UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2006
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 1-9610 Commission file number: 1-15136
Carnival Corporation Carnival plc
(Exact name of registrant as (Exact name of registrant as
specified in its charter) specified in its charter)
Republic of Panama England and Wales
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
59-1562976 98-0357772
(I.R.S. Employer (I.R.S. Employer
Identification No.) Identification No.)
3655 N.W. 87th Avenue Carnival House, 5 Gainsford Street,
Miami, Florida 33178-2428 London SE1 2NE, United Kingdom
(Address of principal (Address of principal
executive offices) executive offices)
(Zip Code) (Zip Code)
(305) 599-2600 011 44 20 7940 5381
(Registrant's telephone number, (Registrant's telephone number,
including area code) including area code)
None None
(Former name, former address (Former name, former address
and former fiscal year, if and former fiscal year, if
changed since last report) changed since last report)
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes |X| No |_|
Indicate by check mark whether the registrants are large accelerated
filers, accelerated filers, or non-accelerated filers. See definition of
"accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange
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|
At March 22, 2006 Carnival At March 22, 2006, Carnival plc had
Corporation had outstanding outstanding 212,589,480 Ordinary Shares
638,735,465 shares of Common $1.66 par value, one Special Voting Share,
Stock, $.01 par value. GBP 1.00 par value and 638,735,465 Trust
Shares of beneficial interest in the P&O
Princess Special Voting Trust.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(in millions, except per share data)
Three Months
Ended February 28,
------------------
2006 2005
---- ----
Revenues
Cruise
Passenger tickets $ 1,908 $ 1,841
Onboard and other 542 546
Other 11 9
------- -------
2,461 2,396
------- -------
Costs and Expenses
Operating
Cruise
Commissions, transportation and other 412 431
Onboard and other 98 96
Payroll and related 276 274
Food 153 154
Fuel 215 133
Other ship operating 320 324
Other 13 11
------- -------
Total 1,487 1,423
Selling and administrative 365 334
Depreciation and amortization 232 221
------- -------
2,084 1,978
------- -------
Operating Income 377 418
------- -------
Nonoperating (Expense) Income
Interest income 7 3
Interest expense, net of
capitalized interest (76) (86)
Other (expense) income, net (14) 7
------- -------
(83) (76)
------- -------
Income Before Income Taxes 294 342
Income Tax (Expense) Benefit, Net (14) 3
------- -------
Net Income $ 280 $ 345
======= =======
Earnings Per Share
Basic $ 0.35 $ 0.43
======= =======
Diluted $ 0.34 $ 0.42
======= =======
Dividends Per Share $ 0.25 $ 0.15
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
1
CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
February 28, November 30,
2006 2005
---- ----
ASSETS
Current Assets
Cash and cash equivalents $ 395 $ 1,178
Short-term investments 11 9
Accounts receivable, net 425 408
Inventories 266 250
Prepaid expenses and other 210 370
-------- --------
Total current assets 1,307 2,215
-------- --------
Property and Equipment, Net 21,957 21,312
Goodwill 3,211 3,206
Trademarks 1,283 1,282
Other Assets 558 417
-------- --------
$ 28,316 $ 28,432
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings $ 409 $ 300
Current portion of long-term debt 643 1,042
Convertible debt subject to current put option 220 283
Accounts payable 656 690
Accrued liabilities and other 746 832
Customer deposits 2,221 2,045
-------- --------
Total current liabilities 4,895 5,192
-------- --------
Long-Term Debt 5,661 5,727
Other Long-Term Liabilities and Deferred Income 581 541
Contingencies (Note 5)
Shareholders' Equity
Common stock of Carnival Corporation; $.01 par
value; 1,960 shares authorized; 640 shares at 2006
issued and outstanding and 639 shares at 2005 issued 6 6
Ordinary shares of Carnival plc; $1.66 par value;
226 shares authorized; 213 shares at 2006 and
212 shares at 2005 issued 353 353
Additional paid-in capital 7,398 7,381
Retained earnings 10,310 10,233
Unearned stock compensation (13)
Accumulated other comprehensive income 170 156
Treasury stock; 2 shares of Carnival Corporation
at 2005 and 42 shares of Carnival plc at 2006
and 2005, at cost (1,058) (1,144)
-------- --------
Total shareholders' equity 17,179 16,972
-------- --------
$ 28,316 $ 28,432
======== ========
The accompanying notes are an integral part of these consolidated financial
statements.
2
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
Three Months
Ended February 28,
------------------
2006 2005
---- ----
OPERATING ACTIVITIES
Net income $ 280 $ 345
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization 232 221
Share-based compensation 20 4
Non-cruise investment write-down 10
Accretion of original issue discount 3 5
Other (1) 3
Changes in operating assets and liabilities
Receivables (17) (2)
Inventories (16) (4)
Prepaid expenses and other (9) (9)
Accounts payable (35) (29)
Accrued and other liabilities (27) (57)
Customer deposits 173 66
------- -------
Net cash provided by operating activities 613 543
------- -------
INVESTING ACTIVITIES
Additions to property and equipment (757) (556)
Purchases of short-term investments (2) (58)
Sales of short-term investments 27
Other, net (6) 1
------- -------
Net cash used in investing activities (765) (586)
------- -------
FINANCING ACTIVITIES
Principal repayments of long-term debt (570) (170)
Dividends paid (202) (120)
Proceeds from (repayments of) short-term
borrowings, net 108 (13)
Proceeds from exercise of stock options 31 23
Other (2) (2)
------- -------
Net cash used in financing activities (635) (282)
------- -------
Effect of exchange rate changes on cash and cash
equivalents 4 3
------- -------
Net decrease in cash and cash equivalents (783) (322)
Cash and cash equivalents at beginning of period 1,178 643
------- -------
Cash and cash equivalents at end of period $ 395 $ 321
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
3
CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - Basis of Presentation
Carnival Corporation is incorporated in Panama, and Carnival plc is
incorporated in England and Wales. 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 joint Quarterly Report on Form 10-Q as "Carnival Corporation &
plc," "our," "us," and "we."
Carnival Corporation and Carnival plc operate 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.
The accompanying consolidated balance sheet at February 28, 2006 and the
consolidated statements of operations and cash flows for the three months ended
February 28, 2006 and 2005 are unaudited and, in the opinion of our management,
contain all adjustments, consisting of only normal recurring adjustments,
necessary for a fair presentation. Our interim consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and the related notes included in the Carnival Corporation & plc 2005 joint
Annual Report on Form 10-K. Our operations are seasonal and results for interim
periods are not necessarily indicative of the results for the entire year.
