than:
(a) its Swingline Tranche B Commitment; or
43
(b) if it does not have a Swingline Tranche B Commitment, the
Swingline Tranche B Commitment of a Lender which is its
Affiliate.
9.9.3 Notwithstanding any other term of this Agreement, each Lender shall
ensure that at all times its Overall Tranche C Commitment is not
less than:
(a) its Swingline Tranche C Commitment; or
(b) if it does not have a Swingline Tranche C Commitment, the
Swingline Tranche C Commitment of a Lender which is its
Affiliate.
10 Optional Currencies
10.1 Selection of currency
A Borrower (or the Company on behalf of a Borrower) shall select the
currency of a Loan Utilisation in a Loan Utilisation Request and a
Bond Utilisation in a Bond Utilisation Request.
10.2 Unavailability of a currency
10.2.1 If before the Specified Time on any Quotation Day:
(a) a Lender notifies the Facilities Agent that the Optional
Currency requested is not readily available to it in the
amount required; or
(b) a Lender notifies the Facilities Agent that compliance with
its obligation to participate in a Loan in the proposed
Optional Currency would contravene a law or regulation
applicable to it,
the Facilities Agent will give notice to the Company and the
relevant Borrower promptly and in any event no later than the
Specified Time on that day.
10.2.2 Any Lender that gives notice pursuant to clause 10.2.1 will be
required to participate in the Loan in the Base Currency for the
Tranche requested (in an amount equal to that Lender's proportion of
the Base Currency Amount for that Tranche or, in respect of a
Rollover Loan, an amount equal to that Lender's proportion of the
Base Currency Amount for that Tranche of the Rollover Loan that is
due to be made) and its participation will be treated as a separate
Loan denominated in the Base Currency for that Tranche during that
Interest Period.
10.2.3 Any part of a Loan treated as a separate Loan under this clause 10.2
will not be taken into account for the purposes of any limit on the
number of Loans outstanding at any one time.
10.2.4 A Loan will still be treated as a Rollover Loan if it is not
denominated in the same currency as the maturing Loan by reason of
the operation of this clause 10.2.
44
10.3 Conditions relating to Optional Currencies
10.3.1 A currency will constitute an Optional Currency in relation to any
Utilisation if it is not the relevant Base Currency and if either:
(a) it is freely convertible into the Base Currency for the
relevant Tranche readily available in the amount requested in
the Relevant Interbank Market on the Quotation Day and the
Utilisation Date for that Utilisation and has been approved by
the Facilities Agent (acting on the instructions of all the
Lenders on or prior to receipt by the Facilities Agent of the
relevant Utilisation Request for that Loan); or
(b) it is US Dollars, euro, Sterling or Australian Dollars.
10.3.2 If the Facilities Agent has received a written request from a
Borrower for a currency to be approved under clause 10.3.1 above,
the Facilities Agent will confirm to that Borrower by the Specified
Time:
(a) whether or not the Lenders have granted their approval; and
(b) if approval has been granted, the minimum amount (and, if
required, integral multiples) for any subsequent Utilisation
in that currency.
11 Repayment
11.1 Each Borrower which has drawn a Loan shall repay that Loan on the
last day of its Interest Period.
11.2 Subject to the other terms of this Agreement, any amounts repaid
under clause 11.1 above may be re-borrowed.
11.3 If, pursuant to the terms of this Agreement, the Lenders are obliged
to make a Rollover Loan, the maturing loan referred to in the
definition of Rollover Loan shall be repaid and the Rollover Loan
shall be made without any requirement for an actual exchange of
payments (other than to the extent that the amount of the maturing
loan is more than the Rollover Loan), but without prejudice to the
relevant Borrower's obligation to pay interest on the maturing loan.
11.4 Notwithstanding the provisions of clause 7, each Bond Borrower shall
ensure that each Bond is repaid in full on or before the Termination
Date.
12 Prepayment and cancellation
12.1 Mandatory prepayment - illegality
12.1.1 A Lender must notify the Company and the Facilities Agent promptly
if it becomes aware that:
(a) it will become; or
(b) it is,
45
unlawful in any applicable jurisdiction for that Lender to perform
any of its obligations under a Finance Document or to fund or
maintain its share in any Utilisation.
12.1.2 If a Fronting Bank becomes aware of any unlawfulness that may affect
its ability to issue a particular Bond, that Fronting Bank shall
promptly notify the Company and the Facilities Agent of that event.
12.1.3 After notification under clause 12.1.1(b) above:
(a) each Borrower must repay or prepay the share of that Lender in
each Utilisation on the date specified in clause 12.1.4 below;
and
(b) the Tranche A Commitment, the Tranche B Commitment and the
Tranche C Commitment of that Lender will be immediately
cancelled.
12.1.4 The date for repayment or prepayment of a Lender's share in an
outstanding Utilisation will be:
(a) the last day of the current Interest Period for that
Utilisation; or
(b) if earlier, the date specified by the Lender in the
notification under clause 12.1.1(b) above and which must not
be earlier than the last day of any applicable grace period
allowed by law.
12.2 Mandatory prepayment - change of ownership
12.2.1 For the purposes of this clause:
Arison Party means each and all of Marilyn B. Arison, Micky Meir
Arison, Shari Arison, Michael Arison or their spouses, children or
lineal descendants of Marilyn B. Arison, Micky Meir Arison, Shari
Arison, Michael Arison or their spouses, any trust established for
the benefit of any Arison family member mentioned herein, or any
person directly or indirectly, controlling, controlled by or under
common control with any Arison family member mentioned herein or any
trust established for the benefit of any such Arison family member
or any charitable trust or non-profit entity established by any of
the aforesaid persons or trusts;
a change of ownership occurs if any person or group of persons
(other than any Arison Party or any two or more Arison Parties)
gains ownership of the Company or Carnival plc provided that a
change of ownership shall be deemed not to have occurred if:
(a) either:
(i) the Company directly or indirectly gains ownership of
Carnival plc; or
(ii) Carnival plc directly or indirectly gains ownership of
the Company; and
(b) such consequential amendments are made to this Agreement (with
the consent of the Company and the Facilities Agent which
consent shall not be unreasonably withheld, delayed or
conditioned) as are required to reflect the relevant change
and to put the Parties in an
46
equivalent position as regards the companies in the Carnival
Corporation & plc Group as would have applied had the relevant
change not occurred; and
(c) the Facilities Agent receives a legal opinion from lawyers
approved by it (acting reasonably) and in form and substance
satisfactory to it (acting reasonably) confirming that (i) the
monetary obligations under the Finance Documents of the
Company will continue to be guaranteed by Carnival plc under
the relevant Deed of Guarantee and/or (ii) the monetary
obligations under the Finance Documents of Carnival plc will
continue to be guaranteed by the Company under the relevant
Deed of Guarantee, in each case, after the relevant change
referred to in paragraph (a) above.
ownership means the ownership of more than fifty per cent. (50%) of
the voting share capital (or equivalent rights of ownership) of the
Company or of Carnival plc.
12.2.2 The Company must promptly notify the Facilities Agent if it becomes
aware of any change of ownership.
12.2.3 If a change of ownership occurs, the Facilities Agent and the
Company shall enter into discussions to determine if there is a
basis acceptable to the Lenders and the Company for continuing the
Facilities. If such agreement is reached within 90 days of the
change of ownership, the Parties will promptly implement the
agreement. If such agreement is not reached within 90 days of the
change of ownership the Facilities Agent must, by notice to the
Company:
(a) cancel the Total Tranche A Commitments, the Total Tranche B
Commitments and the Total Tranche C Commitments; and/or, as
the case may be
(b) declare each outstanding Utilisation, together with accrued
interest and all other amounts accrued under the Finance
Documents, to be immediately due and payable.
Any such notice will take effect in accordance with its terms.
12.3 Voluntary Prepayment
12.3.1 The Company may, by giving not less than three Business Days prior
notice to the Facilities Agent, prepay (or ensure that a Borrower
prepays) any Loan at any time in whole or in part.
12.3.2 A prepayment of part of a Loan must be:
(a) in respect of Tranche A, in a minimum amount of $US5,000,000
(or its equivalent in any Optional Currency);
(b) in respect of Tranche B, in a minimum amount of
(euro)5,000,000 (or its equivalent in any Optional Currency);
and
(c) in respect of Tranche C, in a minimum amount of
(pounds)2,500,000 (or its equivalent in any Optional
Currency).
47
12.4 Automatic cancellation
The Tranche A Commitment, the Tranche B Commitment and the Tranche C
Commitment of each Lender will be automatically cancelled at the
close of business on the last day of the Availability Period.
12.5 Voluntary cancellation
12.5.1 The Company may by notice to the Facilities Agent not later than
8:00 am on the date such cancellation is to take effect, cancel
without penalty the whole or any part of the Available Tranche A
Facility, the Available Tranche B Facility and/or the Available
Tranche C Facility.
12.5.2 Partial cancellation of:
(a) the Available Tranche A Facility must be in a minimum amount
of $US10,000,000;
(b) the Available Tranche B Facility must be in a minimum amount
of (euro)10,000,000; and
(c) the Available Tranche C Facility must be in a minimum amount
of (pounds)10,000,000.
12.5.3 Any cancellation in part will be applied against the relevant
Available Tranche A Facility, the Available Tranche B Facility and
the Available Tranche C Facility, as the case may be, of each Lender
pro rata.
12.6 Involuntary prepayment and cancellation
12.6.1 If an Obligor is, or will be, required to pay to a Lender a Tax
Payment or an Increased Cost, or if any Lender notifies the
Facilities Agent that its Additional Cost Rate is greater than zero
the Company may, while the requirement continues or following the
notification in relation to the Additional Cost Rate, give notice to
the Facilities Agent of prepayment and/or cancellation in respect of
that Lender.
12.6.2 After notification under clause 12.6.1 above:
(a) each Borrower must repay or prepay that Lender's share in each
Utilisation under each Tranche made to it on the date
specified in clause 12.6.3 below; and/or, as the case may be
(b) the Tranche A Commitment, the Tranche B Commitment and the
Tranche C Commitment of that Lender will be immediately
cancelled.
12.6.3 The date for repayment or prepayment of a Lender's share in an
outstanding Utilisation will be the last day of the Interest Period
for that Utilisation during which the Company has given notice under
clause 12.6.1 above or, if earlier, the date specified by the
Company in its notification.
12.7 Miscellaneous provisions
12.7.1 Any notice of prepayment and/or cancellation under this Agreement is
irrevocable and must specify the relevant date(s) upon which the
relevant cancellation is to take effect or prepayment is to be made
48
and the amount of that cancellation or prepayment. The Facilities
Agent must notify the Lenders promptly of receipt of any such
notice.
12.7.2 All prepayments under this Agreement must be made with accrued
interest on the amount prepaid. No premium or penalty is payable in
respect of any prepayment except for Break Costs.
12.7.3 Any part of the Facilities which are prepaid may be reborrowed in
accordance with the terms of this Agreement.
12.7.4 The Majority Lenders may agree a shorter notice period for a
voluntary prepayment.
12.7.5 No prepayment or cancellation is allowed except in accordance with
the express terms of this Agreement.
12.7.6 No amount of the Total Tranche A Commitments, Total Tranche B
Commitments or Total Tranche C Commitments cancelled under this
Agreement may subsequently be reinstated.
13 Interest
13.1 Calculation of interest
The rate of interest on each Loan (other than a Swingline Loan) for
each Interest Period is the percentage rate per annum equal to the
aggregate of:
13.1.1 the applicable Margin;
13.1.2 LIBOR or, in relation to any Loan in euro, EURIBOR; and
13.1.3 Mandatory Cost, if any.
13.2 Payment of interest
The Borrower to which a Loan has been made shall pay accrued
interest on that Loan on the last day of each Interest Period and,
if the Interest Period is longer than six months, on the dates
falling at six monthly intervals after the first day of that
Interest Period.
13.3 Interest on overdue amounts
13.3.1 If an Obligor fails to pay any amount payable by it under the
Finance Documents, it must immediately on demand by the Facilities
Agent pay interest on the overdue amount from its due date up to the
date of actual payment, both before, on and after judgment.
13.3.2 Interest on an overdue amount is payable at a rate determined by the
Facilities Agent to be one per cent. per annum above the rate which
would have been payable if the overdue amount had, during the period
of non-payment, constituted a Loan in the currency of the overdue
amount for successive Interest Periods, each of a duration selected
by the Facilities Agent (acting reasonably) of up to three months.
49
13.3.3 Notwithstanding clause 13.3.2 above, if the overdue amount consists
of all or part of a Loan which became due and payable on a day which
was not the last day of an Interest Period for that Loan, then:
(a) the first Interest Period for that overdue amount shall have a
duration equal to the unexpired portion of the current
Interest Period for that Loan; and
(b) the rate of interest on the overdue amount for that first
Interest Period will be one per cent. per annum above the rate
which would have applied if the overdue amount had not become
due.
After the expiry of the first Interest Period for that overdue
amount, the rate on the overdue amount will be calculated in
accordance with clause 13.3.2 above.
13.3.4 Interest (if unpaid) on an overdue amount will be compounded with
that overdue amount at the end of each Interest Period applicable to
that overdue amount but will remain immediately due and payable.
13.4 Notification of rates of interest
The Facilities Agent shall promptly notify the Lenders and the
relevant Borrower of the determination of a rate of interest under
this Agreement.
13.5 Margin
13.5.1 At the Signing Date the Margin will be 0.175 per cent. per annum.
Thereafter the Margin will, subject to clause 13.5.2, be set in
accordance with the pricing grid below and clause 13.5.3 below to be
the percentage rate per annum specified in Column 2 as set out
opposite the Carnival Credit Rating at the relevant time by Moody's
and S&P specified in Column 1 below.
Column 1 Column 2
Carnival Credit Rating Margin
% p.a.
A+/A1 or higher 0.125
A/A2 0.150
A-/A3 0.175
BBB+/Baa1 0.225
BBB/Baa2 or lower 0.300
13.5.2 During any period in which there is no Carnival Credit Rating
assigned by either Moody's or S&P, the Margin shall be 0.300 per
cent. per annum.
13.5.3 If there is a different Carnival Credit Rating assigned by S&P and
Moody's, the applicable Margin shall be determined by averaging the
Margins for S&P and Moody's as determined in accordance with the
pricing grid in clause 13.5.1 above.
50
13.5.4 For the purposes of this Agreement, any reduction or increase in the
Margin shall be determined on, and shall take effect from, the
Business Day immediately following publication of the relevant
change to the Carnival Credit Rating.
13.5.5 Promptly after becoming aware of the same, the Company shall inform
the Facilities Agent in writing if either (i) there is any change in
the Carnival Credit Rating with either Moody's or S&P which will
cause a change to the Margin or (ii) if any of the circumstances
contemplated by clauses 13.5.2 or 13.5.3 above arise.
13.5.6 For the purposes of this clause 13.5, "Carnival Credit Rating"
means, in respect of Moody's or S&P:
(a) the long term senior unsecured debt rating of the Company
published by Moody's or, as the case may be, S&P; or
(b) if Moody's or S&P (as the case may be) does not publish a long
term senior unsecured debt rating as provided in paragraph (a)
above, the long term senior unsecured debt rating of Carnival
plc published by Moody's or, as the case may be, S&P.
13.6 Maximum Interest Rate
13.6.1 Where any interest rate payable by a Borrower incorporated in Italy
determined in accordance with this Agreement, including default
interest rate, exceeds in any period of three calendar months the
interest rate determined pursuant to paragraph 4 of article 2 of the
Italian Act (Legge) 7 March 1996 No. 108 for transactions of the
type contemplated hereunder, such interest rate will be deemed to be
equal to and shall not exceed the maximum interest rate during such
period determined in accordance with the above-mentioned provisions
of Italian law.
14 Interest Periods
14.1 Selection of Interest Periods
14.1.1 A Borrower (or the Company or Carnival plc on behalf of a Borrower)
may select an Interest Period for a Loan in the Loan Utilisation
Request for that Loan.
14.1.2 Subject to this clause 14, a Borrower (or the Company or Carnival
plc on behalf of a Borrower) may select an Interest Period of one,
two, three or six months or any other period agreed between the
Company and the Facilities Agent (acting on the instructions of all
the Lenders).
14.1.3 An Interest Period for a Loan shall not extend beyond the
Termination Date.
14.1.4 Each Interest Period for a Loan shall start on the Utilisation Date
in respect of that Loan.
14.1.5 A Loan has one Interest Period only.
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14.2 Non-Business Days
If an Interest Period would otherwise end on a day which is not a
Business Day, that Interest Period will instead end on the next
Business Day in that calendar month (if there is one) or the
preceding Business Day (if there is not).
15 Changes to the calculation of interest
15.1 Absence of quotations
Subject to clause 15.2 (Market disruption), if LIBOR or, if
applicable, EURIBOR is to be determined by reference to the
Reference Banks but a Reference Bank does not supply a quotation by
the Specified Time on the Quotation Day, the applicable LIBOR or
EURIBOR shall be determined on the basis of the quotations of the
remaining Reference Banks.
15.2 Market disruption
15.2.1 In this Agreement each of the following events is a Market
Disruption Event:
(a) at or about noon on the Quotation Day for the relevant
Interest Period the Screen Rate is not available and none or
only one of the Reference Banks supplies a rate to the
Facilities Agent to determine LIBOR or, if applicable, EURIBOR
for the relevant currency and Interest Period; or
(b) in respect of a Loan denominated in US Dollars, euro or
Sterling, before close of business in London on the Quotation
Day for the relevant Interest Period, the Facilities Agent
receives notifications from a Lender or Lenders (whose
participations in that Loan exceed 66.666 per cent. of that
Loan) that the cost to it of obtaining matching deposits in
the Relevant Interbank Market would be in excess of LIBOR or,
if applicable, EURIBOR; or
(c) in respect of a Loan denominated in any currency other than US
Dollars, euro or Sterling, before close of business in London
on the Quotation Day for the relevant Interest Period, the
Facilities Agent receives notifications from a Lender or
Lenders (whose participations in that Loan exceed 33.333 per
cent. of that Loan) that the cost to it of obtaining matching
deposits in the Relevant Interbank Market would be in excess
of LIBOR.
15.2.2 The Facilities Agent must promptly notify the Company and the
Lenders of a Market Disruption Event.
15.2.3 After notification under clause 15.2.2 above, the rate of interest
on each Lender's share in the affected Loan for the Interest Period
shall be the rate per annum which is the aggregate of:
(a) the applicable Margin;
(b) in the case of a Lender which has notified the Facilities
Agent that its cost of funds is in excess of LIBOR or, if
applicable, EURIBOR, in accordance with clauses 15.2.1(b) or
(c) above or where the circumstances set out in clause
15.2.1(a) above apply, the rate notified to the
52
Facilities Agent by that Lender as soon as practicable, and in
any event before interest is due to be paid in respect of that
Interest Period, to be that which expresses as a percentage
rate per annum the cost to that Lender of funding its share in
that Loan from whatever source it may reasonably select; and
(c) the Mandatory Cost, if any, applicable to that Lender's share
in the Loan.
15.3 Alternative basis of interest or funding
15.3.1 If a Market Disruption Event occurs and the Facilities Agent or the
Company so requires, the Facilities Agent and the Company must enter
into negotiations for a period of not more than thirty days with a
view to agreeing an alternative basis for determining the rate of
interest and/or funding for the affected Loan and any future Loan.
15.3.2 Any alternative basis agreed pursuant to clause 15.3.1 above shall,
with the prior consent of all the Lenders and the Company, be
binding on all the Parties.
15.4 Break Costs
15.4.1 Each Borrower shall, within three Business Days of demand, pay to
the Facilities Agent for the account of each Lender such Lender's
Break Costs attributable to all or any part of a Loan (other than a
Swingline Loan) or Unpaid Sum being paid by that Borrower on a day
other than the last day of an Interest Period for that Loan or
Unpaid Sum.
15.4.2 Each Lender must supply to the Facilities Agent (who shall
immediately deliver them to the Company and the relevant Borrower)
details of the amount of any Break Costs claimed by it under this
clause 15.4.
16 Fees
16.1 Commitment fee
16.1.1 The Company shall pay to the Facilities Agent (for the account of
each Lender) a commitment fee in the Base Currency of the relevant
Tranche computed at the rate of 30 per cent. of the applicable
Margin per annum on the daily undrawn, uncancelled amount of each
Lender's Commitment.
16.1.2 The accrued commitment fee is payable quarterly in arrear during the
Availability Period and on the last day of the Availability Period
and, if the Total Tranche A Commitments, the Total Tranche B
Commitments and the Total Tranche C Commitments are cancelled in
full, at the time such cancellation is effective.
16.2 Arrangement fee
The Company shall pay to the Arrangers (for the account of each
Arranger) an arrangement fee in the amount and at the times agreed
in a Fee Letter between the Arrangers and the Company.
53
16.3 Agency fee
The Company shall pay to the Facilities Agent (for its own account)
an agency fee in the amount and at the times agreed in a Fee Letter
between the Facilities Agent and the Company.
16.4 Utilisation fee
16.4.1 The Company shall pay to the Facilities Agent (for the account of
each Lender) a utilisation fee computed at the rate of:
(a) for each day on which the aggregate amount of the Utilisations
(where each Utilisation is converted into US Dollars at the
Facilities Agent's Spot Rate of Exchange on that day) equals
or is less than 50 per cent. of the Total Commitments, zero
cent. per annum; and
(b) for each day on which the aggregate amount of the Utilisations
(where each Utilisation is converted into US Dollars at the
Facilities Agent's Spot Rate of Exchange on that day) exceeds
50 per cent. of the Total Commitments, 0.05 per cent. per
annum.
16.4.2 Utilisation fee is payable in US Dollars on the amount of each
Lender's share in the Utilisations.
16.4.3 Accrued utilisation fee is payable quarterly in arrear during the
Availability Period and on the last day of the Availability Period
and, for a Lender, on the date on which it ceases to be a Lender
under this Agreement.
16.5 Fronting fee and Bonding fee
16.5.1 The Bond Borrower shall pay to the relevant Fronting Bank a fronting
fee in respect of each Bond issued at its request in the amount and
at the times agreed in a Fee Letter between that Fronting Bank and
the Company.
16.5.2 Each Bond Borrower shall pay to the Facilities Agent (for the
account of each Lender) for each Bond requested by it a bonding fee
in US Dollars computed at the applicable Margin on the daily
outstanding amount of that Bond for the period from the issue of
that Bond until its Expiry Date or, following a claim under such
Bond, the date of reimbursement of the full amount of such claim to
the relevant Fronting Bank whether pursuant to clause 7.1.2, 7.3.1
or otherwise or, where the Lenders have made any payment to the
relevant Fronting Bank under clause 7.3, the date on which each such
Lender is reimbursed in full by an Obligor pursuant to clause 7.3.4
or otherwise (the "Reimbursement Date"). This fee shall be
distributed according to each Lender's Bond Proportion of that Bond.
16.5.3 The accrued bonding fee on a Bond shall be payable quarterly in
arrear starting on the date of issue of that Bond and on the Expiry
Date or, following a claim under the relevant Bond, the
Reimbursement Date in respect of that Bond.
16.5.4 If a Bond Borrower cash covers any part of a Bond then:
54
(a) the fronting fee payable to the relevant Fronting Bank and the
bonding fee payable for the account of each Lender shall
continue to be payable in accordance with clause 16.5.2; and
(b) the Bond Borrower will be entitled to withdraw the interest
accrued on the cash cover to pay those fees.
16.6 Timing of payments
Notwithstanding any provision to the contrary in any Finance
Document, all payments to be made by an Obligor in respect of any
fees referred to in clauses 16.1, 16.4 and 16.5 are due within three
Business Days of written demand by the Facilities Agent (in respect
of payments under clauses 16.1, 16.4 or 16.5.2) or the relevant
Fronting Bank (in respect of payments under clause 16.5.1) in each
case served no earlier than the times agreed for payment, and
attaching a statement of detailed calculations.
17 Taxes
17.1 Application of clauses
17.1.1 Clauses 17.2 to 17.7 shall only apply in respect of payments by the
following Obligors:
(a) Carnival plc; and
(b) any Additional Borrower resident in the United Kingdom.
17.1.2 Clauses 17.8 to 17.9 shall only apply in respect of payments by the
following Obligors:
(a) the Company;
(b) CC U.S. Ventures, Inc.;
(c) Princess Cruise & Tours, Inc.;
(d) Holland America Line Inc.;
(e) any Additional Borrower incorporated in a state within, and
operating in, the U.S.; and
(f) other members of the Carnival Corporation & plc Group who
become an Additional Borrower as may be requested by the
Company to be covered under this clause 17.1.2, subject to the
consent of the Facilities Agent (such consent not to be
unreasonably withheld, delayed or conditioned).
17.1.3 Clauses 17.10 to 17.15 shall only apply in respect of payments by
the following Obligors:
(a) Costa Crociere S.p.A.; and
(b) any Additional Borrower resident in Italy.
55
17.1.4 Clauses 17.16 to 17.21 shall apply in respect of payments by any
Obligor that does not fall within any of clauses 17.1.1, 17.1.2 or
17.1.3.
17.2 General
In clauses 17.2 to 17.7:
Qualifying Lender means a Lender which is beneficially entitled to
interest payable to that Lender in respect of an advance under this
Agreement and is:
(a) a U.K. Lender; or
(b) a Treaty Lender.
Tax Credit means a credit against any Tax or any relief or remission
for Tax (or its repayment).
Taxes Act means the Income and Corporation Taxes Act 1988.
Treaty Lender means a Lender which:
(a) is resident (as defined in the appropriate double taxation
agreement) in a country with which the U.K. has a double
taxation agreement giving residents of that country full
exemption from U.K. taxation on interest;
(b) does not carry on a business in the U.K. through a permanent
establishment with which the payment is effectively connected;
and
(c) is entitled to receive interest without withholding or, if
withheld, is entitled to reclaim that withholding in full,
under the terms of the appropriate double taxation agreement.
U.K. Lender means a Lender which is:
(a) within the charge to U.K. corporation tax in respect of, and
beneficially entitled to, a payment of interest on a loan made
by a person that was a bank for the purposes of section 349 of
the Taxes Act (as currently defined in section 840A of the
Taxes Act) at the time that loan was made; or
(b) a U.K. Non-Bank Lender.
U.K. Non-Bank Lender means:
(a) a company resident in the U.K. for U.K. tax purposes;
(b) a partnership, each member of which is a company resident in
the U.K. for U.K. tax purposes or a company not resident in
the U.K. for U.K. tax purposes but which carries on a trade in
the U.K. through a permanent establishment and brings into
account in computing its chargeable profits (for the purpose
of section 11(2) of the Taxes Act) the whole of any share of
interest
56
payable to it under this Agreement which falls to it by reason
of sections 114 and 115 of the Taxes Act; or
(c) a company not resident in the U.K. for U.K. tax purposes which
carries on a trade in the U.K. through a permanent
establishment and brings into account interest payable to it
under this Agreement in computing its chargeable profits for
the purpose of section 11(2) of the Taxes Act,
which, in each case, is beneficially entitled to interest payable to
it under this Agreement and which has provided to the Company and
not retracted confirmation of one of the above in accordance with
this Agreement.
17.3 Tax gross-up
(a) Each Obligor must make all payments to be made by it under the
Finance Documents without any Tax Deduction, unless a Tax
Deduction is required by law.
(b) If:
(i) a Lender is not, or ceases to be, a Qualifying Lender;
or
(ii) an Obligor or a Lender is aware that an Obligor must
make a Tax Deduction (or that there is a change in the
rate or the basis of a Tax Deduction),
it must promptly notify the Facilities Agent. The Facilities
Agent must then promptly notify the affected Parties.
(c) Except as provided below, if a Tax Deduction is required by
law to be made by an Obligor, the amount of the payment due
from the Obligor will be increased to an amount which (after
making the Tax Deduction) leaves an amount equal to the
payment which would have been due if no Tax Deduction had been
required.
(d) Except as provided below, an Obligor is not required to make
an increased payment under paragraph (c) above for a Tax
Deduction in respect of the tax imposed by the U.K. to a
Lender that is not, or has ceased to be, a Qualifying Lender
in excess of the increase that the Obligor would have had to
pay under paragraph (c) above had the Lender been, or not
ceased to be, a Qualifying Lender, except that where an amount
(the "Claim") is demanded under the guarantee given by
Carnival plc in respect of a default by one of its
Subsidiaries (the "Paying Party"), Carnival plc shall not be
entitled to the benefit of this paragraph (d) if, but only to
the extent that, the amount paid by Carnival plc in respect of
the Claim would be thereby reduced to an amount less than the
amount which the Lender was entitled to receive from the
Paying Party in respect of the Claim.
(e) Paragraph (d) above will not apply if the Lender has ceased to
be a Qualifying Lender by reason of any change after the date
it became a Lender under this Agreement in (or in the
57
interpretation, administration, or application of) any law or
double taxation agreement or any published practice or
concession of any relevant taxing authority.
(f) An Obligor is not required to make an increased payment to a
Lender under paragraph (c) above for a Tax Deduction in
respect of the tax imposed by the U.K. if that Lender is a
Treaty Lender and the Obligor making the payment is able to
demonstrate that the Tax Deduction would not have been
required if the Lender had complied with its obligations under
paragraph (i) below.
(g) If an Obligor is required to make a Tax Deduction, that
Obligor shall make that Tax Deduction and must make any
payment required in connection with that Tax Deduction within
the time allowed by law.
(h) Within 30 days of making either a Tax Deduction or a payment
required in connection with a Tax Deduction, the Obligor
making that Tax Deduction or payment must deliver to the
Facilities Agent for the relevant Finance Party evidence
reasonably satisfactory to that Finance Party that the Tax
Deduction has been made or (as applicable) the appropriate
payment has been paid to the relevant taxing authority.
(i) A Treaty Lender must co-operate with each Obligor by using its
commercially reasonable endeavours to complete any procedural
formalities necessary for that Obligor to obtain authorisation
to make that payment without a Tax Deduction.
(j) If a Lender is expressed to be a U.K. Non-Bank Lender when it
becomes a party to this Agreement as a Lender, it will be
deemed to have confirmed its status for the purpose of the
definition of U.K. Non-Bank Lender. A U.K. Non-Bank Lender
must promptly notify the Company and the Facilities Agent of
any change to its status that may affect any confirmation made
by it.
(k) In the event that an Obligor changes its country of residence
and a Tax Deduction is imposed by the new country of
residence, that Obligor shall pay such additional amounts to
ensure that the amounts received by the Facilities Agent and
each Lender are no less than the amounts the Facilities Agent
and each Lender would have received but for such change of
country of residence by that Obligor provided always that the
Obligor shall not be obliged to pay such additional amounts to
the extent that such additional amounts would not have been
payable under this paragraph had each Lender remained a
Qualifying Lender.
17.4 Tax indemnity
(a) Except as provided below, the Company must indemnify a Finance
Party against any loss or liability which that Finance Party
acting reasonably determines will be or has been suffered
(directly or indirectly) by that Finance Party for or on
account of Tax in relation to a payment received or receivable
(or any payment deemed to be received or receivable) under a
Finance Document.
58
(b) Paragraph (a) above does not apply to any Tax assessed on a
Finance Party under the laws of the jurisdiction in which:
(i) that Finance Party is incorporated or, if different, the
jurisdiction (or jurisdictions) in which that Finance
Party is treated as resident for tax purposes; or
(ii) that Finance Party's Facility Office is located in
respect of amounts received or receivable in that
jurisdiction,
if that Tax is imposed on or calculated by reference to the
net income received or receivable by that Finance Party.
However, any payment deemed to be received or receivable,
including any amount treated as income but not actually
received by the Finance Party, such as a Tax Deduction, will
not be treated as net income received or receivable for this
purpose.
(c) Paragraph (a) above does not apply to the extent a loss,
liability or cost:
(i) is compensated for by any increased payment under clause
17.3 (Tax gross-up); or
(ii) would have been compensated for by an increased payment
under clause 17.3 (Tax gross-up) but was not so
compensated solely because one of the exclusions in
clause 17.3(d) and (f) and the proviso to clause 17.3(k)
applied.
(d) A Finance Party making, or intending to make, a claim under
paragraph (a) above must promptly notify the Company of the
event which will give, or has given, rise to the claim.
17.5 Tax Credit
(a) Where any payment has been made subject to a Tax Deduction, a
Finance Party agrees to use its commercially reasonable
endeavours to complete any procedural formalities necessary
for the relevant Finance Party to obtain any Tax Credit
available as a result of the payment being made subject to a
Tax Deduction.
(b) If an Obligor makes a Tax Payment and the relevant Finance
Party in its absolute discretion determines that:
(i) a Tax Credit is attributable either to an increased
payment of which that Tax Payment forms part, or to that
Tax Payment; and
(ii) it has used and retained that Tax Credit (on a
consolidated basis if relevant to the determination of
its allowable credit for foreign taxes paid or accrued),
the Finance Party must pay an amount to the Obligor which that
Finance Party determines will leave it (after that payment) in
the same after-Tax position as it would have been if the Tax
Payment had not been required to be made by the Obligor.
59
17.6 Stamp taxes
The Company must pay and indemnify each Finance Party against any
stamp duty, registration or other similar Tax payable in connection
with the entry into, performance or enforcement of any Finance
Document, except for any such Tax payable in connection with the
entry into a Transfer Certificate.
17.7 Value added taxes
(a) Any amount (including costs and expenses) payable under a
Finance Document by an Obligor is exclusive of any value added
tax or any other Tax of a similar nature which might be
chargeable in connection with that amount. If any such Tax is
chargeable, the Obligor must pay to the Finance Party (in
addition to and at the same time as paying that amount) an
amount equal to the amount of that Tax (and such Finance Party
shall as soon as reasonably practicable provide an appropriate
value added tax invoice to the Obligor).
(b) The obligation of any Obligor under paragraph (a) above will
be reduced to the extent that the Finance Party determines
(acting reasonably) that it is entitled to repayment or a
credit in respect of the relevant Tax.
17.8 General
In clause 17.8 to 17.9:
Excluded Taxes means, with respect to the Facilities Agent, any
Lender or any other recipient of any payment to be made by or on
account of any obligation of an Obligor under the Finance Documents:
(a) income, franchise or other similar taxes imposed on, based on
or measured by or with respect to its net income by the United
States of America, or income, franchise or other similar taxes
imposed on, based on or measured by or with respect to its net
income, net worth or capital employed, or gross basis business
and/or occupational taxes by the jurisdiction under the laws
of which such recipient is organized or in which it is
resident or, in the case of any Lender, in which its
applicable lending office is located;
(b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction
described in paragraph (a) above;
(c) in the case of a Lender (other than an assignee pursuant to a
request by an Obligor under clause 17.9(g)), any withholding
tax that:
(i) is attributable to such Lender's failure to comply with
clause 17.9(e); or
(ii) in the case of a Foreign Lender, is imposed by the
United States of America and is in effect and would
apply to amounts payable to such Foreign Lender, at the
time such Foreign Lender becomes a party to this
Agreement (including by assignment) or designates a new
lending office, except to the extent that (x) where the
Foreign Lender
60
is an assignee, the assignor was entitled to receive
additional amounts with respect to any withholding tax
pursuant to clause 17.9, (y) where the Foreign Lender
has designated a new lending office, the Foreign Lender
was entitled to receive additional amounts with respect
to any withholding tax pursuant to clause 17.9 or (z)
such withholding tax shall have resulted from the making
of any payment to a location other than the office
designated by the Facilities Agent or such Foreign
Lender for the receipt of payments of the applicable
type; and
(d) any tax imposed by a jurisdiction to the extent such tax is
attributable to a connection between such jurisdiction and the
Facilities Agent, such Lender or such other recipient, as the
case may be, other than a connection arising from the
transactions contemplated by this Agreement.
Foreign Lender means, with respect to an Obligor, any Lender that is
organized under the laws of a jurisdiction other than that in which
that Obligor is located. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia
shall be deemed to constitute a single jurisdiction.
Governmental Authority means the government of the United States of
America, any other nation or any political subdivision thereof,
whether state or local, and any agency, authority, instrumentality,
regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.
Indemnified Taxes means Taxes other than Excluded Taxes.
Other Taxes means any and all present or future recording, stamp,
documentary, excise, transfer, sales, property or similar taxes,
charges or levies arising from any payment made under the Finance
Documents or from the execution, delivery or enforcement of, or
otherwise with respect to, this Agreement other than (1) Excluded
Taxes and (2) any Taxes required to be paid solely as a result of
the execution or delivery of an instrument effecting an assignment,
designation or participation contemplated in clause 28 (excluding
any designation or assignment initiated pursuant to clause 17.9(g)).
17.9 Taxes
(a) Any and all payments by or on account of any obligation of an
Obligor under the Finance Documents shall be made free and
clear of and without deduction for any Indemnified Taxes or
Other Taxes; provided that if an Obligor shall be required to
deduct any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this clause 17.9) the Facilities Agent or Lender (as the
case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) that Obligor
shall make such deductions and (iii) that Obligor shall pay
the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
61
(b) In addition, an Obligor shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable
law.
(c) Each Obligor shall indemnify the Facilities Agent and each
Lender, within 30 days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by
the Facilities Agent or such Lender, as the case may be, on or
with respect to any payment by or on account of any obligation
of that Obligor under the Finance Documents (including
Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this clause 17.9) and
any penalties, interest and reasonable expenses arising
therefrom or with respect thereto (except to the extent such
penalties, interest or expenses result from the gross
negligence or wilful misconduct of the Facilities Agent or the
applicable Lender), whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by
the relevant Governmental Authority. A certificate as to the
amount of such payment or liability delivered to the Company
by a Lender, or by the Facilities Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest
error, provided that such certificate shall include a
description in reasonable detail of the Indemnified Tax or
Other Tax for which the indemnity is being demanded and the
calculation in reasonable detail of the amount of such
indemnity. The Facilities Agent and each Lender agrees to use
its commercially reasonable endeavours to complete any
procedural formalities necessary for the Facilities Agent and
the Lender to obtain a credit against any Indemnified Tax or
Other Tax or any relief or remission for an Indemnified Tax or
Other Tax (or its repayment). Notwithstanding any contrary
provision under the Finance Documents, the Facilities Agent or
the Lender, as the case may be, shall have no obligation to
contest the imposition or assertion of any Indemnified Tax or
Other Tax.
(d) As soon as practicable after any payment of Indemnified Taxes
or Other Taxes by an Obligor to a Governmental Authority, the
Obligor shall deliver to the Facilities Agent the original or
a certified copy of a receipt issued by such Governmental
Authority evidencing such payment (if such a receipt is
reasonably obtainable from such Governmental Authority), a
copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Facilities Agent.
(e) The Facilities Agent will deliver to the Company, and each
Lender will deliver to the Facilities Agent and the Company,
on or before the first Utilisation Date (or, in the case of a
Lender that becomes a Lender after the first Utilisation Date,
on or before such later date on which such Lender becomes a
Lender) such properly completed and executed Internal Revenue
Service form (Form W-8BEN, W-8ECI, W-8EXP, W-8IMY, or W-9, as
applicable) as will demonstrate, in accordance with applicable
regulations, that payments of interest by an Obligor to the
Facilities Agent for the account of such Lender pursuant to
this Agreement will be exempt from (or entitled to a reduction
in the rate of) United States federal withholding taxes. Any
Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction
in which the Obligor is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this
Agreement shall deliver to the Company (with a
62
copy to the Facilities Agent), at the time or times prescribed
by applicable law, such other properly completed and executed
documentation prescribed by applicable law or reasonably
requested by the Company (including any replacement or
successor form) as will permit such payments to be made
without withholding or at a reduced rate, provided that such
Foreign Lender has received prior written notice from the
Company advising it of the availability of such exemption or
reduction and containing all applicable documentation.
(f) If the Facilities Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or
Other Taxes as to which it has been indemnified by an Obligor
or with respect to which an Obligor has paid additional
amounts pursuant to this clause 17.9, it shall pay over such
refund to that Obligor (but only to the extent of indemnity
payments made, or additional amounts paid, by the Obligor
under this clause 17.9 with respect to the Taxes or Other
Taxes giving rise to such refund), net of all reasonable
out-of-pocket expenses of the Facilities Agent or such Lender
and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund);
provided, that the Obligor, upon the request of the Facilities
Agent or such Lender, agrees to repay the amount paid over to
the Obligor (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the
Facilities Agent or such Lender to the extent that the
Facilities Agent or such Lender is required to repay such
refund to such Governmental Authority. This clause 17.9 shall
not be construed to require the Facilities Agent or any Lender
to make available its tax returns (or any other information
relating to its taxes which it deems confidential) to the
Obligor or any other person.
(g) If an Obligor is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any
Lender pursuant to this clause 17.9, then the Obligor may, at
its sole expense and effort, upon notice to such Lender and
the Facilities Agent, require such Lender to assign and
delegate, without recourse (in accordance with and subject to
the restrictions contained in clause 28), all its interests,
rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided
that (i) the Obligor shall have received the prior written
consent of the Facilities Agent, which consent shall not
unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its
share in the Utilisations, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Obligor (in the case of all
other amounts) and (iii) in the case of any such assignment
resulting from payments required to be made pursuant to this
clause 17.9, such assignment will result in a material
reduction in such compensation or payments. A Lender shall not
be required to make any such assignment and delegation if,
prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Obligor to require
such assignment and delegation cease to apply.
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17.10 General
In clauses 17.10 to 17.15:
Italian Lender means a Lender which is resident in Italy or acting
through a Facility Office in Italy and in either case is entitled to
receive interest without withholding of tax from the relevant
Obligor under the domestic law of Italy.
Qualifying Lender means a Lender which is beneficially entitled to
interest payable to that Lender in respect of an advance under this
Agreement and is:
(a) an Italian Lender; or
(b) a Treaty Lender.
Tax Credit means a credit against any Tax or any relief or remission
for Tax (or its repayment).
Treaty Lender means a Lender which:
(a) is resident (as defined in the appropriate double taxation
agreement) in a country with which Italy has a double taxation
agreement giving residents of that country full exemption from
taxation on interest imposed by Italy;
(b) does not carry on a business in Italy through a permanent
establishment, branch or agency with which the payment is
effectively connected;
(c) is entitled to receive interest without withholding or, if
withheld, is entitled to reclaim that withholding in full,
under the terms of the appropriate double taxation agreement;
and
(d) has agreed with the Company any procedural formalities
necessary for each Obligor to make all payments to be made by
that Obligor to such Lender under the Finance Documents
without any Tax Deduction.
17.11 Tax gross-up
(a) Each Obligor must make all payments to be made by it under the
Finance Documents without any Tax Deduction, unless a Tax
Deduction is required by law.
(b) If:
(i) a Lender is not, or ceases to be, a Qualifying Lender;
or
(ii) an Obligor or a Lender is aware that an Obligor must
make a Tax Deduction (or that there is a change in the
rate or the basis of a Tax Deduction),
it must promptly notify the Facilities Agent. The Facilities
Agent must then promptly notify the affected Parties.
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(c) Except as provided below, if a Tax Deduction is required by
law to be made by an Obligor, the amount of the payment due
from the Obligor will be increased to an amount which (after
making the Tax Deduction) leaves an amount equal to the
payment which would have been due if no Tax Deduction had been
required.
(d) Except as provided below, an Obligor is not required to make
an increased payment under paragraph (c) above for a Tax
Deduction in respect of the tax imposed by Italy to a Lender
that is not, or has ceased to be, a Qualifying Lender in
excess of the increase that the Obligor would have had to pay
under paragraph (c) above had the Lender been, or not ceased
to be, a Qualifying Lender.
(e) Paragraph (d) above will not apply if the Lender has ceased to
be a Qualifying Lender by reason of any change after the date
it became a Lender under this Agreement in (or in the
interpretation, administration, or application of) any law or
double taxation agreement or any published practice or
concession of any relevant taxing authority.
(f) If an Obligor is required to make a Tax Deduction, that
Obligor shall make that Tax Deduction and must make any
payment required in connection with that Tax Deduction within
the time allowed by law.
(g) Within 30 days of making either a Tax Deduction or a payment
required in connection with a Tax Deduction, the Obligor must
deliver to the Facilities Agent for the relevant Finance Party
evidence reasonably satisfactory to that Finance Party that
the Tax Deduction has been made or (as applicable) the
appropriate payment has been paid to the relevant taxing
authority.
(h) In the event that an Obligor changes its country of residence
and a Tax Deduction is imposed by the new country of
residence, that Obligor shall pay such additional amounts to
ensure that the amounts received by the Facilities Agent and
each Lender are no less than the amounts the Facilities Agent
and each Lender would have received but for such change of
country of residence by that Obligor provided always that the
Obligor shall not be obliged to pay such additional amounts to
the extent that such additional amounts would not have been
payable under this paragraph had each Lender remained a
Qualifying Lender.
17.12 Tax indemnity
(a) Except as provided below, the Company must indemnify a Finance
Party against any loss or liability which that Finance Party
acting reasonably determines will be or has been suffered
(directly or indirectly) by that Finance Party for or on
account of Tax in relation to a payment received or receivable
(or any payment deemed to be received or receivable) under a
Finance Document.
(b) Paragraph (a) above does not apply to any Tax assessed on a
Finance Party under the laws of the jurisdiction in which:
65
(i) that Finance Party is incorporated or, if different, the
jurisdiction (or jurisdictions) in which that Finance
Party is treated as resident for tax purposes; or
(ii) that Finance Party's Facility Office is located in
respect of amounts received or receivable in that
jurisdiction,
if that Tax is imposed on or calculated by reference to the
net income received or receivable by that Finance Party.
However, any payment deemed to be received or receivable,
including any amount treated as income but not actually
received by the Finance Party, such as a Tax Deduction, will
not be treated as net income received or receivable for this
purpose.
(c) Paragraph (a) above does not apply to the extent a loss,
liability or cost:
(i) is compensated for by any increased payment under clause
17.11 (Tax gross-up); or
(ii) would have been compensated for by an increased payment
under clause 17.11 (Tax gross-up) but was not so
compensated solely because the exclusion in clause 17.11
(d) or the proviso to clause 17.11(h) applied.
(d) A Finance Party making, or intending to make, a claim under
paragraph (a) above must promptly notify the Company of the
event which will give, or has given, rise to the claim.
17.13 Tax Credit
(a) Where any payment has been made subject to a Tax Deduction, a
Finance Party agrees to use its commercially reasonable
endeavours to complete any procedural formalities necessary
for the relevant Finance Party to obtain any Tax Credit
available as a result of the payment being made subject to a
Tax Deduction.
(b) If an Obligor makes a Tax Payment and the relevant Finance
Party in its absolute discretion determines that:
(i) a Tax Credit is attributable either to an increased
payment of which that Tax Payment forms part, or to that
Tax Payment; and
(ii) it has used and retained that Tax Credit (on a
consolidated basis if relevant to the determination of
its allowable credit for foreign taxes paid or accrued),
the Finance Party must pay an amount to the Obligor which that
Finance Party determines will leave it (after that payment) in
the same after-Tax position as it would have been if the Tax
Payment had not been required to be made by the Obligor.
17.14 Stamp taxes
The Company must pay and indemnify each Finance Party against any
stamp duty, registration or other similar Tax payable in connection
with the entry into, performance or enforcement of any
66
Finance Document, except for any such Tax payable in connection with
the entry into a Transfer Certificate.
17.15 Value added taxes
(a) Any amount (including costs and expenses) payable under a
Finance Document by an Obligor is exclusive of any value added
tax or any other Tax of a similar nature which might be
chargeable in connection with that amount. If any such Tax is
chargeable, the Obligor must pay to the Finance Party (in
addition to and at the same time as paying that amount) an
amount equal to the amount of that Tax (and such Finance Party
shall as soon as reasonably practicable provide an appropriate
value added tax invoice to the Obligor).
(b) The obligation of any Obligor under paragraph (a) above will
be reduced to the extent that the Finance Party determines
(acting reasonably) that it is entitled to repayment or a
credit in respect of the relevant Tax.
17.16 General
In clauses 17.16 to 17.21:
Tax Credit means a credit against any Tax or any relief or remission
for Tax (or its repayment).
17.17 Tax gross-up
(a) Each Obligor must make all payments to be made by it under the
Finance Documents without any Tax Deduction, unless a Tax
Deduction is required by law.
(b) If an Obligor or a Lender is aware that an Obligor must make a
Tax Deduction (or that there is a change in the rate or the
basis of a Tax Deduction), it must promptly notify the
Facilities Agent. The Facilities Agent must then promptly
notify the affected Parties.
(c) Except as provided below, if a Tax Deduction is required by
law to be made by an Obligor, the amount of the payment due
from the Obligor will be increased to an amount which (after
making the Tax Deduction) leaves an amount equal to the
payment which would have been due if no Tax Deduction had been
required.
(d) If an Obligor is required to make a Tax Deduction, that
Obligor shall make that Tax Deduction and must make any
payment required in connection with that Tax Deduction within
the time allowed by law.
(e) Within 30 days of making either a Tax Deduction or a payment
required in connection with a Tax Deduction, the Obligor must
deliver to the Facilities Agent for the relevant Finance Party
evidence reasonably satisfactory to that Finance Party that
the Tax Deduction has been made or (as applicable) the
appropriate payment has been paid to the relevant taxing
authority.
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(f) Where possible, each Finance Party shall, in consultation with
the Company, take all reasonable steps to reduce the risk of a
Tax Deduction being required by law or reduce the amount of
such Tax Deduction, including, without limitation,
transferring its rights and obligations under the Finance
Documents to an Affiliate, changing its Facility Office or
co-operating with each Obligor by using its commercially
reasonable endeavours to complete any procedural formalities
necessary for that Obligor to obtain authorisation to make
payments without a Tax Deduction.
17.18 Tax indemnity
(a) Except as provided below, the Company must indemnify a Finance
Party against any loss or liability which that Finance Party
acting reasonably determines will be or has been suffered
(directly or indirectly) by that Finance Party for or on
account of Tax in relation to a payment received or receivable
(or any payment deemed to be received or receivable) under a
Finance Document.
(b) Paragraph (a) above does not apply to any Tax assessed on a
Finance Party under the laws of the jurisdiction in which:
(i) that Finance Party is incorporated or, if different, the
jurisdiction (or jurisdictions) in which that Finance
Party is treated as resident for tax purposes; or
(ii) that Finance Party's Facility Office is located in
respect of amounts received or receivable in that
jurisdiction,
if that Tax is imposed on or calculated by reference to the
net income received or receivable by that Finance Party.
However, any payment deemed to be received or receivable,
including any amount treated as income but not actually
received by the Finance Party, such as a Tax Deduction, will
not be treated as net income received or receivable for this
purpose.