NOTE 2 - Share-Based Compensation
Effective December 1, 2005, we adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 123(revised 2004), "Share-Based
Payment" ("SFAS No. 123(R)") using the modified prospective application
transition method. Under this method, the share-based compensation cost
recognized beginning December 1, 2005 includes compensation cost for (i) all
share-based payments granted prior to, but not vested as of December 1, 2005,
based on the grant date fair value originally estimated in accordance with the
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," ("SFAS
No. 123")and (ii) all share-based payments granted subsequent to November 30,
2005, based on the grant date fair value estimated in accordance with the
provisions of SFAS No. 123(R). Compensation cost under SFAS No. 123(R) is
recognized ratably using the straight-line attribution method over the expected
vesting period or to the retirement eligibility date, if less than the vesting
period when vesting is not contingent upon any future performance. In addition
pursuant to SFAS No. 123(R), we are required to estimate the amount of expected
forfeitures when calculating the compensation costs, instead of accounting for
forfeitures as incurred, which was our previous method. As of December 1, 2005,
the cumulative effect of adopting the estimated forfeiture method was not
significant. Prior periods are not restated under this transition method.
Prior to December 1, 2005, we accounted for share-based compensation plans
in accordance with the provisions of APB Opinion No. 25, "Accounting for Stock
Issued to Employees," as permitted by SFAS No. 123. We elected to use the
intrinsic value method of accounting for employee and director share-based
compensation expense for our noncompensatory employee and director stock option
awards and did not recognize compensation expense for the issuance of options
with an exercise price equal to or greater than the market price of the
underlying common stock at the date of grant. Had we elected to adopt the fair
value approach as prescribed by SFAS No. 123, which charges earnings for the
estimated fair value of stock options, our pro forma net income and pro forma
earnings per share for the first quarter of fiscal 2005 would have been as
follows (in millions, except per share amounts):
4
Net income, as reported $ 345
Share-based compensation expense included in net income, as reported 4
Total share-based compensation expense determined under the fair
value-based method for all awards(a) (18)
-----
Pro forma net income for basic earnings per share 331
Interest on dilutive convertible notes 12
-----
Pro forma net income for diluted earnings per share $ 343
=====
Earnings per share
Basic
As reported $0.43
=====
Pro forma $0.41
=====
Diluted
As reported $0.42
=====
Pro forma $0.40
=====
(a) These amounts include the expensing of stock options made to
retirement-eligible employees over the expected vesting period of the
option.
Stock Incentive Plans
We issue our share-based compensation awards under Carnival Corporation
and Carnival plc stock plans, which have an aggregate of 40.6 million shares
available for future grant at February 28, 2006. These plans allow us to issue
stock options, restricted stock units and nonvested stock awards (collectively
"incentive awards"). Incentive awards are primarily granted to management level
employees and members of our Board of Directors. The 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 incentive awards are to
be granted and the amounts that may be exercised within a specified term. These
plans allow us to fulfill our incentive award obligations using shares purchased
in the open market, or with unissued or treasury shares. The total share-based
compensation expense was $20 million for the quarter ended February 28, 2006, of
which $18 million has been included in the Consolidated Statements of Operations
as selling, general and administrative expenses and $2 million as cruise payroll
expense.
Stock Option Plans
The stock option exercise price is generally set by the Committee at 100%
or more of the fair market value of the underlying common stock/ordinary shares
on the date the option is granted. All stock options granted during the three
months ended February 28, 2006 and 2005 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. Generally
employee options either vest evenly over five years or at the end of three
years. Our employee options granted prior to October 2005 have a ten-year term
and those options granted thereafter have a seven-year term. Carnival
Corporation director options granted subsequent to fiscal 2000 vest evenly over
five years and have a ten-year term.
As permitted by SFAS No. 123 and SFAS No. 123(R), the fair values of
options were estimated using the Black-Scholes option-pricing model. The
Black-Scholes weighted-average assumptions were as follows:
Three Months ended February 28,
-------------------------------
2006 2005
---- ----
Fair value of options at the
dates of grant $12.63 $14.17
====== ======
Risk free interest rate(a) 4.24% 3.85%
====== ======
Expected dividend yield 2.20% 1.53%
====== ======
Expected volatility(b) 26.5% 27.0%
====== ======
Expected option life (in years)(c) 4.75 4.67
====== ======
5
(a) The risk-free interest rate is based on U.S. Treasury zero-coupon issues
with a remaining term equal to the expected option life assumed at the
date of grant.
(b) In addition to the historical volatility we also consider 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.
(c) The average expected life was based on the contractual term of the option
and expected employee exercise behavior.
A combined summary of Carnival Corporation and Carnival plc stock option
activity was as follows:
Weighted- Weighted-Average Aggregate
Average Remaining Intrinsic
Shares Exercise Price Contractual Term Value(a)
------ -------------- ---------------- --------
(in years) (in millions)
Outstanding at
November 30, 2005 20,058,252 $39.15
Granted 672,512 $54.99
Exercised(b) (1,027,746) $28.79
Forfeited or expired (110,534) $42.12
-----------
Outstanding at
February 28, 2006(c) 19,592,484 $40.27 6.6 $223
==========
Exercisable at
February 28, 2006(d) 8,791,682 $37.34 $126
(a) The aggregate intrinsic value represents the amount by which the fair
value of underlying stock exceeds the option exercise price.
(b) Included 98,000 of Carnival plc options of which 78,000 had a sterling
denominated exercise price.
(c) Included 3.7 million of Carnival plc options at a weighted-average
exercise price of $41.57 per share, based on the February 28, 2006 U.S.
dollar to sterling exchange rate.
(d) Included 0.9 million of Carnival plc options at a weighted-average
exercise price of $29.80 per share, based on the February 28, 2006 U.S.
dollar to sterling exchange rate.
As of February 28, 2006, there was $111 million of total unrecognized
compensation cost related to unvested stock options. The cost is expected to be
recognized over a weighted-average period of 2.0 years.
Nonvested Stock and Restricted Stock Units
Nonvested stock generally has the same rights as Carnival Corporation
common stock, except for transfer restrictions and forfeiture provisions. In
prior periods, 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 estimated retirement eligibility date. Upon adoption of SFAS No.
123(R), the $13 million of unearned stock compensation as of November 30, 2005
was required to be charged against additional paid-in capital. The shares
granted to the officers and non-executive board members either have three or
five-year cliff vesting terms or vest evenly over five years after the grant
date.
In addition, Carnival Corporation and Carnival plc issue restricted stock
units ("RSUs"), which do not have an exercise price, and either vest evenly over
five years or at the end of three or five years. The share-based compensation
expense associated with the RSUs is based on the quoted market price of the
Carnival Corporation or Carnival plc shares on the date of grant, and is
expensed using the straight-line method from the grant date through the earlier
of the vesting date or the employees'
6
estimated retirement eligibility date. RSUs granted prior to fiscal 2006 are
expensed over the vesting period of the RSU.
During the three months ended February 28, 2006 the nonvested stock and
RSUs activity was as follows:
Nonvested Stock Restricted Stock Units
---------------------- ------------------------
Weighted- Weighted-
Average Average
Grant Date Grant Date
Shares Fair Value Shares Fair Value
------ ---------- ------ ----------
Outstanding at
November 30, 2005 966,417 $36.28 159,117 $44.56
Granted 110,000 $53.71 269,610 $52.46
Vested (130,000) $30.16 (47,319) $30.07
-------- -------
Outstanding at
February 28, 2006 946,417 $39.14 381,408 $51.94
======== =======
As of February 28, 2006, there was $27 million of total unrecognized
compensation cost related to nonvested stock and RSUs. The cost is expected to
be recognized over a weighted-average period of 1.9 years.