(c) Paragraph (a) above does not apply to the extent a loss,
liability or cost is compensated for by any increased payment
under clause 17.17 (Tax gross-up).
(d) A Finance Party making, or intending to make, a claim under
paragraph (a) above must promptly notify the Company of the
event which will give, or has given, rise to the claim.
17.19 Tax Credit
(a) Where any payment has been made subject to a Tax Deduction, a
Finance Party agrees to use its commercially reasonable
endeavours to complete any procedural formalities necessary
for the relevant Finance Party to obtain any Tax Credit
available as a result of the payment being made subject to a
Tax Deduction.
(b) If an Obligor makes a Tax Payment and the relevant Finance
Party in its absolute discretion determines that:
68
(i) a Tax Credit is attributable either to an increased
payment of which that Tax Payment forms part, or to that
Tax Payment; and
(ii) it has used and retained that Tax Credit (on a
consolidated basis if relevant to the determination of
its allowable credit for foreign taxes paid or accrued),
the Finance Party must pay an amount to the Obligor which that
Finance Party determines will leave it (after that payment) in
the same after-Tax position as it would have been if the Tax
Payment had not been required to be made by the Obligor.
17.20 Stamp taxes
The Company must pay and indemnify each Finance Party against any
stamp duty, registration or other similar Tax payable in connection
with the entry into, performance or enforcement of any Finance
Document, except for any such Tax payable in connection with the
entry into a Transfer Certificate.
17.21 Value added taxes
(a) Any amount (including costs and expenses) payable under a
Finance Document by an Obligor is exclusive of any value added
tax or any other Tax of a similar nature which might be
chargeable in connection with that amount. If any such Tax is
chargeable, the Obligor must pay to the Finance Party (in
addition to and at the same time as paying that amount) an
amount equal to the amount of that Tax (and such Finance Party
shall as soon as reasonably practicable provide an appropriate
value added tax invoice to the Obligor).
(b) The obligation of any Obligor under paragraph (a) above will
be reduced to the extent that the Finance Party determines
(acting reasonably) that it is entitled to repayment or a
credit in respect of the relevant Tax.
18 Increased Costs
18.1 Increased Costs
Subject to the exceptions set out below, the Company shall, within
three Business Days of demand by the Facilities Agent, pay for the
account of a Finance Party the amount of any Increased Cost incurred
by that Finance Party or any of its Affiliates as a result of:
(a) the introduction of or any change in (or in the
interpretation, administration or application of) any law or
regulation made after the Signing Date; or
(b) compliance with any law or regulation introduced after the
Signing Date.
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18.2 Claims
18.2.1 A Finance Party intending to make a claim for Increased Costs shall
notify the Facilities Agent of the event giving rise to the claim,
following which the Facilities Agent shall promptly notify the
Company. Any such claim must be made on the Company within 6 months
from the date on which the Finance Party becomes aware of such
claim.
18.2.2 Each Finance Party shall, as soon as practicable after a demand by
the Facilities Agent, provide a certificate confirming the amount of
its Increased Costs.
18.3 Exceptions
These provisions do not apply to the extent any Increased Cost is:
(a) attributable to a Tax Deduction required by law to be made by
an Obligor;
(b) compensated for under another clause in this Agreement or
would have been but for an exception in such clause;
(c) compensated for by the payment of the Mandatory Cost;
(d) attributable to the wilful breach by the relevant Finance
Party or its Affiliates of any law or regulation;
(e) a tax on the overall net income or gains of a Finance Party or
any of its Affiliates; or
(f) attributable to the implementation or application of or
compliance with the "International Convergence of Capital
Measurement and Capital Standards, a Revised Framework"
published by the Basel Committee on Banking Supervision in
June 2004 in the form existing on the Signing Date ("Basel
II") or any other law or regulation which implements Basel II
(whether such implementation, application or compliance is by
a government, regulator, Finance Party or any of its
Affiliates).
19 Other indemnities
19.1 Currency indemnity
The Company shall as an independent obligation, within three
Business Days of demand, indemnify each Finance Party against any
loss or liability which that Finance Party incurs as a consequence
of:
(a) that Finance Party receiving an amount in respect of an
Obligor's liability under the Finance Documents; or
(b) that liability being converted into a claim, proof, judgment
or order,
in a currency other than the currency in which the amount is
expressed to be payable under the relevant Finance Document.
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19.1.2 Unless otherwise required by law, each Obligor waives any right it
may have in any jurisdiction to pay any amount under the Finance
Documents in a currency other than that in which it is expressed to
be payable.
19.2 Other indemnities
The Company shall, within three Business Days of demand, indemnify
each Finance Party against any cost, loss or liability (excluding
loss of profit and amounts in respect of Margin) which that Finance
Party incurs as a consequence of:
(a) the occurrence of any Event of Default;
(b) a failure by an Obligor to pay any amount due under a Finance
Document on its due date, including any resulting from any
distribution or redistribution of any amount among the Lenders
under this Agreement;
(c) a Utilisation not being made after a Utilisation Request has
been delivered for that Utilisation by reason of the operation
of any one or more of the provisions of this Agreement (other
than by reason of negligence or default by that Finance Party
alone); or
(d) a Utilisation (or part of a Utilisation) not being prepaid in
accordance with a notice of prepayment.
The Company's liability in each case includes any loss or expense on
account of funds borrowed, contracted for or utilised to fund any
amount payable under any Finance Document, any amount repaid or
prepaid or any Utilisation.
19.3 Indemnity to the Facilities Agent
The Company shall, within three Business Days of demand, indemnify
the Facilities Agent against any loss or liability incurred by the
Facilities Agent (acting reasonably) as a result of:
(a) investigating any event which it reasonably believes to be a
Default provided that prior to any such investigation being
commenced the Facilities Agent has consulted the Company
concerning such event if the Facilities Agent, acting in good
faith, considers that it can do so without prejudicing the
position of the Finance Parties; or
(b) acting or relying on any notice which the Facilities Agent
reasonably believes to be genuine, correct and appropriately
authorised.
20 Mitigation by the Finance Parties
20.1 Each Finance Party must, in consultation with the Company, take all
reasonable steps to mitigate any circumstances which arise and which
result or would result in:
(a) any Tax Payment or Increased Costs being payable to that
Finance Party;
71
(b) that Finance Party being able to exercise any right of
prepayment and/or cancellation under this Agreement by reason
of any illegality; or
(c) that Finance Party incurring any cost of complying with the
minimum reserve requirements of the European Central Bank,
including transferring its rights and obligations under the Finance
Documents to an Affiliate or changing its Facility Office.
20.2 Clause 20.1 above does not in any way limit the obligations of any
Obligor under the Finance Documents.
20.3 The Company must indemnify each Finance Party for all costs and
expenses reasonably incurred by that Finance Party which are
directly referable to the Facility as a result of any step taken by
it under this clause 20.
20.4 A Finance Party is not obliged to take any step under this clause 20
if, in the opinion of that Finance Party (acting reasonably), to do
so could reasonably be expected to be prejudicial to it.
21 Costs and expenses
21.1 Initial costs
Subject to clause 21.4, the Company shall, within three Business
Days of demand, pay to the Facilities Agent and the Arrangers the
amount of all reasonable costs and expenses (including legal fees)
reasonably incurred by them in connection with the negotiation,
preparation, printing, execution and syndication of the Finance
Documents.
21.2 Subsequent costs
21.2.1 Subject to clause 21.4, the Company must promptly on demand pay to
the Facilities Agent the amount of all reasonable costs and expenses
(including legal fees) reasonably incurred by it in connection with:
(a) the negotiation, preparation, printing and execution of any
Finance Document (other than a Transfer Certificate) executed
after the Signing Date; and
(b) any amendment, waiver or consent requested by or on behalf of
an Obligor or an amendment required or specifically allowed by
this Agreement to any Finance Document.
21.3 Enforcement costs
Subject to clause 21.4, the Company must promptly on demand pay to
each Finance Party the amount of all costs and expenses (including
legal fees) properly incurred by it in connection with the
enforcement of, or the preservation of any rights under, any Finance
Document.
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21.4 Legal fees
The Company will only be liable to pay an amount in respect of legal
fees under clauses 22.1 to 21.3 for one law firm, and, in the case
of clauses 21.1 and 21.2, applicable foreign counsel instructed by
such law firm for the purposes of obtaining legal opinions, and, in
the case of clause 21.3, applicable foreign counsel instructed by
such law firm for the purposes of enforcing or preserving any rights
under any Finance Document, representing all of the Finance Parties
together.
22 Guarantee and indemnity
22.1 Guarantee and indemnity by the Company
22.1.1 The Company irrevocably and unconditionally:
(a) guarantees to each Finance Party punctual performance by each
Borrower that is its Subsidiary of all that Borrower's payment
obligations under the Finance Documents;
(b) undertakes with each Finance Party that whenever a Borrower
that is its Subsidiary does not pay any amount when due under
any Finance Document, it shall immediately on demand by the
Facilities Agent pay that amount as if it was the principal
obligor; and
(c) indemnifies each Finance Party immediately on demand against
any loss or liability suffered by that Finance Party if any
payment obligation guaranteed by it hereunder is or becomes
unenforceable, invalid or illegal; the amount of the cost,
loss or liability under this indemnity shall be equal to the
amount which that Finance Party would otherwise have been
entitled to recover.
22.1.2 The guarantee in clause 22.1.1 is a continuing guarantee and will
extend to the ultimate balance of sums payable by any of the
Company's Subsidiaries under the Finance Documents, regardless of
any intermediate payment or discharge in whole or in part.
22.2 Guarantee and indemnity by Carnival plc
22.2.1 Carnival plc irrevocably and unconditionally:
(a) guarantees to each Finance Party punctual performance by each
Borrower that is its Subsidiary of all that Borrower's payment
obligations under the Finance Documents;
(b) undertakes with each Finance Party that whenever a Borrower
that is its Subsidiary does not pay any amount when due under
any Finance Document, it shall immediately on demand by the
Facilities Agent pay that amount as if it was the principal
obligor; and
(c) indemnifies each Finance Party immediately on demand against
any loss or liability suffered by that Finance Party if any
payment obligation guaranteed by it hereunder is or becomes
unenforceable, invalid or illegal; the amount of the cost,
loss or liability under this indemnity
73
shall be equal to the amount which that Finance Party would
otherwise have been entitled to recover.
22.2.2 The guarantee in clause 22.2.1 is a continuing guarantee and will
extend to the ultimate balance of sums payable by any of Carnival
plc's Subsidiaries under the Finance Documents, regardless of any
intermediate payment or discharge in whole or in part.
22.3 Reinstatement
(a) If any discharge (whether in respect of the obligations of any
Obligor or any security for those obligations or otherwise) or
arrangement is made in whole or in part on the faith of any
payment, security or other disposition which is avoided or
must be restored on insolvency, liquidation or otherwise
without limitation, the liability of each Guarantor under this
clause will continue as if the discharge or arrangement had
not occurred.
(b) Each Finance Party may concede or compromise any claim that
any payment, security or other disposition is liable to
avoidance or restoration.
22.4 Waiver of defences
The obligations of each Guarantor under this clause 22 will not be
affected by an act, omission, matter or thing which, but for this
clause, would reduce, release or prejudice any of its obligations
under this clause 22 (without limitation and whether or not known to
it or any Finance Party) including:
(a) any time, waiver or consent granted to, or composition with,
any Obligor or other person;
(b) the release of any other Obligor or any other person under the
terms of any composition or arrangement with any creditor of
any member of the Carnival Corporation & plc Group;
(c) the taking, variation, compromise, exchange, renewal or
release of, or refusal or neglect to perfect, take up or
enforce, any rights against, or security over assets of, any
Obligor or other person;
(d) any non-presentation or non-observance of any formality or
other requirement in respect of any instrument or any failure
to realise the full value of any security;
(e) any incapacity or lack of power, authority or legal
personality of or dissolution or change in the members or
status of an Obligor or any other person;
(f) any amendment (however fundamental) of a Finance Document or
any other document or security;
(g) any unenforceability, illegality or invalidity of any
obligation of any person under any Finance Document or any
other document or security; or
(h) any insolvency or similar proceedings.
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22.5 Immediate recourse
Each Guarantor waives any right it may have of first requiring any
Finance Party (or any trustee or agent on its behalf) to proceed
against or enforce any other rights or security or claim payment
from any person before claiming from that Guarantor under this
clause 22. This waiver applies irrespective of any law or any
provision of the Finance Documents to the contrary.
22.6 Appropriations
22.6.1 Until all amounts which may be or become payable by any of the
Company's Subsidiaries under the Finance Documents have been
irrevocably paid in full, each Finance Party (or any trustee or
agent on its behalf) may:
(a) refrain from applying or enforcing any other moneys, security
or rights held or received by that Finance Party (or any
trustee or agent on its behalf) in respect of those amounts;
or
(b) apply and enforce the same in such manner and order as it sees
fit (whether against those amounts or otherwise); and
(c) hold in an interest-bearing suspense account any moneys
received from the Company or on account of the Company's
liability under this clause 22.
22.6.2 Until all amounts which may be or become payable by any of Carnival
plc's Subsidiaries under the Finance Documents have been irrevocably
paid in full, each Finance Party (or any trustee or agent on its
behalf) may:
(a) refrain from applying or enforcing any other moneys, security
or rights held or received by that Finance Party (or any
trustee or agent on its behalf) in respect of those amounts;
or
(b) apply and enforce the same in such manner and order as it sees
fit (whether against those amounts or otherwise); and
(c) hold in an interest-bearing suspense account any moneys
received from Carnival plc or on account of Carnival plc's
liability under this clause 22.
22.7 Non-competition
22.7.1 The Company shall, until all sums whatsoever payable by any of its
Subsidiaries under the Finance Documents have been irrevocably paid
in full, exercise only in accordance with the Facilities Agent's
instructions:
(a) its rights of subrogation, contribution and indemnity against
that Subsidiary;
(b) its right to take the benefit of, share in or enforce any
security or other guarantee or indemnity for that Subsidiary's
obligations under the Finance Documents held by any of the
Finance Parties; and/or
75
(c) its rights to prove or claim in the bankruptcy, liquidation,
administration or other insolvency proceedings of that
Subsidiary.
22.7.2 Any amount recovered as a result of the exercise of the rights
described in clause 22.7.1 above shall be held on trust for the
Facilities Agent on behalf of the Finance Parties and paid to the
Facilities Agent for the Finance Parties on demand. The Company
warrants to the Finance Parties that it has not taken any security
from its Subsidiaries in relation to the Finance Documents and
agrees not to do so until the Finance Parties receive all sums
payable by those Subsidiaries under the Finance Documents. Any
security taken by the Company in breach of this provision and all
moneys at any time received in respect thereof shall be held in
trust for the Finance Parties.
22.7.3 Carnival plc shall, until all sums whatsoever payable by any of its
Subsidiaries under the Finance Documents have been irrevocably paid
in full, exercise only in accordance with the Facilities Agent's
instructions:
(a) its rights of subrogation, contribution and indemnity against
that Subsidiary;
(b) its right to take the benefit of, share in or enforce any
security or other guarantee or indemnity for that Subsidiary's
obligations under the Finance Documents held by any of the
Finance Parties; and/or
(c) its rights to prove or claim in the bankruptcy, liquidation,
administration or other insolvency proceedings of that
Subsidiary.
22.7.4 Any amount recovered as a result of the exercise of the rights
described in clause 22.7.3 above shall be held on trust for the
Facilities Agent on behalf of the Finance Parties and paid to the
Facilities Agent for the Finance Parties on demand. Carnival plc
warrants to the Finance Parties that it has not taken any security
from its Subsidiaries in relation to the Finance Documents and
agrees not to do so until the Finance Parties receive all sums
payable by those Subsidiaries under the Finance Documents. Any
security taken by Carnival plc in breach of this provision and all
moneys at any time received in respect thereof shall be held in
trust for the Finance Parties.
22.8 Additional security
Each guarantee in clause 22.1 is in addition to and is not in any
way prejudiced by any other guarantee or security now or
subsequently held by any Finance Party.
23 Representations
23.1 Representations
The representations set out in this clause are made in accordance
with clause 23.10 (Times for making representations).
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23.2 Status
Each Obligor is duly incorporated and validly existing under the
laws of its jurisdiction of incorporation as a limited liability
company, a corporation, or other legal entity and has the power to
execute, deliver and perform its obligations under the Finance
Documents; all necessary corporate action has been taken by each
Obligor to authorise the execution, delivery and performance of, the
Finance Documents to which it is or will be a party and each Finance
Document to which it is a party constitutes valid and legally
binding and enforceable obligations in accordance with its terms
(subject to applicable bankruptcy, reorganisation, insolvency,
moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general
application (regardless of whether enforcement is sought in a
proceeding in equity or at law)); each Obligor has the power to own
its assets and carry on its business as it is being conducted where
a lack of such power would have a Material Adverse Effect.
23.3 Non-conflict
The execution, delivery and performance by each Obligor of the
Finance Documents will not contravene any existing law, regulation
or authorisation to which that Obligor is subject, result in the
breach of or default under any agreement or other instrument to
which that Obligor is a party or which is binding upon that Obligor
or its assets or contravene any provision of that Obligor's
constitutional documents.
23.4 No default
23.4.1 No Default has occurred and is continuing or will result from the
execution of, or the performance of any transaction contemplated by,
any Finance Document.
23.4.2 No Obligor nor any of its respective Subsidiaries is in default
under any agreement relating to Borrowed Money to which it or any of
its respective Subsidiaries is a party or by which it or any of its
respective Subsidiaries may be bound which default would have a
Material Adverse Effect.
23.5 Financial statements
The Carnival Corporation & plc Group's audited financial statements
most recently delivered to the Facilities Agent (which, in the case
of the Carnival Corporation & plc Group at the Signing Date, are the
Original Financial Statements):
(a) have been prepared in accordance with GAAP, consistently
applied; and
(b) fairly represent its financial condition (consolidated, if
applicable) as at the date to which they were drawn up,
except, in each case, as disclosed to the contrary in those
financial statements.
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23.6 No material adverse change
There has been no adverse change in the business or consolidated
financial condition of the Carnival Corporation & plc Group since
the date to which the Original Financial Statements were drawn up
which would have a Material Adverse Effect.
23.7 Litigation
No litigation, arbitration or administrative proceedings is taking
place, pending or to its knowledge, threatened against an Obligor or
any Material Subsidiary, which is likely to be determined adversely
to the relevant member of the Carnival Corporation & plc Group and,
if so determined, would be likely to have a Material Adverse Effect.
23.8 Pari passu ranking
The obligations of each Obligor under the Finance Documents to which
it is a party rank at least pari passu with all its other present
unsecured and unsubordinated indebtedness with the exception of any
obligations which are mandatorily preferred by law.
23.9 United States Law
23.9.1 In this Subclause:
controlled has the meaning given to it in the United States
Investment Company Act of 1940;
holding company, affiliate and subsidiary company have the meanings
given to them in the United States Public Utility Holding Company
Act of 1935;
investment company has the meaning given to it in the United States
Investment Company Act of 1940; and
public utility has the meaning given to it in the United States
Federal Power Act of 1920.
23.9.2 No Obligor which is incorporated in the United States of America or
a state thereof is:
(a) a holding company, an affiliate of a holding company or a
subsidiary company of a holding company, or subject to
regulation, under the United States Public Utility Holding
Company Act of 1935;
(b) an investment company or controlled by an investment company
or required to register as an investment company; or
(c) a public utility, or subject to regulation, under the United
States Federal Power Act of 1920.
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23.10 Times for making representations
23.10.1 The representations set out in this clause 23 are made by each
Original Obligor on the Signing Date in respect of itself (and its
respective Subsidiaries if so stated in the representation so
concerned) to each Finance Party.
23.10.2 Unless a representation is expressed to be given at a specific date,
each representation (other than clause 23.4 (No default) to clause
23.7 (Litigation) inclusive) is deemed to be repeated by the Company
and each Borrower to each Finance Party on the date of each
Utilisation Request, each Utilisation Date, the first day of each
Interest Period and, in the case of an Additional Borrower, by the
Additional Borrower on the day on which the Subsidiary becomes an
Additional Borrower.
23.10.3 When a representation is repeated, it shall be made with reference
to the facts and circumstances existing at the time of repetition.
24 Information undertakings
24.1 Financial statements
24.1.1 The Company must supply to the Facilities Agent in sufficient copies
for all the Lenders:
(a) the audited consolidated financial statements of the Carnival
Corporation & plc Group for each of its financial years (which
will be the Carnival Corporation 10-K as filed with the SEC);
(b) the unaudited consolidated financial statements of the
Carnival Corporation & plc Group for each of the first three
fiscal quarters in each of its financial years (which will be
the Carnival Corporation 10-Q as filed with the SEC); and
(c) the registration statements and reports filed with the SEC
(including the Carnival Corporation 10-K) by the Company and
Carnival plc.
24.1.2 All financial statements must be supplied as soon as they are
available and:
(a) in the case of the audited consolidated financial statements
of the Carnival Corporation & plc Group, within 120 days;
(b) in the case of unaudited quarterly financial statements of the
Carnival Corporation & plc Group, within 75 days; and
(c) in the case of registration statements and reports filed with
the SEC, within 15 days,
of the end of the relevant financial period (or in the case of
clause 24.1.1(c) above, of the date of filing with the SEC in
accordance with the time periods specified in the rules and
regulations of the SEC).
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24.2 Form of financial statements
The Company must ensure that each set of financial statements
supplied under this Agreement fairly presents the financial
condition (consolidated or otherwise) of the relevant person as at
the date to which those financial statements were drawn up. The
Company shall not be required to produce footnotes to the unaudited
financial statements.
24.3 Compliance Certificate
24.3.1 The Company must supply to the Facilities Agent a Compliance
Certificate with each set of financial statements sent to the
Facilities Agent under this Agreement.
24.3.2 A Compliance Certificate must be signed by a senior financial
officer of the Company.
24.4 Information - miscellaneous
24.4.1 The Company must supply to the Facilities Agent, in sufficient
copies for all the Lenders if the Facilities Agent so requests:
(a) copies of all documents despatched by the Company or Carnival
plc to its creditors generally at the same time as the
documents are despatched;
(b) promptly on request, a list of the then current Material
Subsidiaries; and
(c) promptly on request, such further information regarding the
financial condition and operations of the Carnival Corporation
& plc Group as any Finance Party through the Facilities Agent
may reasonably require except information which is
confidential in relation to third parties or which the Company
is prohibited from disclosing by law or by regulatory
requirement.
24.4.2 The Company must provide written notice to the Facilities Agent of
any information posted to the website identified in clause 24.6.1(b)
for the benefit of its shareholders, and for this purpose only the
Facilities Agent agrees that it will accept such notification by
email. The Company shall provide such notification as soon as
practicable after the relevant information is posted to the website.
24.5 Notification of Default
The Company must notify the Facilities Agent of any Default (and the
steps, if any, being taken to remedy it) promptly upon becoming
aware of its occurrence.
24.6 Use of websites
24.6.1 Except as provided below, the Company may deliver any information
under this Agreement to a Lender by posting it on to an electronic
website if:
(a) the Facilities Agent and the Lender agree, it being understood
that the Facilities Agent and all Original Lenders provide
their consent for all of the information under clause 24.1.1
to be so delivered;
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(b) the Company and the Facilities Agent designate an electronic
website for this purpose which, for the purpose of clause
24.1.1 hereof shall be www.carnivalcorp.com, until and unless
the Company sends written notice to the Facilities Agent
advising of a change to the details of the website;
(c) the Company notifies the Facilities Agent of the address of
and password (if any) for the website (other than with respect
to the information contemplated by clause 24.1.1 which shall
be posted to the website identified in paragraph (b) above);
and
(d) the information posted is in a format agreed between the
Company and the Facilities Agent.
The Facilities Agent must supply each relevant Lender with the
address of and password for the website.
24.6.2 Notwithstanding the above, the Company must supply to the Facilities
Agent in paper form a copy of any information posted on the website
together with sufficient copies for:
(a) any Lender not agreeing to receive information via the website
(subject to clause 24.6.1(a) above); and
(b) within ten Business Days of request, any other Lender, if that
Lender so requests (subject to clause 24.6.1(a) above).
24.6.3 The Company must promptly upon becoming aware of its occurrence,
notify the Facilities Agent if:
(a) the website cannot be accessed;
(b) the website or any information on the website is infected by
any electronic virus or similar software;
(c) the password (if any) for the website is changed; or
(d) any information to be supplied under this Agreement is posted
on the website or amended after being posted.
If the circumstances in paragraph (a) or (b) above occur, the
Company must supply any information required under this Agreement in
paper form during the time that the website is not available.
24.7 "Know your customer" checks
24.7.1 The Company shall promptly upon the written request of the
Facilities Agent supply, or procure the supply of, such
documentation and other evidence about each Obligor and each
Additional Borrower as is reasonably requested by the Facilities
Agent, for itself, on behalf of any Lender or on behalf of any
prospective New Lender, in order for the Facilities Agent, that
Lender or prospective New Lender to carry out and be satisfied with
the results of all necessary "know your customer" checks that it is
required to carry out by reason of being a party to the transactions
contemplated in the Finance
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Documents, provided that (subject to any change of law, change of
regulation or a change in a Lender's internal compliance procedures,
or any change in the interpretation, administration or application
thereof, that is made, in each case, in accordance with a Lender's
normal practice in respect of companies which are listed (at all
times when the Company is listed) investment grade (at all times
when the Company's debt is of investment grade) and (at all times)
of a comparable credit standing to the Company (other than, in each
case, on those companies first becoming a customer of that Lender),
or any change in status of any Obligor after the Signing Date, that
might reasonably result in further documentation or other evidence
being required) the Facilities Agent may only make one such request
in respect of itself, each Lender and each prospective New Lender.
24.7.2 Each Lender shall promptly upon the request of the Facilities Agent
supply, or procure the supply of, such documentation and other
evidence as is reasonably requested by the Facilities Agent (for
itself) in order for the Facilities Agent to carry out and be
satisfied with the results of all necessary "know your customer"
checks that it is required to carry out pursuant to the transactions
contemplated in the Finance Documents.
25 Financial covenants
25.1 Definitions
Borrowed Money or moneys borrowed means, at any time, all borrowings
of the respective members of the Carnival Corporation & plc Group
whether secured or unsecured and shall be deemed to include (to the
extent that the same would not otherwise fall to be taken into
account):
(a) the principal amount for the time being owing (other than to
any member of the Carnival Corporation & plc Group) of all
debentures (as defined in section 744 of the Companies Act
1985) notwithstanding that the same may be or have been issued
in whole or in part for a consideration other than cash;
except that, in the case of a debenture issued at a discount
which contains provisions for prepayment or acceleration, the
principal amount thereof at any relevant time shall be deemed
to be the highest amount which would, if such debenture were
then to be repaid in accordance with any such provision for
prepayment or acceleration, be repayable in respect of the
principal amount thereof;
(b) the outstanding amount raised by the acceptance of bills (not
being acceptances of trade bills in respect of the purchase or
sale of goods in the ordinary course of trading) by any member
of the Carnival Corporation & plc Group or by any bank or
accepting house under any acceptance credit opened on behalf
of any member of the Carnival Corporation & plc Group;
(c) the fixed premium payable on final redemption or repayment of
any debentures, share capital or other Borrowed Moneys falling
to be taken into account;
(d) the nominal amount of any issued share capital and the
principal amount of any Borrowed Moneys, the redemption or
repayment whereof is guaranteed or the subject of any
indemnity
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or otherwise secured (and where part only is so secured to the
extent so secured) by any other member of the Carnival
Corporation & plc Group except insofar as either the benefit
of such guarantee or indemnity or security or the beneficial
interest in the right to such redemption or repayment is held
by another member of the Carnival Corporation & plc Group or
such nominal or principal amount is otherwise taken into
account hereunder;
Provided that:
(i) moneys borrowed by any member of the Carnival
Corporation & plc Group for the purpose of repaying or
redeeming (with or without premium) in whole or in part
any other Borrowed Moneys falling to be taken into
account and intended to be applied for such purposes
within six months after the borrowing thereof and so
applied shall not during such period except to the
extent not so applied themselves be taken into account;
(ii) moneys borrowed by any member of the Carnival
Corporation & plc Group and owing to any other member of
the Carnival Corporation & plc Group shall not (save to
the extent mentioned in (iii) below) be taken into
account;
(iii) moneys borrowed by a member of the Carnival Corporation
& plc Group which is a partly owned Subsidiary of the
Company and not owing to the Company or another member
of the Carnival Corporation & plc Group shall be taken
into account subject to the exclusion of that proportion
thereof as equals the minority proportion but the
minority proportion of any moneys borrowed by a member
of the Carnival Corporation & plc Group from a
partly-owned Subsidiary (which would otherwise be
excluded by virtue of (ii) above) shall be included; for
these purposes minority proportion shall mean that
proportion of the issued equity share capital (within
the meaning of section 744 of the Companies Act, 1985)
of the partly-owned Subsidiary which is not attributable
directly or indirectly to the Company;
(iv) moneys borrowed by a member of the Carnival Corporation
& plc Group expressed in or calculated by reference to a
currency other than US Dollars shall be converted into
US Dollars in the manner used in the financial
statements filed by the Carnival Corporation & plc Group
with the SEC;
(v) moneys borrowed against the security of an asset in
respect of which there is no recourse against any member
of the Carnival Corporation & plc Group other than to
that asset shall not be taken into account; and
(vi) Excluded Indebtedness shall not be taken into account.
Capital Lease means with respect to any person, any lease of any
property (whether real, personal or mixed) by such person as lessee
that, in accordance with GAAP, either would be required to be
classified and accounted for as a capital lease on a balance sheet
of such person or otherwise be disclosed as such in a note to such
balance sheet, other than, in the case of the Company and
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Carnival plc or a Subsidiary, any such lease under which the
Company, Carnival plc or such Subsidiary is the lessor.
Consolidated Capital means, at any time, the aggregate of the Issued
Capital and Consolidated Reserves of the Carnival Corporation & plc
Group and all Borrowed Moneys for the time being undischarged.
Consolidated Net Interest Charges means Interest Payable less
Interest Receivable during the relevant Measurement Period.
EBITDA means the consolidated net income of the Carnival Corporation
& plc Group for the relevant Measurement Period:
(a) before any deduction for Taxes;
(b) before any deduction for Consolidated Net Interest Charges and
before any amortisation of upfront fees and expenses in
relation to Borrowed Money;
(c) before any deduction for depreciation or impairment;
(d) before any deduction for amortisation; and
(e) excluding exceptional items and separately disclosable items
(for the avoidance of doubt, including restructuring items),
but adjusted by deducting any amounts attributable to minority
interests.
Excluded Indebtedness means any Indebtedness (including Indebtedness
pursuant to a U.S. leveraged lease financing including a U.S. lease
to service contract under Section 7701(e) of the Internal Revenue
Code of 1986 (as amended from time to time)), the payment of which
is provided for by the deposit of cash, cash equivalents or letters
of credit with one or more investment-grade banks or other financial
institutions acting as payment undertaker, irrespective whether any
such arrangements constitutes a defeasance under GAAP.
GAAP means generally accepted accounting principles in the United
States.
Indebtedness means (a) any liability of any person (i) for borrowed
money, or under any reimbursement obligation related to a letter of
credit or bid or performance bond facility, or (ii) evidenced by a
bond, note, debenture or other evidence of indebtedness (including a
purchase money obligation) representing extensions of credit or
given in connection with the acquisition of any business, property,
service or asset of any kind, including without limitation, any
liability under any commodity, interest rate or currency exchange
hedge or swap agreement (other than a trade payable, other current
liability arising in the ordinary course of business or commodity,
interest rate or currency exchange hedge or swap agreement arising
in the ordinary course of business) or (iii) for obligations with
respect to (A) an operating lease, or (B) a lease of real or
personal property that is or would be classified and accounted for
as a Capital Lease; (b) any liability of others either for any
lease, dividend
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or letter of credit, or for any obligation described in the
preceding clause (a) that (i) the person has guaranteed or that is
otherwise its legal liability (whether contingent or otherwise or
direct or indirect, but excluding endorsements or negotiable
instruments for deposit or collection in the ordinary course of
business) or (ii) is secured by any Security Interest on any
property or asset owned or held by that person, regardless whether
the obligation secured thereby shall have been assumed by or is a
personal liability of that person; and (c) any amendment,
supplement, modification, deferral, renewal, extension or refunding
of any liability of the types referred to in clauses (a) and (b)
above; provided however, that "Indebtedness" shall not include
Excluded Indebtedness.
Interest means the aggregate interest, guarantee commission and
amounts in the nature of interest paid or payable in respect of any
Borrowed Moneys (other than agency, arrangement, management or
participation fees or fees of any other nature).
Interest Payable means the aggregate of:
(a) all Interest attributable to the Carnival Corporation & plc
Group and charged to the Carnival Corporation & plc Group's
consolidated profit and loss account during the relevant
Measurement Period; and
(b) the interest (or equivalent) element of payments under finance
leases attributable to the Carnival Corporation & plc Group
and charged to the Carnival Corporation & plc Group's
consolidated profit and loss account during that Measurement
Period;
in each case and calculated on the basis that:
(i) the amount of Interest accrued will be increased by an amount
equal to any amount payable by any member of the Carnival
Corporation & plc Group under interest rate hedging
arrangements in relation to that Measurement Period; and
(ii) the amount of Interest accrued will be reduced by an amount
equal to any amount payable to any member of the Carnival
Corporation & plc Group under interest rate hedging
arrangements in relation to that Measurement Period.
Interest Receivable means all interest and amounts in the nature of
interest attributable to the Carnival Corporation & plc Group and
credited to the Carnival Corporation & plc Group's consolidated
profit and loss account during the relevant Measurement Period
(whether or not paid).
Issued Capital and Consolidated Reserves means at any relevant time
the aggregate of:
(a) the amount paid up or credited as paid up on the issued share
capital of the Company and Carnival plc on a combined basis
(for which purpose an issue or proposed issue of share capital
for cash which has been unconditionally underwritten shall be
deemed paid up to the extent that the underwriters are liable
therefor and that such capital will be paid up within four
months from the date when such underwriting liability became
unconditional); and
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(b) the amounts standing to the credit of the consolidated capital
and revenue reserves of the Carnival Corporation & plc Group
(including any share premium account or capital redemption
reserve fund) after adding thereto or deducting therefrom any
balance to the credit or debit of the profit and loss account,
all determined by reference to the then latest available
audited consolidated balance sheet of Carnival Corporation
(reflecting the Carnival Corporation & plc Group) but after:
(i) deducting an amount equal to any distribution declared,
recommended or made by any member of the Carnival
Corporation & plc Group (otherwise than attributable
directly or indirectly to the Company) out of profits
earned up to and including the date of such balance
sheet to the extent that such distribution is not
provided for in such balance sheet;
(ii) excluding amounts attributable to minority interests in
the Company's or Carnival plc's Subsidiaries;
(iii) excluding any sums set aside for deferred taxation but
only to the extent that the reduction in the tax charge
represented thereby cannot be seen with reasonable
probability to continue for the foreseeable future; and
(iv) deducting any amount representing any intangible assets
other than goodwill arising on consolidation.
Measurement Period means any twelve month period ending on a Testing
Date.
Testing Date means the last day of each financial quarter of the
Carnival Corporation & plc Group.
25.2 Interpretation
25.2.1 Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided that, if the Company
notifies the Facilities Agent that the Company requests an amendment
to any provision hereof to eliminate the effect of any change
occurring after the Signing Date in GAAP or in the application
thereof on the operation of such provision (or if the Facilities
Agent notifies the Company that the Majority Lenders request an
amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP
or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied
immediately before such change shall have become effective until
such notice shall have been withdrawn or such provision amended in
accordance herewith.
25.2.2 Any amount in a currency other than US Dollars is to be taken into
account at its US Dollars equivalent calculated on the basis of the
relevant rates of exchange used by the Carnival Corporation & plc
Group in, or in connection with, its financial statements for that
period.
25.2.3 No item must be credited or deducted more than once in any
calculation under this clause.
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25.3 Issued Capital and Consolidated Reserves
The Company must ensure that on each Testing Date Issued Capital and
Consolidated Reserves are in excess of USD5,000,000,000.
25.4 Gearing
The Company must ensure that on each Testing Date the aggregate of
all Borrowed Moneys (for the time being undischarged) does not
exceed 65 per cent. of Consolidated Capital at that time.
25.5 Interest cover
The Company must ensure that on each Testing Date the ratio of
EBITDA to Consolidated Net Interest Charges, for the Measurement
Period ending on the Testing Date, is not less than 3 to 1.
26 General undertakings
26.1 General
Each Obligor agrees to be bound by the covenants set out in this
clause relating to it and, where the covenant is expressed to apply
to any member of the Carnival Corporation & plc Group and/or
Material Subsidiaries, the Company and Carnival plc shall ensure
that, in respect of each of their Subsidaries, the relevant Carnival
Corporation & plc Group member performs that covenant.
26.2 Authorisations
Each Obligor will obtain and comply with and do all that is
necessary to maintain in full force and effect, and shall procure
that each of its Subsidiaries obtain and comply with and do all that
is necessary to maintain in full force and effect, in all material
respects the terms and conditions of all authorisations, approvals,
resolutions, exemptions, filings, notarisations, consents, licences
and concessions material to the carrying on of its business as a
member of the Carnival Corporation & plc Group, where the failure to
so comply would be likely to have a Material Adverse Effect.
26.3 Negative pledge
No Obligor will create or incur, or suffer to be created or incurred
or come to exist any Security Interest in respect of Indebtedness on
any vessel or other of its properties or assets of any kind, real or
personal, tangible or intangible, included in the consolidated
balance sheet of the Carnival Corporation & plc Group in accordance
with GAAP, nor shall the Company permit any member of the Carnival
Corporation & plc Group to do any of the foregoing provided that
solely for the purposes of this clause 26.3 the term "Security
Interest" shall not include:
(a) any Security Interest in respect of Excluded Assets or
Excluded Indebtedness; and
(b) any other Security Interest in respect of Indebtedness up to
an amount not greater than 40% of the amount of the total
assets of the Carnival Corporation & plc Group as shown in the
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Carnival Corporation & plc Group's most recent consolidated
balance sheet (excluding for these purposes the value of any
intangible assets).
26.4 Insurance
The Company (for itself and its Subsidiaries) and Carnival plc (for
itself and its Subsidiaries) will ensure that it, each other Obligor
and each Material Subsidiary will insure all of their respective
properties and assets with insurance companies to such an extent and
against such risks as prudent companies engaged in businesses
similar to those of the relevant company normally insure where the
failure to so insure would have a Material Adverse Effect if the
risk concerned were to occur.
26.5 ERISA
The Company (for itself and its Subsidiaries) and Carnival plc (for
itself and its Subsidiaries) will ensure that it, each other Obligor
and each Material Subsidiary will comply with all applicable
provisions of ERISA and the regulations and rulings issued
thereunder where failure to so comply would be likely to have a
Material Adverse Effect.
26.6 Margin Stock
The Company (for itself and its Subsidiaries) and Carnival plc (for
itself and its Subsidiaries) will ensure that no Borrower will use
the proceeds of any Utilisation, directly or indirectly, to buy or
carry Margin Stock (as defined in Regulations U and X issued by the
Board of Governors of the United States Federal Reserve System) or
to extend credit to others for the purposes of buying or carrying
Margin Stock in any manner that might cause the borrowing or
application to violate Regulations U or X.
27 Events of Default
27.1 Each of the events set out in this clause is an Event of Default.
27.2 Non-payment
An Obligor does not pay on the due date any amount payable by it
under the Finance Documents in the manner required under the Finance
Documents and such amount is not paid within five Business Days of
receipt of written notice from the Facilities Agent that it has not
received such sum provided that if such failure is solely the result
of any bank or financial institution not promptly remitting a
payment as instructed by the Obligor and if that Obligor has taken
all reasonable steps to cause such payment to be made, the period
for the remedy of such payment failure shall be extended by a
further three Business Days.
27.3 Breach of other obligations
An Obligor defaults in the due performance or observance of any of
its covenants under clause 25 or any material obligations under the
Finance Documents (other than non-payment of any amount payable by
it under the Finance Documents on its due date), unless the
non-compliance is remedied
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within fifteen Business Days of the Facilities Agent giving notice
of the non-compliance and requesting that such default be remedied.
27.4 Misrepresentation
Any material representation or warranty made or deemed to be made or
repeated by an Obligor in any Finance Document is or proves to have
been incorrect in any material respect, unless the same is capable
of remedy and is remedied within fifteen Business Days of the
Facilities Agent giving notice of the misrepresentation.
27.5 Cross-default
Any Borrowed Money in any amount or aggregate amount at any one
time, in excess of USD40,000,000 (or its equivalent in any currency)
of a Carnival Material Group Member:
(a) is not paid as and when the same is and becomes due and
payable (or within any applicable grace period); or
(b) becomes (whether by declaration or automatically in accordance
with the relevant agreement or instrument constituting the
same) due and payable prior to the date when it would
otherwise have become due by reason of any default (however
described),
provided that no Event of Default shall arise under this clause 27.5
where the Borrowed Money in question is a Non-Recourse Financing
Arrangement.
27.6 Insolvency Proceedings
27.6.1 An order is made or resolution passed for the winding-up or
dissolution of a Carnival Material Group Member other than:
(a) for the purpose of an amalgamation, reorganisation, merger or
reconstruction agreed to in writing by the Facilities Agent (acting
on the instructions of the Majority Lenders, such agreement not to
be unreasonably withheld or delayed); or
(b) where such winding-up or dissolution is commenced as a result of
the termination of the dual-listed combination structure between the
Company and Carnival plc and where the surviving entity is (A) the
Company where the Company assumes all the obligations of Carnival
plc under this Agreement, Carnival plc or a Subsidiary of either the
Company or Carnival plc which assumes all the obligations of
Carnival plc under this Agreement and (B) such winding-up or
dissolution is permitted under the terms of the DLC Documents; or
27.6.2 A Carnival Material Group Member makes or seeks to make any
composition or other restructuring with its creditors generally in
respect of indebtedness which it would otherwise be unable to pay or
an administration or similar order is made in relation to, or an
administrator or similar officer is appointed in respect of, the
relevant Carnival Material Group Member.
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27.7 Insolvency
A Carnival Material Group Member is deemed unable to pay its debts
(within the meaning of section 123(1)(e) or (2) of the Insolvency
Act 1986) or, in relation to any Carnival Material Group Member
incorporated in Italy, is insolvent (within the meaning of Article 5
of the Italian Insolvency Law) or an encumbrancer takes possession
of or a receiver or person with similar powers is appointed over the
whole or a substantial part of the relevant Carnival Material Group
Member's assets and shall not be paid off or removed within fifteen
Business Days, and no Event of Default shall arise under this clause
27.7 where the asset or property in question is the subject a
Non-Recourse Financing Arrangement.
27.8 Creditors' process
Any distress, execution or analogous event affects any substantial
part of a Carnival Material Group Member and is not removed or
discharged within fifteen Business Days, and no Event of Default
shall arise under this clause 27.8 where the asset or property in
question is the subject a Non-Recourse Financing Arrangement.
27.9 Cessation of business
An Obligor ceases to carry on all or a substantial part of its
business and such cessation of business has a Material Adverse
Effect.
27.10 Effectiveness of Finance Documents
27.10.1 It is or becomes unlawful for an Obligor to perform any of its
material obligations under the Finance Documents.
27.10.2 Any Finance Document is not effective or is alleged by an Obligor to
be ineffective for any reason.
27.10.3 An Obligor repudiates a Finance Document.
27.11 United States Bankruptcy Laws
27.11.1 In this Subclause:
U.S. Bankruptcy Law means the United States Bankruptcy Code 1978 or
any other United States Federal or State bankruptcy, insolvency or
similar law.
27.11.2 Subject to clause 27.11.3, any of the following occurs in respect of
any Obligor which is subject to U.S. Bankruptcy Law:
(a) it makes a general assignment for the benefit of creditors;
(b) it commences a voluntary case or proceeding under any U.S.
Bankruptcy Law; or
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(c) an involuntary case under any U.S. Bankruptcy Law is commenced
against it and is not controverted within 30 days or is not
dismissed or stayed within 90 days after commencement of the
case.
27.11.3 Clause 27.11.2 shall not apply where an involuntary case is
commenced pursuant to clause 27.11.2(c) above (an "Involuntary
Bankruptcy Event") in respect of a Borrower (other than the Company)
which:
(a) does not have any actual or contingent liabilities as a
Borrower under the Finance Documents at the time the relevant
Involuntary Bankruptcy Event occurs; and
(b) is not a Material Subsidiary,
and in such circumstances:
(c) such Borrower shall, with effect from such Involuntary
Bankruptcy Event, be prevented from incurring any actual or
contingent obligations as a Borrower under any of the Finance
Documents; and
(d) the Company undertakes to use its reasonable endeavours to
procure the resignation of such Borrower as soon as reasonably
practicable.
27.12 Article 2447 or 2482-ter of the Italian Civil Code
The occurrence of the circumstances set forth in Article 2447, or
2482-ter, as applicable, of the Italian Civil Code in relation to a
Carnival Material Group Member incorporated in Italy unless, no
later than 30 days from the date on which such Carnival Material
Group Member's directors have knowledge of such occurrence, a
shareholders' meeting is convened to vote on a resolution approving
either: (a) a capital increase to comply with the minimum capital
requirements under Italian law (and such capital increase has been
fully paid up in the next following 30 days) or (b) in respect of a
Carnival Material Group Member which is incorporated as a societa
per azioni, the transformation of such company into a societa a
responsabilita limitata.
27.13 Acceleration
27.13.1 If an Event of Default described in clause 27.11 (United States
Bankruptcy Laws) occurs the Total Tranche A Commitments, the Total
Tranche B Commitments and the Total Tranche C Commitments will, if
not already cancelled under this Agreement, be immediately and
automatically cancelled and all amounts outstanding under the
Finance Documents shall become immediately due and payable without
notice from the Facilities Agent.
27.13.2 If an Event of Default other than under clause 27.11 (United States
Bankruptcy Laws) is outstanding, the Facilities Agent may, and must
if so instructed by the Majority Lenders, by notice to the Company:
(a) cancel all or any part of the Total Tranche A Commitments, the
Total Tranche B Commitments and the Total Tranche C
Commitments; and/or
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(b) declare that all or part of any amounts outstanding under the
Finance Documents are:
(i) immediately due and payable; and/or
(ii) payable on demand by the Facilities Agent acting on the
instructions of the Majority Lenders; and/or
(c) declare that full cash cover in respect of each Bond is
immediately due and payable whereupon it shall become
immediately due and payable.
Any notice given under this Subclause will take effect in accordance
with its term.
28 Changes to the Lenders
28.1 Assignments and transfers by the Lenders
28.1.1 A Lender (the Existing Lender) may, subject to the provisions of
this clause 28, at any time assign or transfer (including by way of
novation) any of its rights and obligations under this Agreement to
any other bank or financial institution which, in respect of an
assignment or transfer of a Tranche A Commitment, meets the Rating
Requirements at the time of such assignment or transfer (the New
Lender) provided that where the Existing Lender is a Tranche B
Lender and/or a Swingline Lender, such New Lender is able to perform
that function or those functions in the same manner as the Existing
Lender to the extent of the commitment transferred.
28.1.2 The consent of the Company is required for any assignment or
transfer unless:
(a)
(i) the New Lender is another Lender or an Affiliate of a
Lender; and
(ii) following such assignment or transfer no Borrower would
be obliged to pay any greater amount under clause 17
(Taxes), clause 18 (Increased Costs) or any other
provision of a Finance Document, in the circumstances
existing at the time of such assignment or transfer or
which, at the time of such assignment or transfer, the
Existing Lender or the New Lender knows will apply in
the 12 month period following such assignment or
transfer, than would have been payable but for the
assignment or transfer; or
(b) an Event of Default has occurred and has been outstanding for
fifteen Business Days or more.
28.1.3 A Fronting Bank may not assign or transfer any obligations under an
outstanding Bond without the consent of the Company.
28.1.4 The Company may, at any time, appoint or remove any Fronting Bank
(in its capacity as Fronting Bank only) without the consent of the
Facilities Agent or any of the Lenders, by notice to that Fronting
Bank (in the case of a removal) and the Facilities Agent. The
Company will procure that any outstanding Bond issued by a Fronting
Bank which is being removed is repaid or prepaid no later than the
date on
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which that Fronting Bank is to cease to be a Fronting Bank under
this Agreement. Any Lender to be appointed a Fronting Bank by the
Company shall accede to the capacity of Fronting Bank by execution
of a form of accession letter agreed between the Facilities Agent,
the Company and such acceding Fronting Bank.
28.1.5 The consent of the Company must not be unreasonably withheld or
delayed to any request for consent under this clause 28. It will not
be unreasonable for the Company to withhold consent where following
an assignment or transfer, a Borrower would be obliged to pay any
greater amount under clause 17 (Taxes), clause 18 (Increased Costs)
or any other provision of a Finance Document if, in the
circumstances existing at the time of such assignment or transfer,
such greater amount would not have been payable but for the
assignment or transfer or which, at the time of such assignment or
transfer, the Existing Lender or the New Lender knows will apply in
the 12 month period following such assignment or transfer. The
Company will be deemed to have given its consent 10 Business Days
after the Company is given notice of the request unless it is
expressly refused by the Company within that time.
28.1.6 A transfer of obligations will be effective only if either:
(a) the obligations are novated in accordance with the following
provisions of this clause; or
(b) the New Lender confirms to the Facilities Agent and the
Company in form and substance satisfactory to the Facilities
Agent that it is bound by the terms of this Agreement as a
Lender. On the transfer becoming effective in this manner the
Existing Lender will be released from its obligations under
this Agreement to the extent that they are transferred to the
New Lender.
28.1.7 Unless the Facilities Agent otherwise agrees, the New Lender must
pay to the Facilities Agent, for its own account, on or before the
date upon which an assignment or transfer takes effect, a fee of
USD3,500.
28.1.8 Any reference in this Agreement to a Lender includes a New Lender
but excludes a Lender if no amount is or may be owed to or by it
under this Agreement.
28.2 Procedure for transfer
28.2.1 In this Subclause:
Transfer Date means, for a Transfer Certificate, the latest of:
(a) the proposed Transfer Date specified in that Transfer
Certificate;
(b) the date on which the Facilities Agent executes that Transfer
Certificate; and
(c) the date on which the consent of the Company, if required
under clause 28.1.2, is obtained or is deemed to have been
given.
28.2.2 A novation is effected if:
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(a) the Existing Lender and the New Lender deliver to the
Facilities Agent a duly completed Transfer Certificate; and
(b) the Facilities Agent executes it.
The Facilities Agent must execute as soon as reasonably practicable
a Transfer Certificate delivered to it and which appears on its face
to be in order.
28.2.3 The Facilities Agent shall only be obliged to execute a Transfer
Certificate delivered to it by the Existing Lender and the New
Lender upon its completion of all "know your customer" checks that
it is required to carry out in relation to the transfer to such New
Lender.
28.2.4 Each Party (other than the Existing Lender and the New Lender)
irrevocably authorises the Facilities Agent to execute any duly
completed Transfer Certificate on its behalf. A Transfer Certificate
shall not be duly completed unless any and all consents required
under this Agreement have been obtained or deemed obtained.
28.2.5 On the Transfer Date:
(a) the New Lender will assume the rights and obligations of the
Existing Lender expressed to be the subject of the novation in
the Transfer Certificate in substitution for the Existing
Lender;
(b) the Existing Lender will be released from those obligations
and cease to have those rights; and
(c) the Fronting Banks and the New Lender shall acquire the same
rights and assume the same obligations between themselves as
they would have acquired and assumed had the New Lender been
an Original Lender with the rights and/or obligations acquired
or assumed by it as a result of the transfer and to that
extent the Fronting Banks and the Existing Lender shall each
be released from further obligations to each other under this
Agreement.
28.3 Limitation of responsibility of Existing Lenders
28.3.1 Unless expressly agreed to the contrary, an Existing Lender is not
responsible to a New Lender for the legality, validity, adequacy,
accuracy, completeness or performance of:
(a) any Finance Document or any other document; or
(b) any statement or information (whether written or oral) made in
or supplied in connection with any Finance Document,
and any representations or warranties implied by law are excluded.
28.3.2 Each New Lender confirms to the Existing Lender and the other
Finance Parties that it:
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(a) has made, and will continue to make, its own independent
appraisal of all risks arising under or in connection with the
Finance Documents (including the financial condition and
affairs of each Obligor and its related entities and the
nature and extent of any recourse against any Party or its
assets) in connection with its participation in this
Agreement; and
(b) has not relied exclusively on any information supplied to it
by the Existing Lender in connection with any Finance
Document.
28.3.3 Nothing in any Finance Document requires an Existing Lender to:
(a) accept a re-transfer from a New Lender of any of the rights
and obligations assigned or transferred under this clause; or
(b) support any losses incurred by the New Lender by reason of the
non-performance by any Obligor of its obligations under any
Finance Document or otherwise.
28.4 Costs resulting from change of Lender or Facility Office
If:
(a) a Lender assigns or transfers any of its rights and
obligations under the Finance Documents or changes its
Facility Office; and
(b) as a result of circumstances existing at the date the
assignment, transfer or change occurs, (or which such Lender
knows will apply in the following 12 month period) an Obligor
would be obliged to pay an amount under clause 17 (Taxes),
clause 18 (Increased Costs) or any other provision of a
Finance Document,
then, unless the assignment, transfer or change is made by a Lender
to mitigate any circumstances giving rise to the payment of an
amount under clause 17 (Taxes), clause 18 (Increased Costs) or any
other provision of a Finance Document or a right to be prepaid
and/or cancelled by reason of illegality, the Obligor need only pay
that amount under clause 17 (Taxes), clause 18 (Increased Costs) or
any other provision of a Finance Document to the same extent that it
would have been obliged to if no assignment, transfer or change had
occurred.
28.5 Affiliates of Lenders
28.5.1 Each Lender may fulfil its obligations in respect of a Loan through
an Affiliate if the relevant Affiliate is specified in this
Agreement as a Lender or becomes a Lender by means of a Transfer
Certificate in accordance with this Agreement.
28.5.2 If clause 28.5.1 above applies, the Lender and its Affiliate will be
treated as having a single Tranche A Commitment, Tranche B
Commitment and/or Tranche C Commitment, as the case may be, and a
single vote, but, for all other purposes, will be treated as
separate Lenders.
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28.5.3 A Swingline Lender may only assign or transfer all or any (the
"Swingline Commitment Transfer Amount") of its Swingline Tranche A
Commitment, its Swingline Tranche B Commitment or its Swingline
Tranche C Commitment to a Lender which is not its Affiliate if it
or, where it does not have a Tranche A Commitment, Tranche B
Commitment or Tranche C Commitment, its Affiliate, transfers
simultaneously to that proposed Lender or that proposed Lender's
Affiliate an amount equal to or greater than the Swingline
Commitment Transfer Amount of its (or its Affiliate's) Tranche A
Commitment, its (or its Affiliate's) Tranche B Commitment or its (or
its Affiliate's) Tranche C Commitment, as the case may be, and in
any event in accordance with the other terms of this clause 28.
28.6 Sub-participation
A Lender may sub-participate all or any part of its rights and/or
obligations under the Finance Documents or enter into any
contractual arrangement with any person so that the effect thereof
is to give that person an economic or other interest in that
Lender's rights and/or obligations under the Finance Documents which
is less than a legal or equitable transfer or assignment of those
rights and obligations, provided that:
(a) a Lender may not directly or indirectly transfer its voting
rights under the Finance Documents without the consent of the
Company (such consent not to be unreasonably withheld or
delayed); and
(b) following such sub-participation, no Borrower would be obliged
to pay any greater amount under clause 17 (Taxes), clause 18
(Increased Costs) or any other provision of a Finance Document
by reason of such sub-participation.
28.7 Downgrading of a Lender's rating
28.7.1 This clause 28.7 shall only apply to Lenders under Tranche A.
28.7.2 Each Lender confirms that on the Signing Date it meets the Rating
Requirements.
28.7.3 If at any time a Lender ceases to meet the Rating Requirements (an
Affected Lender), the Affected Lender shall promptly notify in
writing each Fronting Bank which has issued a Bond under this
Agreement.
28.7.4 Following the delivery of a notice under paragraph 28.7.3 above, the
Affected Lender shall use reasonable endeavours, for a period of not
more than 45 days from the date of such notice, to arrange for the
transfer of its Tranche A Commitment under this Agreement to an
Eligible Transferee in accordance with clause 28.1 (Assignments and
transfers by the Lenders) (a Lender Downgrade Transfer).
28.7.5 If the Affected Lender successfully effects a Lender Downgrade
Transfer, the Affected Lender's Tranche A Commitment shall be
cancelled and reduced to zero with effect from the relevant Transfer
Date.
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28.7.6 If a Lender Downgrade Transfer is not effected within the 45 day
period referred to in paragraph 28.7.4 above, the Affected Lender
shall (A) on the last day of such period deposit an amount in US
Dollars equal to such Affected Lender's Bond Proportion of the
outstanding amount of each Bond into the relevant Lender Cash Cover
Account and (B) in respect of any Bond which is issued after the
expiry of the 45 day period referred to above deposit into the
relevant Lender Cash Cover Account, within five Business Days of the
date of issue of any such Bond, an amount in US Dollars equal to
such Affected Lender's Bond Proportion of the outstanding amount of
each such Bond.
28.7.7 The relevant Fronting Bank shall be entitled to apply all or any
part of the Lender Cash Cover Amount in or towards the satisfaction
of the relevant Affected Lender's obligations under clause 7.3 of
this Agreement.
28.7.8 In respect of any Bond which is denominated in an Optional Currency
the relevant Fronting Bank shall on each Test Date - Bonds
recalculate the Base Currency Amount for Tranche A of the relevant
Affected Lender's Bond Proportion of the outstanding amount of each
Bond (the "Recalculated Amount"). If on any Test Date - Bonds the
Recalculated Amount exceeds the Lender Cash Cover Amount the
relevant Fronting Bank will promptly notify in writing the relevant
Affected Lender. Within five Business Days of receipt of such notice
the relevant Affected Lender shall deposit into the Lender Cash
Cover Account an amount equal to such excess. If on any Test Date -
Bonds the Lender Cash Cover Amount exceeds the Recalculated Amount
the relevant Fronting Bank will promptly notify in writing the
relevant Affected Lender. Such Fronting Bank shall promptly pay such
excess to the relevant Affected Lender (provided that the relevant
Affected Lender has notified the relevant Fronting Bank of the bank
account details to which such excess amount should be paid).
28.7.9 Subject to paragraph 28.7.8 above, the Lender Cash Cover Amount
shall only be repaid or returned to the relevant Affected Lender by
the Fronting Bank in the event that:
(a) the relevant Affected Lender again meets the Rating
Requirements;
(b) a Mandatory Prepayment Event occurs provided that if such
event occurs under clause 12.2 (Mandatory prepayment - change
of ownership) the Company or the relevant Bond Borrower has
provided full cash cover in accordance with the terms of this
Agreement; or
(c) an acceleration of the Facilities occurs pursuant to clause
27.13 (Acceleration) and the Company or the relevant Bond
Borrower has provided full cash cover in accordance with the
terms of this Agreement.
The Lender Cash Cover Amount otherwise remaining on deposit shall be
repaid to the relevant Affected Lender on the Termination Date.
28.7.10 The relevant Affected Lender shall receive interest from the
relevant Fronting Bank on the Lender Cash Cover Amount at commercial
rates as agreed between the relevant Fronting Bank and the relevant
Affected Lender during the period commencing on the date of deposit
to the earlier of the date of repayment (in accordance with
paragraph 28.7.8 above) and the date on which such amount
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or portion thereof shall be utilised to satisfy the relevant
Affected Lender's obligations in accordance with paragraph 28.7.6
above.
28.7.11 The provisions of this clause 28.7 will not affect the Lenders' or
the Fronting Banks' rights against, or obligations to, each of the
Obligors and, subject to any Lender Downgrade Transfer, the Lenders
and the Fronting Banks shall continue to observe their obligations
to the Obligors (including, without limitation, in respect of any
transfers or assignments) as if the provisions of this clause did
not exist.
28.7.12 For the purposes of this clause 28.7:
"Eligible Transferee" means any bank or financial institution which
meets the Rating Requirements;
"Lender Cash Cover Account" means any account held with a Fronting
Bank for the purposes of this clause 28.7;
"Lender Cash Cover Amount" means, at any time, in relation to a
Fronting Bank the amount standing to the credit of the relevant
Lender Cash Cover Account; and
"Mandatory Prepayment Event" means an event specified in clause 12.1
(Mandatory prepayment - Illegality) or clause 12.2 (Mandatory
prepayment - change of ownership).
28.8 Assignment to Federal Reserve Bank
Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement, without
notice to or consent of any Party, to any U.S. Federal Reserve Bank
provided that (i) no Lender shall be relieved of any of its
obligations under this Agreement as a result of any such assignment
and pledge and (ii) in no event shall such U.S. Federal Reserve Bank
be considered to be a "Lender" or be entitled to require the
assigning Lender to take or omit to take any action under this
Agreement.
28.9 The Register
The Facilities Agent, acting solely for this purpose as an agent of
the Obligors, shall maintain at one of its offices a copy of each
assignment agreement and Transfer Certificate delivered to it and a
register (the "Register") for the recordation of the names and
addresses of each Lender and the commitments of and obligations
owing to each Lender. The entries in the Register shall be
conclusive and each Obligor, the Facilities Agent and each Lender
may treat each Person whose name is recorded in the Register as a
Lender notwithstanding any notice to the contrary. The Register
shall be available for inspection by each Obligor at any reasonable
time and from time to time upon reasonable prior notice.
28.10 Disclosure of information
28.10.1 Each Finance Party must keep confidential any information supplied
to it by or on behalf of any Obligor in connection with the Finance
Documents. However, a Finance Party is entitled to disclose
information:
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(a) which is publicly available, other than as a result of a
breach by that Finance Party of this clause 28.10;
(b) in connection with any legal or arbitration proceedings;
(c) if required to do so under any law or regulation;
(d) to a governmental, banking, taxation or other regulatory
authority;
(e) to its professional advisers, where those professional
advisers are bound by obligations of confidentiality in the
conduct of their business or owe fiduciary obligations to that
Finance Party;
(f) to the extent allowed under clause 28.10.2 below;
(g) to another Obligor; or
(h) with the agreement of the relevant Obligor.
28.10.2 A Finance Party may disclose to an Affiliate or any person with whom
it may enter, or has entered into, any kind of transfer,
participation or other agreement in relation to this Agreement (a
"participant"):
(a) a copy of any Finance Document; and
(b) any information which that Finance Party has acquired under or
in connection with any Finance Document.
However, before a participant may receive any confidential
information, it must agree with the relevant Finance Party to keep
that information confidential on the terms of clause 28.10.1 above
by entering into a Confidentiality Undertaking or a similar
undertaking in such other form as the Company shall approve.
28.10.3 This clause 28.10 supersedes any previous confidentiality
undertaking given by a Finance Party in connection with this
Agreement prior to it becoming a Party.
29 Changes to the Obligors
29.1 Assignments and transfer by the Obligors
No Obligor may assign any of its rights or transfer any of its
rights or obligations under the Finance Documents without the prior
consent of the Facilities Agent (acting on the instructions of all
the Lenders).
29.2 Additional Borrowers
29.2.1 Subject to compliance with the provisions of clause 24.7 ("Know your
customer" checks), the Company and/or Carnival plc may request that
any of its direct or indirect wholly owned Subsidiaries becomes an
Additional Borrower. That Subsidiary shall become an Additional
Borrower if:
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(a) the Company and/or Carnival plc delivers to the Facilities
Agent a duly completed and executed Accession Letter;
(b) the Facilities Agent is satisfied (acting reasonably) that the
guarantee of the Company or Carnival plc under clause 22 will
cover the obligations of its Subsidiary;
(c) the Subsidiary is incorporated in an Approved Jurisdiction;
(d) the Company and/or Carnival plc confirms that no Default is
continuing or would occur as a result of that Subsidiary
becoming an Additional Borrower; and
(e) the Facilities Agent has received all of the documents and
other evidence listed in Part 2 of Schedule 2 (Conditions
precedent) in relation to that Additional Borrower, each in
form and substance satisfactory to the Facilities Agent.
29.2.2 The Facilities Agent shall notify the Company or Carnival plc as
appropriate and the Lenders promptly upon being satisfied that it
has received (in form and substance satisfactory to it) all the
documents and other evidence listed in Part 2 of Schedule 2
(Conditions precedent).
29.2.3 Delivery of an Accession Letter, duly executed by the relevant
Subsidiary and the Company or Carnival plc as appropriate, to the
Facilities Agent constitutes confirmation by that Subsidiary that
the Repeating Representations are true and correct in relation to it
as at the date of delivery as if made by reference to the facts and
circumstances then existing.
29.3 Resignation of a Borrower
29.3.1 The Company or Carnival plc may request that a Borrower (other than
the Company or Carnival plc) ceases to be a Borrower by delivering
to the Facilities Agent a Resignation Letter.
29.3.2 The Facilities Agent shall accept a Resignation Letter and notify
the Company or Carnival plc, as the case may be, and the Lenders of
its acceptance if:
(a) no Default is outstanding or would result from the acceptance
of the Resignation Letter (and the Company or, as the case may
be, Carnival plc has confirmed this is the case in the
Resignation Letter); and
(b) no amount owed by that Borrower under the Finance Documents is
still outstanding,
whereupon that company shall cease to be a Borrower and shall have
no further rights or obligations under the Finance Documents.
29.3.3 In the event that a Borrower ceases to be a direct or indirect
wholly owned Subsidiary of the Company and/or Carnival plc, the
Company or Carnival plc, as appropriate, will procure that such
Borrower repays in full all amounts owed by that Borrower under the
Finance Documents and that it ceases to be a Borrower under clause
29.3.1, in each case within ten Business Days of such Borrower
ceasing to be a direct or indirect wholly owned Subsidiary of the
Company and/or Carnival plc.
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30 Role of the Facilities Agent, the Arrangers and the Fronting Banks
30.1 Appointment of the Facilities Agent
30.1.1 Each other Finance Party appoints the Facilities Agent to act as its
agent under and in connection with the Finance Documents.
30.1.2 Each other Finance Party authorises the Facilities Agent to exercise
the rights, powers, authorities and discretions specifically given
to the Facilities Agent under or in connection with the Finance
Documents together with any other incidental rights, powers,
authorities and discretions.
30.2 Duties of the Facilities Agent
30.2.1 The Facilities Agent shall promptly forward to a Party the original
or a copy of any document which is delivered to the Facilities Agent
for that Party by any other Party.
30.2.2 Except where a Finance Document specifically provides otherwise, the
Facilities Agent is not obliged to review or check the adequacy,
accuracy or completeness of any document it forwards to another
Party.
30.2.3 If the Facilities Agent receives notice from a Party referring to
this Agreement, describing a Default and stating that the
circumstance described is a Default, it shall promptly notify the
Finance Parties and (except where such notice is received from the
Company or Carnival plc) the Company or Carnival plc.
30.2.4 If the Facilities Agent is aware of the non-payment of any
principal, interest, commitment fee or other fee payable to a
Finance Party (other than the Facilities Agent or the Arrangers)
under this Agreement it shall promptly notify the other Finance
Parties and the Company.
30.2.5 The Facilities Agent's duties under the Finance Documents are solely
mechanical and administrative in nature.
30.3 Role of the Arrangers
Except as specifically provided in the Finance Documents, no
Arranger has any obligations of any kind to any other Party under or
in connection with any Finance Document.
30.4 No fiduciary duties
30.4.1 Except as specifically provided for in a Finance Document, nothing
in the Finance Documents makes the Facilities Agent, the Arrangers
or the Fronting Banks a trustee or fiduciary for any other Party or
any other person.
30.4.2 The Facilities Agent, any Arranger or any Fronting Bank shall not be
bound to account to any Lender for any sum or the profit element of
any sum received by it for its own account.
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30.5 Business with the Carnival Corporation & plc Group
The Facilities Agent, the Arrangers and the Fronting Banks may
accept deposits from, lend money to and generally engage in any kind
of banking or other business with any member of the Carnival
Corporation & plc Group.
30.6 Rights and discretions of the Facilities Agent and each Fronting
Bank
30.6.1 The Facilities Agent and, without prejudice to clause 7.2.2, each
Fronting Bank may rely on:
(a) any representation, notice or document believed by it to be
genuine, correct and appropriately authorised; and
(b) any statement made by a director, authorised signatory or
employee of any person regarding any matters which may
reasonably be assumed to be within his knowledge or within his
power to verify.
30.6.2 The Facilities Agent may assume (unless it has received notice to
the contrary in its capacity as agent for the Lenders) that:
(a) no Default has occurred (unless it has actual knowledge of a
Default arising under clause 27.2 (Non-payment));
(b) any right, power, authority or discretion vested in any Party
or the Majority Lenders has not been exercised; and
(c) any notice or request made by the Company (other than a
Utilisation Request) is made on behalf of and with the consent
and knowledge of all the Obligors.
30.6.3 The Facilities Agent and each Fronting Bank may engage, pay for and
rely on the advice or services of any lawyers, accountants or other
experts.
30.6.4 The Facilities Agent and each Fronting Bank may act in relation to
the Finance Documents through its personnel and agents.
30.6.5 The Facilities Agent may disclose to any other Party any information
it reasonably believes it has received as agent under this
Agreement.
30.6.6 Notwithstanding any other provision of any Finance Document to the
contrary, neither the Facilities Agent nor any Arranger is obliged
to do or omit to do anything if it would or might in its reasonable
opinion constitute a breach of any law or regulation or a breach of
a fiduciary duty or duty of confidentiality.
30.7 Majority Lenders' instructions
30.7.1 Unless a contrary indication appears in a Finance Document, the
Facilities Agent shall (a) exercise any right, power, authority or
discretion vested in it as Facilities Agent in accordance with any
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instructions given to it by the Majority Lenders (or, if so
instructed by the Majority Lenders, refrain from exercising any
right, power, authority or discretion vested in it as Facilities
Agent) and (b) not be liable for any act (or omission) if it acts
(or refrains from taking any action) in accordance with an
instruction of the Majority Lenders.
30.7.2 Unless a contrary indication appears in a Finance Document, any
instructions given by the Majority Lenders will be binding on all
the Finance Parties.
30.7.3 The Facilities Agent may refrain from acting in accordance with the
instructions of the Majority Lenders (or, if appropriate, the
Lenders) until it has received such security as it may require for
any cost, loss or liability (together with any associated VAT) which
it may incur in complying with the instructions.
30.7.4 In the absence of instructions from the Majority Lenders, (or, if
appropriate, the Lenders) the Facilities Agent may act (or refrain
from taking action) as it considers to be in the best interest of
the Lenders.
30.7.5 The Facilities Agent is not authorised to act on behalf of a Lender
(without first obtaining that Lender's consent) in any legal or
arbitration proceedings relating to any Finance Document.
30.8 Responsibility for documentation
Neither the Facilities Agent nor any Arranger nor any Fronting Bank:
(a) is responsible for the adequacy, accuracy and/or completeness
of any information (whether oral or written) supplied by the
Facilities Agent, an Arranger, an Obligor or any other person
given in or in connection with any Finance Document; or
(b) is responsible for the legality, validity, effectiveness,
adequacy or enforceability of any Finance Document or any
other agreement, arrangement or document entered into, made or
executed in anticipation of or in connection with any Finance
Document.
30.9 Exclusion of liability
30.9.1 Without limiting clause 30.9.2 below, neither the Facilities Agent
nor any Fronting Bank will be liable for any action taken by it
under or in connection with any Finance Document, unless directly
caused by its gross negligence or wilful misconduct.
30.9.2 No Party (other than the Facilities Agent or any Fronting Bank) may
take any proceedings against any officer, employee or agent of the
Facilities Agent or any Fronting Bank in respect of any claim it
might have against the Facilities Agent or any Fronting Bank or in
respect of any act or omission of any kind by that officer, employee
or agent in relation to any Finance Document and any officer,
employee or agent of the Facilities Agent may rely on this clause
and enforce its terms under the Third Parties Act.
30.9.3 The Facilities Agent will not be liable for any delay (or any
related consequences) in crediting an account with an amount
required under the Finance Documents to be paid by the Facilities
Agent if the Facilities Agent has taken all necessary steps as soon
as reasonably practicable to comply with
103
the regulations or operating procedures of any recognised clearing
or settlement system used by the Facilities Agent for that purpose.
30.9.4 Nothing in this Agreement shall oblige the Facilities Agent or the
Arrangers to carry out any "know your customer" or other checks in
relation to any person on behalf of any Lender and each Lender
confirms to the Facilities Agent and the Arrangers that it is solely
responsible for any such checks it is required to carry out and that
it may not rely on any statement in relation to such checks made by
the Facilities Agent or the Arrangers.
30.10 Lenders' indemnity to the Facilities Agent
Each Lender shall (in proportion to its share of the Total Commitments
or, if the Total Commitments are then zero, to its share of the
Total Commitments immediately prior to their reduction to zero)
indemnify the Facilities Agent, within three Business Days of
demand, against any cost, loss or liability incurred by the
Facilities Agent (otherwise than by reason of the Facilities Agent's
gross negligence or wilful misconduct) in acting as Facilities Agent
under the Finance Documents (unless the Facilities Agent has been
reimbursed by an Obligor pursuant to a Finance Document).
30.11 Resignation of the Facilities Agent
30.11.1 The Facilities Agent may resign and with the prior written consent
of the Company (not to be unreasonably withheld or delayed) appoint
one of its Affiliates as successor by giving notice to the other
Finance Parties and the Company.
30.11.2 Alternatively the Facilities Agent may resign by giving notice to
the other Finance Parties and the Company, in which case the
Majority Lenders may with the prior written consent of the Company
(not to be unreasonably withheld or delayed) appoint a successor
Facilities Agent.
30.11.3 If the Majority Lenders have not appointed a successor Facilities
Agent in accordance with clause 30.11.2 above within 30 days after
notice of resignation was given, the Facilities Agent may with the
prior written consent of the Company (not to be unreasonably
withheld or delayed) appoint a successor Facilities Agent.
30.11.4 The retiring Facilities Agent shall, at its own cost, make available
to the successor Facilities Agent such documents and records and
provide such assistance as the successor Facilities Agent may
reasonably request for the purposes of performing its functions as
Facilities Agent under the Finance Documents.
30.11.5 The Facilities Agent's resignation notice shall only take effect
upon the appointment of a successor.
30.11.6 Upon the appointment of a successor, the retiring Facilities Agent
shall be discharged from any further obligation in respect of the
Finance Documents but shall remain entitled to the benefit of this
clause 30. Its successor and each of the other Parties shall have
the same rights and obligations amongst themselves as they would
have had if such successor had been an original Party.
104
30.11.7 After consultation with the Company, the Majority Lenders may, by
notice to the Facilities Agent, require it to resign in accordance
with clause 30.11.2 above. In this event, the Facilities Agent shall
resign in accordance with clause 30.11.2 above.
30.12 Confidentiality
30.12.1 In acting as agent for the Finance Parties, the Facilities Agent
shall be regarded as acting through its agency division which shall
be treated as a separate entity from any other of its divisions or
departments.
30.12.2 If information is received by another division or department of the
Facilities Agent, it may be treated as confidential to that division
or department and the Facilities Agent shall not be deemed to have
notice of it.
30.13 Relationship with the Lenders
30.13.1 The Facilities Agent may treat each Lender as a Lender, entitled to
payments under this Agreement and acting through its Facility Office
unless it has received not less than five Business Days prior notice
from that Lender to the contrary in accordance with the terms of
this Agreement.
30.13.2 Each Lender shall supply the Facilities Agent with any information
required by the Facilities Agent in order to calculate the Mandatory
Cost in accordance with Schedule 4 (Mandatory Cost formulae).
30.13.3 Credit appraisal by the Lenders
Without affecting the responsibility of any Obligor for information
supplied by it or on its behalf in connection with any Finance
Document, each Lender confirms to the Facilities Agent and each
relevant Fronting Bank and each Arranger that it has been, and will
continue to be, solely responsible for making its own independent
appraisal and investigation of all risks arising under or in
connection with any Finance Document including but not limited to:
(a) the financial condition, status and nature of each member of
the Carnival Corporation & plc Group;
(b) the legality, validity, effectiveness, adequacy or
enforceability of any Finance Document and any other
agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any
Finance Document;
(c) whether that Lender has recourse, and the nature and extent of
that recourse, against any Party or any of its respective
assets under or in connection with any Finance Document, the
transactions contemplated by the Finance Documents or any
other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any
Finance Document; and
(d) the adequacy, accuracy and/or completeness of any information
provided by the Facilities Agent, any Party or by any other
person under or in connection with any Finance Document,
105
the transactions contemplated by the Finance Documents or any
other agreement, arrangement or document entered into, made or
executed in anticipation of, under or in connection with any
Finance Document.
30.14 Reference Banks
If a Reference Bank (or, if a Reference Bank is not a Lender, the
Lender of which it is an Affiliate) ceases to be a Lender, the
Facilities Agent shall, with the prior written consent of the
Company, appoint another Lender or an Affiliate of a Lender to
replace that Reference Bank.
30.15 Deduction from amounts payable by the Facilities Agent
If a Lender owes an amount to the Facilities Agent under the Finance
Documents the Facilities Agent may, after giving notice to that
Lender, deduct an amount not exceeding that amount from any payment
to that Lender which the Facilities Agent would otherwise be obliged
to make under the Finance Documents and apply the amount deducted in
or towards satisfaction of the amount owed. For the purposes of the
Finance Documents that Lender shall be regarded as having received
any amount so deducted.
31 Conduct of business by the Finance Parties
31.1 No provision of this Agreement will:
(a) interfere with the right of any Finance Party to arrange its
affairs (tax or otherwise) in whatever manner it thinks fit;
(b) oblige any Finance Party to investigate or claim any credit,
relief, remission or repayment available to it or the extent,
order and manner of any claim; or
(c) oblige any Finance Party to disclose any information relating
to its affairs (tax or otherwise) or any computations in
respect of Tax.
32 Sharing among the Finance Parties
32.1 Payments to Finance Parties
If a Finance Party (a Recovering Finance Party) receives or recovers
any amount from an Obligor other than in accordance with clause 33
(Payment mechanics) and applies that amount to a payment due under
the Finance Documents then:
(a) the Recovering Finance Party shall, within three Business
Days, notify details of the receipt or recovery, to the
Facilities Agent;
(b) the Facilities Agent shall determine whether the receipt or
recovery is in excess of the amount the Recovering Finance
Party would have been paid had the receipt or recovery been
received or made by the Facilities Agent and distributed in
accordance with clause 33
106
(Payment mechanics), without taking account of any Tax which
would be imposed on the Facilities Agent in relation to the
receipt, recovery or distribution; and
(c) the Recovering Finance Party shall, within three Business Days
of demand by the Facilities Agent, pay to the Facilities Agent
an amount (the Sharing Payment) equal to such receipt or
recovery less any amount which the Facilities Agent determines
may be retained by the Recovering Finance Party as its share
of any payment to be made, in accordance with clause 33.5
(Partial payments).
32.2 Redistribution of payments
The Facilities Agent shall treat the Sharing Payment as if it had
been paid by the relevant Obligor and distribute it between the
Finance Parties (other than the Recovering Finance Party) in
accordance with clause 33.5 (Partial payments).
32.3 Recovering Finance Party's rights
32.3.1 On a distribution by the Facilities Agent under clause 32.2
(Redistribution of payments), the Recovering Finance Party will be
subrogated to the rights of the Finance Parties which have shared in
the redistribution.
32.3.2 If and to the extent that the Recovering Finance Party is not able
to rely on its rights under clause 32.3.1 above, the relevant
Obligor shall be liable to the Recovering Finance Party for a debt
equal to the Sharing Payment which is immediately due and payable.
32.4 Reversal of redistribution
If any part of the Sharing Payment received or recovered by a
Recovering Finance Party becomes repayable and is repaid by that
Recovering Finance Party, then:
(a) each Finance Party which has received a share of the relevant
Sharing Payment pursuant to clause 32.2 (Redistribution of
payments) shall, upon request of the Facilities Agent, pay to
the Facilities Agent for account of that Recovering Finance
Party an amount equal to the appropriate part of its share of
the Sharing Payment (together with an amount as is necessary
to reimburse that Recovering Finance Party for its proportion
of any interest on the Sharing Payment which that Recovering
Finance Party is required to pay); and
(b) that Recovering Finance Party's rights of subrogation in
respect of any reimbursement shall be cancelled and the
relevant Obligor will be liable to the reimbursing Lender for
the amount so reimbursed.
32.5 Exceptions
32.5.1 This clause 32 shall not apply to the extent that the Recovering
Finance Party would not, after making any payment pursuant to this
clause, have a valid and enforceable claim against the relevant
Obligor.
107
32.5.2 A Recovering Finance Party is not obliged to share with any other
Finance Party any amount which the Recovering Finance Party has
received or recovered as a result of taking legal or arbitration
proceedings, if:
(a) it notified that other Finance Party of the legal or
arbitration proceedings; and
(b) that other Finance Party had an opportunity to participate in
those legal or arbitration proceedings but did not do so as
soon as reasonably practicable having received notice and did
not take separate legal or arbitration proceedings.
33 Payment mechanics
33.1 Payments to the Facilities Agent
33.1.1 On each date on which an Obligor or a Lender is required to make a
payment under a Finance Document, that Obligor or Lender shall make
the same available to the Facilities Agent (unless a contrary
indication appears in a Finance Document) for value on the due date
at the time and in such funds specified by the Facilities Agent as
being customary at the time for settlement of transactions in the
relevant currency in the place of payment.
33.1.2 Payment shall be made to such account in the principal financial
centre of the country of that currency (or, in relation to euro, in
a principal financial centre in a Participating Member State or
London) with such bank as the Facilities Agent specifies by not less
than five Business Days' prior notice.
33.2 Distributions by the Facilities Agent
Each payment received by the Facilities Agent under the Finance
Documents for another Party shall, subject to clause 33.3
(Distributions to an Obligor) and clause 33.4 (Clawback) be made
available by the Facilities Agent as soon as practicable after
receipt to the Party entitled to receive payment in accordance with
this Agreement (in the case of a Lender, for the account of its
Facility Office), to such account as that Party may notify to the
Facilities Agent by not less than five Business Days' notice with a
bank in the principal financial centre of the country of that
currency (or, in relation to euro, in the principal financial centre
of a Participating Member State or London).
33.3 Distributions to an Obligor
The Facilities Agent may (with the consent of the Obligor or in
accordance with clause 34 (Set-off)) apply any amount received by it
for that Obligor in or towards payment (on the date and in the
currency and funds of receipt) of any amount due from that Obligor
under the Finance Documents or in or towards purchase of any amount
of any currency to be so applied.
33.4 Clawback
33.4.1 Where a sum is to be paid to the Facilities Agent under the Finance
Documents for another Party, the Facilities Agent is not obliged to
pay that sum to that other Party (or to enter into or perform any
108
related exchange contract) until it has been able to establish to
its satisfaction that it has actually received that sum.
33.4.2 If the Facilities Agent pays an amount to another Party and it
proves to be the case that the Facilities Agent had not actually
received that amount, then the Party to whom that amount (or the
proceeds of any related exchange contract) was paid by the
Facilities Agent shall on demand refund the same to the Facilities
Agent together with interest on that amount from the date of payment
to the date of receipt by the Facilities Agent, calculated by the
Facilities Agent to reflect its cost of funds.
33.5 Partial payments
33.5.1 If the Facilities Agent receives a payment that is insufficient to
discharge all the amounts then due and payable by an Obligor under
the Finance Documents, the Facilities Agent shall apply that payment
towards the obligations of that Obligor under the Finance Documents
in the following order:
(a) first, in or towards payment pro rata of any unpaid fees,
costs and expenses of the Facilities Agent and any Fronting
Bank under the Finance Documents;
(b) secondly, in or towards payment pro rata of any accrued
interest, fee or commission due but unpaid under this
Agreement;
(c) thirdly, in or towards payment pro rata of any principal due
but unpaid under this Agreement and any amount due but unpaid
under clause 7.3 (Indemnities) or clause 9.4 (Indemnities);
and
(d) fourthly, in or towards payment pro rata of any other sum due
but unpaid under the Finance Documents.
33.5.2 The Facilities Agent shall, if so directed by the Majority Lenders,
vary the order set out in clauses 33.5.1(b) to 33.5.1(d) above.
33.5.3 Clauses 33.5.1 and 33.5.2 above will override any appropriation made
by an Obligor.
33.6 No set-off by Obligors
All payments to be made by an Obligor under the Finance Documents
shall be calculated and be made without (and free and clear of any
deduction for) set-off or counterclaim.
33.7 Business Days
33.7.1 Any payment which is due to be made on a day that is not a Business
Day shall be made on the next Business Day in the same calendar
month (if there is one) or the preceding Business Day (if there is
not).
109
33.7.2 During any extension of the due date for payment of any principal or
Unpaid Sum under this Agreement interest is payable on the principal
or Unpaid Sum at the rate payable on the original due date.
33.8 Currency of account
33.8.1 Subject to clauses 33.8.2 to 33.8.5 below, in respect of each
Tranche, the Base Currency for that Tranche is the currency of
account and payment for any sum due from an Obligor under any
Finance Document.
33.8.2 A repayment of a Utilisation or Unpaid Sum or a part of a
Utilisation or Unpaid Sum shall be made in the currency in which
that Utilisation or Unpaid Sum is denominated on its due date.
33.8.3 Each payment of interest shall be made in the currency in which the
sum in respect of which the interest is payable was denominated when
that interest accrued.
33.8.4 Each payment in respect of costs, expenses or Taxes shall be made in
the currency in which the costs, expenses or Taxes are incurred.
33.8.5 Any amount expressed to be payable in a currency shall be paid in
that other currency.
33.9 Change of currency
33.9.1 Unless otherwise prohibited by law, if more than one currency or
currency unit are at the same time recognised by the central bank of
any country as the lawful currency of that country, then:
(a) any reference in the Finance Documents to, and any obligations
arising under the Finance Documents in, the currency of that
country shall be translated into, or paid in, the currency or
currency unit of that country designated by the Facilities
Agent (after consultation with the Company); and
(b) any translation from one currency or currency unit to another
shall be at the official rate of exchange recognised by the
central bank for the conversion of that currency or currency
unit into the other, rounded up or down by the Facilities
Agent (acting reasonably).
33.9.2 If a change in any currency of a country occurs, this Agreement
will, to the extent the Facilities Agent (acting reasonably and
after consultation with the Company) specifies to be necessary, be
amended to comply with any generally accepted conventions and market
practice in the Relevant Interbank Market and otherwise to reflect
the change in currency.
34 Set-off
34.1.1 If an Event of Default has occurred and is outstanding, a Finance
Party may set off any matured obligation due from an Obligor under
the Finance Documents (to the extent beneficially owned by that
Finance Party) against any obligation (whether or not matured) owed
by that Finance Party to that Obligor, regardless of the place of
payment, booking branch or currency of either obligation. If the
110
obligations are in different currencies, the Finance Party may
convert either obligation at a market rate of exchange in its usual
course of business for the purpose of the set-off.
34.1.2 The Finance Party shall notify the Company and the relevant Obligor
as soon as practicable after any set-off is effected under this
clause giving reasonable details of the amounts and accounts
involved.
35 Notices
35.1 Communications in writing
Any communication to be made under or in connection with the Finance
Documents shall be made in writing and, unless otherwise stated, may
be made by fax or letter.
35.2 Addresses
35.2.1 The address and fax number (and the department or officer, if any,
for whose attention the communication is to be made) of each Party
for any communication or document to be made or delivered under or
in connection with the Finance Documents is:
(a) in the case of the Company, that identified with its name
below;
(b) in the case of Carnival plc, that identified with its name
below;
(c) in the case of Costa Crociere S.p.A., that identified with its
name below;
(d) in the case of CC U.S. Ventures, Inc., that identified with
its name below;
(e) in the case of Holland America Line Inc., that identified with
its name below;
(f) in the case of Princess Cruise & Tours, Inc., that identified
with its name below;
(g) in the case of each Lender or any other Original Obligor, that
notified in writing to the Facilities Agent on or prior to the
date on which it becomes a Party; and
(h) in the case of the Facilities Agent, that identified with its
name below,
or any substitute address, fax number or department or officer as
the Party may notify to the Facilities Agent (or the Facilities
Agent may notify to the other Parties, if a change is made by the
Facilities Agent) by not less than five Business Days' notice.
35.2.2 The address, fax number and telex number (and the department or
officer, if any, for whose attention the communication is to be
made) of each Fronting Bank for any communication or document to be
made or delivered under or in connection with the Finance Documents
is that notified in writing to the Facilities Agent prior to the
Signing Date or upon its appointment as a Fronting Bank, or any
substitute address, fax number, telex number or department or
officer as each Fronting Bank may notify to the Facilities Agent by
not less than five Business Days' notice.
111
35.2.3 The contact details of the Company for this purpose are:
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: + 1 305 406 6480
Attention: Treasurer; and
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: +1 305 406 4758
Attention: General Counsel
35.2.4 The contact details of Carnival plc for this purpose are:
Address: Carnival plc, 5 Gainsford Street, London, SE1 2NE, England
Fax number: 0207 940 5382
Tel number: 0207 940 5383
Attention: Corporation Counsel
35.2.5 The contact details of Costa Crociere S.p.A. for this purpose are:
Address: Costa Crociere S.p.A., Via XII Ottobre 2, 16121,
Genoa, Italy
Fax number: + 39 010 548 3446
Attention: Cristina Gado, Treasurer
with a copy to:
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: + 1 305 406 6480
Attention: Treasurer; and
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: +1 305 406 4758
Attention: General Counsel
35.2.6 The contact details of CC U.S. Ventures, Inc. for this purpose are:
Address: c/o Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: + 1 305 406 6480
Attention: Treasurer; and
Address: c/o Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: +1 305 406 4758
Attention: General Counsel
112
35.2.7 The contact details of Holland America Line Inc. for this purpose
are:
Address: Holland America Line Inc., 300 Elliott Avenue West,
Seattle, Washington, 98119
Fax number: + 1 206 286 3936
Attention: Todd W. Kimmel, Treasurer
with a copy to:
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: + 1 305 406 6480
Attention: Treasurer; and
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: +1 305 406 4758
Attention: General Counsel
35.2.8 The contact details of Princess Cruise & Tours, Inc. for this
purpose are:
Address: Princess Cruise & Tours, Inc., 24305 Town Center Drive,
Santa Clarita, California, 91355
Fax number: + 1 661 753 1510
Attention: Alan B. Buckelew, Executive Vice President and Treasurer
with a copy to:
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: + 1 305 406 6480
Attention: Treasurer; and
Address: Carnival Corporation, 3655 NW 87th Avenue, Miami,
Florida 33133
Fax number: +1 305 406 4758
Attention: General Counsel
35.2.9 The contact details of the Facilities Agent for this purpose are:
For Operational Issues (Drawdowns; Rollovers, Rate Fixing: Fee
Claims etc)
The Royal Bank of Scotland plc
Level 3
2-5 Devonshire Square
London
EC2M 4XJ
Attention: Loans Administration / LAU
Fax Number: 44 (0) 20 7615 7673
113
For Non Operational Issues (Covenants; Amendments & Waivers etc)
The Royal Bank of Scotland plc
Level 7
135 Bishopsgate
London
EC2M 3UR
Attention: Philip A. Pentney, Head of Syndicated Loans Agency
Fax No: 44 (0) 20 7085 4564
Telephone Number: 44 (0) 20 7085 8739
E-Mail: philip.pentney@rbos.com
35.3 Delivery
35.3.1 Any communication or document made or delivered by one person to
another under or in connection with the Finance Documents will only
be effective:
(a) if delivered in person, at the time of delivery;
(b) if by way of fax, when received in legible form; or
(c) if by post, five days after being deposited in the post
postage prepaid in an envelope correctly addressed.
35.3.2 Any communication or document to be made or delivered to the
Facilities Agent will be effective only when actually received by
the Facilities Agent.
35.3.3 A communication given under clause 35.3.1 but received on a
non-working day or after business hours in the place of receipt will
only be deemed to be given on the next working day in that place.
35.3.4 All notices from or to an Obligor shall be sent through the
Facilities Agent.
35.3.5 Any communication or document made or delivered to the Company in
accordance with this clause will be deemed to have been made or
delivered to each of the Obligors.
35.4 Notification of address and fax number
Promptly upon receipt of notification of an address and fax number
or change of address or fax number pursuant to clause 35.2
(Addresses) or changing its own address or fax number, the
Facilities Agent shall notify the other Parties.
114
35.5 Electronic communication
35.5.1 Any communication to be made between the Facilities Agent and a
Lender under or in connection with the Finance Documents may be made
by electronic mail or other electronic means, if the Facilities
Agent and the relevant Lender:
(a) agree that, unless and until notified to the contrary, this is
to be an accepted form of communication;
(b) notify each other in writing of their electronic mail address
and/or any other information required to enable the sending
and receipt of information by that means; and
(c) notify each other of any change to their address or any other
such information supplied by them.
35.5.2 Any electronic communication made between the Facilities Agent and a
Lender will be effective only when actually received in readable
form and in the case of any electronic communication made by a
Lender to the Facilities Agent only if it is addressed in such a
manner as the Facilities Agent shall specify for this purpose.
35.6 English language
35.6.1 Any notice given under or in connection with any Finance Document
must be in English.
35.6.2 All other documents provided under or in connection with any Finance
Document must be:
(a) in English; or
(b) if not in English, and if so required by the Facilities Agent,
accompanied by a certified English translation and, in this
case, the English translation will prevail unless the document
is a constitutional, statutory or other official document.
36 Calculations and certificates
36.1 Accounts
In any litigation or arbitration proceedings arising out of or in
connection with a Finance Document, the entries made in the accounts
maintained by a Finance Party are prima facie evidence of the
matters to which they relate.
36.2 Certificates and Determinations
Any certification or determination by a Finance Party of a rate or
amount under any Finance Document is, in the absence of manifest
error, conclusive evidence of the matters to which it relates. The
Facilities Agent shall provide reasonable details to support such
calculation upon the Company's request.
115
36.3 Day count convention
Any interest, commission or fee accruing under a Finance Document
will accrue from day to day and is calculated on the basis of the
actual number of days elapsed and a year of 365 days in relation to
Sterling or 360 days in relation to any other currency or, in any
case where the practice in the Relevant Interbank Market differs, in
accordance with that market practice.
37 Partial invalidity
If, at any time, any provision of the Finance Documents is or
becomes illegal, invalid or unenforceable in any respect under any
law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions nor the legality,
validity or enforceability of such provision under the law of any
other jurisdiction will in any way be affected or impaired.
38 Remedies and waivers
No failure to exercise, nor any delay in exercising, on the part of
any Finance Party, any right or remedy under the Finance Documents
shall operate as a waiver, nor shall any single or partial exercise
of any right or remedy prevent any further or other exercise or the
exercise of any other right or remedy. The rights and remedies
provided in this Agreement are cumulative and not exclusive of any
rights or remedies provided by law.
39 Amendments and waivers
39.1 Required consents
39.1.1 Subject to clause 39.2 (Exceptions) any term of the Finance
Documents may be amended or waived only with the consent of the
Majority Lenders and the Obligors and any such amendment or waiver
will be binding on all Parties.
39.1.2 The Facilities Agent may effect, on behalf of any Finance Party, any
amendment or waiver permitted by this clause.
39.2 Exceptions
39.2.1 An amendment or waiver that has the effect of changing or which
relates to:
(a) the definition of Majority Lenders in clause 1.1
(Definitions);
(b) an extension to the date of payment of any amount under the
Finance Documents other than pursuant to clause 4.2;
(c) a reduction in the Margin or a reduction in the amount of any
payment of principal, interest, fees (other than fronting fees
payable pursuant to clause 16.5) or commission payable;
116
(d) an increase in or an extension of any Tranche A Commitment,
Tranche B Commitment and/or Tranche C Commitment other than
pursuant to clause 4.2;
(e) a change to the Borrowers or Guarantors other than in
accordance with clause 29 (Changes to the Obligors);
(f) any provision which expressly requires the consent of all the
Lenders; or
(g) clause 2.2 (Finance Parties' rights and obligations), clause
28 (Changes to the Lenders) or this clause 39,
shall not be made without the prior consent of all the Lenders.
39.2.2 An amendment or waiver which relates to the rights or obligations of
the Facilities Agent or an Arranger when acting in that capacity may
not be effected without the consent of the Facilities Agent or the
Arrangers.
39.2.3 Notwithstanding any other provision of this Agreement, an amendment
or waiver which relates to the rights or obligations of a Fronting
Bank when acting in that capacity may not be effected without the
consent of that Fronting Bank.
40 Counterparts
Each Finance Document may be executed in any number of counterparts,
and this has the same effect as if the signatures on the
counterparts were on a single copy of the Finance Document.
41 Governing law
This Agreement is governed by English law.
42 Enforcement
42.1 Jurisdiction
42.1.1 The courts of England have exclusive jurisdiction to settle any
dispute arising out of or in connection with this Agreement
(including a dispute regarding the existence, validity or
termination of this Agreement) (a Dispute).
42.1.2 The Parties agree that the courts of England are the most
appropriate and convenient courts to settle Disputes and accordingly
no Party will argue to the contrary.
42.1.3 This clause 42.1 is for the benefit of the Finance Parties only. As
a result, no Finance Party shall be prevented from taking
proceedings relating to a Dispute in any other courts with
jurisdiction. To the extent allowed by law, the Finance Parties may
take concurrent proceedings in any number of jurisdictions.
117
42.2 Service of process
42.2.1 Without prejudice to any other mode of service allowed under any
relevant law, each Obligor (other than an Obligor incorporated in
England and Wales):
(a) irrevocably appoints Carnival plc (and Carnival plc hereby
accepts each such appointment) as its agent for service of
process in relation to any proceedings before the English
courts in connection with any Finance Document; and
(b) agrees that failure by a process agent to notify the relevant
Obligor of the process will not invalidate the proceedings
concerned.
42.3 Waiver of Jury Trial
Each of the parties to this Agreement irrevocably waives trial by
jury in any action or proceeding with respect to this Agreement or
any of the Finance Documents.
43 USA PATRIOT Act
Each Lender hereby notifies each Obligor that pursuant to the
requirements of the USA Patriot Act, such Lender is required to
obtain, verify and record information that identifies such Obligor,
which information includes the name and address of such Obligor and
other information that will allow such Lender to identify such
Obligor in accordance with the USA PATRIOT Act.
44 Summary Document
The Summary Document is set out in Schedule 12 solely to provide a
summary of the main terms and conditions of the Agreement for the
purposes of the Bank of Italy's instructions on the transparency of
banking transactions and services (Istruzioni di vigilanza per le
banche, Titolo X, Capitolo 1). The parties agree that the Summary
Document is not intended to amend, supplement or interpret this
Agreement. In case of inconsistency between this Agreement and the
Summary Document, this Agreement will prevail for all purposes.
This Agreement has been entered into on the date stated at the
beginning of this Agreement.