NOTE 3 - Dry-dock
Commencing with the first quarter of fiscal 2006, we changed the period
over which we amortize our deferred dry-dock costs to the length of time between
dry-docks, which is 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, which have enabled us to extend the
period between dry-docks within the parameters of the existing regulations. As a
result of this change in estimate, our other ship operating expenses for the
three months ended February 28, 2006 was reduced by $21 million and our diluted
earnings per share was increased by $0.025 compared to what our 2006 dry-dock
amortization would have been without this change.
NOTE 4 - Debt
During the three months ended February 28, 2006, $65 million of our
zero-coupon convertible notes were converted at their accreted value into 1.9
million shares of Carnival Corporation common stock.
NOTE 5 - Contingencies
Litigation
As of March 2006, five separate lawsuits had been filed against either
Carnival Corporation or Princess Cruise Lines, Ltd. in the U.S. on behalf of
some current and former crew members alleging that Carnival Cruise Lines and
Princess Cruises failed to pay the plaintiffs for overtime. These suits
generally seek payment of (i) damages for breach of contract or restitution for
back wages, (ii) damages under the Seaman's Wage Act and (iii) interest. The
ultimate outcomes 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 January 2006, a lawsuit was filed against Carnival Corporation and its
subsidiaries and affiliates, and other non-affiliated cruise lines in New York
on
7
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. However, we intend to vigorously
defend this lawsuit.
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 ("CFI") 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 CFI. Festival was declared bankrupt in May
2004 and Festival did not submit observations on our Statement in Intervention.
In December 2005, Festival's trustee was denied authorization to continue
pursuing this matter by the bankruptcy court. In January 2006, the CFI sought
the parties' views on a possible termination of the 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, two actions (collectively, the "Facsimile Complaints")
were filed against Carnival Corporation on behalf of purported classes of
persons who received unsolicited advertisements via facsimile, alleging that
Carnival Corporation and other defendants distributed unsolicited advertisements
via facsimile in contravention of the U.S. Telephone Consumer Protection Act.
The plaintiffs seek to enjoin the sending of unsolicited facsimile
advertisements and statutory damages. The advertisement referred to in the 2002
Facsimile Complaint that reference a Carnival Cruise Line product was not sent
by Carnival Corporation, but rather was distributed by a professional faxing
company at the behest of a third party travel agency. 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. We believe, however, that we have meritorious defenses
and we will continue to vigorously defend against these actions.
Costa Cruises ("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 February 28, 2006, 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
8
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 $275 million of the above noted contingent
obligations, thereby further reducing the already remote exposure to this
portion of the contingent obligations. If the major financial institutions'
credit ratings fall below AA-, Carnival Corporation would be required to move a
majority of the funds from these financial institutions to other highly-rated
financial institutions. If Carnival Corporation's credit rating falls below BBB,
it would be required to provide a standby letter of credit for $76 million, or
alternatively provide mortgages in the aggregate amount of $76 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
February 28, 2006, have to pay a total of $171 million in stipulated damages. As
of February 28, 2006, $180 million of standby letters of credit have been issued
by a major financial institution in order to provide further security for the
payment of these contingent stipulated damages. Between 2017 and 2022, we have
the right to exercise options that would terminate these transactions at no cost
to us.
Some of the debt agreements that we enter into include indemnification
provisions that obligate us to make payments to the counterparty if certain
events occur. These contingencies generally relate to changes in taxes, changes
in laws that increase lender capital costs and other similar costs. The
indemnification clauses are often standard contractual terms and were entered
into in the normal course of business. There are no stated or notional amounts
included in the indemnification clauses and we are not able to estimate the
maximum potential amount of future payments, if any, under these indemnification
clauses. We have not been required to make any material payments under such
indemnification clauses in the past and, under current circumstances, we do not
believe a request for material future indemnification payments is probable.
War Risk Insurance
During the first quarter of fiscal 2006 we obtained additional war risk
insurance, subject to coverage limits, deductibles and exclusions for claims
such as those arising from chemical and biological attacks, to cover damage or
loss to all of our 36 previously uninsured ships, including 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 policies can be cancelled.
NOTE 6 - Comprehensive Income
Comprehensive income was as follows (in millions):
Three Months
Ended February 28,
------------------
2006 2005
---- ----
Net income $ 280 $ 345
Items included in accumulated other comprehensive income
Foreign currency translation adjustment 10 (3)
Changes related to cash flow derivative hedges 4 11
----- -----
Total comprehensive income $ 294 $ 353
===== =====
NOTE 7 - 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
9
primarily represents the hotel, tour and transportation operations of Holland
America Tours and Princess Tours.
Selected segment information for our cruise and other segments was as
follows (in millions):
Three Months Ended February 28,
-----------------------------------------------------------------
Selling Depreciation Operating
Operating and admin- and income
Revenues expenses istrative amortization (loss)
-------- -------- --------- ------------ ------
2006
Cruise $ 2,450 $ 1,474 $ 353 $ 224 $ 399
Other 16 18 12 8 (22)
Intersegment elimination (5) (5)
------- ------- ------- ------- -------
$ 2,461 $ 1,487 $ 365 $ 232 $ 377
======= ======= ======= ======= =======
2005
Cruise $ 2,387 $ 1,412 $ 322 $ 213 $ 440
Other 12 14 12 8 (22)
Intersegment elimination (3) (3)
------- ------- ------- ------- -------
$ 2,396 $ 1,423 $ 334 $ 221 $ 418
======= ======= ======= ======= =======
NOTE 8 - Earnings Per Share
Our basic and diluted earnings per share were computed as follows (in
millions, except per share data):
Three Months
Ended February 28,
------------------
2006 2005
---- ----
Net income $ 280 $ 345
Interest on dilutive convertible notes 6 12
----- -----
Net income for diluted earnings per share $ 286 $ 357
===== =====
Weighted-average common and ordinary
shares outstanding 809 805
Dilutive effect of convertible notes 26 44
Dilutive effect of stock plans 3 6
----- -----
Diluted weighted-average shares
outstanding 838 855
===== =====
Basic earnings per share $0.35 $0.43
===== =====
Diluted earnings per share $0.34 $0.42
===== =====
Options to purchase 2.2 million and 1.4 million shares for the three
months ended February 28, 2006 and 2005, respectively, were excluded from our
diluted earnings per share computation since the effect of including them was
anti-dilutive.
10
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Cautionary Note Concerning Factors That May Affect Future Results
Some of the statements contained in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and elsewhere in this
joint Quarterly Report on Form 10-Q are "forward-looking statements" that
involve risks, uncertainties and assumptions with respect to us, including some
statements concerning future results, outlook, plans, goals and other events
which have not yet occurred. These statements are intended to qualify for the
safe harbors from liability provided by Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. You can find many,
but not all, of these statements by looking for words like "will," "may,"
"believes," "expects," "anticipates," "forecast," "future," "intends," "plans,"
and "estimates" and for similar expressions.