118
Schedule 1
The Original Parties
Part 1
The Original Borrowers
Name of Subsidiaries of the Company and Carnival plc
1 Costa Crociere S.p.A. (a company organised and existing under the
laws of Italy as a societa per azioni, with fully paid-up share
capital equal to Euro 365.364.504,00, having its registered office
in Genoa (Italy), via XII Ottobre 2, registered with the Companies'
Register (Registro delle Imprese) of Genoa under no. 02545900108,
Repertorio Economico Amministrativo no. 279842)
2 CC U.S. Ventures, Inc. (a company organised and existing under the
laws of Delaware the United States)
3 Holland America Line Inc. (a company organised and existing under
the laws of Washington the United States)
4 Princess Cruise & Tours, Inc. (a company organised and existing
under the laws of Delaware the United States)
119
Part 2
The Original Lenders - Loan Commitments
(a) Tranche A Commitment
Name of Original Lender Amount (USD)
Bank of America, N.A 48,866,754.75
Barclays Bank PLC 48,866,754.75
JPMorgan Chase Bank, N.A 48,866,754.75
The Royal Bank of Scotland plc 48,866,754.75
BNP Paribas 48,866,754.75
SANPAOLO IMI S.p.A 48,866,754.75
Citibank, N.A 39,093,403.80
Deutsche Bank AG London Branch 39,093,403.80
KfW 61,662,093.03
HSBC Bank plc 39,093,403.80
Lloyds TSB Bank plc 61,662,093.03
Mizuho Corporate Bank. Ltd., 61,662,093.03
Banca di Roma - London Branch 39,093,403.80
Banca Intesa S.p.A 39,093,403.80
Banca Nazionale del Lavoro SpA, New York Branch 39,093,403.80
Merrill Lynch Bank USA 61,662,093.03
Societe Generale 39,093,403.80
SunTrust Bank 61,662,093.03
UBS Limited 61,662,093.03
UniCredito Italiano - New York Branch 39,093,403.80
Australia and New Zealand Banking Group Limited 30,831,046.51
Banco Bilbao Vizcaya Argentaria S.A 19,546,701.90
Commerzbank Aktiengesellschaft 19,546,701.90
DnB NOR Bank ASA 30,831,046.51
National Australia Bank Limited 30,831,046.51
Sumitomo Mitsui Banking Corporation, New York Branch 30,831,046.51
US Bank, N.A 30,831,046.51
Wells Fargo Bank, National Association 30,831,046.51
Total 1,200,000,000
120
(b) Tranche B Commitment
Name of Original Lender Amount (euro)
Bank of America, N.A 30,303,030.30
Barclays Bank PLC 30,303,030.30
JPMorgan Chase Bank, N.A 30,303,030.30
The Royal Bank of Scotland plc 30,303,030.30
BNP Paribas 30,303,030.30
SANPAOLO IMI S.p.A 30,303,030.30
Citibank, N.A. - Milan Branch 24,242,424.24
Deutsche Bank SpA 24,242,424.24
KfW 0
HSBC Bank plc 24,242,424.24
Lloyds TSB Bank plc 0
Mizuho Corporate Bank. Ltd., 0
Banca di Roma - London Branch 24,242,424.24
Banca Intesa S.p.A 24,242,424.24
Banca Nazionale del Lavoro SpA, New York Branch 24,242,424.24
Merrill Lynch Bank USA 0
Societe Generale 24,242,424.24
SunTrust Bank 0
UBS Limited 0
UniCredito Italiano - New York Branch 24,242,424.24
Australia and New Zealand Banking Group Limited 0
Banco Bilbao Vizcaya Argentaria S.A 12,121,212.12
Commerzbank Aktiengesellschaft 12,121,212.12
DnB NOR Bank ASA 0
National Australia Bank Limited 0
Sumitomo Mitsui Banking Corporation, New York Branch 0
US Bank, N.A 0
Wells Fargo Bank, National Association 0
Total 400,000,000
121
(c) Tranche C Commitment
Name of Original Lender Amount (Sterling)
Bank of America, N.A 8,144,459.13
Barclays Bank PLC 8,144,459.13
JPMorgan Chase Bank, N.A 8,144,459.13
The Royal Bank of Scotland plc 8,144,459.13
BNP Paribas 8,144,459.13
SANPAOLO IMI S.p.A 8,144,459.13
Citibank, N.A 6,515,567.30
Deutsche Bank AG London Branch 6,515,567.30
KfW 10,277,015.50
HSBC Bank plc 6,515,567.30
Lloyds TSB Bank plc 10,277,015.50
Mizuho Corporate Bank. Ltd., 10,277,015.50
Banca di Roma - London Branch 6,515,567.30
Banca Intesa S.p.A 6,515,567.30
Banca Nazionale del Lavoro SpA, New York Branch 6,515,567.30
Merrill Lynch Bank USA 10,277,015.50
Societe Generale 6,515,567.30
SunTrust Bank 10,277,015.50
UBS Limited 10,277,015.50
UniCredito Italiano - New York Branch 6,515,567.30
Australia and New Zealand Banking Group Limited 5,138,507.75
Banco Bilbao Vizcaya Argentaria S.A 3,257,783.65
Commerzbank Aktiengesellschaft 3,257,783.65
DnB NOR Bank ASA 5,138,507.75
National Australia Bank Limited 5,138,507.75
Sumitomo Mitsui Banking Corporation, New York Branch 5,138,507.75
US Bank, N.A 5,138,507.75
Wells Fargo Bank, National Association 5,138,507.75
Total 200,000,000
122
Part 3
[Not Used]
123
Part 4
The Original Swingline Lenders - Swingline Loan Commitments
(a) Swingline Tranche A Commitment
Name of Original Swingline Lender Amount (USD)
Bank of America, N.A 48,747,120.60
Barclays Bank PLC 48,747,120.60
JPMorgan Chase Bank, N.A 48,747,120.60
The Royal Bank of Scotland plc 48,747,120.60
BNP Paribas 48,747,120.60
SANPAOLO IMI S.p.A 48,747,120.60
Citibank, N.A 38,997,696.48
Deutsche Bank AG New York Branch 38,997,696.48
KfW 0
HSBC Bank plc 38,997,696.48
Lloyds TSB Bank plc 61,511,133.70
Mizuho Corporate Bank, Ltd. 61,511,133.70
Banca di Roma - London Branch 38,997,696.48
Banca Intesa S.p.A 38,997,696.48
Banca Nazionale del Lavoro SpA, New York Branch 0
Merrill Lynch Bank USA 0
Societe Generale 38,997,696.48
SunTrust Bank 0
UBS Loan Finance LLC 61,511,133.70
UniCredito Italiano - New York Branch 0
Australia and New Zealand Banking Group Limited 0
Banco Bilbao Vizcaya Argentaria S.A 19,498,848.24
Commerzbank Aktiengesellschaft 19,498,848.24
DnB NOR Bank ASA 0
National Australia Bank Limited 0
Sumitomo Mitsui Banking Corporation, New York Branch 0
US Bank, N.A 0
Wells Fargo Bank, National Association 0
Total 750,000,000
124
(b) Swingline Tranche B Commitment
Name of Original Swingline Lender Amount (euro)
Bank of America, N.A 30,172,413.79
Barclays Bank PLC 30,172,413.79
JPMorgan Chase Bank, N.A 30,172,413.79
The Royal Bank of Scotland plc 30,172,413.79
BNP Paribas 30,172,413.79
SANPAOLO IMI S.p.A 30,172,413.79
Citibank, N.A. - Milan Branch 24,137,931.03
Deutsche Bank SpA 24,137,931.03
KfW 0
HSBC Bank plc 24,137,931.03
Lloyds TSB Bank plc 0
Mizuho Corporate Bank. Ltd., 0
Banca di Roma - London Branch 24,137,931.03
Banca Intesa S.p.A 24,137,931.03
Banca Nazionale del Lavoro SpA, New York Branch 0
Merrill Lynch Bank USA 0
Societe Generale 24,137,931.03
SunTrust Bank 0
UBS Limited 0
UniCredito Italiano - New York Branch 0
Australia and New Zealand Banking Group Limited 0
Banco Bilbao Vizcaya Argentaria S.A 12,068,965.52
Commerzbank Aktiengesellschaft 12,068,965.52
DnB NOR Bank ASA 0
National Australia Bank Limited 0
Sumitomo Mitsui Banking Corporation, New York Branch 0
US Bank, N.A 0
Wells Fargo Bank, National Association 0
Total 350,000,000
125
(c) Swingline Tranche C Commitment
Name of Original Swingline Lender Amount (Sterling)
Bank of America, N.A 8,124,520.10
Barclays Bank PLC 8,124,520.10
JPMorgan Chase Bank, N.A 8,124,520.10
The Royal Bank of Scotland plc 8,124,520.10
BNP Paribas 8,124,520.10
SANPAOLO IMI S.p.A 8,124,520.10
Citibank, N.A 6,499,616.08
Deutsche Bank AG London Branch 6,499,616.08
KfW 0
HSBC Bank plc 6,499,616.08
Lloyds TSB Bank plc 10,251,855.62
Mizuho Corporate Bank, Ltd. 10,251,855.62
Banca di Roma - London Branch 6,499,616.08
Banca Intesa S.p.A 6,499,616.08
Banca Nazionale del Lavoro SpA, New York Branch 0
Merrill Lynch Bank USA 0
Societe Generale 6,499,616.08
SunTrust Bank 0
UBS Limited 10,251,855.62
UniCredito Italiano - New York Branch 0
Australia and New Zealand Banking Group Limited 0
Banco Bilbao Vizcaya Argentaria S.A 3,249,808.04
Commerzbank Aktiengesellschaft 3,249,808.04
DnB NOR Bank ASA 0
National Australia Bank Limited 0
Sumitomo Mitsui Banking Corporation, New York Branch 0
US Bank, N.A 0
Wells Fargo Bank, National Association 0
Total 125,000,000
126
Part 5
The Original Fronting Banks
Bank of America, N.A.
The Royal Bank of Scotland plc
SANPAOLO IMI S.p.A.
127
Schedule 2
Conditions Precedent
Part 1
Conditions precedent to initial Utilisation
Original Obligors
1 A copy of the constitutional documents of each Original Obligor.
2 A copy of a resolution of the board of directors or executive committee
thereof of each Original Obligor (and, if required by its existing
by-laws, a copy of the resolution of the Shareholders' Meeting of Costa
Crociere S.p.A.), approving the terms of, and the transactions
contemplated by, the Finance Documents to which it is a party.
3 A specimen of the signature of each person who executes the Finance
Documents and who is authorised on behalf of an Original Obligor to
execute or witness the execution of any Finance Document or to sign or
send any document or notice in connection with any Finance Document.
4 A certificate of an authorised signatory of the Company:
(a) confirming that utilising or (with respect to the Company and
Carnival plc) guaranteeing the Total Tranche A Commitments, the
Total Tranche B Commitments and the Total Tranche C Commitments (or,
in the case of Costa Crociere S.p.A., utilising the Total Tranche B
Commitments) in full would not breach any limit binding on any
Original Obligor;
(b) certifying that each copy document specified in Part 1 of this
Schedule is correct, complete and in full force and effect as at a
date no earlier than the Signing Date; and
(c) confirming which companies are Material Subsidiaries and providing
reasonable details of the calculations used to make such
determinations.
5 A copy of a good standing certificate with respect to each US Borrower,
issued as of a recent date by the Secretary of State or other appropriate
official of each US Borrower's jurisdiction of incorporation or
organisation.
6 A certificate of registration (certificato di iscrizione) of Costa
Crociere S.p.A. with the relevant Companies' Register dated not earlier
than five Business Days prior to the execution of this Agreement,
confirming that no insolvency procedures have been started in relation to
Costa Crociere S.p.A.
Legal opinions
7 A legal opinion of Clifford Chance, English law legal advisers to the
Arrangers and the Facilities Agent, addressed to the Finance Parties.
128
8 A legal opinion of Tapia, Linares y Alfaro, Panama law legal advisers,
addressed to the Finance Parties.
9 A legal opinion of Clifford Chance, New York state law legal advisers,
addressed to the Finance Parties.
10 A legal opinion of Lane Powell PC, Washington state law legal advisers,
addressed to the Finance Parties.
11 A legal opinion of Clifford Chance Studio Legale Associato, Italian law
legal advisers, addressed to the Finance Parties.
Other documents and evidence
12 The duly executed Finance Documents (other than any of the Utilisation
Requests).
13 Certified copy of the Original Financial Statements.
14 Certified copy of the DLC Documents.
15 Evidence that the fees, costs and expenses then due from the Company
pursuant to clause 16 (Fees) and clause 21 (Costs and expenses) have been
paid or will be paid by the first Utilisation Date.
16 Evidence of prepayment and cancellation in full on or prior to the date of
this Agreement of the Company's USD1.4billion revolving credit agreement
dated 26 June 2001 as amended on 17 November 2003, Carnival plc's
(euro)600m credit facility agreement dated 9 March 2004 and Costa Crociere
S.p.A.'s (euro)257.5m revolving credit agreement dated 3 May 2001.
17 A copy of any other authorisation or other document, opinion or assurance
which the Facilities Agent has notified the Company is necessary or
desirable in connection with the entry into and performance of the
transactions contemplated by the Finance Documents or for the validity and
enforceability of any Finance Document.
129
Part 2
Conditions precedent required to be delivered by an Additional Borrower
Additional Borrowers
1 An Accession Letter, duly executed by the Additional Borrower and the
Company or Carnival plc.
2 A copy of the constitutional documents of the Additional Borrower.
3 A copy of a resolution of the board of directors or executive committee
thereof of the Additional Borrower (and, if such Additional Borrower is
incorporated in Italy and it is required by its existing by-laws, a copy
of the resolution of the Shareholders' Meeting of such Additional
Borrower) approving the terms of, and the transactions contemplated by,
the Accession Letter and the Finance Documents to which it is a party.
4 A specimen of the signature of each person who executes the Accession
Letter and is authorised on behalf of the Additional Borrower to execute
or witness the execution of any Finance Document or to sign or send any
document or notice in connection with any Finance Document.
5 A certificate of an authorised signatory of the Additional Borrower:
(a) confirming that utilising the Total Tranche A Commitments, the Total
Tranche B Commitments and the Total Tranche C Commitments (or, in
the case of an Additional Borrower resident in Italy, utilising the
Total Tranche B Commitments) in full would not breach any limit
binding on it; and
(b) certifying that each copy document specified in Part 2 of this
Schedule is correct, complete and in full force and effect as at a
date no earlier than the date of the Accession Letter.
6 If the proposed Additional Borrower is incorporated in Italy, a summary
sheet (in the form of the Summary Sheet mutatis mutandis) signed for
acknowledgement and acceptance by such Additional Borrower and
constituting the Documento di Sintensi required by the relevant Italian
banking regulations, namely Section 10 of the Bank of Italy's regulations
of 25 July 2003 and the C.I.C.R. resolution dated 4 March 2003.
7 If the proposed Additional Borrower is incorporated in Italy, a
certificate of registration (certificato di iscrizione) of such Additional
Borrower with the relevant Companies' Register dated not earlier than five
Business Days prior to the execution of the relevant Accession Letter,
confirming that no insolvency procedures have been started in relation to
such Additional Borrower.
Legal opinions
8 A legal opinion of Clifford Chance, English law legal advisers to the
Facilities Agent, addressed to the Finance Parties.
9 If the Additional Borrower is incorporated in a jurisdiction other than
England and Wales, a legal opinion from legal advisers in that
jurisdiction, addressed to the Finance Parties.
130
Other documents and evidence
10 A copy of any other authorisation or other document, opinion or assurance
which the Facilities Agent has notified the Company is necessary or
desirable in connection with the entry into and performance of the
transactions contemplated by the Accession Letter or for the validity and
enforceability of any Finance Document.
131
Schedule 3
Utilisation Request
Part 1
Loans
From: o [Borrower]
To: THE ROYAL BANK OF SCOTLAND PLC (Facilities Agent)
Dated: [*]
Dear Sirs
CARNIVAL CORPORATION AND CARNIVAL PLC - USD1,200,000,000,
(euro)400,000,000 and (pounds)200,000,000 Multicurrency Revolving
Facilities Agreement dated [*] (the Agreement)
1 We refer to the Agreement. This is a Loan Utilisation Request. Terms
defined in the Agreement have the same meaning in this Loan Utilisation
Request unless given a different meaning in this Loan Utilisation Request.
2 We wish to borrow a Loan on the following terms:
Tranche: [A/B/C]
Proposed Utilisation Date: [*] (or, if that is not a Business Day, the
next Business Day)
Currency of Loan: [*]
Amount: [*] or, if less, the Available Facility for the
Tranche indicated above
Interest Period: [*]
3 We confirm that each condition specified in clause 5.4.1 is satisfied on
the date of this Loan Utilisation Request.
4 The proceeds of this Loan should be credited to o [account].
5 This Loan Utilisation Request is irrevocable.
Yours faithfully
----------------------------
authorised signatory for
[name of relevant Borrower]
132
Part 2
Bonds
From: [Borrower]
To: THE ROYAL BANK OF SCOTLAND PLC (Facilities Agent)
Dated:
Dear Sirs
CARNIVAL CORPORATION AND CARNIVAL PLC - USD1,200,000,000,
(euro)400,000,000 and (pounds)200,000,000 Multicurrency Revolving
Facilities Agreement dated [*] (the Agreement)
1 We wish to arrange for a Bond to be issued by the relevant Fronting Bank
on the following terms:
Fronting Bank [*]
Tranche: A
Proposed Utilisation Date: [*] (or, if that is not a Business Day, the
next Business Day)
Currency of Bond: [*]
Amount: [*] or, if less, the lesser of the Available
Tranche A Facility and the Available Bond
Facility
Beneficiary: [*]
Account Party: [*]
Term or Expiry Date: [*]
2 We confirm that each condition specified in clause 6.7 (Issue of Bonds) is
satisfied on the date of this Bond Utilisation Request.
3 We attach a copy of the proposed Bond.
4 This Bond Utilisation Request is irrevocable.
Delivery Instructions:
[specify delivery instructions]
Yours faithfully
---------------------------
authorised signatory for
[name of relevant Borrower]
133
Part 3
Swingline Loan
From: [Borrower]
To: THE ROYAL BANK OF SCOTLAND PLC (Facilities Agent)
Dated:
Dear Sirs
CARNIVAL CORPORATION AND CARNIVAL PLC - USD1,200,000,000,
(euro)400,000,000 and (pounds)200,000,000 Multicurrency Revolving
Facilities Agreement dated [*] (the Agreement)
1. We wish to borrow a Swingline Loan on the following terms:
Tranche [A/B/C]
Proposed Utilisation Date: [*] (or, if that is not a Business Day, the
next Business Day)
Currency of Swingline Loan: [USD/(euro)/(pounds)]
Amount: [*] or, if less, the Available Swingline
[Tranche A/Tranche B/Tranche C] Facility
Interest Period: [*]
2. We confirm that each condition specified in clause 8.5 (Swingline Lenders'
participation) is satisfied on the date of this Swingline Loan Utilisation
Request.
3. The proceeds of this Swingline Loan should be credited to [account].
4. This Swingline Loan Utilisation Request is irrevocable.
Yours faithfully
---------------------------
authorised signatory for
[name of relevant Borrower]
134
Schedule 4
Mandatory Cost Formulae
1 The Mandatory Cost is an addition to the interest rate to compensate
Lenders for the cost of compliance with (a) the requirements of the Bank
of England and/or the Financial Services Authority (or, in either case,
any other authority which replaces all or any of its functions) or (b) the
requirements of the European Central Bank.
2 On the first Utilisation Date (or as soon as practicable thereafter) the
Facilities Agent shall calculate or ascertain, as a percentage rate per
annum, a rate (the "Base Cost Rate") for each Lender and, thereafter, on
the first day of each Interest Period (or as soon as practicable
thereafter) as a percentage rate per annum, a rate (the "Current Cost
Rate") for each Lender, in accordance with the paragraphs set out below
and shall notify the Company of the Base Cost Rate and the Current Cost
Rate for each Lender promptly after calculating or ascertaining such
rates.
3 The Mandatory Cost will be calculated by the Facilities Agent as the rate
per annum that is the difference between (i) the weighted average of the
Lenders' Current Cost Rates (weighted in proportion to the percentage
participation of each Lender in the relevant Loan) and (ii) the weighted
average of the Lenders' Base Cost Rates (weighted in proportion to the
percentage participation of each Lender in the relevant Loan) and will be
expressed as a percentage rate per annum provided that if such a rate is
negative, the Mandatory Costs rate shall be deemed to be zero.
The Additional Cost Rate for a Lender will be the Current Cost Rate for
that Lender less the Base Cost Rate for that Lender and will be expressed
a percentage rate per annum provided that if such a rate is negative, the
Additional Cost Rate shall be deemed to be zero.
4 The Base Cost Rate or the Current Cost Rate for any Lender lending from a
Facility Office in a Participating Member State will be the percentage
(expressed as a rate per annum) notified by that Lender to the Facilities
Agent. This percentage will be certified by that Lender in its notice to
the Facilities Agent to be its reasonable determination of the cost
(expressed as a percentage of that Lender's participation in all Loans
made from that Facility Office) of complying with the minimum reserve
requirements of the European Central Bank in respect of loans made from
that Facility Office.
5 The Base Cost Rate or Current Cost Rate for any Lender lending from a
Facility Office in the United Kingdom will be calculated by the Facilities
Agent as follows:
(a) in relation to a Sterling Loan:
AB+C(B-D)+Ex0.01
---------------- per cent. per annum
100-(A+C)
(b) in relation to a Loan in any currency other than Sterling:
135
Ex0.01
------ per cent. per annum.
300
Where:
A is the percentage of Eligible Liabilities (assuming these to be in
excess of any stated minimum) which that Lender is from time to time
required to maintain as an interest free cash ratio deposit with the
Bank of England to comply with cash ratio requirements.
B is the percentage rate of interest (excluding the Margin and the
Mandatory Cost and, if the Loan is an Unpaid Sum, the additional
rate of default interest payable for the relevant Interest Period on
the Loan.
C is the percentage (if any) of Eligible Liabilities which that Lender
is required from time to time to maintain as interest bearing
Special Deposits with the Bank of England.
D is the percentage rate per annum payable by the Bank of England to
the Facilities Agent on interest bearing Special Deposits.
E is designed to compensate Lenders for amounts payable under the Fees
Rules and is calculated by the Facilities Agent as being the average
of the most recent rates of charge supplied by the Reference Banks
to the Facilities Agent pursuant to paragraph 9 below and expressed
in pounds per (pounds)1,000,000.
6 Should a Lender transfer all or part of its Commitment to a New Lender
after the Utilisation Date, the Base Cost Rate of such New Lender shall be
deemed to be either (a) the percentage notified by it to the Facilities
Agent under paragraph 4 above or (b) the percentage calculated by the
Facilities Agent under paragraph 5 above, in each case on the date the
relevant transfer becomes effective.
7 For the purposes of this Schedule:
(a) "Eligible Liabilities" and "Special Deposits" have the meanings
given to them from time to time under or pursuant to the Bank of
England Act 1998 or (as may be appropriate) by the Bank of England;
(b) "Fees Rules" means the rules on periodic fees contained in the FSA
Supervision Manual or such other law or regulation as may be in
force from time to time in respect of the payment of fees for the
acceptance of deposits;
(c) "Fee Tariffs" means the fee tariffs specified in the Fees Rules
under the activity group A.1 Deposit acceptors (ignoring any minimum
fee or zero rated fee required pursuant to the Fees Rules but taking
into account any applicable discount rate); and
(d) "Tariff Base" has the meaning given to it in, and will be calculated
in accordance with, the Fees Rules.
136
8 In application of the above formulae, A, B, C and D will be included in
the formulae as percentages (i.e. 5 per cent. will be included in the
formula as 5 and not as 0.05). A negative result obtained by subtracting D
from B shall be taken as zero. The resulting figures shall be rounded to
four decimal places.
9 If requested by the Facilities Agent, each Reference Bank shall, as soon
as practicable after publication by the Financial Services Authority,
supply to the Facilities Agent, the rate of charge payable by that
Reference Bank to the Financial Services Authority pursuant to the Fees
Rules in respect of the relevant financial year of the Financial Services
Authority (calculated for this purpose by that Reference Bank as being the
average of the Fee Tariffs applicable to that Reference Bank for that
financial year) and expressed in pounds per (pounds)1,000,000 of the
Tariff Base of that Reference Bank.
10 Each Lender shall supply any information required by the Facilities Agent
for the purpose of calculating its Base Cost Rate or Current Cost Rate. In
particular, but without limitation, each Lender shall supply the following
information on or prior to the date on which it becomes a Lender:
(a) the jurisdiction of its Facility Office and, if not U.K., its Base
Cost Rate and Current Cost Rate; and
(b) any other information that the Facilities Agent may reasonably
require for such purpose.
Each Lender shall promptly notify the Facilities Agent of any change
to the information provided by it pursuant to this paragraph.
11 The percentages of each Lender for the purpose of A and C above and the
rates of charge of each Reference Bank for the purpose of E above shall be
determined by the Facilities Agent based upon the information supplied to
it pursuant to paragraphs 9 and 10 above and on the assumption that,
unless a Lender notifies the Facilities Agent to the contrary, each
Lender's obligations in relation to cash ratio deposits and Special
Deposits are the same as those of a typical bank from its jurisdiction of
incorporation with a Facility Office in the same jurisdiction as its
Facility Office.
12 The Facilities Agent shall have no liability to any person if such
determination results in a Base Cost Rate or Current Cost Rate which over
or under compensates any Lender and shall be entitled to assume that the
information provided by any Lender or Reference Bank pursuant to
paragraphs 4, 6, 9 and 10 above is true and correct in all respects.
13 The Facilities Agent shall distribute the additional amounts received as a
result of the Mandatory Cost to the Lenders on the basis of the Current
Cost Rate for each Lender based on the information provided by each Lender
and each Reference Bank pursuant to paragraphs 4, 6, 9 and 10 above.
14 Any determination by the Facilities Agent in accordance with this Schedule
in relation to a formula, the Mandatory Cost, an Additional Cost Rate, a
Base Cost Rate, a Current Cost Rate or any amount payable to a Lender
shall, in the absence of manifest error, be conclusive and binding on all
Parties.
137
15 The Facilities Agent may from time to time, after consultation with the
Company and the Lenders, determine and notify to all Parties any
amendments which are required to be made to this Schedule in order to
comply with any change in law, regulation or any requirements from time to
time imposed by the Bank of England, the Financial Services Authority or
the European Central Bank (or, in any case, any other authority which
replaces all or any of its functions) and any such determination shall, in
the absence of manifest error, be conclusive and binding on all Parties.
138
Schedule 5
Form of Transfer Certificate
To: THE ROYAL BANK OF SCOTLAND PLC as Facilities Agent
From: [The Existing Lender] (the Existing Lender) and [The New Lender] (the
New Lender)
Dated:
CARNIVAL CORPORATION AND CARNIVAL PLC - USD1,200,000,000,
(euro)400,000,000 and (pounds)200,000,000 Multicurrency Revolving
Facilities Agreement dated [*] (the Agreement)
1 We refer to the Agreement. This is a Transfer Certificate. Terms defined
in the Agreement have the same meaning in this Transfer Certificate unless
given a different meaning in this Transfer Certificate.
2 We refer to clause 28.2 (Procedure for transfer):
(a) The Existing Lender and the New Lender agree to the Existing Lender
transferring to the New Lender by novation all or part of the
Existing Lender's Commitment, rights and obligations referred to in
the Schedule in accordance with clause 28.2 (Procedure for
transfer).
(b) The proposed Transfer Date is [*].
(c) The Facility Office and address, fax number and attention details
for notices of the New Lender for the purposes of clause 35.2
(Addresses) are set out in the Schedule.
3 The New Lender expressly acknowledges the limitations on the Existing
Lender's obligations set out in of clause 28.3 (Limitation of
responsibility of Existing Lenders).
4 [The New Lender confirms that the person beneficially entitled to interest
payable to that Lender in respect of an advance under a Finance Document
is a Qualifying Lender, as defined in clause [insert appropriate reference
from clause 17].
[4/5] This Transfer Certificate may be executed in any number of counterparts
and this has the same effect as if the signatures on the counterparts were
on a single copy of this Transfer Certificate.
[5/6] This Transfer Certificate is governed by English law.
139
The Schedule
Commitment/rights and obligations to be transferred
[insert relevant details]
[Facility Office address, fax number and attention details for
notices and account details for payments,]
[Existing Lender] [New Lender]
By: By:
This Transfer Certificate is accepted by the Facilities Agent and the Transfer
Date is confirmed as [*].
[Facilities Agent]
By:
140
Schedule 6
Form of Accession Letter
To: THE ROYAL BANK OF SCOTLAND PLC as Facilities Agent
From: [Subsidiary] and CARNIVAL CORPORATION/CARNIVAL PLC
Dated: [*]
Dear Sirs
CARNIVAL CORPORATION AND CARNIVAL PLC - USD1,200,000,000,
(euro)400,000,000 and (pounds)200,000,000 Multicurrency Revolving
Facilities Agreement dated [*] (the Agreement)
1 We refer to the Agreement. This is an Accession Letter. Terms defined in
the Agreement have the same meaning in this Accession Letter unless given
a different meaning in this Accession Letter.
2 [Subsidiary] agrees to become an Additional Borrower and to be bound by
the terms of the Agreement as an Additional Borrower pursuant to clause
29.2 (Additional Borrowers) of the Agreement. [Subsidiary] is a company
duly incorporated under the laws of [name of relevant jurisdiction].
3 [Subsidiary's] administrative details are as follows:
Address:
Fax No:
Attention:
4 This Accession Letter is governed by English law.
CARNIVAL CORPORATION [Subsidiary]
CARNIVAL PLC
141
Schedule 7
Form of Resignation Letter
To: THE ROYAL BANK OF SCOTLAND PLC as Facilities Agent
From: [resigning Borrower] and CARNIVAL CORPORATION/CARNIVAL PLC
Dated: [*]
Dear Sirs
CARNIVAL CORPORATION AND CARNIVAL PLC - USD1,200,000,000,
(euro)400,000,000 and (pounds)200,000,000 Multicurrency Revolving
Facilities Agreement dated [*] (the Agreement)
1 We refer to the Agreement. This is a Resignation Letter. Terms defined in
the Agreement have the same meaning in this Resignation Letter unless
given a different meaning in this Resignation Letter.
2 Pursuant to clause 29.3 (Resignation of a Borrower), we request that
[resigning Borrower] be released from its obligations as a Borrower under
the Agreement.
3 We confirm that:
(a) no Default is outstanding or would result from the acceptance of
this request; and
(b) as at the date of this request no amount owed by [resigning
Borrower] under the Agreement is outstanding.
4 This Resignation Letter is governed by English law.
CARNIVAL CORPORATION [Subsidiary]
By: By:
CARNIVAL PLC
By:
142
Schedule 8
Form of Compliance Certificate
To: THE ROYAL BANK OF SCOTLAND PLC as Facilities Agent
From: CARNIVAL CORPORATION
Dated: [*]
Dear Sirs
CARNIVAL CORPORATION AND CARNIVAL PLC - USD1,200,000,000,
(euro)400,000,000 and (pounds)200,000,000 Multicurrency Revolving
Facilities Agreement dated [*] (the Agreement)
1 We refer to the Agreement. This is a Compliance Certificate. Terms defined
in the Agreement have the same meaning when used in this Compliance
Certificate unless given a different meaning in this Compliance
Certificate.
2 We confirm that as at as at [relevant testing date]:
(a) Issued Capital and Consolidated Reserves was [ ];
The aggregate of Borrowed Moneys was [ ]; and Consolidated Capital
was [ ]; therefore the aggregate of Borrowed Moneys as a
percentage of Consolidated Capital was [ ].
EBITDA was [ ] and Consolidated Net Interest Charges was [ ];
therefore the ratio of EBITDA to Consolidated Net Interest Charges
was [ ] to 1.
3 We set out below calculations establishing the figures in paragraph 2
above:
[ ].
4 [We confirm that no Default is outstanding as at [relevant testing date]*]
Signed:
-----------------------------
Senior Financial Officer
of
CARNIVAL CORPORATION
- --------------------------------------------------------------------------------
* If this statement cannot be made, the certificate should identify any
Default that is continuing and the steps, if any, being taken to remedy
it.
143
Schedule 9
Form of Confidentiality Undertaking
To: [Transferring Lender]
Re: CARNIVAL CORPORATION - USD1,200,000,000, (euro)400,000,000 and
(pounds)200,000,000 Multicurrency Revolving Facilities Agreement dated [*]
(the Agreement)
================================================================================
[Carnival Plc./Carnival Corporation] (the Company)
Amount:
Facilities Agent:
================================================================================
Dear Sirs
We are considering [acquiring](1) /[arranging the acquisition of](2) an
interest in the Agreement (the Acquisition). In consideration of you agreeing to
make available to us certain information, by our signature of this letter we
agree as follows (acknowledged and agreed by you by your signature of a copy of
this letter):
1. Confidentiality Undertaking
We undertake (a) to keep the Confidential Information confidential and not
to disclose it to anyone except as provided for by paragraph 2 below and
to ensure that the Confidential Information is protected with security
measures and a degree of care that would apply to our own confidential
information, (b) to use the Confidential Information only for the
Permitted Purpose, (c) to use all reasonable endeavours to ensure that any
person to whom we pass any Confidential Information (unless disclosed
under paragraph 2[(c)/(d)](3) below) acknowledges and complies with the
provisions of this letter as if that person were also a party to it, and
(d) not to make enquiries of any member of the Group or any of their
officers, directors, employees or professional advisers relating directly
or indirectly to the Acquisition.
2. Permitted Disclosure
You agree that we may disclose Confidential Information:
to members of the Purchaser Group and their officers,
directors, employees and professional advisers to the extent
necessary for the Permitted Purpose and to any auditors of
members of the Purchaser Group;
[subject to the requirements of the Agreement, in accordance
with the Permitted Purpose so long as any prospective
purchaser has delivered a letter to us in equivalent form to
this letter](2) ;
[(b/c)](3) subject to the requirements of the Agreement, to any person to
(or through) whom we assign or transfer (or may potentially
assign or transfer) all or any of the rights, benefits and
obligations which we may acquire under the Agreement or with
(or through) whom we enter into (or may potentially enter
into) any sub-participation in relation to, or any other
- --------------------------------------------------------------------------------
(1) Delete if purchaser is acting as broker or agent.
(2) Delete if potential purchaser is acting as principal.
(3) Delete as applicable.
144
transaction under which payments are to be made by reference
to, the Agreement or the Company or any member of the Group in
each case so long as that person has delivered a letter to us
in equivalent form to this letter; and
[(b/c/d)]3 (i) where requested or required by any court of competent
jurisdiction or any competent judicial, governmental,
supervisory or regulatory body, (ii) where required by the
rules of any stock exchange on which the shares or other
securities of any member of the Purchaser Group are listed or
(iii) where required by the laws or regulations of any country
with jurisdiction over the affairs of any member of the
Purchaser Group.
3. Notification of Required or Unauthorised Disclosure
We agree (to the extent permitted by law) to inform you of the full
circumstances of any disclosure under paragraph 2[(c)/(d)](3) or upon
becoming aware that Confidential Information has been disclosed in breach
of this letter.
4. Return of Copies
If you so request in writing, we shall return all Confidential Information
supplied by you to us and destroy or permanently erase all copies of
Confidential Information made by us and use all reasonable endeavours to
ensure that anyone to whom we have supplied any Confidential Information
destroys or permanently erases such Confidential Information and any
copies made by them, in each case save to the extent that we or the
recipients are required to retain any such Confidential Information by any
applicable law, rule or regulation or by any competent judicial,
governmental, supervisory or regulatory body or in accordance with
internal policy, or where the Confidential Information has been disclosed
under paragraph 2[(c)/(d)](3) above.
5. Continuing Obligations
The obligations in this letter are continuing and, in particular, shall
survive the termination of any discussions or negotiations between you and
us. Notwithstanding the previous sentence, the obligations in this letter
shall cease (a) if we become a party to or otherwise acquire (by
assignment or sub-participation) an interest, direct or indirect, in the
Agreement or (b) twelve months after we have returned all Confidential
Information supplied to us by you and destroyed or permanently erased all
copies of Confidential Information made by us (other than any such
Confidential Information or copies which have been disclosed under
paragraph 2 above (other than sub-paragraph 2(a)) or which, pursuant to
paragraph 4 above, are not required to be returned or destroyed).
6. No Representation; Consequences of Breach, etc
We acknowledge and agree that:
(a) neither you, [nor your principal](4) nor any member of the Group nor
any of your or their respective officers, employees or advisers
(each a "Relevant Person") (i) make any representation or warranty,
express or implied, as to, or assume any responsibility for, the
accuracy, reliability or completeness of any of the Confidential
Information or any other information supplied by you or the
assumptions on which it is based or (ii) shall be under any
obligation to update or correct any inaccuracy in the Confidential
Information or any other information supplied by you or be otherwise
liable to us or any other person in respect to the Confidential
Information or any such information; and
(b) you [or your principal](4) or members of the Group may be
irreparably harmed by the breach of the terms hereof and damages may
not be an adequate remedy; each Relevant Person may be granted an
injunction or specific performance for any threatened or actual
breach of the provisions of this letter by us.
145
7. No Waiver; Amendments, etc
This letter sets out the full extent of our obligations of confidentiality
owed to you in relation to the information the subject of this letter. No
failure or delay in exercising any right, power or privilege hereunder
will operate as a waiver thereof nor will any single or partial exercise
of any right, power or privilege preclude any further exercise thereof or
the exercise of any other right, power or privileges hereunder. The terms
of this letter and our obligations hereunder may only be amended or
modified by written agreement between us and the Company.
8. Inside Information
We acknowledge that some or all of the Confidential Information is or may
be price-sensitive information and that the use of such information may be
regulated or prohibited by applicable legislation relating to insider
dealing and we undertake not to use any Confidential Information for any
unlawful purpose.
9. Nature of Undertakings
The undertakings given by us under this letter are given to you and
(without implying any fiduciary obligations on your part) are also given
for the benefit of [your principal,](4) the Company and each other member
of the Group.
10. Third Party Rights
(a) Subject to this paragraph 10 and to paragraphs 6 and 9, a person who is
not a party to this letter has no right under the Contracts (Rights of
Third Parties) Act 1999 (the Third Parties Act) to enforce or to enjoy the
benefit of any term of this letter.
(b) The Relevant Persons may enjoy the benefit of the terms of paragraphs 6
and 9 subject to and in accordance with this paragraph 10 and the
provisions of the Third Parties Act.
(c) The parties to this letter do not require the consent of the Relevant
Persons (other than the Company) to rescind or vary this letter at any
time.
11. Governing Law and Jurisdiction
(a) This letter (including the agreement constituted by your acknowledgement
of its terms) is governed by English Law.
(b) The parties submit to the non-exclusive jurisdiction of the English
courts.
12. Definitions
In this letter (including the acknowledgement set out below) terms defined
in the Agreement shall, unless the context otherwise requires, have the
same meaning and:
Confidential Information means any information relating to the Company,
the Group, the Agreement and/or the Acquisition provided to us by you or
any of our affiliates or advisers, in whatever form, and includes
information given orally and any document, electronic file or any other
way of representing or recording information which contains or is derived
or copied from such information but excludes information that (a) is or
becomes public knowledge other than as a direct or indirect result of any
breach of this letter or (b) is known by us before the date the
information is disclosed to us by you or any of your affiliates or
advisers or is lawfully obtained by us thereafter, other than from a
source which is connected with the Group and which, in either case, as far
as we
- --------------------------------------------------------------------------------
(4) Delete if letter is addressed to the Seller rather than the Seller's
broker or agent.
146
are aware, has not been obtained in violation of, and is not otherwise
subject to, any obligation of confidentiality;
Group means the Company and each of its holding companies and subsidiaries
and each subsidiary of each of its holding companies (as each such term is
defined in the Companies Act 1985);
Permitted Purpose means [subject to the terms of this letter, passing on
information to a prospective purchaser for the purpose of](2) considering
and evaluating whether to enter into the Acquisition; and
Purchaser Group means us, each of our holding companies and subsidiaries
and each subsidiary of each of our holding companies (as each such term is
defined in the Companies Act 1985).
Please acknowledge your agreement to the above by signing and returning the
enclosed copy.
Yours faithfully
- ---------------------------------
For and on behalf of
[Potential Purchaser/Purchaser's agent/broker]
To: [Potential Purchaser/Purchaser's agent/broker]
We acknowledge and agree to the above:
- ---------------------------------
For and on behalf of
[Seller/Seller's agent/broker]
147
Schedule 10
Timetables
Each time shown below represents the Specified Time by which the relevant action
listed in the far left column must be completed on a particular day
Part I
Loans
- ------------------------------------------------------------------------------------------------------------------------------
Loans in Loans in euro Loans in sterling Loans in other
US Dollars currencies
- ------------------------------------------------------------------------------------------------------------------------------
Facilities Agent notifies the 3:00 pm (London
Company if a currency is time) 4 Business
approved as an Optional Days before the
Currency in accordance with proposed Utilisation
clause 10.3 (Conditions Date
relating to Optional Currencies)
- ------------------------------------------------------------------------------------------------------------------------------
Delivery of a duly completed 4:00 pm (London time) 4:00 pm (London time) 4:00 pm (London 4:00 pm (London
Loan Utilisation Request 3 Business Days 3 Business Days before time) 1 Business Day time) 3 Business
(clause 5.1 (Delivery of a Loan before the proposed the proposed before the proposed Days before the
Utilisation Request)) Utilisation Date Utilisation Date Utilisation Date proposed Utilisation
Date
- ------------------------------------------------------------------------------------------------------------------------------
Facilities Agent notifies the 5:00 pm (London time) 5:00 pm (London time) 5:00 pm (London 5:00 pm (London
Lenders of the Loan in 3 Business Days 3 Business Days before time) 1 Business time) 3 Business
accordance with clause 5.4 before the proposed the proposed Days before the Days before the
(Lender's participation) Utilisation Date Utilisation Date proposed Utilisation proposed Utilisation
Date Date
- ------------------------------------------------------------------------------------------------------------------------------
Facilities Agent receives a 9:00 am (London
notification from a Lender time) 2 Business
under clause 10.2 Days before the
(Unavailability of a currency) proposed Utilisation
Date
- ------------------------------------------------------------------------------------------------------------------------------
Facilities Agent gives notice 10:00 am (London
in accordance with clause 10.2 time) 2 Business
(Unavailability of a currency) Days before the
proposed Utilisation
Date
- ------------------------------------------------------------------------------------------------------------------------------
LIBOR or EURIBOR is fixed 11:00 am (London 11:00 am (Brussels 11:00 am (London 11:00 am (London
time) on the time) on the Quotation time) on the time) on the
Quotation Day Day Quotation Day Quotation Day
- ------------------------------------------------------------------------------------------------------------------------------
148
Part II
Bonds
- ---------------------------------------------------------------------------------------------------------------
Facilities Agent notifies the Company if a currency is 8 Business Days before the proposed Bond Utilisation
approved as an Optional Currency in accordance with
clause 10.3 (Conditions relating to Optional Currencies)
- ---------------------------------------------------------------------------------------------------------------
Delivery of a duly completed Bond Utilisation Request 3:00 pm (London time) 7 Business Days before the
(clause 6.3 (Delivery of a Bond Utilisation Request)) proposed Bond Utilisation
- ---------------------------------------------------------------------------------------------------------------
Facilities Agent notifies the relevant Fronting Bank and 5:00 pm (London time) 7 Business Days before the
the Lenders of the Bond in accordance with clause 6.7 proposed Bond Utilisation
(Issue of Bonds)
- ---------------------------------------------------------------------------------------------------------------
Delivery of a duly completed Renewal Request (clause 6.8 4 Business Days before the proposed Bond Utilisation
(Renewal of a Bond)) on renewal.
- ---------------------------------------------------------------------------------------------------------------
149
Part III
Swingline Loans
- ----------------------------------------------------------------------------------------------------------------
Tranche A Tranche B Tranche C
- ----------------------------------------------------------------------------------------------------------------
Delivery of a duly completed Swingline Loan Utilisation 11:00 am (New 8:30 am (London 10:30 am (London
Request (clause 8.2 (Delivery of a Swingline Loan York time) on time) on the time) on the
Utilisation Request)) the Utilisation Utilisation Date Utilisation Date
Date
- ----------------------------------------------------------------------------------------------------------------
Facilities Agent notifies each Swingline Lender of the 11:30 am (New 9:00 am (London 11:00 am (London
amount of its participation in the Swingline Loan under York time) on time) on the time) on the
clause 8.5 (Swingline Lenders' participation) the Utilisation Utilisation Date Utilisation Date
Date
- ----------------------------------------------------------------------------------------------------------------
Facilities Agent determines the prime commercial lending 9:30 am (New Not applicable Not applicable
rate under clause 9.6 (Interest) York time) on
the Utilisation
Date
- ----------------------------------------------------------------------------------------------------------------
150
Schedule 11
Pre-Approved Bonds
151
Schedule 12
Summary Document
This is a Summary Document ("Documento di Sintesi"), prepared pursuant to the
Bank of Italy's instructions on the transparency of banking transactions and
services (Istruzioni di vigilanza per le banche, Titolo X, Capitolo 1) and
summarising the terms and conditions of the Facilities Agreement for
US$1,200,000,000, (euro)400,000,000 and (pounds)200,000,000 Multicurrency
Revolving Facilities dated 21 October 2005 (the "Agreement").
Capitalised terms not defined herein shall bear the same meaning ascribed to
them in the Agreement. The term Clause shall refer to a clause of the Agreement,
unless the contrary is stated.
1. FINANCIAL TERMS OF THE FACILITIES AGREEMENT
Aggregate amount granted pursuant to the Agreement: the aggregate of
US$1,200,000,000, (euro)400,000,000 and (pounds)200,000,000;
1.1 Tranche A: Maximum principal amount: US$1,200,000,000;
Purpose: each Borrower shall apply all amounts utilised by it under the
Facilities: (a) by way of Loan Utilisations or Swingline Loans towards
general liquidity and/or working capital purposes of the Carnival
Corporation & plc Group including, but not limited to, (in the case of
Swingline Loans) support for any CP Programme; and (b) by way of Bond
Utilisations, for the purposes of securing the commercial obligations
specified in the Bond;
Availability Period: the period from and including the Signing Date to and
including the Termination Date;
Interest Period: in relation to a Loan, each period determined in
accordance with Clause 14 (Interest Periods) and, in relation to an Unpaid
Sum, each period determined in accordance with Clause 13.3 (Default
Interest);
Interest rate: the interest rate on each Loan (other than a Swingline
Loan) shall be a margin defined as Margin which shall be at the Signing
Date 0.175% per annum and, thereafter, may vary between 0.125% and 0.300%;
plus (ii) LIBOR (or, in relation to any Loan in euro, EURIBOR); plus (iii)
the Mandatory Costs, if any; the interest rate on each Swingline Loan
shall be the higher of (i) the prime commercial lending rate in US Dollars
announced by the Facilities Agent at the Specified Time and in force on
that day; and (ii) 0.50% per annum over the rate per annum determined by
the Facilities Agent to be the Federal Funds Rate (as published by the
Federal Reserve Bank of New York) for that day;
Default Interest: the default interest rate shall be the interest rate
applicable from time to time, plus a margin of 1%;
Repayment: each Borrower which has drawn a Loan shall repay that Loan on
the last day of its Interest Period; each Bond Borrower shall ensure that
each Bond is repaid in full on or before the Termination Date.
152
Borrowers:
Carnival Corporation
3655 N.W. 87th Avenue
Miami, Florida, 33178-2428
Carnival plc
5 Gainsford Street
London SE1 2NE United Kingdom
Costa Crociere S.p.A. (Bond Utilisations only)
Via XII Ottobre 2
16121 Genoa (Italy)
CC U.S. Ventures Inc.
c/o CT Corporation
1209 Orange Street
Wilmington
Delaware
U.S.A. 19801
Holland America Line Inc.
300 Elliott Avenue West
Seattle
Washington
U.S.A. 98110
Princess Cruise & Tours, Inc.
P.O. Box 13471201
North Market Street
Wilmington
Delaware
U.S.A. 19899
1.2 Tranche B: Maximum principal amount: (euro)400,000,000;
Purpose: each Borrower shall apply all amounts utilised by it under the
Facilities by way of Loan Utilisations or Swingline Loans towards general
liquidity and/or working capital purposes of the Carnival Corporation &
plc Group including, but not limited to, (in the case of Swingline Loans)
support for any CP Programme;
Availability Period: the period from and including the Signing Date to and
including the Termination Date;
Interest Period: in relation to a Loan, each period determined in
accordance with Clause 14 (Interest Periods) and, in relation to an Unpaid
Sum, each period determined in accordance with Clause 13.3 (Default
Interest);
Interest rate: the interest rate on each Loan (other than a Swingline
Loan) shall be a margin defined as Margin which shall be at the Signing
Date 0.175% per annum and, thereafter, may vary between 0.125% and 0.300%;
plus (ii) LIBOR (or, in relation to any Loan in euro, EURIBOR); plus (iii)
the Mandatory Costs, if any; the interest rate on each Swingline Loan,
shall be the percentage rate per
153
annum equal to the aggregate of (i) the applicable Margin; (ii) the
arithmetic mean of the rates (rounded up to four decimal places) as
supplied to the Facilities Agent at its request by the Reference Banks to
leading banks in the European Interbank Market as of 11:00am (Brussels
time) on the Utilisation Date for that Swingline Loan for the offering of
deposits in euro for a period comparable to the Interest Period for the
relevant Swingline Loan and for settlement on that day; (iii) and
Mandatory Costs (if any);
Default Interest: the default interest rate shall be the interest rate
applicable from time to time, plus a margin of 1%;
Repayment: each Borrower which has drawn a Loan shall repay that Loan on
the last day of its Interest Period.
Borrowers:
Carnival Corporation
3655 NW 87th Avenue
Miami, Florida 33133 USA
Carnival plc
5 Gainsford Street
London SE1 2NE United Kingdom
Costa Crociere S.p.A.
Via XII Ottobre 2
16121 Genoa (Italy)
CC U.S. Ventures Inc.
c/o CT Corporation
1209 Orange Street
Wilmington
Delaware
U.S.A. 19801
Holland America Line Inc.
300 Elliott Avenue West
Seattle
Washington
U.S.A. 98110
Princess Cruise & Tours, Inc.
P.O. Box 13471201
North Market Street
Wilmington
Delaware
U.S.A. 19899
1.3 Tranche C: Maximum principal amount: (pounds)200,000,000;
154
Purpose: each Borrower shall apply all amounts utilised by it under the
Facilities by way of Loan Utilisations or Swingline Loans towards general
liquidity and/or working capital purposes of the Carnival Corporation &
plc Group including, but not limited to, (in the case of Swingline Loans)
support for any CP Programme;
Availability Period: the period from and including the Signing Date to and
including the Termination Date;
Interest Period: in relation to a Loan, each period determined in
accordance with Clause 14 (Interest Periods) and, in relation to an Unpaid
Sum, each period determined in accordance with Clause 13.3 (Default
Interest);
Interest rate: the interest rate on each Loan (other than a Swingline
Loan) shall be a margin defined as Margin which shall be at the Signing
Date 0.175% per annum and, thereafter, may vary between 0.125% and 0.300%;
plus (ii) LIBOR (or, in relation to any Loan in euro, EURIBOR); plus (iii)
the Mandatory Costs, if any; the interest rate on each Swingline Loan,
shall be the percentage rate per annum equal to the aggregate of (i) the
applicable Margin; (ii) LIBOR; (iii) and Mandatory Costs (if any);
Default Interest: the default interest rate shall be the interest rate
applicable from time to time, plus a margin of 1%;
Repayment: each Borrower which has drawn a Loan shall repay that Loan on
the last day of its Interest Period;
Borrowers:
Carnival Corporation
3655 NW 87th Avenue
Miami, Florida 33133 USA
Carnival plc
5 Gainsford Street
London SE1 2NE United Kingdom
CC U.S. Ventures Inc.
c/o CT Corporation
1209 Orange Street
Wilmington
Delaware
U.S.A. 19801
Holland America Line Inc.