Because forward-looking statements involve risks and uncertainties, there
are many factors that could cause our actual results, performance or
achievements to differ materially from those expressed or implied in this joint
Quarterly Report on Form 10-Q. Forward-looking statements include those
statements which may impact the forecasting of our earnings per share, net
revenue yields, booking levels, pricing, occupancy, operating, financing and/or
tax costs, 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 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 operating and financing 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.
11
Forward-looking statements should not be relied upon as a prediction of
actual results. Subject to any continuing obligations under applicable law or
any relevant listing rules, we expressly disclaim any obligation to disseminate,
after the date of this joint Quarterly Report on Form 10-Q, any updates or
revisions to any such forward-looking statements to reflect any change in
expectations or events, conditions or circumstances on which any such statements
are based.
Key Performance Indicators and Critical Accounting Estimates
We use net cruise revenues per ALBD ("net revenue yields") and net cruise
costs per ALBD as significant non-GAAP financial measures of our cruise segment
financial performance. We believe that net revenue yields are commonly used in
the cruise industry to measure a company's cruise segment revenue performance.
This measure is also used for revenue management purposes. In calculating net
revenue yields, we use "net cruise revenues" rather than "gross cruise
revenues." We believe that net cruise revenues is a more meaningful measure in
determining revenue yield than gross cruise revenues because it reflects the
cruise revenues earned by us net of our most significant variable costs, which
are travel agent commissions, cost of air transportation and certain other
variable direct costs associated with onboard revenues. Substantially all of our
remaining cruise costs are largely fixed once our ship capacity levels have been
determined, except for the impact of changing prices.
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 quarter rates, or on a "constant dollar basis," in
order to remove the impact of changes in exchange rates on our non-U.S. cruise
operations. We believe that this is a useful measure indicating the actual
growth of our operations in a fluctuating exchange rate environment. On a
constant dollar basis, net cruise revenues and net cruise costs would be $1.98
billion and $1.35 billion for the three months ended February 28, 2006,
respectively. On a constant dollar basis, gross cruise revenues and gross cruise
costs would be $2.51 billion and $1.88 billion for the three months ended
February 28, 2006, 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 the three
months ended February 28, 2006 compared to February 28, 2005.
For a discussion of our critical accounting estimates, see "Management's
Discussion and Analysis of Financial Condition and Results of Operations," which
is included in Carnival Corporation & plc's 2005 joint Annual Report on Form
10-K.
12
Outlook for Remainder of Fiscal 2006
As of March 23, 2006 we said that we expected our diluted earnings per
share for the second quarter of 2006 would be approximately $0.48 to $0.50 and
approximately $2.90 to $3.00 for the 2006 full year. Our guidance was based on
the then current forward fuel price curve of $331 per metric ton for the second
quarter of 2006 and $336 per metric ton for the last nine months of fiscal 2006.
In addition, this guidance was also based on currency exchange rates of $1.19 to
the euro and $1.75 to sterling.
Subsequent to the preparation of the earnings guidance noted above,
Princess Cruises' Star Princess had a fire onboard, which resulted in
significant damage to the ship. After completing a damage assessment, we have
decided to take the ship out of service in order to have the necessary repairs
completed. The ship is expected to return to service on May 15, 2006, the date
of its first scheduled European cruise. We estimate that the cancelled cruises
and damages caused by the fire will result in approximately a $0.04 to $0.05
reduction to our second quarter and 2006 full year diluted earnings per share
guidance.
Our 2006 outlook includes the impact of two accounting matters. Commencing
with the first quarter of fiscal 2006, we began to recognize share-based
compensation expense in our statement of operations. The increase in our 2006
full year share-based compensation expense is expected to be approximately $55
million compared to our reported fiscal 2005 share-based compensation expense.
We will continue to expense share-based compensation in future periods pursuant
to SFAS No. 123(R) requirements. Also commencing in the first quarter of fiscal
2006, we changed the period over which we amortize our deferred dry-dock costs.
This change in estimate is expected to reduce our fiscal 2006 dry-dock
amortization by approximately $63 million, compared to what our amortization was
expected to be without the change. However, this change is expected to reduce
fiscal 2006 dry-dock amortization by approximately $40 million, compared to
normal average levels of dry-dock amortization. The reduction in our 2006
amortization expense will not be a recurring benefit, as our dry-dock
amortization will start to move back to its higher more normal levels over the
next 2 to 3 years.
The year-over-year percentage increase in our ALBD capacity, resulting
from new ships entering service, is expected to be 4.5%, 5.1% and 5.7% for the
second, third and fourth quarters of 2006, respectively, based on ships
currently on order and net of both the expected sale of the Pacific Sky by P&O
Cruises Australia in May 2006 and the temporary removal from service of the Star
Princess.
Seasonality
Our revenue from the sale of passenger tickets is seasonal. Historically,
demand for cruises has been greatest during our third quarter, which includes
the Northern Hemisphere summer months. This higher demand during the third
quarter 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.
13
Selected Information and Non-GAAP Financial Measures
Selected information was as follows:
Three Months Ended February 28,
-------------------------------
2006 2005
---- ----
Passengers carried (in thousands)(a) 1,523 1,619
=========== ===========
Occupancy percentage 104.2% 103.8%
=========== ===========
Fuel cost per metric ton $ 319 $ 196
=========== ===========
(a) Passengers carried in 2006 are less than 2005 because 2006 does not
include any passengers for the three ships chartered to the Military
Sealift Command ("MSC") in connection with the Hurricane Katrina relief
efforts.