300 Elliott Avenue West
Seattle
Washington
U.S.A. 98110
155
Princess Cruise & Tours, Inc.
P.O. Box 13471201
North Market Street
Wilmington
Delaware
U.S.A. 19899
1.4 Lenders and Applicable Tranches
----------------------------------------------------------------------------------------------------
Legal name Lending office address Applicable
Tranche(s)
----------------------------------------------------------------------------------------------------
Bank of America, N.A. TX 1-492-64-01, 901 Main St., A, Swingline (A)
Dallas, TX 72502, U.S.A.
----------------------------------------------------------------------------------------------------
Bank of America, N.A. - Milan Branch Corso Matteotti, 10, B, Swingline (B)
20121 Milan, Italy (for Costa Crociere
S.p.A.)
----------------------------------------------------------------------------------------------------
Bank of America, N.A. 5 Canada Square, London E14 5AQ, B,C, Swingline
United Kingdom (B,C) (except for
Costa Crociere
S.p.A.)
----------------------------------------------------------------------------------------------------
Barclays Bank PLC 5 The North Colonnade A,B,C, Swingline
Canary Wharf, London (A,B,C)
E14 4BB, United Kingdom
----------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, N.A. 270 Park Avenue A, Swingline (A)
New York 10017, USA
----------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, N.A. Piazza Meda, 1 B, Swingline (B)
Via Catena 4, (for Costa Crociere
Milan 20121, Italy S.p.A.)
----------------------------------------------------------------------------------------------------
JPMorgan Chase Bank, N.A. 125 London Wall, London EC2Y B,C, Swingline
5AJ, United Kingdom (B,C) (except for
Costa Crociere
S.p.A.)
----------------------------------------------------------------------------------------------------
The Royal Bank of Scotland plc CIB Leisure, 8th Floor, 135 A,B,C, Swingline
Bishopsgate, London EC2M 3UR (A,B,C)
----------------------------------------------------------------------------------------------------
BNP Paribas 1200 Smith Street, Suite 3100, A, Swingline (A)
Houston, Texas 77002, U.S.A.
----------------------------------------------------------------------------------------------------
BNP Paribas Piazza San Fedele, 2, 20121 B, Swingline (B)
Milano (MI)
----------------------------------------------------------------------------------------------------
BNP Paribas 10 Harewood Avenue, London NW1 C, Swingline (C)
6AA, United Kingdom
----------------------------------------------------------------------------------------------------
SANPAOLO IMI S.p.A. Warwick Court, 18-24 Warwick A,B,C, Swingline
Lane, London EC4M 7LZ (B,C)
----------------------------------------------------------------------------------------------------
SANPAOLO IMI S.p.A. New York Branch, 245 Park Swingline (A)
Avenue, Suite 3500, New York, NY
10167
----------------------------------------------------------------------------------------------------
Citibank, N.A. 2 Penn's Way A, Swingline (A)
New Castle, DE. 19720
----------------------------------------------------------------------------------------------------
Citibank, N.A. - Milan Branch Foro Buonaparte, 16-20121 B, Swingline (B)
Milano, Italy
----------------------------------------------------------------------------------------------------
Citibank, N.A. UK Loans Processing Unit C, Swingline (C)
2nd Floor
4 Harbour Exchange
Isle of Dogs
London E14 9GE U.K.
----------------------------------------------------------------------------------------------------
Deutsche Bank AG London Branch Winchester House, 1 Great A,C, Swingline (C)
Winchester Street, London EC2N
2DB
----------------------------------------------------------------------------------------------------
156
----------------------------------------------------------------------------------------------------
Legal name Lending office address Applicable
Tranche(s)
----------------------------------------------------------------------------------------------------
Deutsche Bank AG New York Branch 60 Wall Street, New York, NY Swingline (A)
10005
----------------------------------------------------------------------------------------------------
Deutsche Bank SpA Piazza del Calendario, 3, 20126, B, Swingline (B)
Milan, Italy
----------------------------------------------------------------------------------------------------
KfW Palmengartenstrasse 5-9, D-60325 A, C
Frankfurt am Main
----------------------------------------------------------------------------------------------------
HSBC Bank plc 8 Canada Square, London E14 5HQ A,C, Swingline (A,C)
----------------------------------------------------------------------------------------------------
HSBC Bank plc Milan Branch, Piazetta B, Swingline (B)
Maurilio Bossi, 1, 20121
Milano, Italy
----------------------------------------------------------------------------------------------------
Lloyds TSB Bank plc 25 Gresham Street, London, EC2V A,C, Swingline (C)
7HN
----------------------------------------------------------------------------------------------------
Lloyds TSB Bank plc 1251 Avenue of the Americas, Swingline (A)
39th Floor, New York, New York
10020
----------------------------------------------------------------------------------------------------
Mizuho Corporate Bank. Ltd., River Plate House, 7-11 Finsbury A,C
Circus, London EC2M 7DH
----------------------------------------------------------------------------------------------------
Mizuho Corporate Bank, Ltd. 1251 Avenue of the Americas, New Swingline (A,C)
York, N.Y. 10020, U.S.A.
----------------------------------------------------------------------------------------------------
Banca di Roma - London Branch 34 East 51st Street, New York, A, Swingline (A)
NY 10022, U.S.A.
----------------------------------------------------------------------------------------------------
Banca di Roma - London Branch Piazza de Ferrari 3N., 16121 B, Swingline (B)
Genova, Italy (for Costa Crociere
S.p.A.)
----------------------------------------------------------------------------------------------------
Banca di Roma - London Branch 81/87 Gresham Street, London B,C, Swingline
EC2V 7NQ, UK (B,C) (except for
Costa Crociere
S.p.A.)
----------------------------------------------------------------------------------------------------
Banca Intesa S.p.A. Piazza Dante 44R, 16121, Genova, B, Swingline (B)
Italy (for Costa Crociere
S.p.A.)
----------------------------------------------------------------------------------------------------
Banca Intesa S.p.A. 90 Queen Street, London EC4N 1SA A,B,C Swingline
(A,B,C) (except for
Costa Crociere
S.p.A. and US
incorporated
borrowers)
----------------------------------------------------------------------------------------------------
Banca Intesa S.p.A. 1 William Street, New York, NY A, Swingline (A)
10004, U.S.A. (for US
incorporated
borrowers)
----------------------------------------------------------------------------------------------------
Banca Nazionale del Lavoro SpA, New York 51 West 52nd Street, 36th Floor, A,B,C
Branch New York, N.Y. 10019
----------------------------------------------------------------------------------------------------
Merrill Lynch Bank USA 15W. South Temple Street, STE A,C
300, Salt Lake City, UT 84101
----------------------------------------------------------------------------------------------------
Societe Generale 41 Tower Hill, London EC3N 4SG A,B,C, Swingline
(A,B,C)
----------------------------------------------------------------------------------------------------
SunTrust Bank 200 S. Orange Avenue, Tower A,C
10-MC 1106, Orlando, FL 32801
----------------------------------------------------------------------------------------------------
UBS Limited 1 Finsbury Avenue, London EC2M A,C, Swingline (C)
2PP
----------------------------------------------------------------------------------------------------
UBS Loan Finance LLC 677 Washington Blvd., Stamford, Swingline (A)
CT 06901, U.S.A.
----------------------------------------------------------------------------------------------------
UniCredito Italiano - New York Branch 430 Park Avenue, 9th Floor, New A,B,C
York, New York 10022
----------------------------------------------------------------------------------------------------
157
----------------------------------------------------------------------------------------------------
Legal name Lending office address Applicable
Tranche(s)
----------------------------------------------------------------------------------------------------
Australia and New Zealand Banking Group Minerva House, Montague Close, A,C
Limited London SE1 9DH
----------------------------------------------------------------------------------------------------
Banco Bilbao Vizcaya Argentaria S.A. 108 Cannon Street, London EC4N A,B,C, Swingline
6EU (B,C) (except for
Costa Crociere
S.p.A.)
----------------------------------------------------------------------------------------------------
Banco Bilbao Vizcaya Argentaria S.A., Milan Via Cino del Duca 8 B, Swingline (B)
20122 Milan, Italy (for Costa Crociere
S.p.A.)
----------------------------------------------------------------------------------------------------
Banco Bilbao Vizcaya Argentaria S.A., New 1345 Avenue of the Americas, Swingline (A)
York 45th Floor
New York, New York 10105 U.S.A.
----------------------------------------------------------------------------------------------------
Commerzbank Aktiengesellschaft Global Shipping, Ness 7-9, 20457 A,B,C, Swingline
Hamburg (A,B,C)
----------------------------------------------------------------------------------------------------
DnB NOR Bank ASA 200 Park Avenue, 31st Floor, New A,C
York, NY 10166-0396, U.S.A.
----------------------------------------------------------------------------------------------------
National Australia Bank Limited (ABN 12 88 Wood Street, London EC2V 7QQ A,C
004 044 937)
----------------------------------------------------------------------------------------------------
Sumitomo Mitsui Banking Corporation, New 277 Park Avenue, New York, NY A,C
York Branch 10172
----------------------------------------------------------------------------------------------------
US Bank, N.A. US Bank Tower, 425 Walnut A,C
Street, 8th Floor, Cincinnati,
OH 45202, U.S.A.
----------------------------------------------------------------------------------------------------
Wells Fargo Bank, National Association 7000 Central Parkway, Suite 600, A,C
Atlanta, Georgia 30328, U.S.A.
----------------------------------------------------------------------------------------------------
1.4 Facilities Agent: The Royal Bank of Scotland plc;
1.5 Guarantors: (1) Carnival Corporation in respect of its Subsidiaries and
Carnival plc and (2) Carnival plc in respect of its Subsidiaries and
Carnival Corporation.
2. REPRESENTATIONS
As more particularly described in Clause 23 (Representations), these
include: (a) Status; (b) Non-conflict; (c) No default; (d) Financial
statements; (e) No material adverse change; (f) Litigation; (g) Pari passu
ranking; and (h) United States Law.
3. UNDERTAKINGS
As more particularly described in Clause 26 (General undertakings), these
include: (a) Authorisations; (b) Negative pledge; (c) Insurance; (d)
ERISA; and (e) Margin Stock.
4. EVENTS OF DEFAULT
4.1 As more particularly described in Clause 27 (Events of Default), these
include: (a) Non-payment; (b) Breach of other obligations; (c)
Misrepresentation; (d) Cross-default; (e) Insolvency Proceedings; (f)
Insolvency; (g) Creditors' process; (h) Cessation of business; (i)
Effectiveness of Finance Documents; and (l) Article 2447 or 2482-ter of
the Italian civil code;
4.2 Acceleration: if an Event of Default occurs, as more particularly
described in Clause 27.13 (Acceleration) of the Agreement.
158
5. ANNUAL PERCENTAGE RATE OF CHARGE (INDICATORE SINTETICO DI COSTO) ("ISC")
5.1 ISC relating to Costa Crociere S.p.A. for Tranche A is equal to 0.375%.
For the purposes of calculating the ISC for Tranche A, reference has been
made to a Margin equal to 0.300%.
5.2 ISC relating to Costa Crociere S.p.A. for Tranche B is equal to 3.45%.
For the purposes of calculating the ISC for Tranche B, the following
assumptions have been made:
(a) assuming that the currency selected for Loan Utilisations is euro,
reference has been made to EURIBOR at 3.15% as determined on 19
October 2005;
(b) for the calculation of EURIBOR, reference has been made to an
Interest Period of five years; and
(c) reference has been made to a Margin equal to 0.300%.
Additional charges in relation to the Loans granted or Bonds issued under
the Agreement may arise in connection with the application of Clause 15.4
(Break costs) and Clause 17 (Taxes).
6. APPLICABLE LAW AND JURISDICTION
The Agreement is governed by English law. The courts of England have
exclusive jurisdiction to settle any dispute arising out of or in
connection with the Agreement (including a dispute regarding the
existence, validity or termination of this Agreement).
159
SIGNATORIES
CARNIVAL CORPORATION
By: /s/ David Bernstein
-------------------
By: DAVID BERNSTEIN, VICE-PRESIDENT AND TREASURER
CARNIVAL PLC
By: /s/ David Bernstein
-------------------
By: DAVID BERNSTEIN, VICE-PRESIDENT AND TREASURER
COSTA CROCIERE S.p.A.
By: /s/ David Bernstein
-------------------
By: DAVID BERNSTEIN, VICE-PRESIDENT AND TREASURER OF CARNIVAL CORPORATION AND
CARNIVAL PLC/ATTORNEY-IN-FACT
CC U.S. VENTURES, INC.
By: /s/ David Bernstein
-------------------
By: DAVID BERNSTEIN, VICE-PRESIDENT AND TREASURER OF CARNIVAL CORPORATION AND
CARNIVAL PLC/AUTHORISED SIGNATORY
Oral agreements or oral commitments to loan money, extend credit, or to forbear
from enforcing repayment of a debt are not enforceable under Washington law.
HOLLAND AMERICA LINE INC.
By: /s/ David Bernstein
-------------------
By: DAVID BERNSTEIN, VICE-PRESIDENT AND TREASURER OF CARNIVAL CORPORATION AND
CARNIVAL PLC/AUTHORISED SIGNER
PRINCESS CRUISE & TOURS, INC.
By: /s/ David Bernstein
-------------------
By: DAVID BERNSTEIN, VICE-PRESIDENT AND TREASURER OF CARNIVAL CORPORATION AND
CARNIVAL PLC/AUTHORISED SIGNATORY
Guarantors
CARNIVAL CORPORATION
By: /s/ David Bernstein
-------------------
By: DAVID BERNSTEIN, VICE-PRESIDENT AND TREASURER
CARNIVAL PLC
By: /s/ David Bernstein
-------------------
By: DAVID BERNSTEIN, VICE-PRESIDENT AND TREASURER
160
Arrangers
BANC OF AMERICA SECURITIES LIMITED
By: /s/ Stephan James
--------------------------
By: STEPHAN JAMES
BARCLAYS CAPITAL
By: /s/ Sarah Brooks
--------------------------
By: SARAH BROOKS
BNP PARIBAS
By: /s/ Ann M.F. Rix
--------------------------
By: ANN M. F. RIX
By: /s/ Steve Duranti
--------------------------
By: STEVE DURANTI
J.P. MORGAN PLC
By: /s/ J. David Stewart
--------------------------
By: J. DAVID STEWART
SANPAOLO IMI S.p.A.
By: /s/ Dante Campioni
--------------------------
By: DANTE CAMPIONI
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Michael Ian Porter
--------------------------
By: MICHAEL IAN PORTER
Original Lenders
Tranche A
BANK OF AMERICA, N.A.
By: /s/ Justin Lien
--------------------------
By: JUSTIN LIEN
BARCLAYS BANK PLC
By: /s/ Sarah Brooks
--------------------------
By: SARAH BROOKS
161
JPMORGAN CHASE BANK, N.A.
By: /s/ Karl Olsen
--------------------------
By: KARL OLSEN
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Maxine Sanders
--------------------------
By: MAXINE SANDERS
BNP PARIBAS
By: /s/ Ann M.F. Rix
--------------------------
By: ANN M. F. RIX
By: /s/ Steve Duranti
--------------------------
By: STEVE DURANTI
SANPAOLO IMI S.p.A.
By: /s/ Dante Campioni
--------------------------
By: DANTE CAMPIONI
CITIBANK, N.A.
By: /s/ Charles R Delamater
--------------------------
By: CHARLES R. DELAMATER
DEUTSCHE BANK AG LONDON BRANCH
By: /s/ Simon Derrick
--------------------------
By: SIMON DERRICK
By: /s/ Richard Sedlacek
--------------------------
By: RICHARD SEDLACEK
KfW
By: /s/ Marco Albers
--------------------------
By: MARCO ALBERS
By: /s/ Sabine Kapschak
--------------------------
By: SABINE KAPSCHAK
HSBC BANK PLC
By: /s/ Arwel Davies
--------------------------
By: ARWEL DAVIES
LLOYDS TSB BANK PLC
By: /s/ David Moore
--------------------------
By: DAVID MOORE
162
MIZUHO CORPORATE BANK. LTD.,
By: /s/ Robert Pettitt
--------------------------
By: ROBERT PETTITT
BANCA DI ROMA - LONDON BRANCH
By: /s/ Vincent Wright
--------------------------
By: VINCENT WRIGHT
By: /s/ Peter Scharf
--------------------------
By: PETER SCHARF
BANCA INTESA S.p.A.
By: /s/Paul Samuels
--------------------------
By: PAUL SAMUELS
By: /s/ Lawrence Wybranlec
--------------------------
By: LAWRENCE WYBRANLEC
BANCA NAZIONALE DEL LAVORO SpA, NEW YORK BRANCH
By: /s/Juan Cortes
--------------------------
By: JUAN CORTES
By: /s/ Francesco Di Mario
--------------------------
By: FRANCESCO DI MARIO
MERRILL LYNCH BANK USA
By: /s/ Louis Alder
--------------------------
By: LOUIS ALDER
SOCIETE GENERALE
By: /s/ Alain Bataille
--------------------------
By: ALAIN BATAILLE
SUNTRUST BANK
By: /s/ Bradley J. Staples
--------------------------
By: BRADLEY J. STAPLES
UBS LIMITED
By: /s/Sharon Canham
--------------------------
By: SHARON CANHAM
By: /s/ Andrew Sudlow
--------------------------
By: ANDREW SUDLOW
163
UNICREDITO ITALIANO - NEW YORK BRANCH
By: /s/ Christopher J. Eldin
--------------------------
By: CHRISTOPHER J. ELDIN
By: /s/ Saiyed A. Abbas
--------------------------
By: SAIYED A. ABBAS
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
By: /s/ Richard Heyhoe
--------------------------
By: RICHARD HEYHOE
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
By: /s/ Pedro Cayuela
--------------------------
By: PEDRO CAYUELA
By: /s/ Javier Ruiz
--------------------------
By: JAVIER RUIZ
COMMERZBANK AKTIENGESELLSCHAFT
By: /s/ Christoph Beneke
--------------------------
By: CHRISTOPH BENEKE
By: /s/ Christian Welk
--------------------------
By: CHRISTIAN WELK
DnB NOR BANK ASA
By: /s/ Erlend Bryn
--------------------------
By: ERLEND BRYN
By: /s/ Barbara Gronquist
--------------------------
By: BARBARA GRONQUIST
NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937)
By: /s/ David Roberts
--------------------------
By: DAVID ROBERTS
SUMITOMO MITSUI BANKING CORPORATION, NEW YORK BRANCH
By: /s/ William Ginn
--------------------------
By: WILLIAM GINN
US BANK, N.A.
By: /s/ Richard J. Popp
--------------------------
By: RICHARD J. POPP
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/Alex Idichandy
--------------------------
By: ALEX IDICHANDY
164
By: /s/ Kevin R. Combs
--------------------------
By: KEVIN R. COMBS
Tranche B
BANK OF AMERICA, N.A.
By: /s/ Justin Lien
--------------------------
By: JUSTIN LIEN
BARCLAYS BANK PLC
By: /s/ Sarah Brooks
--------------------------
By: SARAH BROOKS
JPMORGAN CHASE BANK, N.A.
By: /s/ Karl Olsen
--------------------------
By: KARL OLSEN
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Maxine Sanders
--------------------------
By: MAXINE SANDERS
BNP PARIBAS
By: /s/ Ann M.F. Rix
--------------------------
By: ANN M. F. RIX
By: /s/ Steve Duranti
--------------------------
By: STEVE DURANTI
SANPAOLO IMI S.p.A.
By: /s/ Dante Campioni
--------------------------
By: DANTE CAMPIONI
CITIBANK, N.A. - MILAN BRANCH
By: /s/ Charles R. Delamater
--------------------------
By: CHARLES R. DELAMATER
DEUTSCHE BANK SpA
By: /s/ Simon Derrick
--------------------------
By: SIMON DERRICK
By: /s/ Richard Sedlacek
--------------------------
By: RICHARD SEDLACEK
165
HSBC BANK PLC
By: /s/ Arwel Davies
--------------------------
By: ARWEL DAVIES
BANCA DI ROMA - LONDON BRANCH
By: /s/ Vincent Wright
--------------------------
By: VINCENT WRIGHT
By: /s/ Peter Scharf
--------------------------
By: PETER SCHARF
BANCA INTESA S.p.A.
By: /s/ Paul Samuels
--------------------------
By: PAUL SAMUELS
By: /s/ Lawrence Wybranlec
--------------------------
By: LAWRENCE WYBRANLEC
BANCA NAZIONALE DEL LAVORO SpA, NEW YORK BRANCH
By: /s/Juan Cortes
--------------------------
By: JUAN CORTES
By: /s/ Francesco Di Mario
--------------------------
By: FRANCESCO DI MARIO
SOCIETE GENERALE
By: /s/ Alain Bataille
--------------------------
By: ALAIN BATAILLE
UNICREDITO ITALIANO - NEW YORK BRANCH
By: /s/ Christopher J. Eldin
--------------------------
By: CHRISTOPHER J. ELDIN
By: /s/ Saiyed A. Abbas
--------------------------
By: SAIYED A. ABBAS
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
By: /s/ Pedro Cayuela
--------------------------
By: PEDRO CAYUELA
By: /s/ Javier Ruiz
--------------------------
By: JAVIER RUIZ
COMMERZBANK AKTIENGESELLSCHAFT
By: /s/ Christoph Beneke
--------------------------
By: CHRISTOPH BENEKE
166
By: /s/ Christian Welk
--------------------------
By: CHRISTIAN WELK
Tranche C
BANK OF AMERICA, N.A.
By: /s/ Justin Lien
--------------------------
By: JUSTIN LIEN
BARCLAYS BANK PLC
By: /s/ Sarah Brooks
--------------------------
By: SARAH BROOKS
JPMORGAN CHASE BANK, N.A.
By: /s/ Karl Olsen
--------------------------
By: KARL OLSEN
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Maxine Sanders
--------------------------
By: MAXINE SANDERS
BNP PARIBAS
By: /s/ Ann M.F. Rix
--------------------------
By: ANN M. F. RIX
By: /s/ Steve Duranti
--------------------------
By: STEVE DURANTI
SANPAOLO IMI S.p.A.
By: /s/ Dante Campioni
--------------------------
By: DANTE CAMPIONI
CITIBANK, N.A.
By: /s/ Charles R. Delamater
--------------------------
By: CHARLES R. DELAMATER
DEUTSCHE BANK AG LONDON BRANCH
By: /s/ Simon Derrick
--------------------------
By: SIMON DERRICK
By: /s/ Richard Sedlacek
--------------------------
By: RICHARD SEDLACEK
167
KfW
By: /s/ Marco Albers
--------------------------
By: MARCO ALBERS
By: /s/ Sabine Kapschak
--------------------------
By: SABINE KAPSCHAK
HSBC BANK PLC
By: /s/ Arwel Davies
--------------------------
By: ARWEL DAVIES
LLOYDS TSB BANK PLC
By: /s/ David Moore
--------------------------
By: DAVID MOORE
MIZUHO CORPORATE BANK. LTD.,
By: /s/ Robert Pettitt
--------------------------
By: ROBERT PETTITT
BANCA DI ROMA - LONDON BRANCH
By: /s/ Vincent Wright
--------------------------
By: VINCENT WRIGHT
By: /s/ Peter Scharf
--------------------------
By: PETER SCHARF
BANCA INTESA S.p.A.
By: /s/ Paul Samuels
--------------------------
By: PAUL SAMUELS
By: /s/ Lawrence Wybranlec
--------------------------
By: LAWRENCE WYBRANLEC
BANCA NAZIONALE DEL LAVORO SpA, NEW YORK BRANCH
By: /s/ Juan Cortes
--------------------------
By: JUAN CORTES
By: /s/ Francesco Di Mario
--------------------------
By: FRANCESCO DI MARIO
MERRILL LYNCH BANK USA
By: /s/ Louis Adler
--------------------------
By: LOUIS ALDER
168
SOCIETE GENERALE
By: /s/ Alain Bataille
--------------------------
By: ALAIN BATAILLE
SUNTRUST BANK
By: Bradley J. Staples
--------------------------
By: BRADLEY J. STAPLES
UBS LIMITED
By: /s/ Sharon Canham
--------------------------
By: SHARON CANHAM
By: /s/ Andrew Sudlow
--------------------------
By: ANDREW SUDLOW
UNICREDITO ITALIANO - NEW YORK BRANCH
By: /s/ Christopher J. Eldin
--------------------------
By: CHRISTOPHER J. ELDIN
By: /s/ Saiyed A. Abbas
--------------------------
By: SAIYED A. ABBAS
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED
By: /s/ Richard Heyhoe
--------------------------
By: RICHARD HEYHOE
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
By: /s/ Pedro Cayuela
--------------------------
By: PEDRO CAYUELA
By: /s/ Javier Ruiz
--------------------------
By: JAVIER RUIZ
COMMERZBANK AKTIENGESELLSCHAFT
By: /s/ Christoph Beneke
--------------------------
By: CHRISTOPH BENEKE
DnB NOR BANK ASA
By: /s/ Erlend Bryn
--------------------------
By: ERLEND BRYN
By: /s/ Barbara Gronquist
--------------------------
By: BARBARA GRONQUIST
NATIONAL AUSTRALIA BANK LIMITED (ABN 12 004 044 937)
By: /s/ David Roberts
--------------------------
By: DAVID ROBERTS
169
SUMITOMO MITSUI BANKING CORPORATION, NEW YORK BRANCH
By: /s/ William Ginn
--------------------------
By: WILLIAM GINN
US BANK, N.A.
By: /s/ Richard J. Popp
--------------------------
By: RICHARD J. POPP
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: /s/ Alex Idichandy
--------------------------
By: ALEX IDICHANDY
By: /s/ Kevin R Combs
--------------------------
By: KEVIN R. COMBS
Original Swingline Lenders
Swingline Tranche A
BANK OF AMERICA, N.A.
By: /s/ Justin Lien
--------------------------
By: JUSTIN LIEN
BARCLAYS BANK PLC
By: /s/ Sarah Brooks
--------------------------
By: SARAH BROOKS
JPMORGAN CHASE BANK, N.A.
By: /s/ Karl Olsen
--------------------------
By: KARL OLSEN
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Maxine Sanders
--------------------------
By: MAXINE SANDERS
BNP PARIBAS
By: /s/ Ann M.F. Rix
--------------------------
By: ANN M. F. RIX
By: /s/ Steve Duranti
--------------------------
By: STEVE DURANTI
170
SANPAOLO IMI S.p.A.
By: /s/ Dante Campioni
--------------------------
By: DANTE CAMPIONI
CITIBANK, N.A.
By: /s/ Charles R. Delamater
--------------------------
By: CHARLES R. DELAMATER
DEUTSCHE BANK AG NEW YORK BRANCH
By: /s/ Simon Derrick
--------------------------
By: SIMON DERRICK
By: /s/ Richard Sedlacek
--------------------------
By: RICHARD SEDLACEK
HSBC BANK PLC
By: /s/ Arwel Davies
--------------------------
By: ARWEL DAVIES
LLOYDS TSB BANK PLC
By: /s/ David Moore
--------------------------
By: DAVID MOORE
MIZUHO CORPORATE BANK, LTD.
By: /s/ Robert Pettitt
--------------------------
By: ROBERT PETTITT
BANCA DI ROMA - LONDON BRANCH
By: /s/ Vincent Wright
--------------------------
By: VINCENT WRIGHT
By: /s/ Peter Scharf
--------------------------
By: PETER SCHARF
BANCA INTESA S.p.A.
By: /s/ Paul Samuels
--------------------------
By: PAUL SAMUELS
By: /s/ Lawrence Wybranlec
--------------------------
By: LAWRENCE WYBRANLEC
SOCIETE GENERALE
By: /s/ Alain Bataille
--------------------------
By: ALAIN BATAILLE
171
UBS LOAN FINANCE LLC
By: /s/ Richard L. Tavrow
--------------------------
By: RICHARD L. TAVROW
By: /s/ Joselin Fernandes
--------------------------
By: JOSELIN FERNANDES
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
By: /s/ Pedro Cayuela
--------------------------
By: PEDRO CAYUELA
By: /s/ Javier Ruiz
--------------------------
By: JAVIER RUIZ
COMMERZBANK AKTIENGESELLSCHAFT
By: /s/ Christoph Beneke
--------------------------
By: CHRISTOPH BENEKE
By: /s/ Christian Welk
--------------------------
By: CHRISTIAN WELK
Swingline Tranche B
BANK OF AMERICA, N.A.
By: /s/ Justin Lien
--------------------------
By: JUSTIN LIEN
BARCLAYS BANK PLC
By: /s/ Sarah Brooks
--------------------------
By: SARAH BROOKS
JPMORGAN CHASE BANK, N.A.
By: /s/ Karl Olsen
--------------------------
By: KARL OLSEN
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Maxine Sanders
--------------------------
By: MAXINE SANDERS
BNP PARIBAS
By: /s/ Ann M.F. Rix
--------------------------
By: ANN M. F. RIX
172
By: /s/ Steve Duranti
--------------------------
By: STEVE DURANTI
SANPAOLO IMI S.p.A.
By: /s/ Dante Campioni
--------------------------
By: DANTE CAMPIONI
CITIBANK, N.A. - MILAN BRANCH
By: /s/ Charles R. Delamater
--------------------------
By: CHARLES R. DELAMATER
DEUTSCHE BANK SpA
By: /s/ Simon Derrick
--------------------------
By: SIMON DERRICK
By: /s/ Richard Sedlacek
--------------------------
By: RICHARD SEDLACEK
HSBC BANK PLC
By: /s/ Arwel Davies
--------------------------
By: ARWEL DAVIES
BANCA DI ROMA - LONDON BRANCH
By: /s/ Vincent Wright
--------------------------
By: VINCENT WRIGHT
By: /s/ Peter Scharf
--------------------------
By: PETER SCHARF
BANCA INTESA S.p.A.
By: /s/ Paul Samuels
--------------------------
By: PAUL SAMUELS
By: /s/ Lawrence Wybranlec
--------------------------
By: LAWRENCE WYBRANLEC
SOCIETE GENERALE
By: /s/ Alain Bataille
--------------------------
By: ALAIN BATAILLE
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
By: /s/ Pedro Cayuela
--------------------------
By: PEDRO CAYUELA
By: /s/ Javier Ruiz
--------------------------
By: JAVIER RUIZ
173
COMMERZBANK AKTIENGESELLSCHAFT
By: /s/ Christoph Beneke
--------------------------
By: CHRISTOPH BENEKE
By: /s/ Christian Welk
--------------------------
By: CHRISTIAN WELK
Swingline Tranche C
BANK OF AMERICA, N.A.
By: /s/ Justin Lien
--------------------------
By: JUSTIN LIEN
BARCLAYS BANK PLC
By: /s/ Sarah Brooks
--------------------------
By: SARAH BROOKS
JPMORGAN CHASE BANK, N.A.
By: /s/ Karl Olsen
--------------------------
By: KARL OLSEN
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Maxine Sanders
--------------------------
By: MAXINE SANDERS
BNP PARIBAS
By: /s/ Ann M.F. Fix
--------------------------
By: ANN M. F. FIX
By: /s/ Steve Duranti
--------------------------
By: STEVE DURANTI
SANPAOLO IMI S.p.A.
By: /s/ Dante Campioni
--------------------------
By: DANTE CAMPIONI
CITIBANK, N.A.
By: /s/ Charles R. Delamater
--------------------------
By: CHARLES R. DELAMATER
174
DEUTSCHE BANK AG LONDON BRANCH
By: /s/ Simon Derrick
--------------------------
By: SIMON DERRICK
By: /s/ Richard Sedlacek
--------------------------
By: RICHARD SEDLACEK
HSBC BANK PLC
By: /s/ Arwel Davies
--------------------------
By: ARWEL DAVIES
LLOYDS TSB BANK PLC
By: /s/ David Moore
--------------------------
By: DAVID MOORE
MIZUHO CORPORATE BANK, LTD.
By: /s/ Robert Pettitt
--------------------------
By: ROBERT PETTITT
BANCA DI ROMA - LONDON BRANCH
By: /s/ Vincent Wright
--------------------------
By: VINCENT WRIGHT
By: /s/ Peter Scharf
--------------------------
By: PETER SCHARF
BANCA INTESA S.p.A.
By: /s/ Paul Samuels
--------------------------
By: PAUL SAMUELS
By: /s/ Lawrence Wybranlec
--------------------------
By: LAWRENCE WYBRANLEC
SOCIETE GENERALE
By: /s/ Alain Bataille
--------------------------
By: ALAIN BATAILLE
UBS LIMITED
By: /s/ Sharon Canham
--------------------------
By: SHARON CANHAM
By: /s/ Andrew Sudlow
--------------------------
By: ANDREW SUDLOW
BANCO BILBAO VIZCAYA ARGENTARIA S.A.
By: /s/ Pedro Cayuela
--------------------------
By: PEDRO CAYUELA
175
By: /s/ Javier Ruiz
--------------------------
By: JAVIER RUIZ
COMMERZBANK AKTIENGESELLSCHAFT
By: /s/ Christoph Beneke
--------------------------
By: CHRISTOPH BENEKE
By: /s/ Christian Welk
--------------------------
By: CHRISTIAN WELK
Facilities Agent
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Paul T Fletcher
--------------------------
By: PAUL T. FLETCHER
Original Fronting Banks
BANK OF AMERICA, N.A.
By: /s/ Justin Lien
--------------------------
By: JUSTIN LIEN
THE ROYAL BANK OF SCOTLAND PLC
By: /s/ Maxine Sanders
--------------------------
By: MAXINE SANDERS
SANPAOLO IMI S.p.A.
By: /s/ Dante Campioni
--------------------------
By: DANTE CAMPIONI
176
Exhibit 10.63
Dated 21 October 2005
----------------------------------------
CARNIVAL CORPORATION (1)
as Guarantor
and
THE ROYAL BANK OF SCOTLAND PLC (2)
as Facilities Agent
----------------------------------------
DEED OF GUARANTEE
in relation to a US$1,200,000,000,
(euro)400,000,000 and (pound)200,000,000
Multicurrency Revolving
Facilities Agreement
----------------------------------------
Contents
Clause Page
1 Interpretation ...................................................... 1
2 Guarantee ........................................................... 2
3 Guarantor as Principal Debtor/Indemnity ............................. 2
4 Interest ............................................................ 2
5 Continuing Guarantee ................................................ 3
6 Liability Unconditional ............................................. 3
7 Demand .............................................................. 3
8 Waiver of Guarantor's Rights ........................................ 3
9 Representations and Warranties ...................................... 4
10 Certificates ........................................................ 5
11 Settlements Conditional ............................................. 5
12 Counterparts ........................................................ 5
13 Assignment and references to Finance Party .......................... 5
14 Notices ............................................................. 6
15 Invalidity .......................................................... 6
16 No Set-Off or Counterclaim .......................................... 7
17 No Implied Waivers, Remedies Cumulative ............................. 7
18 Expenses ............................................................ 7
19 Third Party Rights .................................................. 7
20 Additional Security ................................................. 7
21 Governing Law and Jurisdiction ...................................... 8
THIS GUARANTEE is made by way of deed on 21 October 2005
BETWEEN:
(1) CARNIVAL CORPORATION a Panamanian corporation having its principal place
of business at Carnival Place, 3655 N.W. 87th Avenue, Miami, Florida,
33178-2428 (the "Guarantor"); and
(2) THE ROYAL BANK OF SCOTLAND PLC a company registered in Scotland, with its
registered office at 36 St Andrew Square, Edinburgh, EH2 2YB (the
"Facilities Agent", which expression includes its successors and assigns
for and on behalf of the Finance Parties).
WHEREAS:
(A) By a multicurrency revolving facilities agreement (the "Facilities
Agreement") dated on or about the date of this Guarantee and made between
(1) Carnival Corporation, (2) Carnival plc, (3) the subsidiaries of
Carnival Corporation and Carnival plc listed in Part 1 of Schedule 1
thereto, (4) Carnival Corporation and Carnival plc as guarantors, (5) Banc
of America Securities Limited, Barclays Capital, BNP Paribas, J.P. Morgan
plc, SANPAOLO IMI S.p.A and The Royal Bank of Scotland plc as mandated
lead arrangers, (6) the financial institutions listed in Part 2 and Part 4
of Schedule 1 thereto as lenders (the "Original Lenders"), (7) The Royal
Bank of Scotland plc as facilities agent and (8) the financial
institutions listed in Part 5 of Schedule 1 thereto as fronting banks for
the Bonds it was agreed that the Original Lenders would make available
multicurrency revolving facilities of up to US$1,200,000,000,
(euro)400,000,000 and (pound)200,000,000.
(B) The execution and delivery to the Facilities Agent of this Guarantee is
one of the conditions precedent to the delivery of a Utilisation Request
under the Facilities Agreement.
IT IS AGREED as follows:
1 Interpretation
1.1 Words and expressions defined in the Facilities Agreement shall have the
same meaning when used in this Guarantee, except where the context
otherwise requires or otherwise defined in this Guarantee.
1.2 In this Guarantee:
"Facilities Agreement" means the Facilities Agreement referred to in
Recital (A), and includes any existing or future amendments or
supplements, whether made with the Guarantor's consent or otherwise; and
"Guaranteed Amounts" means all moneys, obligations and liabilities
expressed to be guaranteed by the Guarantor in Clause 2.1.
1.3 Clause 1.2 of the Facilities Agreement applies, with any necessary
modifications, to this Guarantee.
2 Guarantee
2.1 The Guarantor hereby unconditionally and irrevocably:
2.1.1 guarantees to each Finance Party the punctual payment of all sums
payable by Carnival plc to that Finance Party under the Finance
Documents, including, without limitation, default interest payable
under Clause 13.3 of the Facilities Agreement and payment upon any
indemnity or otherwise; and
2.1.2 undertakes to each Finance Party that if for any reason Carnival plc
shall fail to pay any such sum or sums on its due date the Guarantor
shall, within 5 Business Days after first written demand by the
Facilities Agent, unconditionally pay such sum or sums to the
Facilities Agent in the currency or currencies in which such sum or
sums are payable under the relevant Finance Document.
3 Guarantor as Principal Debtor/Indemnity
3.1 If any sums expressed to be payable by Carnival plc under the terms of the
Finance Documents are not recoverable from Carnival plc by reason of (a)
any invalidity, unenforceability or illegality of a Finance Document or
any provision thereof (b) any legal limitation or incapacity of Carnival
plc or (c) as a result of such Finance Document or any provision thereof
being or becoming void, voidable or unenforceable such sums shall
nevertheless be recoverable by the Facilities Agent on behalf of the
Finance Parties from the Guarantor as if it were principal debtor. The
Guarantor agrees to indemnify the Finance Parties on demand in an amount
equal to any loss or liability arising from any such invalidity,
unenforceability, illegality, legal limitation or incapacity affecting any
Finance Document or Carnival plc.
4 Interest
4.1 The Guarantor agrees to pay interest on each amount demanded of it
hereunder from the date of demand until payment (as well after as before
judgment) at the rate then applicable under the Facilities Agreement to
the sums in respect of which such demand is made (or would be so
applicable but for any legal or other limitation affecting Carnival plc),
provided that under no circumstances will the Guarantor be liable for
interest on the same amount both under this Clause 4.1 and under the
Facilities Agreement.
5 Continuing Guarantee
5.1 The guarantee and indemnity constituted by this Guarantee shall continue
in full force and effect until all sums whatsoever payable by Carnival plc
under the Finance Documents have been finally and irrevocably paid in
full, notwithstanding any intermediate payment or discharge or partial
settlement or other matter.
6 Liability Unconditional
6.1 The Guarantor's liability under this Guarantee shall not be discharged,
reduced or otherwise affected in any way by reason of (i) any of the
Finance Parties giving Carnival plc time or any other concession, (ii) any
composition, discharge, release or other variation of liability entered
into with, or granted to Carnival plc, (iii) any of the Finance Parties
taking, holding, varying, realising or not enforcing any other security
for the liabilities of Carnival plc under the Facilities Agreement, (iv)
any amendment, variation or waiver (however fundamental) of any provision
of a Finance Document, (v) any legal limitation or incapacity relating to
Carnival plc, (vi) the invalidity, illegality, non-provability or
unenforceability of a Finance Document, (vii) any insolvency or similar
proceedings or any other act or omission of any of the Finance Parties or
any other circumstances which, but for this provision, might discharge the
Guarantor.
7 Demand
7.1 The Facilities Agent shall not be entitled to make any demand on the
Guarantor under Clause 2.1.2 for payment by the Guarantor of any sums
payable by Carnival plc under any Finance Document unless such action has
first been approved by the Majority Lenders.
8 Waiver of Guarantor's Rights
8.1 Waiver
The Guarantor shall, until all the Guaranteed Amounts have been finally
and irrevocably paid, discharged or satisfied in full, exercise only in
accordance with the Facilities Agent's instructions:
8.1.1 its rights of subrogation, contribution and indemnity against
Carnival plc;
8.1.2 its right to take the benefit of, share in or enforce any security
or other guarantee or indemnity for Carnival plc's obligations held
by any of the Finance Parties; and
8.1.3 its right to prove or claim in bankruptcy, liquidation,
administration or other insolvency proceedings of Carnival plc.
Any amount obtained by the Guarantor in breach of this Clause 8
shall be held on trust for the relevant Finance Parties and paid to
the Facilities Agent (on behalf of such Finance Parties) on demand.
8.2 Appropriations
Until all amounts which may be or become payable by Carnival plc under or
in connection with the Finance Documents have been irrevocably paid in
full, each Finance Party (or any trustee or agent on its behalf) may:
8.2.1 refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and the Guarantor shall not be
entitled to the benefit of the same; and
8.2.2 hold in an interest-bearing suspense account any moneys received
from the Guarantor or on account of the Guarantor's liability under
this Guarantee.
8.3 Immediate recourse
The Guarantor waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any person
before claiming from the Guarantor under this Guarantee. This waiver
applies irrespective of any provision of a Finance Document to the
contrary.
9 Representations and Warranties
9.1 The Guarantor represents and warrants to each Finance Party that:
9.1.1 it is duly incorporated and validly existing under the laws of the
jurisdiction of its incorporation as a limited liability company and
has the power to execute, deliver and perform its obligations under
this Guarantee;
9.1.2 all necessary corporate action has been taken by it to authorise the
execution, delivery and performance of this Guarantee and this
Guarantee constitutes valid and legally binding obligations of the
Guarantor enforceable in accordance with its terms (subject to
applicable bankruptcy, reorganisation, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as
to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in
equity or at law));
9.1.3 it has the power to own its assets and carry on its business as it
is being conducted where a lack of such power would have a Material
Adverse Effect;
9.1.4 the execution, delivery and performance of this Guarantee by the
Guarantor will not contravene any existing law, regulation or
authorisation to which it is subject, result in the breach of or
default under any agreement or other instrument to which the
Guarantor is a party or which is binding upon the Guarantor or its
assets or contravene any provision of the Guarantor's constitutional
documents;
9.1.5 its obligations under this Guarantee rank at least pari passu with
all its other present unsecured and unsubordinated indebtedness with
the exception of any obligations which are mandatorily preferred by
law; and
9.1.6 the Guarantor has not taken any security from Carnival plc in
relation to this Guarantee.
10 Certificates
10.1 A certificate of the Facilities Agent setting forth the amount of any sum
due by the Guarantor and not then paid by Carnival plc and/or the
Guarantor shall be conclusive evidence of such amount against the
Guarantor in the absence of any manifest error.
11 Settlements Conditional
11.1 If any moneys paid to any Finance Party in reduction of the obligation of
Carnival plc under a Finance Document have to be repaid by such Finance
Party by virtue of any provision or enactment relating to bankruptcy,
insolvency or liquidation for the time being in force or on any other
ground, following such repayment the liability of the Guarantor under this
Guarantee shall be computed as if such moneys had never been paid to such
Finance Party at all.
12 Counterparts
12.1 This Guarantee may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which shall be an original
but all of which shall together constitute one and the same instrument.
13 Assignment and references to Finance Party
13.1 A Finance Party may assign its rights under and in connection with this
Guarantee to the same extent as it may assign its rights under the
Facilities Agreement.
13.2 This Guarantee shall remain in effect despite any amalgamation or merger
(however effected) relating to a Finance Party.
13.3 References to a Finance Party shall be deemed to include any assignee or
successor in title of such Finance Party and any person who, under the
laws of its jurisdiction of incorporation or domicile, has assumed the
rights and obligations of the relevant Finance Party under the Facilities
Agreement or this Guarantee or to which under such laws the same have been
transferred.
14 Notices
14.1 Any notice or demand to the Guarantor under or in connection with this
Guarantee shall be given by letter or fax at:
Carnival Corporation
3655 NW 87th Avenue
Miami, FL 33133 USA
Fax No: + 1 (305) 406-6480
Attention: Treasurer
With a copy to:
Carnival Corporation
3655 NW 87th Avenue
Miami, FL 33178, USA
Fax No: + 1 (305) 406-4758
Attention: General Counsel
or to such other address which the Guarantor may notify to the Facilities
Agent.
14.2 Clause 35 of the Facilities Agreement applies to any notice or demand
under or in connection with this Guarantee but no notice may be served by
email in connection with this Guarantee.
14.3 A demand under this Guarantee shall be valid notwithstanding that it is
served on the date on which the amount to which it relates is payable by
Carnival plc under the Facilities Agreement and a demand under this
Guarantee may refer to all amounts payable under or in connection with the
Facilities Agreement without specifying a particular sum or aggregate sum.
14.4 The Facilities Agent agrees to send to the Guarantor copies of all formal
demands served on Carnival plc pursuant to the Facilities Agreement.
15 Invalidity
15.1 If any provision of this Guarantee is or becomes illegal, invalid,
prohibited or unenforceable in any jurisdiction, such invalidity,
illegality, prohibition or unenforceability shall not invalidate the
remaining provisions hereof or affect the legality, validity or
enforceability of such provision in any other jurisdiction.
16 No Set-Off or Counterclaim
16.1 All payments by the Guarantor hereunder shall be made in full, without
set-off or counterclaim in immediately available, freely transferable,
cleared funds for value on the date specified in the Facilities Agent's
demand to the account notified to the Guarantor by the Facilities Agent.
16.2 If an Event of Default has occurred and is outstanding, a Finance Party
may set off any matured obligation owed to it by the Guarantor under the
Finance Documents (to the extent beneficially owned by that Finance Party)
against any obligation (whether or not matured) owed by that Finance Party
to the Guarantor, regardless of the place of payment, booking branch or
currency of either obligation. If the obligations are in different
currencies, the relevant Finance Party may convert either obligation at a
market rate of exchange in its usual course of business for the purpose of
the set-off. The relevant Finance Party shall notify the Guarantor as soon
as practicable after any set-off is effected under this Clause giving
reasonable details of the amounts and accounts involved.
17 No Implied Waivers, Remedies Cumulative
17.1 No failure or delay on the part of any of the Finance Parties to exercise
any power, right or remedy under this Guarantee shall operate as a waiver
thereof, nor shall any single or partial exercise by any of the Finance
Parties of any power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or remedy. The
remedies provided in this Guarantee are cumulative and are not exclusive
of any remedies provided by law.
18 Expenses
18.1 The Guarantor shall pay to each Finance Party on demand all legal fees and
other costs, charges or expenses properly incurred by it in connection
with the preservation of its rights under or enforcement of this
Guarantee.
19 Third Party Rights
19.1 Any person other than any Finance Party who is not a party to this
Guarantee shall have no right under the Contracts (Rights of Third
Parties) Act 1999 to enforce any of its terms.
19.2 The Facilities Agent shall be entitled to exercise any and all rights and
benefits under this Guarantee on behalf of each of the Finance Parties.
20 Additional Security
This Guarantee is in addition to and is not in any way prejudiced by any
other guarantee or security now or subsequently held by any Finance Party.
21 Governing Law and Jurisdiction
21.1 This Guarantee shall be governed by, and construed in accordance with,
English law.
21.2 Subject to the provisions of this Clause 21, the courts of England shall
have exclusive jurisdiction to settle any disputes which may arise out of
or in connection with this Guarantee.
21.3 The Facilities Agent reserves the rights:
21.3.1 to commence proceedings in relation to any matter which arises out
of or in connection with this Guarantee in the courts of any country
other than England; and
21.3.2 to commence such proceedings in the courts of any such country or
countries concurrently with or in addition to proceedings in England
or without commencing proceedings in England.
21.4 The Guarantor shall not commence any proceedings in any country other than
England in relation to a matter which arises out of or in connection with
this Guarantee.
21.5 Nothing in this Clause 21 shall exclude or limit any right which any
Finance Party may have (whether under the law of any country, an
international convention or otherwise) with regard to the bringing of
proceedings, the service of process, the recognition or enforcement of a
judgment or any similar or related matter in any jurisdiction.
21.6 In this Clause 21, "proceedings" means proceedings of any kind, including
an application for a provisional or protective measure.
THIS GUARANTEE has been duly executed as a deed on the date first written above.
EXECUTED as a DEED ) /s/ David Bernstein
On behalf of CARNIVAL CORPORATION ) -------------------
By DAVID BERNSTEIN )
Name: DAVID BERNSTEIN )
Title: VICE PRESIDENT & TREASURER )
SIGNED by MICHAEL IAN PORTER ) s/ Michael Ian Porter
for and on behalf of ) ---------------------
THE ROYAL BANK OF SCOTLAND PLC )
In the presence of: )
WITNESSED BY:
PAUL T. FLETCHER
s/ Paul T. Fletcher
- -------------------
Exhibit 10.64
Dated 21 October 2005
----------------------------------------
CARNIVAL PLC (1)
as Guarantor
and
THE ROYAL BANK OF SCOTLAND PLC (2)
as Facilities Agent
----------------------------------------
DEED OF GUARANTEE
in relation to a US$1,200,000,000,
(euro)400,000,000 and (pound)200,000,000
Multicurrency Revolving
Facilities Agreement
----------------------------------------
Contents
Clause Page
1 Interpretation ....................................................... 1
2 Guarantee ............................................................ 2
3 Guarantor as Principal Debtor/Indemnity .............................. 2
4 Interest ............................................................. 2
5 Continuing Guarantee ................................................. 3
6 Liability Unconditional .............................................. 3
7 Demand ............................................................... 3
8 Waiver of Guarantor's Rights ......................................... 3
9 Representations and Warranties ....................................... 4
10 Certificates ......................................................... 5
11 Settlements Conditional .............................................. 5
12 Counterparts ......................................................... 5
13 Assignment and references to Finance Party ........................... 5
14 Notices .............................................................. 6
15 Invalidity ........................................................... 6
16 No Set-Off or Counterclaim ........................................... 7
17 No Implied Waivers, Remedies Cumulative .............................. 7
18 Expenses ............................................................. 7
19 Third Party Rights ................................................... 7
20 Additional Security .................................................. 8
21 Governing Law and Jurisdiction ....................................... 8
THIS GUARANTEE is made by way of deed on 21 October 2005
BETWEEN:
(1) CARNIVAL PLC a company organised and existing under the laws of England
with registered number 04039524 (the "Guarantor"); and
(2) THE ROYAL BANK OF SCOTLAND PLC a company registered in Scotland, with its
registered office at 36 St Andrew Square, Edinburgh, EH2 2YB (the
"Facilities Agent", which expression includes its successors and assigns
for and on behalf of the Finance Parties).