Gross and net revenue yields were computed by dividing the gross or net
revenues, without rounding, by ALBDs as follows:
Three Months Ended February 28,
-------------------------------
2006 2005
---- ----
(in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets $ 1,908 $ 1,841
Onboard and other 542 546
----------- -----------
Gross cruise revenues 2,450 2,387
Less cruise costs
Commissions, transportation and other (412) (431)
Onboard and other (98) (96)
----------- -----------
Net cruise revenues $ 1,940 $ 1,860
=========== ===========
ALBDs 11,936,438 11,586,444
=========== ===========
Gross revenue yields $ 205.28 $ 206.07
=========== ===========
Net revenue yields $ 162.50 $ 160.59
=========== ===========
Gross and net cruise costs per ALBD were computed by dividing the gross or
net cruise costs, without rounding, by ALBDs as follows:
Three Months Ended February 28,
-------------------------------
2006 2005
---- ----
(in millions, except ALBDs and costs per ALBD)
Cruise operating expenses $ 1,474 $ 1,412
Cruise selling and administrative expenses 353 322
----------- -----------
Gross cruise costs 1,827 1,734
Less cruise costs included in net cruise revenues
Commissions, transportation and other (412) (431)
Onboard and other (98) (96)
----------- -----------
Net cruise costs $ 1,317 $ 1,207
=========== ===========
ALBDs 11,936,438 11,586,444
=========== ===========
Gross cruise costs per ALBD $ 153.00 $ 149.62
=========== ===========
Net cruise costs per ALBD $ 110.23 $ 104.13
=========== ===========
14
Three Months Ended February 28, 2006 ("2006") Compared to the Three Months Ended
February 28, 2005 ("2005")
Revenues
Net cruise revenues increased $80 million, or 4.3%, to $1.94 billion in
2006 from $1.86 billion in 2005. The 3.0% increase in ALBDs between 2005 and
2006 accounted for $56 million of the increase, and the remaining $24 million
was from increased net revenue yields, which increased 1.2% in 2006 compared to
2005 (gross revenue yields decreased by 0.4%). Net revenue yields increased in
2006 primarily from higher cruise ticket prices and a 0.4% increase in
occupancy, partially offset by the stronger U.S. dollar relative to the euro and
sterling. In addition, the higher net revenue yield was in part due to the
non-recurrence in 2006 of the cancellation of the higher yielding P&O Cruises
Aurora world cruise. Net revenue yields as measured on a constant dollar basis,
increased 3.3% in 2006. The strengthening of the U.S. dollar against the euro
and sterling had a significant impact on our net revenue yields because a
considerable portion of our business is transacted in those currencies. Gross
cruise revenues increased $63 million, or 2.6%, in 2006 to $2.45 billion from
$2.39 billion in 2005 for largely the same reasons as net cruise revenues.
Onboard and other revenues included concession revenues of $66 million in
2006 and $69 million in 2005. Onboard and other revenues decreased $4 million in
2006 compared to 2005, primarily because we chartered three ships to the MSC,
which did not generate onboard revenue in 2006 as the entire charter price was
recorded in passenger ticket revenues, the disruption to our Cozumel port
facility caused by hurricane Wilma, which adversely impacted our shore excursion
revenues in 2006, and the stronger U.S. dollar. This decrease was partially
offset by the 3.0% increase in ALBDs.
Costs and Expenses
Net cruise costs increased $110 million, or 9.1%, to $1.32 billion in 2006
from $1.21 billion in 2005. The 3.0% increase in ALBDs between 2005 and 2006
accounted for $36 million of the increase, and the balance of $74 million was
from increased net cruise costs per ALBD, which increased 5.9% in 2006 compared
to 2005 (gross cruise costs per ALBD increased 2.3%). Net cruise costs per ALBD
increased primarily due to a $123 increase in fuel cost per metric ton, or 63%,
to $319 per metric ton in 2006 and a $17 million increase in share-based
compensation expense, which was substantially all a result of the adoption of
SFAS No. 123(R) (see Note 2 in the accompanying financial statements). This
increase was partially offset by a stronger U.S. dollar relative to the euro and
sterling in 2006 and the $21 million decrease in dry-dock amortization primarily
as a result of lengthening the period over which dry-dock costs are recognized
(see Note 3 in the accompanying financial statements). Net cruise costs per ALBD
as measured on a constant dollar basis compared to 2005 increased 8.4% in 2006,
and increased 2.1%, excluding fuel costs, compared to 2005. Gross cruise costs
increased $93 million, or 5.4%, in 2006 to $1.83 billion from $1.73 billion in
2005.
Depreciation and amortization expense increased by $11 million, or 5.0%,
to $232 million in 2006 from $221 million in 2005 largely due to the 3.0%
increase in ALBDs through the addition of new ships, and ship improvement
expenditures, partially offset by the impact of a stronger U.S. dollar.
Nonoperating (Expense) Income
Net interest expense, excluding capitalized interest, decreased $10
million to $78 million in 2006 from $88 million in 2005. This decrease was
primarily due to lower average borrowings.
Other expense in 2006 included a $10 million expense for the write-down of
a non-cruise investment and a $5 million provision for a litigation reserve.
Other income in 2005 included $7 million from the settlement of litigation
associated with the DLC transaction.
15
Income Taxes
Income tax expense increased by $17 million from 2005 to $14 million in
2006 from a $3 million benefit in 2005 primarily because we recorded $21 million
for U.S. federal and state income taxes related to the MSC charter, which ended
in early March 2006. This expense was partially offset by the tax benefit
generated by the 2006 first quarter seasonal loss of our Alaska tour operation.
Liquidity and Capital Resources
Sources and Uses of Cash
Our business provided $613 million of net cash from operations during the
three months ended February 28, 2006, an increase of $70 million, or 12.9%,
compared to fiscal 2005. 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 the first quarter of 2006, our net expenditures for capital
projects were $757 million, of which $588 million was spent for our ongoing new
shipbuilding program, including the $324 million final delivery payment for
Holland America Line's Noordam. The remaining capital expenditures consisted
primarily of $120 million for ship improvements and refurbishments, and $49
million for Alaska tour assets, cruise port facility developments and
information technology assets.
During the three months ended February 28, 2006, we repaid $570 million of
long-term debt, which included $512 million of Costa's indebtedness. We also
paid cash dividends of $202 million during the first quarter of 2006.
Future Commitments and Funding Sources
Our contractual cash obligations remained generally unchanged at February
28, 2006 compared to November 30, 2005, including ship construction contracts
entered into in December 2005, except for changes to our debt and the Noordam
delivery payment as noted above. As of November 30, 2005, we had contractual
cash obligations on our variable-rate debt, including interest swapped from a
fixed-rate to a variable rate, using the forward interest rate curve for the
terms of the loans, as follows (in millions): $86, $73, $37, $29, $21 and $37 in
fiscal 2006 through 2010 and thereafter, respectively.
At February 28, 2006, we had liquidity of $4.24 billion, which consisted
of $406 million of cash, cash equivalents and short-term investments, $1.93
billion available for borrowing under our revolving credit facility, and $1.91
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, 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 the remainder of fiscal 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. We cannot be certain that our future operating cash flow will
be sufficient to fund future obligations or that we will be able to obtain
additional financing, if necessary.
16
Off-Balance Sheet Arrangements
We are not a party to any off-balance sheet arrangements, including
guarantee contracts, retained or contingent interests, certain derivative
instruments and variable interest entities, that either have, or are reasonably
likely to have, a current or future material effect on our financial statements.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable
assurance that information required to be disclosed by us in the reports that we
file or submit, is recorded, processed, summarized and reported, within the time
periods specified in the 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 February 28, 2006, that they were effective as described
above.
Changes in Internal Control over Financial Reporting
There have been no changes in our internal control over financial
reporting during the quarter ended February 28, 2006 that have materially
affected or are reasonably likely to materially affect our internal control over
financial reporting.
It should be noted that any system of controls, however well designed and
operated, can provide only reasonable, and not absolute, assurance that the
objectives of the system will be met. In addition, the design of any control
system is based in part upon certain assumptions about the likelihood of future
events. Because of these and other inherent limitations of control systems,
there is only reasonable assurance that our controls will succeed in achieving
their goals under all potential future conditions.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
In February and March 2006, lawsuits were filed against Carnival
Corporation and Princess Cruise Lines, Ltd., in the U.S. District Court for the
Central District of California on behalf of some current and former crew members
alleging that the cruise lines failed to pay the plaintiffs for overtime. These
suits seek payment of (i) damages and/or restitution for back wages, (ii)
damages under the Seaman's Wage Act, (iii) interest and (iv) injunctive relief.
We believe we have meritorious defenses to these claims and we intend to
vigorously defend these lawsuits.
An action filed by some current and former Carnival Cruise Lines crew
members in March 2005 was previously reported in the Carnival Corporation & plc
2005 joint Annual Report on Form 10-K. As previously reported, the plaintiffs
filed an appeal of their overtime wages claim to the Eleventh Circuit U.S. Court
of Appeals. The appeal is scheduled for oral argument on May 17, 2006.
An action referred to as the Festival Action was previously reported in
the Carnival Corporation & plc 2005 joint Annual Report on Form 10-K. As
previously reported, Festival was declared bankrupt in May 2004. In December
2005, Festival's trustee was denied authorization to continue pursuing this
matter by the bankruptcy court. In January 2006, the Court of First Instance of
the European communities in Luxembourg sought the parties' views on a possible
termination of the proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
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
17
ordinary shares commencing in 2005 subject to certain repurchase restrictions on
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 28, 2006
and March 27, 2006, the remaining availability pursuant to our share repurchase
program was $614 million and $493 million, respectively. During the 2006 first
quarter, there were no repurchases of Carnival Corporation common stock and/or
Carnival plc ordinary shares.
During the three months ended February 28, 2006 $65 million of our
zero-coupon convertible notes were converted, at their accreted value into 1.9
million shares of Carnival Corporation common stock, of which 1.8 million were
issued from treasury stock. The issuance was exempt from registration under
Section 3(a)(9) of the Securities Act of 1933, as amended.
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. 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.
10.1 Amendment to the Carnival Corporation Nonqualified Retirement Plan
For Highly Compensated Employees.
10.2 Corporate Aviation Administrative Policy Statement for the use of
Carnival Corporation & plc aircraft.
10.3 Form of Restricted Share Unit Award Certificate for the Amended and
Restated Carnival plc 2005 Employee Share Plan.
10.4 Form of Restricted Stock Unit Agreement for the Amended and Restated
Carnival Corporation 2002 Stock Plan.
12 Ratio of Earnings to Fixed Charges.
31.1 Certification of Chief Executive Officer of Carnival Corporation
pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Operating Officer of Carnival Corporation
pursuant to Rule 13a-14(a), as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.3 Certification of Executive Vice President and Chief Financial and
Accounting Officer of Carnival Corporation pursuant to Rule
13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
18
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.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CARNIVAL CORPORATION CARNIVAL PLC
By:/s/ Micky Arison By:/s/ Micky Arison
---------------- ----------------
Micky Arison Micky Arison
Chairman of the Board of Directors Chairman of the Board of Directors
and Chief Executive Officer and Chief Executive Officer
By:/s/ Howard S. Frank By:/s/ Howard S. Frank
------------------- -------------------
Howard S. Frank Howard S. Frank
Vice Chairman of the Board of Vice Chairman of the Board of
Directors and Chief Operating Officer Directors and Chief Operating Officer
By:/s/ Gerald R. Cahill By:/s/ Gerald R. Cahill
-------------------- --------------------
Gerald R. Cahill Gerald R. Cahill
Executive Vice President Executive Vice President
and Chief Financial and and Chief Financial and
Accounting Officer Accounting Officer
Dated: March 28, 2006 Dated: March 28, 2006
20
Exhibit 10.1
AMENDMENT TO
THE CARNIVAL CORPORATION
NONQUALIFIED RETIREMENT PLAN
FOR HIGHLY COMPENSATED EMPLOYEES
- --------------------------------------------------------------------------------
Carnival Corporation Nonqualified Retirement Plan For Highly Compensated
Employees (the "Plan") is hereby amended, effective January 1, 2003, as follows:
(1) Section 1.9 of the Plan is amended to read as follows:
1.9 Compensation - all cash remuneration paid or made available for any
Plan Year by an Employer to an Employee for the Employee's services
as salary, wages, commissions and including (a) bonuses (including
deferred bonus amounts earned but not received during the Plan
Year), (b) pay at premium rates (holiday, overtime or other), (c)
workers' compensation payments made by the Employer, (d) any amounts
contributed on behalf of the Employee to a cafeteria plan or cash or
deferred arrangement and not includible in income under Section 125
or 402(g) of the Internal Revenue Code and (e) and amounts
(including bonuses) deferred under The Carnival Corporation "Fun
Ship" Qualified and Nonqualified Savings Plans, but excluding (1)
any other amounts paid for that Plan Year on account of the Employee
under this Plan or under any other employee pension benefit plan (as
defined in Section 3(2) of ERISA), (2) any other amounts which are
not includible in the Employee's income for federal income tax
purposes and (3) any income attributable to the Company's stock
programs or other fringe benefit programs. Employee's Compensation
shall not exceed the maximum compensation rate under section
401(a)(17) of the Code (determined without regard to the reduction
to $150,000 (i.e., $250,000 for 1996)) as further indexed for cost
of living by reference to the annual percentage change of the CPI-U,
U.S. City Average, All Items (non-seasonally adjusted) for the
period from August to August of the preceding year (i.e. the annual
change published in September of the year prior to the year the
compensation limit is in effect). Effective for Eligible Employees
(other than Eligible Employees who are participating in The Carnival
Corporation "Fun Ship" Nonqualified Savings Plan and receiving
Company contributions under that plan) who are actively employed by
an Employer (which solely for this purpose shall include Eligible
Employees employed within the controlled group of the Company as
determined under Sections 414(b), (c) or (m) of the Internal Revenue
Code) on or after December 20, 2002, an Eligible Employee's
Compensation for periods on and after January 1, 1989 shall not be
limited by the preceding sentence with the exception of Michael
Arison whose compensation shall remain subject to such maximum
compensation limit as indexed.
Exhibit 10.2
-----------------------------------------
Carnival Corporation & plc Issue Date: February 21, 2006
CORPORATE AVIATION Approved by: Carnival Corporation & plc
ADMINISTRATIVE POLICY STATEMENT Compensation Committee
2. USE OF CARNIVAL CORPORATION &
PLC ("Company") AIRCRAFT
-----------------------------------------
- --------------------------------------------------------------------------------
1.0 PURPOSE
1.1 To establish procedures and controls as to the authorized use of the
Company's aircraft.
2.0 SCOPE
2.1 This policy applies to all Company owned or chartered aircraft,
including short-term charter arrangements.
3.0 PROCEDURE
3.1 Each usage of the Company aircraft requires the written pre-approval
of the Carnival Corporation & plc Chairman of the Board of Directors
("Chairman") or Vice Chairman of the Board of Directors ("Vice
Chairman").