WHEREAS:
(A) By a multicurrency revolving facilities agreement (the "Facilities
Agreement") dated on or about the date of this Guarantee and made between
(1) Carnival Corporation, (2) Carnival plc, (3) the subsidiaries of
Carnival Corporation and Carnival plc listed in Part 1 of Schedule 1
thereto, (4) Carnival Corporation and Carnival plc as guarantors, (5) Banc
of America Securities Limited, Barclays Capital, BNP Paribas, J.P. Morgan
plc, SANPAOLO IMI S.p.A and The Royal Bank of Scotland plc as mandated
lead arrangers, (6) the financial institutions listed in Part 2 and Part 4
of Schedule 1 thereto as lenders (the "Original Lenders"), (7) The Royal
Bank of Scotland plc as facilities agent and (8) the financial
institutions listed in Part 5 of Schedule 1 thereto as fronting banks for
the Bonds it was agreed that the Original Lenders would make available
multicurrency revolving facilities of up to US$1,200,000,000,
(euro)400,000,000 and (pound)200,000,000.
(B) The execution and delivery to the Facilities Agent of this Guarantee is
one of the conditions precedent to the delivery of a Utilisation Request
under the Facilities Agreement.
IT IS AGREED as follows:
1 Interpretation
1.1 Words and expressions defined in the Facilities Agreement shall have the
same meaning when used in this Guarantee, except where the context
otherwise requires or otherwise defined in this Guarantee.
1.2 In this Guarantee:
"Facilities Agreement" means the Facilities Agreement referred to in
Recital (A), and includes any existing or future amendments or
supplements, whether made with the Guarantor's consent or otherwise; and
"Guaranteed Amounts" means all moneys, obligations and liabilities
expressed to be guaranteed by the Guarantor in Clause 2.1.
1.3 Clause 1.2 of the Facilities Agreement applies, with any necessary
modifications, to this Guarantee.
2 Guarantee
2.1 The Guarantor hereby unconditionally and irrevocably:
2.1.1 guarantees to each Finance Party the punctual payment of all sums payable
by Carnival Corporation to that Finance Party under the Finance Documents,
including, without limitation, default interest payable under Clause 13.3
of the Facilities Agreement and payment upon any indemnity or otherwise;
and
2.1.2 undertakes to each Finance Party that if for any reason Carnival
Corporation shall fail to pay any such sum or sums on its due date the
Guarantor shall, within 5 Business Days after first written demand by the
Facilities Agent, unconditionally pay such sum or sums to the Facilities
Agent in the currency or currencies in which such sum or sums are payable
under the relevant Finance Document.
3 Guarantor as Principal Debtor/Indemnity
3.1 If any sums expressed to be payable by Carnival Corporation under the
terms of the Finance Documents are not recoverable from Carnival
Corporation by reason of (a) any invalidity, unenforceability or
illegality of a Finance Document or any provision thereof (b) any legal
limitation or incapacity of Carnival Corporation or (c) as a result of
such Finance Document or any provision thereof being or becoming void,
voidable or unenforceable such sums shall nevertheless be recoverable by
the Facilities Agent on behalf of the Finance Parties from the Guarantor
as if it were principal debtor. The Guarantor agrees to indemnify the
Finance Parties on demand in an amount equal to any loss or liability
arising from any such invalidity, unenforceability, illegality, legal
limitation or incapacity affecting any Finance Document or Carnival
Corporation.
4 Interest
4.1 The Guarantor agrees to pay interest on each amount demanded of it
hereunder from the date of demand until payment (as well after as before
judgment) at the rate then applicable under the Facilities Agreement to
the sums in respect of which such demand is made (or would be so
applicable but for any legal or other limitation affecting Carnival
Corporation), provided that under no circumstances will the Guarantor be
liable for interest on the same amount both under this Clause 4.1 and
under the Facilities Agreement.
5 Continuing Guarantee
5.1 The guarantee and indemnity constituted by this Guarantee shall continue
in full force and effect until all sums whatsoever payable by Carnival
Corporation under the Finance Documents have been finally and irrevocably
paid in full, notwithstanding any intermediate payment or discharge or
partial settlement or other matter.
6 Liability Unconditional
6.1 The Guarantor's liability under this Guarantee shall not be discharged,
reduced or otherwise affected in any way by reason of (i) any of the
Finance Parties giving Carnival Corporation time or any other concession,
(ii) any composition, discharge, release or other variation of liability
entered into with, or granted to Carnival Corporation, (iii) any of the
Finance Parties taking, holding, varying, realising or not enforcing any
other security for the liabilities of Carnival Corporation under the
Facilities Agreement, (iv) any amendment, variation or waiver (however
fundamental) of any provision of a Finance Document, (v) any legal
limitation or incapacity relating to Carnival Corporation, (vi) the
invalidity, illegality, non-provability or unenforceability of a Finance
Document, (vii) any insolvency or similar proceedings or any other act or
omission of any of the Finance Parties or any other circumstances which,
but for this provision, might discharge the Guarantor.
7 Demand
7.1 The Facilities Agent shall not be entitled to make any demand on the
Guarantor under Clause 2.1.2 for payment by the Guarantor of any sums
payable by Carnival Corporation under any Finance Document unless such
action has first been approved by the Majority Lenders.
8 Waiver of Guarantor's Rights
8.1 Waiver
The Guarantor shall, until all the Guaranteed Amounts have been finally
and irrevocably paid, discharged or satisfied in full, exercise only in
accordance with the Facilities Agent's instructions:
8.1.1 its rights of subrogation, contribution and indemnity against
Carnival Corporation;
8.1.2 its right to take the benefit of, share in or enforce any security
or other guarantee or indemnity for Carnival Corporation's
obligations held by any of the Finance Parties; and
8.1.3 its right to prove or claim in bankruptcy, liquidation,
administration or other insolvency proceedings of Carnival
Corporation.
Any amount obtained by the Guarantor in breach of this Clause 8
shall be held on trust for the relevant Finance Parties and paid to
the Facilities Agent (on behalf of such Finance Parties) on demand.
8.2 Appropriations
Until all amounts which may be or become payable by Carnival Corporation
under or in connection with the Finance Documents have been irrevocably
paid in full, each Finance Party (or any trustee or agent on its behalf)
may:
8.2.1 refrain from applying or enforcing any other moneys, security or
rights held or received by that Finance Party (or any trustee or
agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether
against those amounts or otherwise) and the Guarantor shall not be
entitled to the benefit of the same; and
8.2.2 hold in an interest-bearing suspense account any moneys received
from the Guarantor or on account of the Guarantor's liability under
this Guarantee.
8.3 Immediate recourse
The Guarantor waives any right it may have of first requiring any Finance
Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any person
before claiming from the Guarantor under this Guarantee. This waiver
applies irrespective of any provision of a Finance Document to the
contrary.
9 Representations and Warranties
9.1 The Guarantor represents and warrants to each Finance Party that:
9.1.1 it is duly incorporated and validly existing under the laws of the
jurisdiction of its incorporation as a limited liability company and
has the power to execute, deliver and perform its obligations under
this Guarantee;
9.1.2 all necessary corporate action has been taken by it to authorise the
execution, delivery and performance of this Guarantee and this
Guarantee constitutes valid and legally binding obligations of the
Guarantor enforceable in accordance with its terms (subject to
applicable bankruptcy, reorganisation, insolvency, moratorium or
similar laws affecting creditors' rights generally and subject, as
to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in
equity or at law));
9.1.3 it has the power to own its assets and carry on its business as it
is being conducted where a lack of such power would have a Material
Adverse Effect;
9.1.4 the execution, delivery and performance of this Guarantee by the
Guarantor will not contravene any existing law, regulation or
authorisation to which it is subject, result in the breach of or
default under any agreement or other instrument to which the
Guarantor is a party or which is binding upon the Guarantor or its
assets or contravene any provision of the Guarantor's constitutional
documents;
9.1.5 its obligations under this Guarantee rank at least pari passu with
all its other present unsecured and unsubordinated indebtedness with
the exception of any obligations which are mandatorily preferred by
law; and
9.1.6 the Guarantor has not taken any security from Carnival Corporation
in relation to this Guarantee.
10 Certificates
10.1 A certificate of the Facilities Agent setting forth the amount of any sum
due by the Guarantor and not then paid by Carnival Corporation and/or the
Guarantor shall be conclusive evidence of such amount against the
Guarantor in the absence of any manifest error.
11 Settlements Conditional
11.1 If any moneys paid to any Finance Party in reduction of the obligation of
Carnival Corporation under a Finance Document have to be repaid by such
Finance Party by virtue of any provision or enactment relating to
bankruptcy, insolvency or liquidation for the time being in force or on
any other ground, following such repayment the liability of the Guarantor
under this Guarantee shall be computed as if such moneys had never been
paid to such Finance Party at all.
12 Counterparts
12.1 This Guarantee may be executed in any number of counterparts and by the
parties to it on separate counterparts, each of which shall be an original
but all of which shall together constitute one and the same instrument.
13 Assignment and references to Finance Party
13.1 A Finance Party may assign its rights under and in connection with this
Guarantee to the same extent as it may assign its rights under the
Facilities Agreement.
13.2 This Guarantee shall remain in effect despite any amalgamation or merger
(however effected) relating to a Finance Party.
13.3 References to a Finance Party shall be deemed to include any assignee or
successor in title of such Finance Party and any person who, under the
laws of its jurisdiction of incorporation or
domicile, has assumed the rights and obligations of the relevant Finance
Party under the Facilities Agreement or this Guarantee or to which under
such laws the same have been transferred.
14 Notices
14.1 Any notice or demand to the Guarantor under or in connection with this
Guarantee shall be given by letter or fax at:
Carnival plc
5 Gainsford Street
London
SE1 2NE
England
Fax No: 0207 940 5382
Attention: Corporate Counsel
With a copy to:
Carnival Corporation
3655 NW 87th Avenue
Miami, FL 33178, USA
Fax No: + 1 (305) 406-4758
Attention: Treasurer
or to such other address which the Guarantor may notify to the Facilities
Agent.
14.2 Clause 35 of the Facilities Agreement applies to any notice or demand
under or in connection with this Guarantee but no notice may be served by
email in connection with this Guarantee.
14.3 A demand under this Guarantee shall be valid notwithstanding that it is
served on the date on which the amount to which it relates is payable by
Carnival Corporation under the Facilities Agreement and a demand under
this Guarantee may refer to all amounts payable under or in connection
with the Facilities Agreement without specifying a particular sum or
aggregate sum.
14.4 The Facilities Agent agrees to send to the Guarantor copies of all formal
demands served on Carnival Corporation pursuant to the Facilities
Agreement.
15 Invalidity
15.1 If any provision of this Guarantee is or becomes illegal, invalid,
prohibited or unenforceable in any jurisdiction, such invalidity,
illegality, prohibition or unenforceability shall not invalidate the
remaining provisions hereof or affect the legality, validity or
enforceability of such provision in any other jurisdiction.
16 No Set-Off or Counterclaim
16.1 All payments by the Guarantor hereunder shall be made in full, without
set-off or counterclaim in immediately available, freely transferable,
cleared funds for value on the date specified in the Facilities Agent's
demand to the account notified to the Guarantor by the Facilities Agent.
16.2 If an Event of Default has occurred and is outstanding, a Finance Party
may set off any matured obligation owed to it by the Guarantor under the
Finance Documents (to the extent beneficially owned by that Finance Party)
against any obligation (whether or not matured) owed by that Finance Party
to the Guarantor, regardless of the place of payment, booking branch or
currency of either obligation. If the obligations are in different
currencies, the relevant Finance Party may convert either obligation at a
market rate of exchange in its usual course of business for the purpose of
the set-off. The relevant Finance Party shall notify the Guarantor as soon
as practicable after any set-off is effected under this Clause giving
reasonable details of the amounts and accounts involved.
17 No Implied Waivers, Remedies Cumulative
17.1 No failure or delay on the part of any of the Finance Parties to exercise
any power, right or remedy under this Guarantee shall operate as a waiver
thereof, nor shall any single or partial exercise by any of the Finance
Parties of any power, right or remedy preclude any other or further
exercise thereof or the exercise of any other power, right or remedy. The
remedies provided in this Guarantee are cumulative and are not exclusive
of any remedies provided by law.
18 Expenses
18.1 The Guarantor shall pay to each Finance Party on demand all legal fees and
other costs, charges or expenses properly incurred by it in connection
with the preservation of its rights under or enforcement of this
Guarantee.
19 Third Party Rights
19.1 Any person other than any Finance Party who is not a party to this
Guarantee shall have no right under the Contracts (Rights of Third
Parties) Act 1999 to enforce any of its terms.
19.2 The Facilities Agent shall be entitled to exercise any and all rights and
benefits under this Guarantee on behalf of each of the Finance Parties.
20 Additional Security
This Guarantee is in addition to and is not in any way prejudiced by any
other guarantee or security now or subsequently held by any Finance Party.
21 Governing Law and Jurisdiction
21.1 This Guarantee shall be governed by, and construed in accordance with,
English law.
21.2 Subject to the provisions of this Clause 21, the courts of England shall
have exclusive jurisdiction to settle any disputes which may arise out of
or in connection with this Guarantee.
21.3 The Facilities Agent reserves the rights:
21.3.1 to commence proceedings in relation to any matter which arises out
of or in connection with this Guarantee in the courts of any country
other than England; and
21.3.2 to commence such proceedings in the courts of any such country or
countries concurrently with or in addition to proceedings in England
or without commencing proceedings in England.
21.4 The Guarantor shall not commence any proceedings in any country other than
England in relation to a matter which arises out of or in connection with
this Guarantee.
21.5 Nothing in this Clause 21 shall exclude or limit any right which any
Finance Party may have (whether under the law of any country, an
international convention or otherwise) with regard to the bringing of
proceedings, the service of process, the recognition or enforcement of a
judgment or any similar or related matter in any jurisdiction.
21.6 In this Clause 21, "proceedings" means proceedings of any kind, including
an application for a provisional or protective measure.
THIS GUARANTEE has been duly executed as a deed on the date first written above.
EXECUTED as a DEED ) /s/ David Bernstein
by DAVID BERNSTEIN ) -------------------
for and on behalf of CARNIVAL PLC )
pursuant to a power of attorney )
dated 10 October 2005 )
in the presence of: )
THOMAS BROWER
/s/ Thomas Brower
- -----------------
Witness
Name: THOMAS BROWER
Address: 3301 KAPALUA COURT, FREEHOLD, NEW JERSEY 07728
Occupation: BANKER
SIGNED by MICHAEL IAN PORTER ) s/ Michael Ian Porter
for and on behalf of ) ---------------------
THE ROYAL BANK OF SCOTLAND PLC )
In the presence of: )
WITNESSED BY
PAUL T. FLETCHER
s/ Paul T. Fletcher
- -------------------
Exhibit 12
CARNIVAL CORPORATION & PLC
Ratio of Earnings to Fixed Charges
(In millions, except ratios)
Years Ended November 30,
----------------------------------------------------
2005 2004 2003 2002 2001
---- ---- ---- ---- ----
Net income $ 2,257 $ 1,854 $ 1,194 $ 1,016 $ 926
Income tax expense (benefit),
net 73 47 29 (57) (12)
------- ------- ------- ------- -------
Income before income taxes 2,330 1,901 1,223 959 914
Adjustment to earnings:
(Income) loss from
affiliated operations
and dividends received (3) 3 1 2 57
------- ------- ------- ------- -------
Earnings as adjusted 2,327 1,904 1,224 961 971
------- ------- ------- ------- -------
Fixed charges
Interest expense, net 330 284 195 111 121
Interest portion of
rent expense (a) 17 17 16 5 4
Capitalized interest 21 26 49 39 29
------- ------- ------- ------- -------
Total fixed charges 368 327 260 155 154
------- ------- ------- ------- -------
Fixed charges not affecting
earnings:
Capitalized interest (21) (26) (49) (39) (29)
------- ------- ------- ------- -------
Earnings before fixed
charges $ 2,674 $ 2,205 $ 1,435 $ 1,077 $ 1,096
======= ======= ======= ======= =======
Ratio of earnings to
fixed charges 7.3x 6.7x 5.5x 6.9x 7.1x
======= ======= ======= ======= =======
(a) Represents one-third of rent expense, which we believe to be representative
of the interest portion of rent expense.
48
EXHIBIT 13
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
Years Ended November 30,
------------------------
2005 2004 2003
---- ---- ----
Revenues
Cruise
Passenger tickets $ 8,379 $ 7,357 $ 5,039
Onboard and other 2,356 2,070 1,420
Other 352 300 259
-------- ------- -------
11,087 9,727 6,718
-------- ------- -------
Costs and Expenses
Operating
Cruise
Commissions, transportation and other 1,665 1,572 1,021
Onboard and other 408 359 229
Payroll and related 1,145 1,003 744
Food 615 550 393
Fuel 709 493 340
Other ship operating 1,425 1,270 897
Other 250 210 190
-------- ------- -------
Total 6,217 5,457 3,814
Selling and administrative 1,329 1,285 936
Depreciation and amortization 902 812 585
-------- ------- -------
8,448 7,554 5,335
-------- ------- -------
Operating Income 2,639 2,173 1,383
-------- ------- -------
Nonoperating (Expense) Income
Interest income 28 17 27
Interest expense, net of
capitalized interest (330) (284) (195)
Other (expense) income, net (7) (5) 8
-------- ------- -------
(309) (272) (160)
-------- ------- -------
Income Before Income Taxes 2,330 1,901 1,223
Income Tax Expense, Net (73) (47) (29)
-------- ------- -------
Net Income $ 2,257 $ 1,854 $ 1,194
======== ======= =======
Earnings Per Share
Basic $ 2.80 $ 2.31 $ 1.66
======== ======= =======
Diluted $ 2.70 $ 2.24 $ 1.63
======== ======= =======
Dividends Per Share $ 0.80 $ 0.525 $ 0.44
======== ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
F-1
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(in millions, except par value)
November 30,
---------------
ASSETS 2005 2004
---- ----
Current Assets
Cash and cash equivalents $ 1,178 $ 643
Short-term investments 9 17
Accounts receivable, net 408 409
Inventories 250 240
Prepaid expenses and other 370 419
-------- --------
Total current assets 2,215 1,728
-------- --------
Property and Equipment, Net 21,312 20,823
Goodwill 3,206 3,321
Trademarks 1,282 1,306
Other Assets 417 458
-------- --------
$ 28,432 $ 27,636
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 300 $ 381
Current portion of long-term debt 1,042 681
Convertible debt subject to current put option 283 600
Accounts payable 690 631
Accrued liabilities and other 832 868
Customer deposits 2,045 1,873
-------- --------
Total current liabilities 5,192 5,034
-------- --------
Long-Term Debt 5,727 6,291
Other Long-Term Liabilities and Deferred Income 541 551
Commitments and Contingencies (Notes 7 and 8)
Shareholders' Equity
Common stock of Carnival Corporation; $.01 par
value; 1,960 shares authorized; 639 shares at 2005
and 634 shares at 2004 issued 6 6
Ordinary shares of Carnival plc; $1.66 par value;
226 shares authorized; 212 shares at 2005 and
2004 issued 353 353
Additional paid-in capital 7,381 7,311
Retained earnings 10,233 8,623
Unearned stock compensation (13) (16)
Accumulated other comprehensive income 156 541
Treasury stock; 2 shares of Carnival Corporation
at 2005 and 42 shares of Carnival plc at 2005
and 2004, at cost (1,144) (1,058)
-------- --------
Total shareholders' equity 16,972 15,760
-------- --------
$ 28,432 $ 27,636
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Years Ended November 30,
------------------------
2005 2004 2003
---- ---- ----
OPERATING ACTIVITIES
Net income $ 2,257 $ 1,854 $ 1,194
Adjustments to reconcile net income to
Fuel
Depreciation and amortization 902 812 585
Investment write-down 22
Accretion of original issue discount 20 21 20
Other 15 16 8
Changes in operating assets and liabilities,
excluding business acquired
Receivables (71) 11 (91)
Inventories (15) (73) (17)
Prepaid expenses and other (105) (54) 82
Accounts payable 84 (28) 43
Accrued and other liabilities 89 178 (16)
Customer deposits 212 479 125
------- ------- -------
Net cash provided by operating activities 3,410 3,216 1,933
------- ------- -------
INVESTING ACTIVITIES
Additions to property and equipment (1,977) (3,586) (2,516)
Sales of short-term investments 943 1,216 3,745
Purchases of short-term investments (935) (772) (3,803)
Cash acquired from the acquisition of P&O Princess, net 140
Proceeds from retirement of property and equipment 77 51
Other, net (1) (24) (50)
------- ------- -------
Net cash used in investing activities (1,970) (3,089) (2,433)
------- ------- -------
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 1,152 843 2,123
Principal repayments of long-term debt (1,096) (932) (1,137)
Dividends paid (566) (400) (292)
(Repayments of) proceeds from short-term borrowings, net (58) 272 94
Proceeds from exercise of stock options 63 142 53
Purchase of treasury stock (386)
Other (1) (4) (15)
------- ------- -------
Net cash (used in) provided by
financing activities (892) (79) 826
------- ------- -------
Effect of exchange rate changes on cash and cash
equivalents (13) (15) (23)
------- ------- -------
Net increase in cash and cash equivalents 535 33 303
Cash and cash equivalents at beginning of year 643 610 307
------- ------- -------
Cash and cash equivalents at end of year $ 1,178 $ 643 $ 610
======= ======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
F-3
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in millions)
Compre- Additional
hensive Common Ordinary paid-in Retained
income stock shares capital earnings
----------- ----------- ----------- ----------- -----------
Balances at November 30, 2002 $ 6 $ 1,089 $ 6,326
Comprehensive income
Net income $ 1,194 $ 1,194
Foreign currency
translation adjustment 162
Unrealized losses on
marketable securities, net (1)
Changes related to cash flow
derivative hedges, net (9)
-----------
Total comprehensive income $ 1,346
===========
Cash dividends declared (329)
Acquisition of Carnival plc $ 346 6,010
Issuance of stock under stock
plans 3 64
Amortization of unearned stock
compensation
----------- ----------- ----------- -----------
Balances at November 30, 2003 6 349 7,163 7,191
Comprehensive income
Net income $ 1,854 1,854
Foreign currency
translation adjustment 398
Unrealized loss on
marketable securities (1)
Minimum pension liability
adjustments (3)
Changes related to cash flow
derivative hedges, net (13)
-----------
Total comprehensive income $ 2,235
===========
Cash dividends declared (422)
Issuance of stock under stock
plans 4 148
Amortization of unearned stock
compensation
----------- ----------- ----------- -----------
Balances at November 30, 2004 6 353 7,311 8,623
Comprehensive income
Net income $ 2,257 2,257
Foreign currency
translation adjustment (398)
Minimum pension liability
adjustments (2)
Changes related to cash flow
derivative hedges, net 15
-----------
Total comprehensive income $ 1,872
===========
Cash dividends declared (647)
Issuance of stock under stock
plans 73
Amortization of unearned stock
compensation
Purchase of treasury stock
Issuance of common stock upon
conversion of convertible debt (3)
----------- ----------- ----------- -----------
Balances at November 30, 2005 $ 6 $ 353 $ 7,381 $ 10,233
=========== =========== =========== ===========
Unearned Accumulated Total
stock other share-
compen- comprehensive Treasury holders'
sation income (loss) stock equity
----------- -------------- ----------- -----------
Balances at November 30, 2002 $ (11) $ 8 $ 7,418
Comprehensive income
Net income 1,194
Foreign currency
translation adjustment 162 162
Unrealized losses on
marketable securities, net (1) (1)
Changes related to cash flow
derivative hedges, net (9) (9)
Total comprehensive income
Cash dividends declared (329)
Acquisition of Carnival plc $ (1,058) 5,298
Issuance of stock under stock
plans (14) 53
Amortization of unearned stock
compensation 7 7
----------- -------------- ----------- -----------
Balances at November 30, 2003 (18) 160 (1,058) 13,793
Comprehensive income
Net income 1,854
Foreign currency
translation adjustment 398 398
Unrealized loss on
marketable securities (1) (1)
Minimum pension liability
adjustments (3) (3)
Changes related to cash flow
derivative hedges, net (13) (13)
Total comprehensive income
Cash dividends declared (422)
Issuance of stock under stock
plans (7) 145
Amortization of unearned stock
compensation 9 9
----------- -------------- ----------- -----------
Balances at November 30, 2004 (16) 541 (1,058) 15,760
Comprehensive income
Net income 2,257
Foreign currency
translation adjustment (398) (398)
Minimum pension liability
adjustments (2) (2)
Changes related to cash flow
derivative hedges, net 15 15
Total comprehensive income
Cash dividends declared (647)
Issuance of stock under stock
plans (9) 64
Amortization of unearned stock
compensation 12 12
Purchase of treasury stock (386) (386)
Issuance of common stock upon
conversion of convertible debt 300 297
----------- -------------- ----------- -----------
Balances at November 30, 2005 $ (13) $ 156 $ (l,144) $ 16,972
=========== ============== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
F-4
CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - General
Description of Business
Carnival Corporation is incorporated in Panama, and Carnival plc is
incorporated in England and Wales. The accompanying consolidated financial
statements include the accounts of Carnival Corporation and Carnival plc and
their respective subsidiaries. Together with their consolidated subsidiaries
they are referred to collectively in these consolidated financial statements and
elsewhere in this 2005 Annual Report as "Carnival Corporation & plc," "our,"
"us," and "we." Our consolidated financial statements only include the results
of operations and cash flows of the former P&O Princess Cruises plc since April
17, 2003.
Carnival Corporation and Carnival plc (formerly known as P&O Princess
Cruises plc or "P&O Princess") operates as a dual listed company ("DLC"),
whereby the businesses of Carnival Corporation and Carnival plc are combined
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. Each company's shares continue to be publicly traded; on
the New York Stock Exchange ("NYSE") for Carnival Corporation and the London
Stock Exchange for Carnival plc. In addition, Carnival plc American Depository
Shares ("ADSs") are traded on the NYSE. See Note 3.
We are the largest cruise company and one of the largest vacation
companies in the world. As of November 30, 2005, a summary of the number of
cruise ships we operate, by brand, their passenger capacity and the primary
areas in which they are marketed is as follows:
Number of Passenger Primary
Cruise Brands Cruise Ships Capacity (a) Market
------------- ------------ ------------ ------
Carnival Cruise
Lines 21 47,820 North America
Princess Cruises
("Princess") 14 29,152 North America
Holland America Line 12 16,930 North America
Costa Cruises ("Costa") 10 17,262 Europe
P&O Cruises 5 8,844 United Kingdom
AIDA Cruises ("AIDA") 4 5,378 Germany
Cunard Line ("Cunard") 2 4,410 North America and United Kingdom
P&O Cruises Australia(b) 3 3,680 Australia and New Zealand
Ocean Village 1 1,578 United Kingdom
Swan Hellenic 1 678 United Kingdom
Seabourn Cruise Line
("Seabourn") 3 624 North America
Windstar Cruises 3 604 North America
-- -------
79 136,960
== =======
(a) In accordance with cruise industry practice, passenger capacity is
calculated based on two passengers per cabin even though some cabins can
accommodate three or more passengers.
(b) In December 2005, we entered into an agreement for the sale of P&O Cruises
Australia's Pacific Sky, which is expected to leave our fleet in May 2006.
Preparation of Financial Statements
The preparation of our consolidated financial statements in accordance
with accounting principles generally accepted in the United States of America
requires us to make estimates and assumptions that affect the amounts reported
and disclosed in our financial statements. Actual results could differ from
these estimates. All significant intercompany balances and transactions are
eliminated in consolidation.
F-5
NOTE 2 - Summary of Significant Accounting Policies
Basis of Presentation
We consolidate entities over which we have control (see Note 3), as
typically evidenced by a direct ownership interest of greater than 50%. For
affiliates where significant influence over financial and operating policies
exists, as typically evidenced by a direct ownership interest from 20% to 50%,
the investment is accounted for using the equity method.
Cash and Cash Equivalents and Short-Term Investments
Cash and cash equivalents include investments with original maturities of
three months or less, which are stated at cost. At November 30, 2005 and 2004,
cash and cash equivalents included $980 million and $495 million of investments,
respectively, primarily comprised of time deposits, investment grade
asset-backed debt obligations, commercial paper and money market funds.
Substantially all of our short-term investments, which consist of
investments with original maturities greater than three months, are comprised of
investment grade variable rate debt obligations, which are asset-backed and
categorized as available-for-sale. Our investments in these securities are
recorded at cost, which approximates their fair value due to these investments
having variable interest rates, which typically reset every 28 days. Despite the
long-term nature of their stated contractual maturities, we have the ability to
quickly liquidate these securities. As a result of the resetting variable rates,
at November 30, 2005 and 2004 we had no cumulative gross unrealized or realized
holding gains or losses from these investments. All income generated from these
investments was recorded as interest income.
Inventories
Inventories consist of provisions, gift shop and art merchandise held for
resale, fuel and supplies carried at the lower of cost or market. Cost is
determined using the weighted-average or first-in, first-out methods.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization
were computed using the straight-line method over our estimates of average
useful lives and residual values, as a percentage of original cost, as follows:
Residual
Values Years
--------- -----
Ships 15% 30
Ship improvements 0% or 15% 2 to remaining
life of ship
Buildings and improvements 0-10% 5-40
Transportation equipment and other 0-25% 2-20
Leasehold improvements, including port facilities Shorter of lease term
or related asset life
We review our long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of these assets may not be
fully recoverable. The assessment of possible impairment is based on our ability
to recover the carrying value of our asset based on our estimate of its
undiscounted future cash flows. If these estimated undiscounted future cash
flows are less than the carrying value of the asset, an impairment charge is
recognized for the excess, if any, of the asset's carrying value over its
estimated fair value.
Dry-dock costs primarily represent planned major maintenance activities
that are incurred when a ship is taken out of service for scheduled maintenance.
These costs are included in prepaid expenses and are amortized to other ship
operating expenses using the straight-line method generally over one to two
years.
F-6
Ship improvement costs that we believe add value to our ships are
capitalized to the ships, and depreciated over the improvements' estimated
useful lives, while costs of repairs and maintenance are charged to expense as
incurred. Upon replacement or refurbishment of previously capitalized ship
components, these assets' estimated cost and accumulated depreciation are
written off.
We capitalize interest on ships and other capital projects during their
construction period.
Goodwill
We review our goodwill for impairment annually, or, when events or
circumstances dictate, more frequently. All of our goodwill has been allocated
to our cruise reporting units. There were no significant changes to our goodwill
carrying amounts since November 30, 2003, other than the changes resulting from
using different foreign currency translation rates at each balance sheet date,
except as noted below.
During 2004, we increased the fair values of the P&O Princess publicly
traded debt, and correspondingly, goodwill, by $61 million to take into account
the extension of Carnival Corporation's guarantee to cover this debt as of April
2003, the acquisition date. In addition, we reduced the fair value of P&O
Princess' trademarks and, correspondingly increased goodwill by $54 million to
properly value our acquired trademarks as of the acquisition date. The impact of
these changes on our financial statements was immaterial.
Our goodwill impairment reviews consist of a two-step process of first
determining the fair value of the reporting unit and comparing it to the
carrying value of the net assets allocated to the reporting unit. Fair values of
our reporting units were determined based on our estimates of comparable market
price or discounted future cash flows. If this fair value exceeds the carrying
value, which was the case for our reporting units, no further analysis or
goodwill write-down is required. If the fair value of the reporting unit is less
than the carrying value of the net assets, the implied fair value of the
reporting unit is allocated to all the underlying assets and liabilities,
including both recognized and unrecognized tangible and intangible assets, based
on their fair value. If necessary, goodwill is then written-down to its implied
fair value.
Trademarks
The cost of developing and maintaining our trademarks have been expensed
as incurred. However, for acquisitions made after June 2001 we have allocated a
portion of the purchase price to the acquiree's identified trademarks. The
trademarks that Carnival Corporation recorded as part of its acquisition of P&O
Princess, which are estimated to have an indefinite useful life and, therefore,
are not amortizable, are reviewed for impairment annually, or more frequently
when events or circumstances indicate that the trademark may be impaired. Our
trademarks would be considered impaired if their carrying value exceeds their
fair value.
Derivative Instruments and Hedging Activities
We utilize derivative and nonderivative financial instruments, such as
foreign currency swaps and foreign currency obligations, to limit our exposure
to fluctuations in foreign currency exchange rates and interest rate swaps to
manage our interest rate exposure and to achieve a desired proportion of
variable and fixed rate debt (see Notes 6 and 11).
All derivatives are recorded at fair value, and the changes in fair value
must be immediately included in earnings if the derivatives do not qualify as
effective hedges. If a derivative is a fair value hedge, then changes in the
fair value of the derivative are offset against the changes in the fair value of
the underlying hedged item. If a derivative is a cash flow hedge, then changes
in the fair value of the derivative are recognized as a component of accumulated
other comprehensive income ("AOCI") until the underlying hedged item is
recognized in earnings. If a derivative or a nonderivative financial instrument
is designated as a hedge of a net investment in a foreign operation, then
changes in the fair value of the financial instrument are recognized as a
component of AOCI to offset the change
F-7
in the translated value of the net investment being hedged, until the investment
is liquidated. We formally document all relationships between hedging
instruments and hedged items, as well as our risk management objectives and
strategies for undertaking our hedge transactions.
We classify the fair value of our derivative contracts and the fair value
of our offsetting hedged firm commitments as either current or long-term, which
are included in prepaid and other assets and accrued and other liabilities,
depending on whether the maturity date of the derivative contract is within or
beyond one year from our balance sheet dates. The cash flows from derivatives
treated as hedges are classified in our statements of cash flows in the same
category as the item being hedged.
During fiscal 2005, 2004 and 2003, all net changes in the fair value of
both our fair value hedges and the offsetting hedged firm commitments and our
cash flow hedges were immaterial, as were any ineffective portions of these
hedges. No fair value hedges or cash flow hedges were derecognized or
discontinued in fiscal 2005, 2004 or 2003. In addition, the amount of realized
net losses or gains from cash flow hedges that were reclassified into earnings
during fiscal 2005, 2004 and 2003 was not significant. The amount of estimated
cash flow hedges unrealized net losses which are expected to be reclassified to
earnings in the next twelve months is approximately $4 million.
Finally, if any shipyard with which we have contracts to build our ships
is unable to perform, we would be required to perform under our foreign currency
swaps related to these shipbuilding contracts. Accordingly, based upon the
circumstances, we may have to discontinue the accounting for those currency
swaps as hedges, if the shipyard cannot perform. However, we believe that the
risk of shipyard nonperformance is remote.
Revenue and Expense Recognition
Guest cruise deposits represent unearned revenues and are initially
recorded as customer deposit liabilities when received. Customer deposits are
subsequently recognized as cruise revenues, together with revenues from onboard
and other activities and all associated direct costs of a voyage, upon
completion of voyages with durations of ten nights or less and on a pro rata
basis for voyages in excess of ten nights. Future travel discount vouchers
issued to guests are typically recorded as a reduction of revenues when such
vouchers are utilized. Revenues and expenses from our tour and travel services
are recognized at the time the services are performed or expenses are incurred.
Insurance/Self-Insurance
We use a combination of insurance and self-insurance for a number of risks
including claims related to crew and passengers, hull and machinery, war risk,
workers' compensation and general liability. Liabilities associated with these
risks, including estimates for crew and passenger claims, are estimated based
on, among other things, historical claims experience, severity factors and other
actuarial assumptions. Our expected loss accruals are based on estimates, and
while we believe the amounts accrued are adequate, the ultimate loss may differ
from the amounts provided.
Advertising Costs
Advertising costs are charged to expense as incurred except for brochures
and media production costs. The brochures and media production costs are
recorded as prepaid expenses and charged to expense as consumed or upon the
first airing of the advertisement, respectively. Advertising expenses totaled
$455 million, $464 million and $335 million in fiscal 2005, 2004 and 2003,
respectively. At November 30, 2005 and 2004, the amount of advertising costs
included in prepaid expenses was not significant.
Foreign Currency Translations and Transactions
For our foreign subsidiaries and affiliates using the local currency as
their functional currency, assets and liabilities are translated at exchange
rates in effect at the balance sheet dates. Revenues and expenses of these
foreign subsidiaries and affiliates are translated at weighted-average exchange
rates for the period. Equity is translated at
F-8
historical rates, and the resulting cumulative foreign currency translation
adjustments resulting from this process are included as a component of AOCI.
Therefore, the U.S. dollar value of these items in our financial statements
fluctuates from period to period, depending on the value of the dollar against
these functional currencies.
Exchange gains and losses arising from the remeasurement of monetary
assets and liabilities and foreign currency transactions denominated in a
currency other than the functional currency of the entity involved are
immediately included in our earnings, unless such net liabilities have been
designated to act as a hedge of a net investment in a foreign operation. In
addition, the unrealized exchange gains or losses on our long-term intercompany
receivables denominated in a non-functional currency, which are not expected to
be repaid in the foreseeable future and are therefore considered to form part of
our net investment, are recorded as a foreign currency translation adjustment,
which is included as a component of AOCI. Finally, net foreign currency
transaction gains or losses recorded in our earnings were not significant in
fiscal 2005, 2004 and 2003.
Earnings Per Share
Basic earnings per share is computed by dividing net income by the
weighted-average number of shares of common stock and ordinary shares
outstanding during each period. Diluted earnings per share is computed by
dividing adjusted net income by the weighted-average number of shares of common
stock and ordinary shares, common stock equivalents and other potentially
dilutive securities outstanding during each period. All shares that are issuable
under our outstanding convertible notes that have contingent share conversion
features have been considered outstanding for our diluted earnings per share
computations, if dilutive, using the "if converted" method of accounting from
the date of issuance.
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):
Years ended November 30,
-----------------------------
2005 2004 2003
---- ---- ----
Net income, as reported $2,257 $ 1,854 $ 1,194
Stock-based compensation
expense included in net
income, as reported 12 11 7
Total stock-based compensation
expense determined under
the fair value-based
method for all awards(c) (86)(a) (66)(b) (36)
------ ------- -------
Pro forma net income for basic
earnings per share 2,183 1,799 1,165
Interest on dilutive convertible notes 47 49 43
------ ------- -------
Pro forma net income for diluted
earnings per share $2,230 $ 1,848 $ 1,208
====== ======= =======
Earnings per share
Basic
As reported $ 2.80 $ 2.31 $ 1.66
====== ======= =======
Pro forma $ 2.71 $ 2.24 $ 1.62
====== ======= =======
Diluted
As reported $ 2.70 $ 2.24 $ 1.63
====== ======= =======
Pro forma $ 2.62 $ 2.18 $ 1.60
====== ======= =======
F-9
(a) In January 2005, Carnival Corporation granted approximately 1.4 million
employee stock options, with a $57.30 exercise price and a 2-year vesting
term, in substitution for a similar number of outstanding options whose
termination date was accelerated because of a corporate reorganization of
our European and U.S. operations that was completed in 2004 ("2004
reorganization"). Due to the unusually short vesting period of these
options, we would be required upon the adoption of SFAS No. 123 (revised
2004), "Share-Based Payment" ("SFAS No. 123(R)"), to recognize a large
charge for stock compensation expense in 2006. Such a charge would distort
stock compensation expense in 2006 and not be indicative of our expected
future normal annual charge for stock options. Accordingly, in the fourth
quarter of 2005, we authorized the immediate vesting of these options,
resulting in an increase of $11 million in stock compensation expense in
the 2005 pro forma net income. In addition, prior to this accelerated
vesting we had expensed $8 million for 2005 pro forma stock expense
compensation related to these options. In addition, for employee stock
options granted after September 2005, we reduced the options contractual
term from 10 years to 7 years, in order to reduce the options' expected
option life, thus reducing its estimated fair value.
(b) As a result of the 2004 reorganization, 1.6 million unvested options held
by employees vested immediately and their termination dates were
accelerated. This vesting occurred either in accordance with the terms of
the option plan or to avoid having these employees and Carnival
Corporation incur unduly burdensome taxes upon the exercise of such
options at a later date. As a result of this accelerated vesting, we
included an additional $19 million of stock-based compensation expense in
the 2004 pro forma net income.
(c) These amounts include the expensing of stock options made to
retirement-eligible employees over the expected vesting period of the
option. SFAS 123(R), when adopted, will require the expensing of future
option grants over the period to retirement eligibility, if less than the
vesting period, because vesting is not contingent upon any future
performance.
As recommended by SFAS No. 123, the fair value of options were estimated
using the Black-Scholes option-pricing model. The Black-Scholes option-pricing
model was developed for use in estimating the fair value of traded options that
have no vesting or trading restrictions and are fully transferable. In addition,
option-pricing models require the input of subjective assumptions, including
expected stock price volatility and dividend yields. Because our options have
characteristics different from those of traded options and because changes in
the subjective assumptions can materially affect our estimate of the fair value
of stock options, we believe that the existing valuation models, including
Black-Scholes, do not necessarily provide a reliable single measure of the fair
value of our options. Since 2004, we have continued to refine our Black-Scholes'
estimates and assumptions based upon more in-depth reviews of the underlying
information in order to more accurately value our options. The impact of such
changes has generally been to reduce the estimated fair value of our option
awards. The Black-Scholes weighted-average assumptions were as follows:
Years ended November 30,
--------------------------
2005 2004 2003
---- ---- ----
Fair value of options at the
dates of grant $12.99 $15.87 $13.33
====== ====== ======
Risk free interest rate 4.1% 3.4% 3.5%
====== ====== ======
Expected dividend yield 1.90% 1.36% 1.30%
====== ====== ======
Expected volatility(a) 27.0% 35.0% 48.7%
====== ====== ======
Expected option life (in years) 4.74 5.75 6.00
====== ====== ======
(a) In 2003, our volatility assumption was based on the historical volatility of
Carnival Corporation common stock. Subsequent to 2003, we also considered the
implied volatilities derived from our exchange traded options and convertible
notes in determining our expected volatility assumption since we believe these
implied market volatilities should be considered in estimating our expected
future volatilities.
In December 2004, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 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 over the corresponding service
period, and also requires an estimation of forfeitures when calculating
compensation expense, instead of accounting for forfeitures as incurred, which
is our current method. This statement is effective for us in the first quarter
of fiscal 2006
F-10
and is expected to increase our full year 2006 share-based compensation expense
by approximately $55 million compared to 2005. We have not yet determined which
of the two alternative transition methods we will use upon adoption of this new
statement.
Concentrations of Credit Risk
As part of our ongoing control procedures, we monitor concentrations of
credit risk associated with financial and other institutions with which we
conduct significant business. Credit risk, including counterparty nonperformance
under derivative instruments, contingent obligations and new ship progress
payment guarantees, is considered minimal, as we primarily conduct business with
large, well-established financial institutions who have long-term credit ratings
of A or above and we seek to diversify our counterparties. In addition, we have
established guidelines regarding credit ratings and investment maturities that
we follow to maintain safety and liquidity. We do not anticipate nonperformance
by any of our significant counterparties.
We also monitor the creditworthiness of our customers to which we grant
credit terms in the normal course of our business. Concentrations of credit risk
associated with these receivables are considered minimal primarily due to their
short maturities and the large number of accounts within our customer base. We
have experienced only minimal credit losses on our trade receivables. We do not
normally require collateral or other security to support normal credit sales.
However, we do normally require collateral and/or guarantees to support notes
receivable on significant asset sales and new ship progress payments to
shipyards.
Reclassifications
Reclassifications have been made to prior year amounts to conform to the
current year presentation.
NOTE 3 - DLC Transaction
On April 17, 2003, Carnival Corporation and Carnival plc completed a DLC
transaction, which implemented Carnival Corporation & plc's DLC structure. The
contracts governing the DLC structure provide that Carnival Corporation and
Carnival plc each continue to have separate boards of directors, but the boards
and senior executive management of both companies are identical. The amendments
to the constituent documents of each of the companies also provide that, on most
matters, the holders of the common equity of both companies effectively vote as
a single body. On specified matters where the interests of Carnival
Corporation's shareholders may differ from the interests of Carnival plc's
shareholders (a "class rights action"), each shareholder body will vote
separately as a class, such as transactions primarily designed to amend or
unwind the DLC structure. Generally, no class rights action will be implemented
unless approved by both shareholder bodies.
Upon the closing of the DLC transaction, Carnival Corporation and Carnival
plc also executed the Equalization and Governance Agreement, which provides for
the equalization of dividends and liquidation distributions based on an
equalization ratio and contains provisions relating to the governance of the DLC
structure. Because the current equalization ratio is 1 to 1, one Carnival plc
ordinary share is entitled to the same distributions, subject to the terms of
the Equalization and Governance Agreement, as one share of Carnival Corporation
common stock. In a liquidation of either company or both companies, if the
hypothetical potential per share liquidation distributions to each company's
shareholders are not equivalent, taking into account the relative value of the
two companies' assets and the indebtedness of each company, to the extent that
one company has greater net assets so that any liquidation distribution to its
shareholders would not be equivalent on a per share basis, the company with the
ability to make a higher net distribution is required to make a payment to the
other company to equalize the possible net distribution to shareholders, subject
to certain exceptions.
At the closing of the DLC transaction, Carnival Corporation and Carnival
plc also executed deeds of guarantee. Under the terms of Carnival Corporation's
deed of guarantee, Carnival Corporation has agreed to guarantee all indebtedness
and certain other monetary obligations of Carnival plc that are incurred under
agreements entered into on or after the
F-11
closing date of the DLC transaction. The terms of Carnival plc's deed of
guarantee are identical to those of Carnival Corporation's. In addition,
Carnival Corporation and Carnival plc have each extended their respective deeds
of guarantee to the other's pre-DLC indebtedness and certain other monetary
obligations, or alternatively standalone guarantees in lieu of utilization of
these deeds of guarantee, thus effectively cross guaranteeing all Carnival
Corporation and Carnival plc indebtedness and other monetary obligations. Each
deed of guarantee provides that the creditors to whom the obligations are owed
are intended third party beneficiaries of such deed of guarantee.
The deeds of guarantee are governed and construed in accordance with the
laws of the Isle of Man. Subject to the terms of the guarantees, the holders of
indebtedness and other obligations that are subject to the guarantees will have
recourse to both Carnival plc and Carnival Corporation though a Carnival plc
creditor must first make written demand on Carnival plc and a Carnival
Corporation creditor on Carnival Corporation. Once the written demand is made by
letter or other form of notice, the holders of indebtedness or other obligations
may immediately commence an action against the relevant guarantor. There is no
requirement under the deeds of guarantee to obtain a judgment, take other
enforcement actions or wait any period of time prior to taking steps against the
relevant guarantor. All actions or proceedings arising out of or in connection
with the deeds of guarantee must be exclusively brought in courts in England.
Under the terms of the DLC transaction documents, Carnival Corporation and
Carnival plc are permitted to transfer assets between the companies, make loans
or investments in each other and otherwise enter into intercompany transactions.
The companies have entered into some of these types of transactions and expect
to enter into additional transactions in the future to take advantage of the
flexibility provided by the DLC structure and to operate both companies as a
single unified economic enterprise in the most effective manner. In addition,
under the terms of the Equalization and Governance Agreement and the deeds of
guarantee, the cash flow and assets of one company are required to be used to
pay the obligations of the other company, if necessary.
Given the DLC structure as described above, we believe that providing
separate financial statements for each of Carnival Corporation and Carnival plc
would not present a true and fair view of the economic realities of their
operations. Accordingly, separate financial statements for both Carnival
Corporation and Carnival plc have not been presented.
Simultaneously with the completion of the DLC transaction, a partial share
offer ("PSO") for 20% of Carnival plc's shares was made and accepted, which
enabled 20% of Carnival plc shares to be exchanged for 41.7 million Carnival
Corporation shares. The 41.7 million shares of Carnival plc held by Carnival
Corporation as a result of the PSO, which cost $1.05 billion, are being
accounted for as treasury stock in the accompanying balance sheets.
Carnival plc was the third largest cruise company in the world and
operated many well-known global brands with leading positions in the U.S., UK,
Germany and Australia. The combination of Carnival Corporation with Carnival plc
under the DLC structure has been accounted for under U.S. generally accepted
accounting principles ("GAAP") as an acquisition of Carnival plc by Carnival
Corporation pursuant to SFAS No. 141, "Business Combinations." The number of
additional shares effectively issued in the combined entity for purchase
accounting purposes was 209.6 million. In addition, Carnival Corporation
incurred $60 million of direct acquisition costs, which have been included in
the aggregate purchase price of $5.36 billion.
The following pro forma information has been prepared assuming the DLC
transaction had occurred on December 1, 2002, rather than April 17, 2003, and
has not been adjusted to reflect any net transaction benefits. In addition, the
pro forma information does not purport to represent what the results of
operations actually could have been if the DLC transaction had occurred on
December 1, 2002. For fiscal 2003, our pro forma revenues and net income would
have been $7.60 billion and $1.16 billion, respectively, and our basic and
diluted pro forma earnings per share would have been $1.46 and $1.43, based on
797 million and 840 million pro forma weighted-average shares outstanding.
F-12
NOTE 4 - Property and Equipment
Property and equipment consisted of the following (in millions):
November 30,
-----------------
2005 2004
---- ----
Ships $ 23,506 $ 22,572
Ships under construction 540 429
-------- --------
24,046 23,001
Land, buildings and improvements,
and port facilities 593 555
Transportation equipment and other 692 628
-------- --------
Total property and equipment 25,331 24,184
Less accumulated depreciation and amortization (4,019) (3,361)
-------- --------
$ 21,312 $ 20,823
======== ========
Capitalized interest, primarily on our ships under construction, amounted
to $21 million, $26 million and $49 million in fiscal 2005, 2004 and 2003,
respectively. Amounts related to ships under construction include progress
payments for the construction of the ship, as well as design and engineering
fees, capitalized interest, construction oversight costs and various owner
supplied items. At November 30, 2005, 7 ships with an aggregate net book value
of $2.63 billion were pledged as collateral pursuant to mortgages related to
$1.37 billion of debt and a $483 million contingent obligation (see Notes 6 and
7).
Maintenance and repair expenses and dry-dock amortization were $445
million, $353 million and $256 million in fiscal 2005, 2004 and 2003,
respectively.
NOTE 5 - Variable Interest Entity
In accordance with FASB Interpretation No. 46, "Consolidation of Variable
Interest Entities," we have determined that we are carrying a loan, initially
made in April 2001, to a ship repair facility that is a variable interest entity
("VIE"). Although we use this facility for some of our ship repair work, we are
not a "primary beneficiary" and, accordingly, this entity is not consolidated in
our financial statements. At November 30, 2005 and 2004, our loan to this VIE,
which is also our maximum exposure to loss, was $46 million and $41 million,
respectively.
NOTE 6 - Debt
Short-Term Borrowings
Short-term borrowings were unsecured and consisted of the following (in
millions):
November 30,
-------------
2005 2004
---- ----
Euro commercial paper (a) $ 187
Euro bank loans (a) $ 284
Bank loans (b) 113 97
------ -----
$ 300 $ 381
====== =====
Weighted-average interest rate 3.1% 2.4%
====== =====
(a) These euro denominated borrowings have been translated to U.S. dollars at
the period-end exchange rates.
(b) These loans are denominated in U.S. dollars.
F-13
Long-Term Debt
Long-term debt consisted of the following (in millions):
November 30,
-----------------
2005(a) 2004(a)
---- ----
Secured
Floating rate notes, collateralized by four ships,
bearing interest from libor plus 1.13% to libor
plus 1.29% (4.9% to 5.7% at 2005 and 3.0% to 3.6%
at 2004), due through 2015 (b) $ 788 $ 904
Fixed rate notes, collateralized by two ships, bearing
interest at 5.4% and 5.5%, due through 2016 (b) 380 381
Euro floating rate note, collateralized by one ship,
bearing interest at euribor plus 0.5% (2.75%
at 2005 and 2004), due through 2008 64 101
Euro fixed rate note, collateralized by one ship,
bearing interest at 4.74%, due through 2012 142 183
Capitalized lease obligations, collateralized by
two ships, implicit interest at 3.66% 110
Other 2 3
------- -------
Total Secured 1,376 1,682
------- -------
Unsecured
Fixed rate notes, bearing interest at 3.75% to 7.2%,
due through 2028(c) 2,239 2,039
Euro floating rate notes, bearing interest at euribor
plus 0.25% to euribor plus 1.29% (2.4% to 2.6% at
2005 and 2.4% to 3.5% at 2004), due through 2010(d) 933 1,265
Sterling fixed rate notes, bearing interest at 5.63%,
due in 2012 372 415
Euro fixed rate notes, bearing interest at 5.57%,
due in 2006 355 399
Sterling floating rate note, bearing interest at libor
plus 0.33% (4.91% at 2005), due in 2010(d) 285
Other 34 36
Convertible notes, bearing interest at 2%, due in
2021, with next put option in 2008 600 600
Convertible notes, bearing interest at 1.75%, net of
discount, with a face value of $889 million, due in
2033, with first put option in 2008 575 575
Zero-coupon convertible notes, net of discount,
with a face value of $510 million and $1.05 billion
at 2005 and 2004, respectively, due in 2021, with
first put option in 2006 283 561
------- -------
Total Unsecured 5,676 5,890
------- -------
7,052 7,572
Less portion due within one year (1,325) (1,281)
------- -------
$ 5,727 $ 6,291
======= =======
(a) All borrowings are in U.S. dollars unless otherwise noted and all interest
rates are as of year ends. Euro and sterling denominated notes have been
translated to U.S. dollars at the period-end exchange rates. At November
30, 2005, 56%, 30% and 14%, (60%, 29% and 11% at November 30, 2004) of our
long-term debt was U.S. dollar, euro and sterling denominated,
respectively, including the effect of foreign currency swaps. In addition,
at November 30, 2005, 75% of the interest cost on our long-term debt was
fixed (68% at November 30, 2004) and 25% was variable (32% at November 30,
2004), including the effect of interest rate swaps.
(b) In 2004, we borrowed an aggregate of $739 million to finance a portion of
the Diamond Princess and Sapphire Princess purchase prices, which loans
have both a fixed and variable interest rate component.
(c) In July 2005, we borrowed $328 million under an unsecured term loan
facility, to pay a portion of the Carnival Liberty purchase price. This
facility bears interest at 4.51% and
F-14
is repayable in semi-annual installments through July 2017. In addition,
we entered into a foreign currency swap, which effectively converted this
U.S. dollar debt to euro debt.
(d) In March 2005, Carnival plc entered into a five-year unsecured
multi-currency term loan facility, bearing interest at euribor/libor plus
0.33%, which margin will vary based on Carnival plc's senior unsecured
credit rating. Under this facility, we borrowed 368 million euros ($436
million U.S. dollars at the November 30, 2005 exchange rate) to repay a
368 million euro note, which bore interest at euribor plus 0.60%, prior to
its October 2008 maturity date. We also borrowed 165 million sterling
under this facility ($285 million U.S. dollars at the November 30, 2005
exchange rate), which we used to pay a portion of P&O Cruises' purchase
price for the Arcadia. Finally, we entered into interest rate swap
agreements to fix the interest rates on these euro and sterling borrowings
at 3.50% and 5.40%, respectively.
Convertible Notes
Carnival Corporation's 2% convertible notes ("2% Notes"), its 1.75%
convertible notes ("1.75% Notes") and its zero-coupon convertible notes
("Zero-Coupon Notes") are convertible into 15.3 million shares, a maximum of
20.9 million shares (11.1 million shares during fiscal 2005) and 8.5 million
shares, respectively, of Carnival Corporation common stock.
The 2% Notes are convertible at a conversion price of $39.14 per share,
subject to adjustment, during any fiscal quarter for which the closing price of
the Carnival Corporation common stock is greater than $43.05 per share for a
defined duration of time in the preceding fiscal quarter. The conditions for
conversion of the 2% Notes were satisfied since the first quarter of 2004 and,
accordingly, the 2% Notes have been convertible into Carnival Corporation common
stock since the second quarter of fiscal 2004. A nominal amount of 2% Notes were
converted in fiscal 2005 and 2004. At November 30, 2004, our 2% 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, subsequent to April
15, 2005 we have again classified our 2% Notes as long-term debt, since the next
date that the noteholders can require us to repurchase them is on April 15,
2008.
The 1.75% Notes are convertible at a conversion price of $53.11 per share,
subject to adjustment, during any fiscal quarter for which the closing price of
the Carnival Corporation common stock is greater than a specified trigger price
for a defined duration of time in the preceding fiscal quarter. During the
fiscal quarters ending from August 31, 2003 through April 29, 2008, the trigger
price will be $63.73 per share. Thereafter, this conversion trigger price
increases each quarter based on an annual rate of 1.75%, until maturity. In
addition, holders may also surrender the 1.75% Notes for conversion if they have
been called for redemption or for other specified occurrences, including the
credit rating assigned to the 1.75% Notes being Baa3 or lower by Moody's
Investors Service and BBB- or lower by Standard & Poor's Rating Services, as
well as certain corporate transactions. The conditions for conversion of the
1.75% Notes have not been met since their issuance. The 1.75% Notes interest is
payable in cash semi-annually in arrears through April 29, 2008. Effective April
30, 2008, the 1.75% Notes no longer require a cash interest payment, but
interest will accrete at a 1.75% yield to maturity.
The Zero-Coupon Notes have a 3.75% yield to maturity and are convertible
during any fiscal quarter for which the closing price of the Carnival
Corporation common stock is greater than a specified trigger price for a defined
duration of time in the preceding fiscal quarter. The trigger price commenced at
a low of $31.94 per share for the first quarter of fiscal 2002 and increases at
an annual rate of 3.75% thereafter, until maturity. The trigger price was $36.72
for the 2005 fourth quarter. Since the third quarter of 2003, the Zero-Coupon
Notes have been convertible into Carnival Corporation common stock. During
fiscal 2005, $297 million of our Zero-Coupon Notes were converted at their
accreted value into 9.0 million shares of Carnival Corporation common stock, of
which 6.2 million shares were issued from treasury stock. No Zero-Coupon Notes
were converted prior to fiscal 2005.
At November 30, 2005, the Zero-Coupon Notes were classified as a current
liability, since the noteholders have the right to require us to repurchase them
on October 24, 2006 at their accreted values. If the noteholders do not exercise
their rights in full, we will change the classification of any outstanding
Zero-Coupon Notes to long-term debt, as the next
F-15
repurchase date does not occur until October 24, 2008. We currently expect that
we will satisfy any Zero-Coupon Note conversions through the issuance of
Carnival Corporation common stock.
Subsequent to April 29, 2008 and October 23, 2008, we may redeem all or a
portion of the 1.75% Notes and Zero-Coupon Notes, respectively, at their
accreted values and subsequent to April 14, 2008, we may redeem all or a portion
of our 2% Notes at their face value plus any unpaid accrued interest, subject to
the noteholders' right to convert.
In addition, on April 29 of 2008, 2013, 2018, 2023 and 2028 the 1.75%
noteholders, on April 15 of 2008 and 2011 the 2% noteholders and on October 24
of 2006, 2008, 2011 and 2016 the Zero-Coupon noteholders may require us to
repurchase all or a portion of the outstanding 1.75% Notes and Zero-Coupon Notes
at their accreted values and the 2% Notes at their face value plus any unpaid
accrued interest.
Upon conversion, redemption or repurchase of the 1.75% Notes, the 2% Notes
and the Zero-Coupon Notes, we may choose to deliver Carnival Corporation common
stock, cash or a combination of cash and common stock with a total value equal
to the value of the consideration otherwise deliverable.
Revolving Credit and Committed Financing Facilities
In October 2005, simultaneously with the termination of the Carnival
Corporation $1.4 billion, the Carnival plc 600 million euro and the Costa 257.5
million euro revolving credit facilities, Carnival Corporation, Carnival plc,
and certain of Carnival plc's subsidiaries, entered into a five-year unsecured
multi-currency revolving credit facility for $1.2 billion, 400 million euros and
200 million sterling (aggregating $2.02 billion U.S. dollars at the November 30,
2005 exchange rates) (the "Facility"). The Facility currently bears interest at
libor/euribor plus a margin of 17.5 basis points ("BPS"). In addition, we are
required to pay a commitment fee of 30% of the margin per annum. Both the margin
and the commitment fee will vary based on changes to Carnival Corporation's
senior unsecured credit ratings. Finally, an additional utilization fee of 5 BPS
per annum of the outstanding amounts under the Facility is payable if such
outstanding amounts exceed 50% of the aggregate commitments.
Our multi-currency commercial paper programs are supported by this Facility
and,accordingly, any amounts outstanding under our commercial paper programs
effectively reduce the aggregate amount available under this Facility. At
November 30, 2005, we had borrowed 158 million euros ($187 million U.S. dollars
at the November 30, 2005 exchange rate) under our euro commercial paper program,
which is classified as a short-term borrowing since we do not expect to
refinance it using proceeds from our long-term Facility. This Facility also
supports up to $700 million for bonds and letters of credit issued by the
facility lenders on behalf of Carnival Corporation & plc. The issuance of any
such bonds or letters of credit, none outstanding at November 30, 2005, will
reduce the aggregate amount available under this Facility. At November 30, 2005,
$1.83 billion was available under the Facility, based on the November 30, 2005
exchange rates.
In 2005 and January 2006, we entered into five unsecured long-term loan
financing facilities, which provide us with the option to borrow up to an
aggregate of $1.65 billion for a portion of the purchase price of five ships.
These ships are expected to be delivered through 2009. These facilities are
repayable semi-annually over a 12 year period. However, we have the option to
terminate them up until 60 days prior to the ships' delivery dates.
The Facility and other of our loan and derivative agreements, contain
covenants that require us, among other things, to maintain minimum debt service
coverage, minimum shareholders' equity and limits our debt to capital and debt
to equity ratios, and the amounts of our secured assets and secured
indebtedness. Generally, if an event of default under any loan agreement is
triggered, then pursuant to cross default acceleration clauses, substantially
all of our outstanding debt and derivative contract payables could become due
and the underlying facilities could be terminated. At November 30, 2005, we were
in compliance with all of our debt covenants.
F-16
At November 30, 2005, the scheduled annual maturities of our long-term
debt was as follows (in millions):
Fiscal
------
2006 $1,325(a)
2007 1,035
2008 1,672(a)
2009 169
2010 944
Thereafter 1,907
------
$7,052
======
(a) Includes $283 million of Carnival Corporation's Zero-Coupon Notes in 2006,
$600 million and $575 million of its 2% Notes and 1.75% Notes in 2008,
based in each case on the date of the noteholders' next put option.
Debt issuance costs are generally amortized to interest expense using the
straight-line method, which approximates the effective interest method, over the
term of the notes or the noteholders first put option date, whichever is
earlier. In addition, all loan issue discounts are amortized to interest expense
using the effective interest rate method over the term of the notes.
F-17
NOTE 7 - Commitments
Ship Commitments
A description of our ships under contract for construction at November 30,
2005, as adjusted for our December 2005 ship orders, was as follows:
Expected
Service Passenger Estimated Total Cost(b)
Brand and Ship Date(a) Capacity Euros Sterling USD
- -------------- ---- -------- ---------------------------------
(in millions)
Carnival Cruise Lines
Carnival Freedom 3/07 2,974 $ 500
Newbuild 6/08 3,000 (euro) 485
Newbuild(c) 10/09 3,608 560
------ ----------- ------
Total Carnival Cruise Lines 9,582 1,045 500
------ ----------- ------
Princess
Crown Princess 6/06 3,100 500
Emerald Princess 4/07 3,100 525
Newbuild(c) 10/08 3,100 570
------ ------
Total Princess 9,300 1,595
------ ------
Holland America Line
Noordam(d) 2/06 1,918 420
Newbuild(c) 7/08 2,044 450
------ ------
Total Holland America Line 3,962 870
------ ------
AIDA
Newbuild(e) 4/07 2,030 315
Newbuild(e) 4/08 2,030 315
Newbuild(e) 4/09 2,030 315
------ -----------
Total AIDA 6,090 945
------ -----------
Costa
Costa Concordia(e) 7/06 3,000 450
Costa Serena(e) 6/07 3,000 475
Newbuild(c)(e) 6/09 3,000 485
------ -----------
Total Costa 9,000 1,410
------ -----------
Total Euro Commitments (euro)3,400
-----------
Total Euro Commitments converted to USD(f) 4,035
------
P&O Cruises
Ventura(d) 4/08 3,100 (pound) 355
Cunard
Queen Victoria(d) 12/07 1,982 270 45
------ ----------- ------
Total Sterling Commitments (pound) 625
-----------
Total Sterling Commitments converted to USD(f) 1,085
------
Grand Total 43,016
======
Grand Total in USD $8,130
======
(a) The expected service date is the month in which the ship is currently
expected to begin its first revenue generating cruise.
(b) Estimated total cost of the completed ship includes the contract price
with the shipyard, design and engineering fees, capitalized interest,
construction oversight costs and various owner supplied items. All of our
ship construction contracts are with the Fincantieri shipyards in Italy,
except for AIDA's which are with the Meyer Werft shipyard
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in Germany. In addition, the estimated total cost reflects the currency
denomination that we are committed to expend, including the effect of
foreign currency swaps.
(c) These construction contracts aggregating $2.26 billion were entered into
in December 2005.
(d) These construction contracts are denominated in euros, except for $45
million of the Queen Victoria costs, which are denominated in USD. The
euro denominated contract amounts have been fixed into U.S. dollars or
sterling by utilizing foreign currency swaps.
(e) These construction contracts are denominated in euros, which is the
functional currency of the cruise line which will operate the ship and,
therefore, we do not expect to enter into foreign currency swaps to hedge
these commitments.
(f) The estimated total costs of these contracts denominated in euros and
sterling have been translated into U.S. dollars using the November 30,
2005 exchange rate.
In connection with our cruise ships under contract for construction listed
above, we have paid $540 million through November 30, 2005 and anticipate paying
the remaining estimated total costs as follows: $1.71 billion, $2.34 billion,
$2.13 billion and $1.41 billion in fiscal 2006, 2007, 2008 and 2009,
respectively.
Operating Leases
Rent expense under our operating leases, primarily for office and
warehouse space, was $50 million in each of fiscal 2005 and 2004 and $48 million
in fiscal 2003. At November 30, 2005, minimum annual rentals for our operating
leases, with initial or remaining terms in excess of one year, were as follows
(in millions): $43, $30, $25, $20 and $16 and $66 in fiscal 2006 through 2010
and thereafter, respectively.
Port Facilities and Other
At November 30, 2005, we had commitments through 2052, with initial or
remaining terms in excess of one year, to pay minimum amounts for our annual
usage of port facilities and other contractual commitments as follows (in
millions): $58, $70, $70, $56, $52, and $294 in fiscal 2006 through 2010 and
thereafter, respectively.
NOTE 8 - Contingencies
Litigation
In January 2006, a lawsuit was filed against Carnival Corporation and its
subsidiaries and affiliates, and other non-affiliated cruise lines in the U.S.
District Court for the Southern District of New York on behalf of James Jacobs
and a purported class of owners of intellectual property rights to musical plays
and other works performed in the U.S. The plaintiffs claim infringement of
copyrights to Broadway, off Broadway and other plays. The suit seeks payment of
(i) damages, (ii) disgorgement of alleged profits and (iii) an injunction
against future infringement. The ultimate outcome of this matter cannot be
determined at this time. We intend to vigorously defend this lawsuit.
In November 2005, two separate lawsuits were filed against Carnival
Corporation and Princess Cruise Lines, Ltd. in the U.S. District Court for the
Southern District of Florida on behalf of some current and former crewmembers
alleging that Carnival Cruise Lines and Princess failed to pay the plaintiffs
for overtime. These suits seek payment of (i) damages for breach of contract,
(ii) damages under the Seaman's Wage Act and (iii) interest. The ultimate
outcome of these matters cannot be determined at this time. However, we believe
we have meritorious defenses and we intend to vigorously defend these lawsuits.
In March 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 and minimum wages. The suit seeks payment of (i)
the wages alleged to be owed, (ii) damages under the Seaman's Wage Act and (iii)
interest. On August 5, 2005, the court dismissed the lawsuit. The plaintiffs
filed an appeal of their overtime claim to the Eleventh Circuit U. S. Court of
Appeals on August 15, 2005, which is currently pending, but have voluntarily
dismissed their minimum wage claim. The ultimate outcome of this matter cannot
be determined at this time. However, we believe we have meritorious defenses and
we intend to vigorously defend this lawsuit.
F-19
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.
The oral hearing was scheduled to take place on December 15, 2005 but has been
postponed while the Court seeks clarification of the status of the Festival
Action with the Italian judge presiding over Festival's bankruptcy proceedings.
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 2002 and 2004, three actions 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. One of the actions filed in 2002 has
been settled for a nominal amount leaving two open actions (collectively, the
"Facsimile Complaints"). The plaintiffs seek to enjoin the sending of
unsolicited facsimile advertisements and statutory damages. The advertisements
referred to in the 2002 Facsimile Complaints that reference a Carnival Cruise
Line product were not sent by Carnival Corporation, but rather were distributed
by a professional faxing company at the behest of third party travel agencies.
The faxes involved in the 2004 case were sent to a travel agency with whom we
had conducted business. 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 instituted arbitration proceedings in Italy in 2000 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 2007 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 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
which are not covered by insurance cannot be determined at this time.
Contingent Obligations
At November 30, 2005, Carnival Corporation had contingent obligations
totaling approximately $1.1 billion to participants in lease out and lease back
type 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 AA or higher. In
addition, Carnival Corporation obtained a direct guarantee from another AA+
rated financial institution for $306 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
F-20
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 $88 million, or
alternatively provide mortgages in the aggregate amount of $88 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
November 30, 2005, have to pay a total of $171 million in stipulated damages. As
of November 30, 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. In addition, in 2004 Carnival
Corporation entered into a five year $170 million unsecured revolving credit
facility, guaranteed by Carnival plc, which is being used to support these
standby letters of credit through the issuance of a back-up letter of credit. In
the event we were to default under covenants in our loan agreements, any amounts
outstanding under the $170 million unsecured revolving credit facility would be
due and payable, and we would be required to post cash collateral to support the
stipulated damages standby letters of credit in excess of $170 million. Between
2017 and 2022, we have the right to exercise options that would terminate these
transactions at no cost to us. As a result of these three transactions, we have
$40 million and $43 million of deferred income recorded on our balance sheets as
of November 30, 2005 and 2004, respectively, which is being amortized to
nonoperating income through 2022.
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.
War Risk Insurance
We maintain war risk insurance, subject to coverage limits and exclusions
for claims such as those arising from chemical and biological attacks, on all of
our ships covering our legal liability to crew, passengers and other third
parties arising from war or war-like actions, including terrorist risks. Due
primarily to its high costs, we only carry war risk insurance coverage for
physical damage to 43 of our 79 ships, which includes terrorist risks. Under the
terms of our war risk insurance coverage, which is typical for war risk policies
in the marine industry, underwriters can give seven days notice to the insured
that the liability and physical damage policies can be cancelled. If one or more
of our 36 uninsured ships suffer damage in an attack, then the cost of any such
damages would be expensed, and such amounts could be material.
NOTE 9 - Income and Other Taxes
For fiscal 2004 and 2003, we believe that substantially all of our income,
with the exception of our U.S. source income principally from the
transportation, hotel and tour businesses of Holland America Tours and Princess
Tours, is derived from, or incidental to, the international operation of ships,
and is therefore exempt from U.S. federal income taxes. For fiscal 2005,
regulations under Section 883 of the Internal Revenue Code limiting the types of
income considered to be derived from the international operation of a ship first
became effective. Section 883 is the primary provision upon which we rely to
exempt certain of our international ship operation earnings from U.S. income
taxes. Accordingly, the 2005 provision for U.S. federal income taxes includes
taxes on a portion of our ship operating income that is in addition to the U.S.
source transportation, hotel and tour income on which U.S. taxes have
historically been provided. In addition, during the fourth quarter of 2005 we
chartered three ships to the Military Sealift Command in connection with the
Hurricane Katrina relief effort. Income from these charters is not considered to
be income from the international operation of our ships and, accordingly,
approximately $18 million of income taxes were provided on the net earnings of
these charters in our 2005 fourth quarter at an
F-21
effective tax rate of approximately 60%.
If we were found not to qualify for exemption pursuant to applicable
income tax treaties or under the Internal Revenue Code or if the income tax
treaties or Internal Revenue Code were to be changed in a manner adverse to us,
a portion of our income would become subject to taxation by the U.S. at higher
than normal corporate tax rates.
Cunard, Ocean Village, P&O Cruises, P&O Cruises Australia, Swan Hellenic,
AIDA (except for prior to November 2004), and Costa, since the beginning of
fiscal 2005, are subject to income tax under the tonnage tax regimes of either
the United Kingdom or Italy. Under both tonnage tax regimes, shipping profits,
as defined under the applicable law, are subject to corporation tax by reference
to the net tonnage of qualifying vessels. Income not considered to be shipping
profits under tonnage tax rules is taxable under either the normal UK income tax
rules or the tax regime applicable to Italian-registered ships. We believe that
substantially all of the income attributable to these brands constitutes
shipping profits and, accordingly, Italian and UK income tax expenses for these
operations has been and is expected to be minimal under the current tax regimes.
We do not expect to incur income taxes on future distributions of
undistributed earnings of foreign subsidiaries and, accordingly, no deferred
income taxes have been provided for the distribution of these earnings.
In addition to or in place of income taxes, virtually all jurisdictions
where our ships call impose taxes based on passenger counts, ship tonnage or
some other measure. These taxes, other than those directly charged to and/or
collected from passengers by us, are recorded as operating expenses in the
accompanying statements of operations.
NOTE 10 - Shareholders' Equity
Carnival Corporation's articles of incorporation authorize its Board of
Directors, at its discretion, to issue up to 40 million shares of its preferred
stock and Carnival plc has 100,000 authorized preference shares. At November 30,
2005 and 2004, no Carnival Corporation preferred stock had been issued and only
a nominal amount of Carnival plc preferred shares had been issued.
In October 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 February 6, 2006, we repurchased
8.0 million shares of Carnival Corporation common stock for $386 million. No
expiration date has been specified for this authorization.
At November 30, 2005, there were 75.5 million shares of Carnival
Corporation common stock reserved for issuance pursuant to its convertible notes
and its employee benefit and dividend reinvestment plans. In addition, Carnival
plc shareholders have authorized 13.5 million ordinary shares for future
issuance under its employee benefit plans.
At November 30, 2005 and 2004 accumulated other comprehensive income was
as follows (in millions):
2005 2004
---- ----
Cumulative foreign currency translation adjustments, net $190 $588
Minimum pension liability adjustments (19) (17)
Unrealized losses on cash flow derivative hedges, net (15) (30)
---- ----
$156 $541
==== ====
NOTE 11 - Financial Instruments
Considerable judgment is required in interpreting data to develop
estimates of fair value and, accordingly, amounts are not necessarily indicative
of the amounts that we could realize in a current market exchange. Our financial
instruments are not held for trading or other speculative purposes.
F-22
Cash and Cash Equivalents and Short-Term Investments
The carrying amounts of our cash and cash equivalents and short-term
investments approximate their fair values due to their short maturities or
variable interest rates.
Other Assets
At November 30, 2005 and 2004, long-term other assets included notes and
other receivables and marketable securities held in rabbi trusts for certain of
our nonqualified benefit plans. These assets had carrying and fair values of
$406 million and $405 million at November 30, 2005, respectively, and carrying
and fair values of $240 million and $227 million at November 30, 2004. Fair
values were based on public market prices, estimated discounted future cash
flows or estimated fair value of collateral.
Debt
The fair values of our non-convertible debt and convertible notes were
$5.98 billion and $2.03 billion, respectively, at November 30, 2005 and $6.32
billion and $2.53 billion at November 30, 2004. These fair values were greater
than the related carrying values by $86 million and $572 million, respectively,
at November 30, 2005 and by $100 million and $790 million at November 30, 2004.
The net difference between the fair value of our non-convertible debt and its
carrying value was due primarily to our issuance of debt obligations at fixed
interest rates that are above market interest rates in existence at the
measurement dates. The net difference between the fair value of our convertible
notes and its carrying value is largely due to the impact of changes in the
Carnival Corporation common stock value on the value of our convertible notes on
those dates. The fair values of our unsecured fixed rate public notes,
convertible notes, sterling bonds and unsecured 5.57% euro notes were based on
their public market prices. The fair values of our other debt were estimated
based on appropriate market interest rates being applied to this debt.
Foreign Currency Swaps and Other Hedging Instruments
We have foreign currency swaps that are designated as foreign currency
fair value hedges for three of our euro denominated shipbuilding contracts (see
Note 7). At November 30, 2005 and 2004, the fair value of the foreign currency
swaps related to our shipbuilding commitments was a net unrealized gain of $29
million and $219 million, respectively. These foreign currency swaps mature
through 2008.
At November 30, 2005, we have foreign currency swaps totaling $1.11
billion that are effectively designated as hedges of our net investments in
foreign subsidiaries, which have euro and sterling denominated functional
currencies. These foreign currency swaps were entered into to effectively
convert $237 million and $736 million of U.S. dollar denominated debt into
sterling debt and euro debt ($251 million and $466 million at November 30,
2004), respectively. In addition, $138 million and $170 million of euro
denominated debt was effectively converted into sterling debt at November 30,
2005 and 2004, respectively. At November 30, 2005 and 2004, the fair value of
these foreign currency swaps was an unrealized loss of $58 million and $137
million, respectively, which is included in the cumulative translation
adjustment component of AOCI. These currency swaps mature through 2017.
The fair values of these foreign currency swaps were estimated based on
prices quoted by financial institutions for these instruments.
Finally, we have designated $1.58 billion and $1.1 billion of our
outstanding euro and sterling debt and other obligations, which are
nonderivatives and mature through 2012, as hedges of our net investments in
foreign operations and, accordingly, have included $95 million and $194 million
of foreign currency transaction losses in the cumulative translation adjustment
component of AOCI at November 30, 2005 and 2004, respectively.
Interest Rate Swaps
We have interest rate swap agreements designated as fair value hedges
whereby we receive fixed interest rate payments in exchange for making variable
interest rate payments. At November 30, 2005 and 2004, these interest rate swap
agreements effectively changed $926
F-23
million and $929 million, respectively, of fixed rate debt to libor-based
floating rate debt.
In addition, we also have interest rate swap agreements designated as cash
flow hedges whereby we receive variable interest rate payments in exchange for
making fixed interest rate payments. At November 30, 2005 and 2004, these
interest rate swap agreements effectively changed $1.25 billion and $828
million, respectively, of euribor and GBP libor floating rate debt to fixed rate
debt.
These interest rate swap agreements mature through 2010. At November 30,
2005 and 2004, the fair value of our interest rate swaps designated as cash flow
hedges was an unrealized loss of $6 million and $22 million, respectively. The
fair values of our interest rate swap agreements were estimated based on prices
quoted by financial institutions for these instruments.
NOTE 12 - Segment Information
Our cruise segment includes 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 hotel, tour and
transportation operations of Holland America Tours and Princess Tours, and the
business to business travel agency operations of P&O Travel Ltd., the latter two
since completion of the DLC transaction on April 17, 2003. The significant
accounting policies of our segments are the same as those described in Note 2 -
"Summary of Significant Accounting Policies." Information for our cruise and
other segments as of and for the years ended November 30 was as follows (in
millions):
Selling
and Depreciation Capital
Operating adminis- and Operating expend- Total
Revenues(a) expenses trative amortization income itures assets
----------- -------- ------- ------------ ------ ------ ------
2005
Cruise $ 10,735 $ 5,967 $ 1,276 $ 873 $ 2,619 $l,892 $ 27,883
Other 467 365 53 29 20 85 549(b)
Intersegment
elimination (115) (115)
-------- -------- -------- -------- -------- -------- --------
$ 11,087 $ 6,217 $ 1,329 $ 902 $ 2,639 $ 1,977 $ 28,432
======== ======== ======== ======== ======== ======== ========
2004
Cruise $ 9,427 $ 5,247 $ 1,231 $ 791 $ 2,158 $ 3,512 $ 27,136
Other 398 308 54 21 15 74 500(b)
Intersegment
elimination (98) (98)
-------- -------- -------- -------- -------- -------- --------
$ 9,727 $ 5,457 $ 1,285 $ 812 $ 2,173 $ 3,586 $ 27,636
======== ======== ======== ======== ======== ======== ========
2003
Cruise $ 6,459 $ 3,624 $ 896 $ 568 $ 1,371 $ 2,454 $ 24,090
Other 345 276 40 17 12 62 401(b)
Intersegment
elimination (86) (86)
-------- -------- -------- -------- -------- -------- --------
$ 6,718 $ 3,814 $ 936 $ 585 $ 1,383 $ 2,516 $ 24,491
======== ======== ======== ======== ======== ======== ========
(a) A portion of other segment revenues include revenues for the cruise
portion of a tour, when a cruise is sold along with a land tour package by
Holland America Tours or Princess Tours, and shore excursion and port
hospitality services provided to cruise passengers by these tour
companies. These intersegment revenues, which are included in full in the
cruise segment, are eliminated from the other segment revenues in the line
"Intersegment elimination."
(b) Other segment assets primarily included hotels and lodges in Alaska and
the Canadian Yukon, luxury dayboats offering tours to a glacier in Alaska
and on the Yukon River, motorcoaches used for sightseeing and charters in
the States of Washington and Alaska, British Columbia, Canada and the
Canadian Yukon and private, domed rail cars, which run on the Alaska
Railroad between Anchorage and Fairbanks, Whittier and Denali, and
Whittier and Talkeetna.
F-24
Foreign revenues for our cruise brands represent sales generated from
outside the U.S. primarily by foreign tour operators and foreign travel
agencies. Substantially all of these foreign revenues are from the UK, Germany,
Italy, Canada, France, Australia, Spain, Switzerland and Brazil. Substantially
all of our long-lived assets are located outside of the U.S. and consist
principally of our ships and ships under construction and exclude goodwill and
trademarks.
Revenue information by geographic area for fiscal 2005, 2004 and 2003 was
as follows (in millions):
2005 2004 2003
---- ---- ----
U.S. $ 6,439 $5,788 $4,513
Continental Europe 1,681 1,549 971
UK 1,520 1,341 724
Canada 665 562 231
Australia and New Zealand 311 215 71
Others 471 272 208
------- ------ ------
$11,087 $9,727 $6,718
======= ====== ======
NOTE 13 - Benefit Plans
Stock Option Plans
We have stock option plans primarily for management level employees and
members of our Board of Directors. The Carnival Corporation and Carnival plc
plans are administered by a committee of our independent directors (the
"Committee"), that determines who is eligible to participate, the number of
shares for which options are to be granted and the amounts that may be exercised
within a specified term. The Carnival Corporation and Carnival plc option
exercise price is generally set by the Committee at 100% of the fair market
value of the common stock/ordinary shares on the date the option is granted.
Substantially all Carnival Corporation and Carnival plc options granted during
fiscal 2005, 2004 and 2003 were granted at an exercise price per share equal to
or greater than the fair market value of the Carnival Corporation common stock
and Carnival plc ordinary shares on the date of grant. Carnival Corporation and
Carnival plc employee options generally vest evenly over five years and at the
end of three years, respectively. Our employee options granted prior to October
2005 have a ten-year term and those options granted thereafter had a seven-year
term. Carnival Corporation director options granted subsequent to fiscal 2000
vest evenly over five years and have a ten-year term. At November 30, 2005,
Carnival Corporation had 27.9 million shares and Carnival plc had 13.5 million
shares, which were available for future grants under the option plans.
A combined summary of the activity and status of the Carnival Corporation
and Carnival plc stock option plans was as follows:
Weighted-
Average Exercise Price Number of Options
Per Share Years Ended November 30,
---------------------------- ----------------------------------------
2005 2004 2003 2005 2004 2003
---- ---- ---- ---- ---- ----
Outstanding options-
beginning of year $35.61 $28.79 $29.26 18,203,942 19,297,979 11,828,958
Carnival plc
outstanding options
at April 17, 2003(a) $19.64 5,523,013
Options granted $51.88 $47.52 $30.88 4,446,260(d) 5,306,802 (c) 5,464,109
Options exercised(b) $30.56 $25.23 $17.35 (1,953,396) (5,686,484)(c) (2,919,554)
Options canceled $36.11 $30.17 $28.64 (638,554) (714,355) (598,547)
----------- ----------- -----------
Outstanding options-
end of year $39.15 $35.61 $28.79 20,058,252(e) 18,203,942(e) 19,297,979(e)
=========== =========== ===========
Options exercisable-
end of year $36.87 $32.05 $27.68 8,560,318(d,f) 5,920,890(d,f) 7,848,335(f)
=========== =========== ===========
(a) All Carnival plc unvested options outstanding on the date the DLC
transaction was
F-25
completed vested fully on such date, except for 1.3 million options, which
were granted on April 15, 2003.
(b) Included 0.4 million, 2.0 million and 1.8 million Carnival plc options in
2005, 2004 and 2003, of which 0.3 million, 0.8 million and 1.0 million had
a sterling denominated exercise price, respectively.
(c) During 2004, as a result of Costa being transferred to the Carnival plc
side of the DLC structure, options to purchase 973,000 shares of Carnival
Corporation vested immediately and their termination dates were
accelerated to 2004. These vested options, along with all of Costa
employees' already exercisable options, were exercised in 2004 to avoid
unduly burdensome taxes. In 2004, Carnival plc granted 1.1 million options
to replace the 973,000 options and another 127,000 of options that were
terminated early at an exercise price equal to the fair market value of
Carnival plc ordinary shares on the grant date. See Note 2.
(d) On December 1, 2003, as a result of the Princess cruise operations being
transferred to the Carnival Corporation side of the DLC structure, options
to purchase 743,000 shares of Carnival plc vested immediately, and the
termination dates on all Princess employees' Carnival plc exercisable
options were shortened. All such changes have been made pursuant to the
original terms of the Carnival plc plan. In January 2005, Carnival
Corporation granted 1.4 million options to replace the 657,000 options and
another 743,000 options that were terminated early at an exercise price
per share equal to the fair market value of Carnival Corporation common
stock on the grant date. In late 2005, these 1.4 million unvested options
were vested. See Note 2.
(e) Included 3.2 million, 3.3 million and 3.6 million of Carnival plc options
at a weighted- average exercise price of $38.29, $38.42 and $20.89 per
share, based on the November 30, 2005, 2004 and 2003 U.S. dollar to
sterling exchange rate, respectively.
(f) Included 0.7 million, 0.9 million and 2.2 million of Carnival plc options
at a weighted- average exercise price of $23.89, $22.15 and $18.06 per
share, based on the November 30, 2005, 2004 and 2003 U.S. dollar to
sterling exchange rate, respectively.
Combined information with respect to outstanding and exercisable Carnival
Corporation and Carnival plc stock options at November 30, 2005 was as follows:
Options Outstanding Options Exercisable
----------------------------------- ---------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Remaining Exercise Exercise
Price Range Shares Life (Years) Price Shares Price
- ----------- ----------------------------------- ---------------------
$ 1.94-$ 5.73 30,980 (a) $ 2.07 30,980 $ 2.07
$ 5.74-$17.19 245,674 4.0 $16.51 245,674 $16.51
$17.20-$22.92 1,612,064 5.5 $22.08 1,132,313 $21.88
$22.93-$28.65 3,426,680 6.5 $26.82 1,457,132 $26.12
$28.66-$34.38 1,881,786 5.2 $30.19 1,310,425 $30.15
$34.39-$40.11 1,924,441 7.6 $34.60 524,931 $35.01
$40.12-$45.84 3,886,238 5.7 $44.35 1,963,880 $44.30
$45.85-$51.57 4,488,284 8.0 $48.09 539,930 $48.37
$51.58-$57.30 2,562,105 8.1 $55.46 1,355,053 $57.30
---------- --- ------ --------- ------
Total 20,058,252 6.8 $39.15 8,560,318 $36.87
========== === ====== ========= ======
(a) These stock options do not have an expiration date.
In addition, at November 30, 2005, Carnival Corporation had 50,998
restricted stock units ("RSUs") outstanding, which do not have an exercise
price, and either have three or five-year cliff vesting terms. The
weighted-average remaining vesting period of these RSUs is 2.9 years.
Carnival Corporation Nonvested Stock
Carnival Corporation has issued nonvested stock to a few officers and some
non-executive board members. These shares have the same rights as Carnival
Corporation common stock, except for transfer restrictions and forfeiture
provisions. During fiscal 2005, 2004 and 2003, 158,750 shares, 160,000 shares
and 455,000 shares, respectively, of Carnival
F-26
Corporation common stock were issued, which were valued at $9 million, $7
million and $14 million, respectively. Unearned stock compensation was recorded
within shareholders' equity at the date of award based on the quoted market
price of the Carnival Corporation common stock on the date of grant and is
amortized to expense using the straight-line method from the grant date through
the earlier of the vesting date or the officers' and directors' estimated
retirement date. The shares granted to the executive officers either have three
or five-year cliff vesting terms and the shares granted to the non-executive
board members vest evenly over five years after the grant date. As of November
30, 2005 and 2004 there were 1,063,750 shares and 1,065,000 shares,
respectively, issued under the plan, which remained to be vested.
Defined Benefit Pension Plans
We have several defined benefit pension plans, which cover some of our
shipboard and shoreside employees. The U.S. and UK shoreside employee plans are
closed to new membership and are funded at or above the level required by U.S.
or UK regulations. The remaining defined benefit plans are primarily unfunded.
In determining our plans' benefit obligations at November 30, 2005, we used
assumed weighted-average discount rates of 5.5% and 4.8% for our U.S. and
foreign plans, respectively. The net liabilities related to the obligations
under these single employer defined benefit pension plans are not material.
A minimum pension liability adjustment is required when the actuarial
present value of accumulated benefits exceeds plan assets and accrued pension
liabilities. At November 30, 2005 and 2004, our single employer plans had
aggregated additional minimum pension liability adjustments, less allowable
intangible assets, of $19 million and $17 million, respectively, which are
included in AOCI.
In addition, P&O Cruises participated in a Merchant Navy Ratings Pension
Fund, which is a defined benefit multiemployer pension plan that was available
to their shipboard non-officers. This plan has a significant funding deficit and
has been closed to further benefit accrual since prior to the completion of the
DLC transaction. P&O Cruises, along with other unrelated employers, are making
payments into this plan under a non-binding Memorandum of Understanding to
reduce the deficit. Accordingly, at November 30, 2005 and 2004, we had recorded
a long-term pension liability of $22 million and $26 million, which represented
our estimate of the present value of our entire liability under this plan, based
on our current intention to continue to make these voluntary payments.
P&O Cruises, Princess and Cunard participate in an industry-wide British
Merchant Navy Officers Pension Fund ("MNOPF"), which is a defined benefit
multiemployer pension plan that is available to certain of their British
shipboard 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. At November 30, 2005, the New Section was estimated to
have a funding deficit and the Old Section was estimated to have a funding
surplus.
Substantially all of any MNOPF New Section deficit liability which we may
have relates to P&O Cruises and Princess obligations, which existed prior to the
DLC transaction. However, since the MNOPF is a multiemployer plan and it was not
probable that we would withdraw from the plan nor was our share of the liability
certain, we could not record our estimated share of the ultimate deficit as a
Carnival plc acquisition liability that existed at the DLC transaction date. The
amount of our share of the fund's ultimate deficit could vary considerably if
different pension assumptions and/or estimates were used. Therefore, we expense
our portion of any deficit as amounts are invoiced by the fund's trustee. In
August 2005, we received an invoice from the fund for what the trustee
calculated to be our share of the entire MNOPF liability. Accordingly, we
recorded the full invoiced liability of $23 million in payroll and related
expense in 2005. It is possible that the fund's trustee may invoice us for
additional amounts in the future for various reasons, including if they believe
the fund requires further funding.
Total expense for all of our defined benefit pension plans, including our
multiemployer plans, was $45 million, $18 million and $17 million in fiscal
2005, 2004 and 2003, respectively.
F-27
Defined Contribution Plans
We have several defined contribution plans available to most of our
employees. We contribute to these plans based on employee contributions, salary
levels and length of service. Total expense relating to these plans was $14
million, $13 million and $12 million in fiscal 2005, 2004 and 2003,
respectively.
NOTE 14 - Earnings Per Share
Our basic and diluted earnings per share were computed as follows (in
millions, except per share data):
Years Ended November 30,
----------------------------
2005 2004 2003
---- ---- ----
Net income $2,257 $1,854 $1,194
Interest on dilutive convertible notes 47 49 43
------ ------ ------
Net income for diluted earnings
per share $2,304 $1,903 $1,237
====== ====== ======
Weighted-average common and ordinary
shares outstanding 806 802 718
Dilutive effect of convertible notes 42 44 39
Dilutive effect of stock plans 5 5 2
------ ------ ------
Diluted weighted-average shares
outstanding 853 851 759
====== ====== ======
Basic earnings per share $ 2.80 $ 2.31 $ 1.66
====== ====== ======
Diluted earnings per share $ 2.70 $ 2.24 $ 1.63
====== ====== ======
The weighted-average shares outstanding for the year ended November 30,
2003 includes the pro rata Carnival plc shares since April 17, 2003. Options to
purchase 2.1 million, 6.0 million and 8.4 million shares for fiscal 2005, 2004
and 2003, respectively, were excluded from our diluted earnings per share
computation since the effect of including them was anti-dilutive.
NOTE 15 - Supplemental Cash Flow Information
Total cash paid for interest was $314 million, $250 million and $156
million in fiscal 2005, 2004 and 2003, respectively. In addition, cash paid for
income taxes was $15 million, $8 million and $20 million in fiscal 2005, 2004
and 2003, respectively. Finally, in 2005 $297 million of our Zero-Coupon Notes
were converted through a combination of the issuance of Carnival Corporation
treasury stock and newly issued Carnival Corporation Common stock, which
represented a noncash financing activity.
F-28
Report of Independent Registered Certified Public Accounting Firm To the Boards
of Directors and Shareholders of Carnival Corporation and Carnival plc:
We have completed integrated audits of Carnival Corporation & plc's November 30,
2005 and 2004 consolidated financial statements and of its internal control over
financial reporting as of November 30, 2005, and an audit of its 2003
consolidated financial statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Our opinions on Carnival
Corporation's and Carnival plc's November 30, 2005, 2004 and 2003 consolidated
financial statements and its internal control over financial reporting as of
November 30, 2005, based on our audits, are presented below.
Consolidated financial statements
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, cash flows and shareholders' equity
present fairly, in all material respects, the financial position of Carnival
Corporation & plc (comprising Carnival Corporation and Carnival plc and their
respective subsidiaries, the "Company") at November 30, 2005 and November 30,
2004, and the results of their operations and their cash flows for each of the
three years in the period ended November 30, 2005 in conformity with accounting
principles generally accepted in the United States of America. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with the
standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit of financial statements includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
Internal control over financial reporting
Also, in our opinion, management's assessment, included in the accompanying
Management's Report on Internal Control Over Financial Reporting appearing under
Item 9A, that the Company maintained effective internal control over financial
reporting as of November 30, 2005 based on criteria established in Internal
Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"), is fairly stated, in all
material respects, based on those criteria. Furthermore, in our opinion, the
Company maintained, in all material respects, effective internal control over
financial reporting as of November 30, 2005, based on criteria established in
Internal Control - Integrated Framework issued by the COSO. The Company's
management is responsible for maintaining effective internal control over
financial reporting and for its assessment of the effectiveness of internal
control over financial reporting. Our responsibility is to express opinions on
management's assessment and on the effectiveness of the Company's internal
control over financial reporting based on our audit. We conducted our audit of
internal control over financial reporting in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in
all material respects. An audit of internal control over financial reporting
includes obtaining an understanding of internal control over financial
reporting, evaluating management's assessment, testing and evaluating the design
and operating effectiveness of internal control, and performing such other
procedures as we consider necessary in the circumstances. We believe that our
audit provides a reasonable basis for our opinions.
A company's internal control over financial reporting is a process designed 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
F-29
principles. A company's internal control over financial reporting includes those
policies and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
Miami, Florida
February 8, 2006
F-30
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 2005 Annual Report 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 2005
Annual Report. Forward-looking statements include those statements which may
impact the forecasting of our earnings per share, net revenue yields, booking
levels, pricing, occupancy, operating, financing and/or tax costs, fuel costs,
costs per available lower berth day ("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 implementation of U.S. regulations requiring U.S. citizens to obtain
passports for travel to or from additional foreign destinations;
- 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 a series of cruises and the impact of the spread of
contagious diseases;
- changing consumer 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 financing and operating costs, including changes
in foreign currency exchange rates and interest rates and fuel, food,
payroll, insurance and security costs;
- the impact of pending or threatened litigation;
- changes in the environmental, health, safety, security, tax and other
regulatory regimes under which we operate;
- continued availability of attractive port destinations;
- our ability to successfully implement cost reduction plans;
- 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.
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 2005 Annual Report, any updates or revisions to any such
forward-looking statements to reflect any change in
F-31
expectations or events, conditions or circumstances on which any such statements
are based.
Executive Overview
In 2003, the demand for travel was challenged by, among other things, an
unstable geopolitical environment, a weaker economy, the emergence of Severe
Acute Respiratory Syndrome ("SARS") in Asia and the threat and eventual outbreak
of war in Iraq. These events had a negative effect on the public's willingness
to travel, and consequently, negatively impacted our net revenue yields (see
"Key Performance Indicators" below).
Since the beginning of 2004 and continuing through 2005, the effects of
those factors on the cruise industry were reduced, and we experienced a
substantial improvement in our net revenue yields. The improvement in net
revenue yields was primarily the result of higher passenger ticket prices,
onboard revenues and occupancy and, to a lesser extent, a weaker U.S. dollar
relative to the euro and sterling. The increase in 2005 pricing was achieved
despite an 8.5% increase in cruise capacity relating to the introduction of
three new ships in fiscal 2005. In addition, from 2003 through 2005, the cruise
industry was impacted by substantial increases in fuel prices. However, the 2005
increased net revenue yields more than compensated for the increase in fuel
costs. It is possible that fuel prices may continue to increase in 2006 and
future years. As discussed below, our 2006 earnings guidance is impacted by an
expectation of higher fuel costs.
Throughout this period we generated significant cash flows and remained in
a strong financial position, which is a high priority and we believe provides us
with a competitive advantage in the capital intensive cruise industry. However,
our operations are subject to many risks, as briefly noted above and under the
caption "Cautionary Note Concerning Factors That May Affect Future Results,"
which could adversely impact our future results.
During calendar 2005, we ordered six additional ships for our North
American and European brands, which are expected to be delivered between 2007
and 2009. As of January 30, 2006, we had signed agreements with two shipyards
providing for the construction of 16 additional cruise ships (see Note 7 in the
accompanying financial statements). These new ships are expected to continue to
help us maintain our leadership position within the cruise industry. The
year-over-year percentage increases in our ALBD capacity, resulting from new
ships entering service, is expected to be 5.1%, 7.5%, 8.4% and 6.5% for fiscal
2006, 2007, 2008 and 2009, respectively, based on ships currently on order and
net of the expected sale of the Pacific Sky by P&O Cruises Australia in May
2006.
Outlook For Fiscal 2006 ("2006")
As of December 16, 2005 we said that we expected our 2006 full year
earnings per share will be between $3.00 to $3.10. We also said that we expected
our first quarter 2006 earnings per share to be in the range of $0.34 to $0.36.
Our guidance was based on the then current forward fuel price curve for all of
2006 of $322 per metric ton and $312 per metric ton for the first quarter 2006.
In addition, this guidance was also based on currency exchange rates of $1.17 to
the euro and $1.73 to sterling.
Our 2006 outlook includes the impact of two accounting matters. Commencing
with the first quarter of fiscal 2006, we will begin to recognize compensation
costs in our statement of operations in an amount equal to the fair value of
share-based payments granted to employees and directors pursuant to SFAS No.