3.2 For each flight an onboard travel form must be completed and signed
by the Chairman, Vice Chairman or the Chief Pilot, if neither one of
them is onboard. This travel form will indicate, among other things,
the purpose of the trip, identification of all passengers, including
whether business or personal, tax responsible person for personal
guests, etc. All personal travel will be reported as taxable
compensation to the responsible person in accordance with the IRS
rules and regulations (see section 5).
3.3 The Company's aircraft can only be used for business purposes,
except as noted below. Only the Company's Chairman and Vice Chairman
(with the authorization of the Chairman) are authorized to use the
aircraft for personal travel, and can be accompanied by their
guests, provided the Chairman has approved such use in advance. Any
personal use of the aircraft, under the rare circumstance when the
Chairman or Vice Chairman are not on board, is limited to persons
specifically authorized by the Chairman.
4.0 RESPONSIBILITY FOR COMPLIANCE
4.1 The Aviation Department Chief Pilot is responsible for obtaining the
appropriate written approvals from the Chairman or Vice-Chairman.
The Chairman and Vice Chairman are responsible for compliance with
this policy.
5.0 PERSONAL USE
5.1 No pre-determined annual limit for personal use of the Company
aircraft shall apply to the Chairman or Vice Chairman.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5.2 Personal use of the Company aircraft is required to be reported in
the Company's annual proxy statement/remuneration report and may be
taxable, as appropriate. Such amounts of personal use shall be
calculated utilizing an approved formula for calculating incremental
costs for such personal usage. This shall be calculated by the
Finance Department and generally includes the following:
a. Fuel and lube;
b. Maintenance and pre-flight inspections;
c. Cabin consumables;
d. Catering; and
e. Other flight expenses, including but not limited to: airport
handling, routine maintenance, aircraft certification, crew
accommodations, and crew per diems.
- --------------------------------------------------------------------------------
Exhibit 10.3
C A R N I V A L
plc
Carnival plc 2005 Employee Share Plan
(the Plan)
Restricted Share Unit Award Certificate - Conditional Right to Receive
This is to certify that the Compensation Committee of the Board of Carnival plc
(the Company) has on [DATE] granted to you, [NAME], an award of [#RSUs]
Restricted Share Units (the Award) pursuant to rule 9.1 of the Plan which is in
the form of a conditional allocation of shares in the Company. The detailed
terms governing the Award are set out in the rules of the Plan which are legally
binding and are deemed to be incorporated in this Agreement. In the event of any
inconsistency the rules of the Plan shall take precedence. Terms defined in the
rules of the Plan have the same meaning in this Agreement.
Terms of the Award
Each Restricted Share Unit comprised in your Award is equivalent to a
hypothetical investment in one ordinary share of $1.66 each in the capital of
the Company (a Share). Your Award is in the form of a conditional allocation of
Shares that will be of no effect until expiry of the Restricted Period and
attainment of certain vesting criteria. Terms defined in the rules of the Plan
have the same meaning in this Agreement.
Your Award is subject to a Restricted Period. In this case the Restricted Period
commenced on the Date of Grant of the Award and expires on [RESTRICTED PERIOD
END DATE] unless release of the Award would be prohibited by law, the Model Code
for Securities Transactions by Directors of Listed Companies or the Company's
dealing rules in which case the period during which the Award shall be released
will be extended by an additional period equal to the length of the period of
prohibition and the Award shall not be released until the expiry of such
additional period).
You will have no beneficial interest in any Shares during the Restricted Period.
Restricted Period
Generally, your Award will be forfeited automatically on you ceasing to be an
employee of the plc Group (whether lawfully or unlawfully) before the expiry of
the Restricted Period. The rules of the Plan do allow certain exceptions to
this, such as cessation of employment by reason of retirement. Further, the
rules of the Plan also permit the Award to vest on death in certain
circumstances.
Release of Award
Following expiration of the Restricted Period and attainment of the vesting
criteria set out in the Vesting Schedule contained in the Appendix to this
Agreement the Company shall procure the delivery to you of one Share for each
Restricted Share Unit which has vested save where the release of the Award would
be prohibited by law, the Model Code for Securities Transactions by Directors of
Listed Companies or the Company's dealing rules in which case the period during
which the Award shall be released will be extended by an
additional period equal to the length of the period of prohibition and the Award
shall not be released until the expiry of such additional period.
Dividends
The Remuneration Committee has determined that on each occasion on which a
dividend is paid in respect of one Share, a notional amount of cash and shares
equal to the cash and share dividend paid in respect of one Share will be
credited to each Restricted Share Unit comprised in your Award (the Dividend
Equivalents). Dividend Equivalents (together with interest) will be withheld by
the Company for your account and will be distributed to you on settlement of
your Award. If your Award is forfeited, you will have no entitlement to such
Dividend Equivalents.
Taxation
Any income tax and employee's National Insurance Contributions, which are due on
vesting of the Award, must be paid under PAYE. You are required under rule 11.4
of the Plan to satisfy any such tax liability and the grant of the Award is
conditional on your compliance with any arrangements specified by the Company
for the payment of tax including employer's National Insurance Contributions.
General
The Award is not transferable otherwise than in the limited circumstances
specified in rule 11 of the Plan. This Agreement is notice of your Award under
the Plan and should be kept in a safe place.
EXECUTED AND DELIVERED )
AS A DEED BY CARNIVAL PLC )
ACTING BY A DIRECTOR )
AND A DIRECTOR )
OR THE SECRETARY )
/s/ Howard S. Frank /s/ Arnaldo Perez
- ------------------------------- --------------------------------
Howard S. Frank, Director Arnaldo Perez, Secretary
APPENDIX
VESTING SCHEDULE
Exhibit 10.4
Form of
CARNIVAL CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
Carnival Corporation (the "Company"), having heretofore adopted the
Carnival Corporation 2002 Stock Plan (as amended through the date hereof) (the
"Plan"), hereby irrevocably grants to ______________ (the "Executive"),
effective ____________ (the "Grant Date"), a Restricted Stock Unit Award (the
"RSU Award"), consisting of __________ restricted stock units ("RSUs"), which is
in the form of a conditional allocation of shares in the Company, on terms and
conditions set forth herein. Each capitalized term used in this Agreement and
not otherwise defined herein shall have the meaning assigned to it in the Plan.
1. This Agreement shall be subject to all the terms and provisions of the
Plan, which are incorporated by reference herein and are made a part hereof. In
the event of any inconsistency between the provisions of this Agreement and the
provisions of the Plan, the provisions of the Plan shall govern.
2. Each RSU comprised in your RSU Award is equivalent to a hypothetical
investment in one share of the Company's common stock, par value $1.00 (a
Share). Your RSU Award is in the form of a conditional allocation of Shares that
will be of no effect until expiry of the Restricted Period and attainment of
certain vesting criteria. Subject to Section 3 of this Agreement, the Restricted
Period applying to the RSUs shall expire ___________________; provided however,
that where the release of the RSU Award would be prohibited by law or the
Company's dealing rules the Restricted Period will be extended until the expiry
of the prohibition.
3. Notwithstanding the provisions of paragraph 2, if (i) there is a Change
of Control or (ii) the Executive's employment with the Company or any Subsidiary
shall terminate by reason of his or her death or Disability, the Restricted
Period shall expire as to 100% of the RSUs. Upon the termination of the
Executive's employment with the Company or any Subsidiary for any reason other
than death or Disability, all of the RSUs as to which the Restricted Period has
not expired shall be forfeited and all rights of the Executive in respect of
such RSUs shall terminate without further obligation on the part of the Company.
The RSUs and the rights evidenced hereby are not transferable in any
manner other than by will or by the laws of descent and distribution.
Notwithstanding the above, the Company shall recognize the Executive's duly
executed Beneficiary Designation Form on file with the Company, in the event of
the Executive's death prior to the expiration of the Restricted Period.
4. No Shares shall be issued at the Grant Date in respect of the RSUs, and
the Executive shall have no rights (whether legal or beneficial) as a holder of
Shares in respect of the RSUs. The Company shall not be required to set aside
any fund for the payment of the RSUs.
5. Pending the expiration of the Restricted Period, each RSU shall be
credited with dividend equivalents equal to the value of cash and stock
dividends paid with respect to one Share, and such cash and stock dividend
equivalents shall be withheld by the Company for the Executive's account, and
interest shall be credited on the amount of cash dividend equivalents withheld
at a rate of __% per annum, in accordance with such terms as are established by
the Committee. The cash dividend equivalents and stock dividend equivalents so
withheld and attributable to any particular RSU, and earnings thereon, shall be
distributed to the Executive upon the settlement of the RSU in accordance with
Section 6 of this Agreement and, if such RSU is forfeited, the Executive shall
have no right to such cash dividend equivalents, stock dividend equivalents or
earnings thereon.
6. Upon the expiration of the Restricted Period with respect to RSUs which
have not been forfeited in accordance with the second sentence of Section 3 of
this Agreement, the Company shall deliver to the Executive, or his or her
beneficiary, without charge one Share for each RSU with respect to which the
Restricted Period has expired and the dividend equivalents associated therewith.
The dividend equivalents shall be settled in Shares the number of which shall be
equal to the accumulated value of the dividend equivalents and earnings thereon
divided by the Fair Market Value of one Share as of the date on which the
Restricted Period lapsed up to the extent such accumulated value equates whole
Shares.
Following expiration of the Restricted Period and attainment of the vesting
criteria set out in the Vesting Schedule contained in the Appendix to this
Agreement the Company shall procure the delivery to you of one Share for each
Restricted Share Unit which has vested.
7. Nothing in the Plan or this Agreement shall confer upon the Executive
any right to continue in the employ of the Company or any Affiliate or shall
interfere with or restrict in any way the right of the Company or any
Subsidiary, which are hereby expressly reserved, to remove, terminate or
discharge the Executive at any time for any reason whatsoever, with or without,
Cause.
8. Upon the settlement of the RSUs in Shares, the Executive shall be
required as a condition of such settlement to pay to the Company by check the
amount of any tax withholding that the Company determines is required; provided
that, the Executive may elect to satisfy such tax withholding obligation by
having the Company withhold from the settlement that number of Shares having a
Fair Market Value equal to the amount of such withholding; provided, further,
that the number of Shares that may be so withheld by the Company shall be
limited to that number of Shares having an aggregate Fair Market Value on the
date of such withholding equal to the aggregate amount of the Executive's
federal, state, and local tax liabilities based upon the applicable minimum
withholding rates. The Company's obligation to deliver any Shares, to the
Executive in connection with the RSU Award shall be subject to the Executive's
payment of all applicable federal, state and local withholding and employment
taxes. The Company's obligation to deliver Shares in respect of the RSU
Award shall be subject to all applicable laws, rules and regulations and such
approvals by any governmental agency as may be required.
9. The Committee shall have final authority to interpret and construe the
Plan and this Agreement and to make any and all determinations under them, and
its decision shall be binding and conclusive upon the Company, its Affiliates,
the Executive and the Executive's legal representatives and beneficiaries in
respect of any questions arising under the Plan or this Agreement.
10. This Agreement and the Plan contain the entire agreement and
understanding of the parties hereto with respect to the subject matter contained
herein and supersede all prior communications, representations and negotiations
in respect thereto.
11. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Florida without regard to the principles of conflicts
of law thereof, or principles of conflicts of laws of any other jurisdiction
which could cause the application of the laws of any jurisdiction other than the
State of Florida.
12. The terms and provisions of this Agreement may be modified or amended
as provided in the Plan.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
CARNIVAL CORPORATION
----------------------------------
By:
Title:
----------------------------------
[Name of Executive]
Appendix
[Vesting Schedule applicable to the Award]
Exhibit 12
CARNIVAL CORPORATION & PLC
Ratio of Earnings to Fixed Charges
(in millions, except ratios)
Three Months
Ended February 28,
------------------
2006 2005
---- ----
Net income $ 280 $ 345
Income tax expense (benefit), net 14 (3)
----- -----
Income before income taxes 294 342
----- -----
Fixed charges
Interest expense, net 76 86
Interest portion of rent expense(a) 4 4
Capitalized interest 8 5
----- -----
Total fixed charges 88 95
----- -----
Fixed charges not affecting earnings
Capitalized interest (8) (5)
----- -----
Earnings before fixed charges $ 374 $ 432
===== =====
Ratio of earnings to fixed charges 4.3x 4.5x
===== =====
(a) Represents one-third of rent expense, which we believe to be
representative of the interest portion of rent expense.
Exhibit 31.1
I, Micky Arison, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: March 28, 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 quarterly report on Form 10-Q of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: March 28, 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 quarterly report on Form 10-Q of Carnival Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: March 28, 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 quarterly report on Form 10-Q of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: March 28, 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 quarterly report on Form 10-Q of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: March 28, 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 quarterly report on Form 10-Q of Carnival plc;
2. Based on my knowledge, this report does not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision,
to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation of internal control over financial reporting, to the
registrant's auditors and the audit committee of the registrant's board of
directors:
(a) All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control over
financial reporting.
Date: March 28, 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 Quarterly Report on Form 10-Q for the quarter ended
February 28, 2006 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: March 28, 2006
By:/s/ Micky Arison
-------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
Exhibit 32.2
In connection with the Quarterly Report on Form 10-Q for the quarter ended
February 28, 2006 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: March 28, 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 Quarterly Report on Form 10-Q for the quarter ended
February 28, 2006 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: March 28, 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 Quarterly Report on Form 10-Q for the quarter ended
February 28, 2006 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: March 28, 2006
By:/s/ Micky Arison
-------------------------------
Micky Arison
Chairman of the Board of Directors
and Chief Executive Officer
Exhibit 32.5
In connection with the Quarterly Report on Form 10-Q for the quarter ended
February 28, 2006 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: March 28, 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 Quarterly Report on Form 10-Q for the quarter ended
February 28, 2006 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: March 28, 2006
By:/s/ Gerald R. Cahill
-------------------------------
Gerald R. Cahill
Executive Vice President and Chief
Financial and Accounting Officer