123(R). The increase in our share-based compensation expense in 2006 is expected
to be approximately $55 million compared to our reported fiscal 2005 stock-based
compensation expense (see Note 2). Also commencing with the first quarter of
fiscal 2006, we will change the period over which we amortize our deferred
dry-dock costs to the length of time between dry-docks, generally two to three
years, instead of amortizing them generally over one to two years. This change
in estimate reflects the lengthening of the time between dry-docks, resulting
from regulatory changes and technological enhancements to our ships. In 2006,
this change is expected to reduce dry-dock amortization by approximately $40
million compared to normal levels of dry-dock amortization.
Since the date of our December earnings release, the cruise industry has
begun a period of heavy bookings generally referred to as "wave season."
Bookings and pricing for our brands since the start of wave season are up
slightly compared to the corresponding period last year.
Since our December guidance, the forward prices for fuel for the full year
2006 and first quarter 2006 have increased from $322 per ton and $312 per ton to
$334
F-32
per ton and $321 per ton, respectively. If actual fuel prices for the full year
2006 and first quarter 2006 ultimately equal the more recent forward prices, our
diluted earnings per share would be reduced by $0.04 and $0.01 for the full year
2006 and first quarter 2006, respectively.
Partially offsetting the impact of fuel prices, the U.S. dollar has
weakened relative to both the euro and sterling, to currency exchange rates of
$1.20 to the euro and $1.75 to sterling. Assuming the exchange rates remain at
the current levels, our diluted earnings per share would increase by
approximately $0.01 for the year 2006 and would be unchanged for the 2006 first
quarter.
Key Performance Indicators and Pro Forma Information
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 that 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 current period currency exchange rates have remained constant with
the prior year's 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 $8.63
billion and $5.15 billion for fiscal 2005, respectively. In addition to our two
non-GAAP financial measures discussed above, our non-U.S. cruise operations'
depreciation and net interest expense were impacted by the changes in exchange
rates for fiscal 2005 compared to 2004.
Our 2003 reported results only included the results of P&O Princess since
April 17, 2003. Consequently, for the year ended November 30, 2004, we believe
that the most meaningful comparison of our annual operating income and revenue
and cost metrics is to the comparable pro forma results and metrics in 2003,
which reflect the operations of both Carnival Corporation and P&O Princess as if
the companies had been consolidated throughout 2003. Accordingly, we have
disclosed pro forma information for the year ended November 30, 2003, as well as
the required reported information, in the discussion of our results of
operations.
The 2003 pro forma information was computed by adding the results of P&O
Princess' annual operations, and acquisition adjustments of $16 million of
depreciation expense and $3 million of interest expense and excluding $51
million of nonrecurring DLC transaction costs, to the 2003 Carnival Corporation
reported results for the year ended November 30, 2003.
F-33
Critical Accounting Estimates
Our critical accounting estimates are those which we believe require our
most significant judgments about the effect of matters that are inherently
uncertain. A discussion of our critical accounting estimates, the underlying
judgments and uncertainties used to make them and the likelihood that materially
different estimates would be reported under different conditions or using
different assumptions is as follows:
Ship Accounting
Our most significant assets are our ships and ships under construction,
which represent 85% of our total assets. We make several critical accounting
estimates dealing with our ship accounting. First, we compute our ships'
depreciation expense, which represented 11% of our cruise operating expenses in
fiscal 2005, which requires us to estimate the average useful life of each of
our ships, as well as their residual values. Secondly, we account for ship
improvement costs by capitalizing those costs, that we believe will add value to
our ships and depreciate those improvements over their estimated useful lives,
while expensing repairs and maintenance costs as they are incurred. Finally,
when we record the retirement of a ship component that is included within the
ship's cost basis, we estimate its net book value to determine the amount of
ship component retired.
We determine the average useful life of our ships and their residual
values based primarily on our estimates of the weighted-average useful lives and
residual values of the ships' major component systems, such as cabins, main
diesels, main electric, superstructure and hull. In addition, we consider, among
other things, long-term vacation market conditions and competition and
historical useful lives of similarly-built ships. We have estimated our new
ships' average useful lives at 30 years and their average residual values at 15%
of our original ship cost.
Given the very large and complex nature of our ships, ship accounting
estimates require considerable judgment and are inherently uncertain. We do not
have cost segregation studies performed to specifically componentize our ship
systems. In addition, since we do not separately componentize our ships, we do
not identify and track depreciation of specific component systems. Therefore, we
have to estimate the net book value of components that are replaced or
refurbished, based primarily upon their replacement or refurbishment cost and
the age of the ship.
If materially different conditions existed, or if we materially changed
our assumptions of ship lives and residual values, our depreciation expense or
loss on replacement or refurbishment of ship assets and net book value of our
ships would be materially different. In addition, if we change our assumptions
in making our determinations as to whether improvements to a ship add value, the
amounts we expense each year as repair and maintenance costs could increase,
partially offset by a decrease in depreciation expense, as less costs would have
been initially capitalized to our ships. Our fiscal 2005 ship depreciation
expense would have increased by approximately $23 million for every year we
reduced our estimated average 30 year ship useful life. In addition, if our
ships were estimated to have no residual value, our fiscal 2005 depreciation
expense would have increased by approximately $120 million.
We believe that the estimates we made for ship accounting purposes are
reasonable and our methods are consistently applied and, accordingly, result in
depreciation expense that is based on a rational and systematic method to
equitably allocate the costs of our ships to the periods during which services
are obtained from their use. In addition, we believe that the estimates we made
are reasonable and our methods consistently applied (1) in determining the
average useful life and average residual values of our ships; (2) in determining
which ship improvement costs add value to our ships; and (3) in determining the
net book value of ship component assets being replaced or refurbished. Finally,
we believe our critical ship accounting estimates are generally comparable with
those of other major cruise companies.
Asset Impairment
The impairment reviews of our ship, trademark assets and of our goodwill,
which has been allocated to our cruise line reporting units, require us to make
significant estimates to
F-34
determine the fair values of these assets or reporting units.
The determination of fair value includes numerous uncertainties, unless a
viable actively traded market exists for the asset or for a comparable reporting
unit, which is usually not the case for cruise ships, cruise lines and
trademarks. For example, in determining fair values of ships and cruise lines
utilizing discounted forecasted cash flows, significant judgments are made
concerning, among other things, future net revenue yields, net cruise costs per
ALBD, interest and discount rates, cruise itineraries, ship additions and
retirements, technological changes, consumer demand, governmental regulations
and the effects of competition. In addition, third party appraisers are
sometimes used to determine fair values and some of their valuation
methodologies are also subject to similar types of uncertainties. Also, the
determination of fair values of reporting units using a price earnings multiple
approach also requires significant judgments, such as determining reasonably
comparable multiples. Finally, determining trademark fair values also requires
significant judgments in determining both the estimated trademark cash flows,
and the appropriate royalty rates to be applied to those cash flows to determine
their fair value. We believe that we have made reasonable estimates and
judgments in determining whether our ships, goodwill and trademarks have been
impaired. However, if there is a material change in the assumptions used in our
determination of fair value or if there is a material change in the conditions
or circumstances influencing fair value, we could be required to recognize a
material impairment charge.
Contingencies
We periodically assess the potential liabilities related to any lawsuits
or claims brought against us, as well as for other known unasserted claims,
including environmental, legal, passenger and crew, and tax matters. While it is
typically very difficult to determine the timing and ultimate outcome of these
matters, we use our best judgment to determine if it is probable that we will
incur an expense related to the settlement or final adjudication of such matters
and whether a reasonable estimation of such probable loss, if any, can be made.
In assessing probable losses, we make estimates of the amount of insurance
recoveries, if any. We accrue a liability when we believe a loss is probable and
the amount of the loss can be reasonably estimated, in accordance with the
provisions of SFAS No. 5, "Accounting for Contingencies," as amended. Such
accruals are typically based on developments to date, management's estimates of
the outcomes of these matters, our experience in contesting, litigating and
settling other similar matters, historical claims experience and actuarially
determined assumptions of liabilities, and any related insurance coverage. See
Note 8 in the accompanying financial statements for additional information
concerning our contingencies.
Given the inherent uncertainty related to the eventual outcome of these
matters and potential insurance recoveries, it is possible that all or some of
these matters may be resolved for amounts materially different from any
provisions or disclosures that we may have made with respect to their
resolution. In addition, as new information becomes available, we may need to
reassess the amount of probable liability that needs to be accrued related to
our contingencies. All such revisions in our estimates could materially impact
our results of operations and financial position.
Results of Operations
We earn our cruise revenues primarily from the following:
- sales of passenger cruise tickets and, in some cases, the sale of
air and other transportation to and from our ships. The cruise
ticket price includes accommodations, most meals, some non-alcoholic
beverages, entertainment and many onboard activities,
- the sale of goods and/or services primarily on board our ships,
which include bar and some beverage sales, casino gaming, shore
excursions, gift shop and spa sales, photo and art sales, and pre-
and post cruise land packages. These goods and services are either
provided directly by us or by independent concessionaires, from
which we receive a percentage of their revenues.
F-35
We incur cruise operating costs and expenses for the following:
- the costs of passenger cruise tickets, which represent costs that
vary directly with passenger cruise ticket revenues, and include
travel agent commissions, air and other travel related costs,
- onboard and other cruise costs, which represent costs that vary
directly with onboard and other revenues, and include the costs of
liquor and some beverages, costs of tangible goods sold by us from
our gift, photo and art auction activities, pre- and post cruise
land packages and credit card fees. Concession revenues do not have
any significant amount of costs associated with them, as the costs
and services incurred for these activities are provided by our
concessionaires,
- payroll and related costs, which represent costs for all our
shipboard personnel, including deck and engine officers and crew and
hotel and administrative employees,
- food costs, which include both our passenger and crew food costs,
- fuel costs, which include fuel delivery costs, and
- other ship operating costs, which include repairs and maintenance,
port charges, insurance, entertainment and all other shipboard
operating costs and expenses.
For segment information related to our revenues, expenses, operating
income and other financial information see Note 12 in the accompanying financial
statements.
F-36
Summary
Our reported and pro forma results of operations and selected information
were as follows:
Years Ended November 30,
--------------------------------------------------
Pro Forma Reported
--------- --------
2005 2004 2003 2003
---- ---- ---- ----
(dollars in millions, except selected information)
Revenues
Cruise
Passenger tickets $ 8,379 $ 7,357 $ 5,732 $ 5,039
Onboard and other 2,356 2,070 1,600 1,420
Other 352 300 264 259
-------- ------- ------- -------
11,087 9,727 7,596 6,718
-------- ------- ------- -------
Costs and Expenses
Operating
Cruise
Commissions, transportation
and other 1,665 1,572 1,227 1,021
Onboard and other 408 359 279 229
Payroll and related 1,145 1,003 841 744
Food 615 550 447 393
Fuel 709 493 390 340
Other ship operating 1,425 1,270 1,038 897
Other 250 210 198 190
-------- ------- ------- -------
Total 6,217 5,457 4,420 3,814
Selling and administrative 1,329 1,285 1,103 936
Depreciation and amortization 902 812 653 585
-------- ------- ------- -------
Operating Income 2,639 2,173 1,420 1,383
Nonoperating Expense, Net (309) (272) (185) (160)
-------- ------- ------- -------
Income Before Income Taxes 2,330 1,901 1,235 1,223
Income Tax Expense, Net (73) (47) (25) (29)
-------- ------- ------- -------
Net Income $ 2,257 $ 1,854 $ 1,210 $ 1,194
======== ======= ======= =======
Selected Information
Passengers carried
(in thousands) 6,848 6,306 5,422 5,038
======== ======= ======= =======
Occupancy percentage 105.6% 104.5% 102.6% 103.4%
======== ======= ======= =======
Fuel cost per metric ton (a) $ 260 $ 194 $ 179 $ 182
======== ======= ======= =======
(a) Fuel cost per metric ton is calculated by dividing the cost of our fuel by
the number of metric tons consumed.
F-37
Non-GAAP Financial Measures
Gross and net revenue yields were computed by dividing the gross or net
revenues, without rounding, by ALBDs as follows:
Years Ended November 30,
--------------------------------------------------------
Pro Forma Reported
--------- --------
2005 2004 2003 2003
---- ---- ---- ----
(in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets $ 8,379 $ 7,357 $ 5,732 $ 5,039
Onboard and other 2,356 2,070 1,600 1,420
------------ ------------ ------------ ------------
Gross cruise revenues 10,735 9,427 7,332 6,459
Less cruise costs
Commissions, transportation
and other (1,665) (1,572) (1,227) (1,021)
Onboard and other (408) (359) (279) (229)
------------ ------------ ------------ ------------
Net cruise revenues $ 8,662 $ 7,496 $ 5,826 $ 5,209
============ ============ ============ ============
ALBDs 47,754,627 44,009,061 37,554,709 33,309,785
============ ============ ============ ============
Gross revenue yields $ 224.80 $ 214.21 $ 195.23 $ 193.91
============ ============ ============ ============
Net revenue yields $ 181.39 $ 170.32 $ 155.11 $ 156.38
============ ============ ============ ============
Gross and net cruise costs per ALBD were computed by dividing the gross or
net cruise costs, without rounding, by ALBDs as follows:
Years Ended November 30,
---------------------------------------------------------
Pro Forma Reported
2005 2004 2003 2003
---- ---- ---- ----
(in millions, except ALBDs and costs per ALBD)
Cruise operating expenses $ 5,967 $ 5,247 $ 4,222 $ 3,624
Cruise selling and
administrative expenses 1,276 1,231 1,054 896
------------ ------------ ------------ ------------
Gross cruise costs 7,243 6,478 5,276 4,520
Less cruise costs included in net
cruise revenues
Commissions, transportation
and other (1,665) (1,572) (1,227) (1,021)
Onboard and other (408) (359) (279) (229)
------------ ------------ ------------ ------------
Net cruise costs $ 5,170 $ 4,547 $ 3,770 $ 3,270
============ ============ ============ ============
ALBDs 47,754,627 44,009,061 37,554,709 33,309,785
============ ============ ============ ============
Gross cruise costs per ALBD $ 151.67 $ 147.20 $ 140.50 $ 135.69
============ ============ ============ ============
Net cruise costs per ALBD $ 108.25 $ 103.31 $ 100.38 $ 98.16
============ ============ ============ ============
Fiscal 2005 ("2005") Compared to Fiscal 2004 ("2004")
Revenues
Net cruise revenues increased $1.17 billion, or 15.6%, to $8.66 billion in
2005 from $7.50 billion in 2004. The 8.5% increase in ALBDs between 2005 and
2004 accounted for $638 million of the increase, and the remaining $528 million
was from increased net revenue yields, which increased 6.5% in 2005 compared to
2004 (gross revenue yields increased by 4.9%). Net revenue yields increased in
2005 primarily from higher cruise ticket prices, a 1.1% 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
6.1% in 2005. Gross cruise revenues increased $1.31 billion, or 13.9%, in 2005
to $10.74
F-38
billion from $9.43 billion in 2004 for largely the same reasons as net cruise
revenues.
Onboard and other revenues included concession revenues of $289 million in
2005 and $261 million in 2004. Onboard and other revenues increased in 2005
compared to 2004, primarily because of the 8.5% increase in ALBDs and increased
passenger spending on our ships.
Other non-cruise revenues increased $69 million, or 17.3%, to $467 million
in 2005 from $398 million in 2004 primarily due to the increase in the number of
cruise/tours sold.
Costs and Expenses
Net cruise costs increased $623 million, or 13.7%, to $5.17 billion in
2005 from $4.55 billion in 2004. The 8.5% increase in ALBDs between 2004 and
2005 accounted for $387 million of the increase, and the remaining $236 million
was from increased net cruise costs per ALBD, which increased 4.8% in 2005
compared to 2004 (gross cruise costs per ALBD increased 3.0%). Net cruise costs
per ALBD increased primarily due to a $66 increase in fuel cost per metric ton,
or 34.0%, to $260 per metric ton in 2005, higher dry-dock amortization expense,
a $23 million MNOPF contribution (see Note 13 in the accompanying financial
statements) and a weaker U.S. dollar relative to the euro and to sterling in
2005. Net cruise costs per ALBD as measured on a constant dollar basis compared
to 2004 increased 4.3% in 2005 and were flat excluding fuel costs and the MNOPF
contribution, compared to 2004. Gross cruise costs increased $765 million, or
11.8%, in 2005 to $7.24 billion from $6.48 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.
Other non-cruise operating expense increased $57 million, or 18.5%, to
$365 million in 2005 from $308 million in 2004 primarily due to the increase in
the number of cruise/tours sold.
Depreciation and amortization expense increased by $90 million, or 11.1%,
to $902 million in 2005 from $812 million in 2004 largely due to the 8.5%
increase in ALBDs through the addition of new ships and ship improvement
expenditures.
Nonoperating (Expense) Income
Net interest expense, excluding capitalized interest, increased $31
million in 2005 to $323 million in 2005 from $292 million in 2004. This increase
was primarily due to a $36 million increase in interest expense from higher
average borrowing rates and a weaker U.S. dollar, partially offset by a $5
million increase in interest income due to higher average invested fund
balances.
Other expense in 2005 included a $22 million expense for the write-down of
a non-cruise investment, partially offset by $7 million income from the
settlement of litigation associated with the DLC transaction.
Income Taxes
Income tax expense increased by $26 million from 2004 to $73 million in
2005 from $47 million in 2004 primarily because we recorded approximately $18
million for U.S. income taxes related to the charter of three ships to the
Military Sealift Command ("MSC") in connection with the Hurricane Katrina relief
efforts. Commencing in September 2005, these three ships were chartered for six
months, and pursuant to our agreement with the MSC, the net earnings from the
charter will be equal to the amount of net earnings we would have earned on
these ships if we had not entered into this charter.
Fiscal 2004 ("2004") Compared to Pro Forma 2003 ("pro forma 2003") and Reported
Results 2003 ("reported 2003")
Revenues
Net cruise revenues increased $1.67 billion, or 29%, to $7.50 billion in
2004 from $5.83 billion in pro forma 2003. The 17.2% increase in ALBDs between
pro forma 2003 and 2004 accounted for $1.0 billion of the increase, and the
remaining $670 million was from increased
F-39
net revenue yields, which increased 9.8% in 2004 compared to pro forma 2003
(gross revenue yields increased by 9.7%). Net revenue yields increased in 2004
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 6.6% in
2004. Gross cruise revenues increased $2.10 billion, or 29%, in 2004 to $9.43
billion from $7.33 billion in pro forma 2003 primarily for the same reasons as
net cruise revenues.
Net cruise revenues increased $2.29 billion, or 44%, to $7.50 billion in
2004 from $5.21 billion in reported 2003. The 32.1% increase in ALBDs between
reported 2003 and 2004, which included P&O Princess for a full year in 2004, but
only since April 17, 2003 during 2003, accounted for $1.67 billion of the
increase, and the remaining $615 million was from increased net revenue yields,
which increased 8.9% in 2004 compared to 2003 (gross revenue yields increased by
10.5%). Net revenue yields increased primarily for the same reasons as noted
above. Gross cruise revenues increased $2.97 billion, or 46%, in 2004 to $9.43
billion from $6.46 billion for primarily the same reasons as net cruise
revenues.
Onboard and other revenues included concession revenues of $261 million in
2004, $201 million in pro forma 2003 and $192 million in reported 2003, which
increased in 2004 compared to both pro forma 2003 and reported 2003 primarily
because of the increases in ALBDs and increased passenger spending on our ships.
Other non-cruise revenues increased $48 million, or 13.7%, to $398 million
in 2004 from $350 million in proforma 2003 (an increase of $53 million, or 15.4%
from $345 million in reported 2003) primarily due to the increase in the number
of cruise/tours sold, as well as price increases.
Costs and Expenses
Net cruise costs increased $777 million, or 21%, to $4.55 billion in 2004
from $3.77 billion in pro forma 2003. The 17.2% increase in ALBDs between pro
forma 2003 and 2004 accounted for $650 million of the increase, and the
remaining $127 million was from increased net cruise costs per ALBD, which
increased 2.9% in 2004 compared to pro forma 2003 (gross cruise costs per ALBD
increased 4.8%). Net cruise costs per ALBD increased primarily due to a $15
increase in fuel cost per metric ton, or 8.4%, to $194 per metric ton in 2004
and the weaker U.S. dollar relative to the euro and the sterling in 2004. Net
cruise costs per ALBD as measured on a constant dollar basis compared to pro
forma 2003 declined 0.5% in 2004. The decrease in constant dollar net cruise
costs was primarily the result of the economies of scale associated with the pro
forma 17.2% ALBD increase and synergy savings from the integration efforts
following the DLC transaction. Gross cruise costs increased $1.20 billion, or
23%, in 2004 to $6.48 billion from $5.23 billion in pro forma 2003 primarily for
the same reasons as net cruise costs.
Net cruise costs increased $1.28 billion, or 39%, to $4.55 billion in 2004
from $3.27 billion in reported 2003. The 32.1% increase in ALBDs between
reported 2003 and 2004 accounted for $1.05 billion of the increase, and the
remaining $230 million was from increased net cruise costs per ALBD, which
increased 5.2% in 2004 compared to reported 2003 (gross cruise costs per ALBD
increased 8.5%). Net cruise costs per ALBD increased primarily for the same
reasons as noted above. Gross cruise costs increased $1.96 billion, or 43%, in
2004 to $6.48 billion from $4.52 billion in reported 2003 primarily for the same
reasons as net cruise costs and a higher proportion of P&O Princess brands'
customers who purchased air from us.
Other non-cruise operating expense increased $24 million, or 8.5%, to $308
million in 2004 from $284 million in pro forma 2003 (an increase of $32 million,
or 11.6%, from $276 million in reported 2003) primarily due to the increased
volume of cruise/tours sold in 2004.
Depreciation and amortization expense increased by $159 million, or 24.3%,
to $812 million in 2004 from $653 million in pro forma 2003 largely due to the
pro forma 17.2% expansion of the combined fleet and ship improvement
expenditures, as well as the impact of a weaker U.S. dollar. Depreciation and
amortization increased by $227 million, or 38.8%, to $812 million in 2004 from
$585 million in reported 2003. This increase was primarily due to the same
factors as noted above and the result of the consolidation of P&O Princess.
F-40
Nonoperating (Expense) Income
Net interest expense, excluding capitalized interest, increased to $292
million in 2004 from $217 million in reported 2003, or $75 million, which
increase consisted primarily of a $102 million increase in interest expense from
our higher level of average borrowings and a weaker U.S. dollar, partially
offset by a $27 million decrease in interest expense due to lower average
borrowing rates. The higher average debt balances were primarily a result of our
consolidation of the former P&O Princess debt and new ship deliveries.
Income Taxes
Income tax expense increased $18 million from reported 2003 to $47 million
in 2004 primarily because of the increase in Costa's Italian taxable income and
other taxes relating to our operations.
Liquidity and Capital Resources
Sources and Uses of Cash
Our business provided $3.41 billion of net cash from operations during
fiscal 2005, an increase of $194 million, or 6.0%, compared to fiscal 2004. We
continue to generate substantial cash from operations and remain in a strong
financial position, thus providing us with substantial financial flexibility in
meeting operating, investing and financing needs.
During fiscal 2005, our net expenditures for capital projects were $1.98
billion, of which $1.47 billion was spent for our ongoing new shipbuilding
program, including the final delivery payments for the Carnival Valor, Carnival
Liberty and P&O Cruises' Arcadia. The remaining capital expenditures consisted
primarily of $324 million for ship improvements and refurbishments, and $179
million for Alaska tour assets, cruise port facility developments and
information technology assets. During fiscal 2004, our net expenditures for
capital projects were $3.59 billion primarily because we took delivery of seven
new ships.
During fiscal 2005, we borrowed $1.15 billion, of which a portion was used
to pay a part of the Arcadia and Carnival Liberty purchase prices and to
refinance debt as noted below. During fiscal 2005, we made $609 million of debt
repayments, which included the final payment on our capitalized lease
obligations of $110 million, $100 million repayment of our 7.05% fixed rate
notes and $253 million in repayments of Costa indebtedness. In addition, we
refinanced $487 million of euro debt in 2005 to reduce our future borrowing
rate. We also paid cash dividends of $566 million and purchased $386 million of
treasury stock during 2005.
F-41
Future Commitments and Funding Sources
At November 30, 2005, our contractual cash obligations, including ship
construction contracts entered into in December 2005, and the effects such
obligations are expected to have on our liquidity and cash flow in future
periods were as follows (in millions):
Payments Due by Fiscal Year
--------------------------------------------------------------------
Contractual Cash
Obligations Total 2006 2007 2008 2009 2010 Thereafter
----------- ----- ---- ---- ---- ---- ---- ----------
Long-term debt(a) $ 7,052 $1,325 $1,035 $1,672 $ 169 $ 944 $1,907
Short-term borrowings(a) 300 300
Fixed-rate interest
payments(a) 1,679 203 188 166 146 128 848
Shipbuilding(a) 7,590 1,710 2,340 2,130 1,410
Port facilities and
other(a) 600 58 70 70 56 52 294
Operating leases(a) 200 43 30 25 20 16 66
Purchase obligations(b) 615 516 81 11 5 2
Other long-term
liabilities reflected
on the balance
sheet(c) 457 23 106 52 39 33 204
------- ------ ------ ------ ------ ------ ------
Total contractual
cash obligations(d) $18,493 $4,178 $3,850 $4,126 $1,845 $1,175 $3,319
======= ====== ====== ====== ====== ====== ======
(a) See Notes 6 and 7 in the accompanying financial statements for additional
information regarding these contractual cash obligations. Fixed-rate
interest payments represent cash outflows for fixed interest payments,
including interest swapped from a variable- rate to a fixed-rate, but does
not include interest payments on variable-rate debt or interest swapped
from a fixed-rate to a variable-rate. Ship construction contracts entered
into after November 30, 2005 aggregated $2.26 billion.
(b) Represents legally-binding commitments to purchase inventory and other
goods and services made in the normal course of business to meet
operational requirements. Many of our contracts contain clauses that allow
us to terminate the contract with notice, and with or without a
termination penalty. Termination penalties are generally an amount less
than the original obligation. Historically, we have not had any
significant defaults of our contractual obligations or incurred
significant penalties for termination of our contractual obligations.
(c) Represents cash outflows for certain of our long-term liabilities that
could be reasonably estimated. The primary outflows are for estimates of
our employee benefit plan obligations, crew and passenger claims, certain
deferred income taxes and other long-term liabilities. Other long-term
liabilities, such as deferred income, derivative contracts payable, which
convert fixed rate debt to variable rate debt, fair value of hedged
commitments and certain deferred income taxes, have been excluded from the
table as they do not require cash settlement in the future or the timing
of the cash outflow cannot be reasonably estimated.
(d) Foreign currency payments are based on the November 30, 2005 exchange
rates.
During 2004, the Boards of Directors authorized the repurchase of up to an
aggregate of $1 billion of Carnival Corporation common stock and/or Carnival plc
ordinary shares commencing in 2005, subject to certain repurchase restrictions
on Carnival plc shares. From December 1, 2004 through February 6, 2006, we had
repurchased 8.0 million shares for $386 million.
At November 30, 2005, as adjusted for $916 million of additional committed
ship financing facilities entered into in January 2006, we had liquidity of
$4.67 billion, which consisted of $1.19 billion of cash, cash equivalents and
short-term investments, $1.83 billion available for borrowing under our
revolving credit facility, and $1.65 billion under committed ship financing
facilities. Our revolving credit facility matures in 2010. 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,
F-42
dividend payments, working capital and other firm commitments. In addition,
based on our future forecasted operating results and cash flows for fiscal 2006,
we expect to be in compliance with our debt covenants during 2006. 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.
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.
Foreign Currency Exchange Rate Risks
In 2003, we broadened our global presence through Carnival plc's foreign
operations, in addition to the foreign currency denominated operations of our
Costa subsidiary. Specifically, our expanded international business operations
through P&O Cruises, Ocean Village and Swan Hellenic in the UK and AIDA in
Germany subject us to an increasing level of foreign currency exchange risk
related to the sterling and euro because these operations have either the
sterling or the euro as their functional currency. Accordingly, exchange rate
fluctuations of the sterling and the euro against the dollar will affect our
reported financial results since the reporting currency for our consolidated
financial statements is the U.S. dollar and the functional currency for our
international operations is generally the local currency. Any weakening of the
U.S. dollar against these local functional currencies has the financial
statement effect of increasing the U.S. dollar values reported for cruise
revenues and cruise expenses in our consolidated financial statements.
Strengthening of the U.S. dollar has the opposite effect.
We seek to minimize the impact of fluctuations in foreign currency
exchange rates through our normal operating and financing activities, including
netting certain exposures to take advantage of any natural offsets and, when
considered appropriate, through the use of derivative financial instruments. The
financial impacts of these hedging instruments are generally offset by
corresponding changes in the underlying exposures being hedged. Our policy is to
not use any financial instruments for trading or other speculative purposes.
One of our primary foreign currency exchange rate risks is related to our
outstanding commitments under ship construction contracts denominated in a
currency other than the functional currency of the cruise brand that is expected
to be operating the ship. These currency commitments are affected by
fluctuations in the value of the functional currency as compared to the currency
in which the shipbuilding contract is denominated. We generally use foreign
currency swaps to manage foreign currency exchange rate risk from ship
construction contracts (see Notes 2, 7 and 11 in the accompanying financial
statements). Accordingly, increases and decreases in the fair value of these
foreign currency swaps offset changes in the fair value of the foreign currency
denominated ship construction commitments, thus resulting in the elimination of
such risk.
Specifically, we have foreign currency swaps for three of our euro
denominated shipbuilding contracts. At November 30, 2005, the fair value of
these foreign currency swaps was a net unrealized gain of $29 million which is
recorded, along with an offsetting $29 million fair value liability related to
our shipbuilding firm commitments, on our accompanying 2005 balance sheet. Based
upon a 10% strengthening or weakening of the U.S. dollar and sterling compared
to the euro as of November 30, 2005, assuming no changes in comparative interest
rates, the estimated fair value of these foreign currency swaps would decrease
or increase by $120 million, which would be offset by a decrease or increase of
$120 million in the U.S. dollar value of the related foreign currency ship
construction commitments resulting in no net dollar impact to us.
F-43
However, at November 30, 2005, as adjusted for our December 2005 ship
orders, we have two euro denominated shipbuilding contracts aggregating 1.05
billion in euros assigned to Carnival Cruise Lines, a U.S. dollar functional
currency operation, for which we have not entered into any foreign currency
swaps. Therefore, the U.S. dollar cost of these ships will increase or decrease
based upon changes in the exchange rate until the payments are made under the
shipbuilding contracts or we enter into a foreign currency swap. These euro
commitments effectively act as an economic hedge against a portion of our net
investment in euro-denominated cruise operations. Accordingly, any increase or
decrease in our ship costs resulting from changes in the exchange rate will be
offset by a corresponding change in the net assets of our euro-denominated
cruise operations. Based upon a 10% hypothetical increase or decrease in the
November 30, 2005 U.S. dollar to euro foreign currency exchange rate, the cost
of these ships would increase or decrease by $124 million. Decisions regarding
whether or not to hedge a given ship commitment are made on a case-by-case
basis, taking into consideration the amount and duration of the exposure, market
volatility, and economic trends.
The cost of shipbuilding orders that we may place in the future for our
cruise lines who generate their cash flows in a currency that is different than
the shipyard's operating currency, generally the euro, is expected to be
affected by foreign currency exchange rate fluctuations. Given the decline in
the U.S. dollar relative to the euro over the past several years, the U.S.
dollar cost to order new cruise ships at current exchange rates has increased
significantly. If the U.S. dollar remains at current levels or declines further,
this may affect our ability to order future new cruise ships for U.S. dollar
functional currency brands.
Finally, we consider our investments in foreign subsidiaries to be
denominated in relatively stable currencies and of a long-term nature. In
addition to the strategy discussed above, we also partially address these
exposures by denominating a portion of our debt, or entering into foreign
currency swaps, in our subsidiaries' functional currencies (generally euros or
sterling). Specifically, we have debt of $1.68 billion in euros and $657 million
in sterling and have $1.11 billion of foreign currency swaps, whereby we have
converted $237 million of U.S. dollar debt into sterling debt, $736 million of
U.S. dollar debt into euro debt and $138 million of euro debt into sterling
debt, thus partially offsetting this foreign currency exchange rate risk. At
November 30, 2005, the fair value of these foreign currency swaps was a net
unrealized loss of $58 million, which is recorded in AOCI and offsets a portion
of the gains recorded in AOCI upon translating these foreign subsidiaries net
assets into U.S. dollars. Based upon a 10% hypothetical increase or decrease in
the November 30, 2005 foreign currency exchange rate, we estimate that these
contracts' fair values would increase or decrease by $111 million, which would
be offset by a decrease or increase of $111 million in the U.S. dollar value of
our net investments.
Interest Rate Risks
We seek to minimize the impact of fluctuations in interest rates through
our long-term investment and debt portfolio strategies, which include entering
into a substantial amount of fixed rate debt instruments. We continuously
evaluate our debt portfolio, and make periodic adjustments to the mix of
floating rate and fixed rate debt based on our view of interest rate movements
through the use of interest rate swaps. At November 30, 2005, 75% of the
interest cost on our long-term debt was effectively fixed and 25% was variable,
including the effect of our interest rate swaps.
Specifically, we have interest rate swaps at November 30, 2005, which
effectively changed $926 million of fixed rate debt to libor-based floating rate
debt. In addition, we have interest rate swaps at November 30, 2005, which
effectively changed $961 million and $286 of euribor and GBP libor floating rate
debt, respectively, to fixed rate debt. The fair value of our long-term debt and
interest rate swaps at November 30, 2005 was $7.70 billion. Based upon a
hypothetical 10% decrease or increase in the November 30, 2005 market interest
rates, the fair value of our long-term debt and interest rate swaps would
increase or decrease by approximately $85 million and interest expense on our
variable rate debt, including the effect of our interest rate swaps, would
increase or decrease by approximately $7 million.
F-44
In addition, based upon a hypothetical 10% decrease or increase in
Carnival Corporation's November 30, 2005 common stock price, the fair value of
our convertible notes would increase or decrease by approximately $197 million.
These hypothetical amounts are determined by considering the impact of the
hypothetical interest rates and common stock price on our existing long-term
debt and interest rate swaps. This analysis does not consider the effects of the
changes in the level of overall economic activity that could exist in such
environments or any relationships which may exist between interest rate and
stock price movements. Furthermore, since substantially all of our fixed rate
long-term debt cannot currently be called or prepaid and $1.25 billion of our
variable rate long-term debt is subject to interest rate swaps which effectively
fix the interest rate, it is unlikely we would be able to take any significant
steps in the short-term to mitigate our exposure in the unlikely event of a
significant decrease in market interest rates.
Bunker Fuel Price Risks
We have typically not used financial instruments to hedge our exposure to
the bunker fuel price market risk. We estimate that our fiscal 2006 fuel cost
would increase or decrease by approximately $2.9 million for each $1 per metric
ton increase or decrease in our average bunker fuel price.
Selected Financial Data
The selected consolidated financial data presented below for fiscal 2001
through 2005 and as of the end of each such year, are derived from our audited
financial statements and should be read in conjunction with those financial
statements and the related notes.
Years Ended November 30,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---- ---- ---- ---- ----
(in millions, except per share and other operating data)
Statement of Operations
and Cash Flow Data(a)
Revenues $11,087 $9,727 $6,718 $4,383 $4,549
Operating income $2,639 $2,173 $1,383 $1,042 $ 892
Net income(b) $2,257 $1,854 $1,194 $1,016(c) $ 926(c)
Earnings per share(b)
Basic $ 2.80 $ 2.31 $ 1.66 $ 1.73 $ 1.58
Diluted $ 2.70 $ 2.24 $ 1.63 $ 1.69 $ 1.57
Dividends declared
per share $0.800 $0.525 $0.440 $0.420 $0.420
Cash from operations $3,410 $3,216 $1,933 $1,469 $1,239
Capital expenditures $1,977 $3,586 $2,516 $1,986 $ 827
Other Operating Data(a)
Available lower berth days(d) 47,754,627 44,009,061 33,309,785 21,435,828 20,685,123
Passengers carried 6,848,386 6,306,168 5,037,553 3,549,019 3,385,280
Occupancy percentages(e) 105.6% 104.5% 103.4% 105.2% 104.7%
As of November 30,
----------------------------------------------------------------------
2005 2004 2003 2002 2001
---- ---- ---- ---- ----
(in millions, except percentages)
Balance Sheet and Other
Data(a)
Total assets $28,432 $27,636 $24,491 $12,335 $11,564
Long-term debt, excluding
current portion $ 5,727 $ 6,291 $ 6,918 $ 3,014 $ 2,955
Total shareholders' equity $16,972 $15,760 $13,793 $ 7,418 $ 6,591
Debt to capital(f) 30.2% 33.5% 34.9% 29.9% 31.1%
(a) Includes the results of Carnival plc since April 17, 2003. Accordingly,
the information from 2003 and thereafter is not comparable to the prior
periods. Our results for the
F-45
three years prior to fiscal 2004, were negatively affected by a number of
factors affecting consumers' vacation demands including, among other
things, armed conflicts in the Middle East and elsewhere, terrorist
attacks in the U.S. and elsewhere, the uncertain worldwide economy and
adverse publicity surrounding these and other events.
(b) Effective December 1, 2001, we adopted SFAS No. 142, which required us to
stop amortizing goodwill as of December 1, 2001. If amortization of
goodwill had not been recorded for fiscal 2001, our adjusted net income
would have been $952 million and our adjusted basic and diluted earnings
per share would have been $1.63 and $1.61, respectively.
(c) Our net income for fiscal 2002 and 2001 includes an impairment charge of
$20 million and $140 million, respectively, and fiscal 2001 includes a
nonoperating net gain of $101 million from the sale of our investment in
Airtours plc. In addition, fiscal 2002 includes a $51 million income tax
benefit as a result of an Italian investment incentive.
(d) Total annual passenger capacity for the period, assuming two passengers
per cabin, that we offered for sale, which is computed by multiplying
passenger capacity by revenue- producing ship operating days in the
period.
(e) In accordance with cruise industry practice, occupancy percentage is
calculated using a denominator of two passengers per cabin even though
some cabins can accommodate three or more passengers. The percentages in
excess of 100% indicate that more than two passengers occupied some
cabins.
(f) Percentage of total debt to the sum of total debt and shareholders'
equity.
Market Price for Common Stock and Ordinary Shares
Carnival Corporation's common stock, together with paired trust shares of
beneficial interest in the P&O Princess Special Voting Trust (which holds a
Special Voting Share of Carnival plc), is traded on the NYSE under the symbol
"CCL." Carnival plc's ordinary shares trade on the London Stock Exchange under
the symbol "CCL." Carnival plc's ADSs, each one of which represents one Carnival
plc ordinary share, are traded on the NYSE under the symbol "CUK." The
depository for the ADSs is JPMorgan Chase Bank. The high and low stock sales
price for the periods indicated were as follows:
Carnival Corporation Carnival plc
-------------------- ---------------------------------------------------
Price per Ordinary
Share (GBP) Price per ADS (USD)
------------------ -------------------
High Low High Low High Low
---- --- ---- --- ---- ---
Fiscal 2005
Fourth Quarter $54.98 $45.78 (pound)33.19 (pound)26.60 $56.48 $47.32
Third Quarter $55.75 $48.76 (pound)33.40 (pound)28.31 $58.10 $51.46
Second Quarter $55.96 $46.76 (pound)31.45 (pound)25.90 $59.21 $50.02
First Quarter $58.98 $48.90 (pound)32.69 (pound)29.13 $62.17 $56.50
Fiscal 2004
Fourth Quarter $53.65 $45.29 (pound)30.89 (pound)26.22 $57.15 $47.43
Third Quarter $48.05 $41.55 (pound)27.30 (pound)23.65 $50.03 $43.85
Second Quarter $46.50 $40.05 (pound)26.72 (pound)22.98 $48.05 $41.20
First Quarter $46.30 $34.95 (pound)26.12 (pound)20.30 $49.21 $35.13
As of February 6, 2006, there were 4,287 holders of record of Carnival
Corporation common stock and 48,601 holders of record of Carnival plc ordinary
shares and 69 holders of record of Carnival plc ADSs. The past performance of
our stock prices cannot be relied on as a guide to their future performance.
All dividends for both Carnival Corporation and Carnival plc are declared
in U.S. dollars. Holders of Carnival Corporation common stock or Carnival plc
ADS's receive a dividend payable in U.S. dollars. The dividends payable for
Carnival plc ordinary shares are payable in sterling, unless the shareholders
elect to receive the dividends in U.S. dollars. Dividends payable in sterling
will be converted from U.S. dollars into sterling based upon a current U.S.
dollar to sterling exchange rate announced prior to the dividend payment date.
Selected Quarterly Financial Data (Unaudited)
Our revenue from the sale of passenger tickets is seasonal. Historically,
demand for cruises has been the greatest during our third quarter which includes
the Northern Hemisphere summer months. This higher demand during the third
quarter results in higher net revenue
F-46
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.
Quarterly financial results for fiscal 2005 were as follows:
Quarters Ended
---------------------------------------------------
February 28 May 31 August 31 November 30
----------- ------ --------- -----------
(in millions, except per share data)
Revenues $2,396 $2,519 $3,605 $2,567
Operating income $ 418 $ 482 $1,291 $ 448
Net income $ 345 $ 408 $1,151 (a) $ 353
Earnings per share
Basic $ 0.43 $ 0.51 $ 1.43 $ 0.44
Diluted $ 0.42 $ 0.49 $ 1.36 $ 0.43
Dividends declared
per share $ 0.15 $ 0.20 $ 0.20 $ 0.25
(a) Includes a $23 million expense related to the MNOPF contribution and a $22
million expense for a non-cruise investment write-down.
Quarterly financial results for fiscal 2004 were as follows:
Quarters Ended
---------------------------------------------------
February 29 May 31 August 31 November 30
----------- ------ --------- -----------
(in millions, except per share data)
Revenues $1,981 $2,253 $3,250 $2,243
Operating income $ 260 $ 406 $1,160 $ 347
Net income $ 203 $ 332 $1,025 $ 294
Earnings per share
Basic $ 0.25 $ 0.41 $ 1.28 $ 0.37
Diluted $ 0.25 $ 0.40 $ 1.22 $ 0.36
Dividends declared
per share $0.125 $0.125 $0.125 $ 0.15
F-47
Exhibit 21
Significant Subsidiaries of Carnival Corporation and Carnival plc(1)
Jurisdiction of Incorporation
Name of Subsidiary or Organization
------------------ ---------------
Costa Crociere, S.p.A.(2) Italy
HAL Antillen N.V. Netherlands Antilles
Holland America Line N.V.(3) Netherlands Antilles
Princess Bermuda Holdings Ltd.(4) Bermuda
Princess Cruise Lines Ltd.(5) Bermuda
Sitmar International Srl ("Sitmar") Panama
Sunshine Shipping Corp. ("Sunshine")(6) Bermuda
(1) Carnival Corporation, incorporated in the Republic of Panama, and Carnival
plc, incorporated in England and Wales, are separate legal entities, which
have entered into a DLC structure as discussed in Notes 1 and 3 to the
Consolidated Financial Statements in Exhibit 13 to the joint Annual Report
on Form 10-K. We have accounted for the DLC transaction under U.S. GAAP as
an acquisition of Carnival plc by Carnival Corporation. Accordingly, we
have determined the significant subsidiaries based upon the consolidated
results of operations and financial position of Carnival Corporation &
plc.
(2) Majority owned subsidiary of Carnival plc.
(3) Subsidiary of HAL Antillen N.V.
(4) Subsidiary of Sitmar.
(5) Subsidiary of Sunshine.
(6) Subsidiary of Princess Bermuda Holdings Ltd.
Exhibit 23
Consent of Independent Registered Certified Public Accounting Firm
We hereby consent to the incorporation by reference in the joint
Registration Statements on Form S-3 of Carnival Corporation and Carnival plc
(File Nos. 333-113310, 333-106850, 333-106553, 333-72729, 333-68999 and
333-43269), the Registration Statements on Form S-8 of Carnival Corporation
(File Nos. 333-125418, 333-105672, 333-87036, 333-67394, 333-60558, 333-43885,
33-53099, 33-51195, 33-45287 and 33-26898) and the Registration Statements on
Form S-8 of Carnival plc (File Nos. 333-125418, 333-124640, 333-104609,
333-84968, 333-13794 and 333-12742), of our report, dated February 8, 2006,
relating to the financial statements and management's assessment of the
effectiveness of internal control over financial reporting and the effectiveness
of internal control over financial reporting, which appears in this joint Annual
Report to Shareholders of Carnival Corporation and Carnival plc, which is
incorporated in this joint Annual Report on Form 10-K.
/s/PricewaterhouseCoopers LLP
Miami, Florida
February 8, 2006
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned directors of Carnival
Corporation, a company incorporated under the laws of the Republic of Panama,
and Carnival plc, a company organized and existing under the laws of England and
Wales, do and each of them does, hereby constitute and appoint Micky Arison,
Howard S. Frank, Gerald R. Cahill and Arnaldo Perez, his or her true and lawful
attorneys-in-fact and agents, and each of them with full power to act without
the others, for him or her and in his or her name, place and stead, to sign the
Carnival Corporation and Carnival plc joint Annual Report on Form 10-K ("Form
10-K") for the year ended November 30, 2005 and any and all future amendments
thereto; and to file said Form 10-K and any such amendments with all exhibits
thereto, and any and all other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
said attorneys-in-fact and agents, or any of them, may lawfully do or cause to
be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands and seals this
23rd day of December 2005.
CARNIVAL CORPORATION CARNIVAL PLC
/s/ Richard G. Capen, Jr. /s/ Richard G. Capen, Jr.
- --------------------------- --------------------------
Richard G. Capen, Jr. Richard G. Capen, Jr.
Director Director
/s/ Robert H. Dickinson /s/ Robert H. Dickinson
- --------------------------- --------------------------
Robert H. Dickinson Robert H. Dickinson
Director Director
/s/ Arnold W. Donald /s/ Arnold W. Donald
- --------------------------- --------------------------
Arnold W. Donald Arnold W. Donald
Director Director
/s/ Pier Luigi Foschi /s/ Pier Luigi Foschi
- --------------------------- --------------------------
Pier Luigi Foschi Pier Luigi Foschi
Director Director
/s/ Richard J. Glasier /s/ Richard J. Glasier
- --------------------------- --------------------------
Richard J. Glasier Richard J. Glasier
Director Director
/s/ Baroness Sarah Hogg /s/ Baroness Sarah Hogg
- --------------------------- --------------------------
Baroness Sarah Hogg Baroness Sarah Hogg
Director Director
/s/ A. Kirk Lanterman /s/ A. Kirk Lanterman
- --------------------------- --------------------------
A. Kirk Lanterman A. Kirk Lanterman
Director Director
/s/ Dr. Modesto A. Maidique /s/ Dr. Modesto A. Maidique
- --------------------------- ---------------------------
Dr. Modesto A. Maidique Dr. Modesto A. Maidique
Director Director
/s/ Sir John Parker /s/ Sir John Parker
- --------------------------- --------------------------
Sir John Parker Sir John Parker
Director Director
/s/ Peter G. Ratcliffe /s/ Peter G. Ratcliffe
- --------------------------- ----------------------------
Peter G. Ratcliffe Peter G. Ratcliffe
Director Director
/s/ Stuart Subotnick /s/ Stuart Subotnick
- --------------------------- --------------------------
Stuart Subotnick Stuart Subotnick
Director Director
/s/ Uzi Zucker /s/ Uzi Zucker
- --------------------------- ----------------------------
Uzi Zucker Uzi Zucker
Managing Director Managing Director
Exhibit 31.1 I, Micky Arison, certify that: 1. I have reviewed this annual report on Form 10-K 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: February 9, 2006 By:/s/ Micky Arison - ------------------------------------- Micky Arison Chairman of the Board of Directors and Chief Executive Officer
Exhibit 31.2 I, Howard S. Frank, certify that: 1. I have reviewed this annual report on Form 10-K 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: February 9, 2006 By:/s/ Howard S. Frank - ---------------------------------- Howard S. Frank Vice Chairman of the Board of Directors and Chief Operating Officer
Exhibit 31.3 I, Gerald R. Cahill, certify that: 1. I have reviewed this annual report on Form 10-K 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: February 9, 2006 By:/s/ Gerald R. Cahill - --------------------------------- Gerald R. Cahill Executive Vice President and Chief Financial and Accounting Officer
Exhibit 31.4
I, Micky Arison, certify that:
1. I have reviewed this annual report on Form 10-K 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: February 9, 2006
By:/s/ Micky Arison
- -------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
Exhibit 31.5 I, Howard S. Frank, certify that: 1. I have reviewed this annual report on Form 10-K 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: February 9, 2006 By:/s/ Howard S. Frank - ---------------------------------- Howard S. Frank Vice Chairman of the Board of Directors and Chief Operating Officer
Exhibit 31.6
I, Gerald R. Cahill, certify that:
1. I have reviewed this annual report on Form 10-K 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: February 9, 2006
By:/s/ Gerald R. Cahill
- ---------------------------------------
Gerald R. Cahill
Executive Vice President
and Chief Financial and
Accounting Officer
Exhibit 32.1
In connection with the Annual Report on Form 10-K for the year ended
November 30, 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: February 9, 2006
By:/s/ Micky Arison
----------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
Exhibit 32.2
In connection with the Annual Report on Form 10-K for the year ended
November 30, 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: February 9, 2006
By:/s/ Howard S. Frank
-------------------
Howard S. Frank
Vice Chairman of the Board of Directors
and Chief Operating Officer
Exhibit 32.3
In connection with the Annual Report on Form 10-K for the year ended
November 30, 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: February 9, 2006
By:/s/ Gerald R. Cahill
--------------------
Gerald R. Cahill
Executive Vice President
and Chief Financial and
Accounting Officer
Exhibit 32.4
In connection with the Annual Report on Form 10-K for the year ended
November 30, 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: February 9, 2006
By:/s/ Micky Arison
----------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
Exhibit 32.5
In connection with the Annual Report on Form 10-K for the year ended
November 30, 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: February 9, 2006
By:/s/ Howard S. Frank
-------------------
Howard S. Frank
Vice Chairman of the Board of Directors
and Chief Operating Officer
Exhibit 32.6
In connection with the Annual Report on Form 10-K for the year ended
November 30, 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: February 9, 2006
By:/s/ Gerald R. Cahill
--------------------
Gerald R. Cahill
Executive Vice President
and Chief Financial and
Accounting Officer