Carnival Corp Ltd 10-Q for FY2020 Q2

Carnival Corp Ltd. (CCL)

10-Q 2020-07-10 For: 2020-05-31

Added on April 08, 2026

About this 10-Q

Carnival Corp Ltd filed this 10-Q on July 10, 2020, covering the quarter ended May 31, 2020 (FY2020 Q2).

Headline figures

Quarter ended May 31, 2020, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $740M; down 84.7% from $4.84B a year earlier
Net loss: $4.37B; compared with net income of $451M a year earlier
Diluted EPS: -$6.07; compared with $0.65 a year earlier

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(305)	599-2600	011	44 23 8065 5000
(Registrant’s telephone number, including area code)			(Registrant’s telephone number, including area code)

None			None
(Former name, former address and former fiscal year, if changed since last report)			(Former name, former address and former fiscal year, if changed since last report)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock ($0.01 par value)	CCL	New York Stock Exchange, Inc.
Ordinary Shares each represented by American Depository Shares ($1.66 par value), Special Voting Share, GBP 1.00 par value and Trust Shares of beneficial interest in the P&O Princess Special Voting Trust	CUK	New York Stock Exchange, Inc.
1.625% Senior Notes due 2021	CCL21	New York Stock Exchange LLC
1.875% Senior Notes due 2022	CUK22	New York Stock Exchange LLC
1.000% Senior Notes due 2029	CUK29	New York Stock Exchange LLC


	Three Months Ended May 31,						Six Months Ended May 31,
	2020		2019		2020		2019
Revenues
Passenger ticket	$	446	$	3,257	$	3,680	$	6,456
Onboard and other	294		1,580		1,849		3,054
	740		4,838		5,529		9,511
Operating Costs and Expenses
Commissions, transportation and other	297		613		1,064		1,322
Onboard and other	114		485		585		952
Payroll and related	705		566		1,315		1,123
Fuel	201		423		598		804
Food	108		269		385		538
Ship and other impairments	589		—		919		—
Other operating	471		803		1,142		1,562
	2,484		3,159		6,007		6,301
Selling and administrative	492		621		1,170		1,250
Depreciation and amortization	577		542		1,147		1,059
Goodwill impairment	1,364		—		2,096		—
	4,918		4,323		10,420		8,609
Operating Income (Loss)	(4,177)		515		(4,891)		902
Nonoperating Income (Expense)
Interest income	6		5		11		9
Interest expense, net of capitalized interest	(182)		(54)		(237)		(105)

Other income (expense), net	(32)		(7)		(39)		(9)
	(208)		(56)		(265)		(105)
Income (Loss) Before Income Taxes	(4,385)		459		(5,155)		797
Income Tax Benefit (Expense), Net	11		(8)		—		(10)
Net Income (Loss)	$	(4,374)	$	451	$	(5,155)	$	787
Earnings Per Share
Basic	$	(6.07)	$	0.65	$	(7.34)	$	1.14
Diluted	$	(6.07)	$	0.65	$	(7.34)	$	1.13


	Three Months Ended May 31,						Six Months Ended May 31,
	2020		2019		2020		2019
Net Income (Loss)	$	(4,374)	$	451	$	(5,155)	$	787
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment	23		(194)		48		(114)
Other	43		(13)		56		(13)
Other Comprehensive Income (Loss)	65		(207)		103		(127)
Total Comprehensive Income (Loss)	$	(4,309)	$	244	$	(5,052)	$	660


	May 31, 2020		November 30, 2019
ASSETS
Current Assets
Cash and cash equivalents	$	6,881	$	518
Trade and other receivables, net	604		444
Inventories	362		427
Prepaid expenses and other	374		671
Total current assets	8,222		2,059
Property and Equipment, Net	37,139		38,131
Operating Lease Right-of-Use Assets (a)	1,413		—
Goodwill	790		2,912
Other Intangibles	1,168		1,174
Other Assets	1,086		783
	$	49,817	$	45,058
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$	3,562	$	231
Current portion of long-term debt	2,373		1,596
Current portion of operating lease liabilities (a)	153		—
Accounts payable	1,809		756
Accrued liabilities and other	1,343		1,809
Customer deposits	2,618		4,735
Total current liabilities	11,858		9,127
Long-Term Debt	14,870		9,675
Long-Term Operating Lease Liabilities (a)	1,292		—
Other Long-Term Liabilities	956		890
Contingencies
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 731 shares at 2020 and 657 shares at 2019 issued	7		7
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2020 and 2019 issued	360		358
Additional paid-in capital	9,683		8,807
Retained earnings	21,155		26,653
Accumulated other comprehensive income (loss) (“AOCI”)	(1,962)		(2,066)
Treasury stock, 130 shares at 2020 and 2019 of Carnival Corporation and 60 shares at 2020 and 2019 of Carnival plc, at cost	(8,404)		(8,394)
Total shareholders’ equity	20,840		25,365
	$	49,817	$	45,058


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


At July 1, 2020, Carnival Corporation had outstanding 600,663,402 shares of Common Stock, $0.01 par value.						At July 1, 2020, Carnival plc had outstanding 182,572,740 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 600,663,402 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.


	Three Months Ended
	Common stock		Ordinary shares		Additional paid-in capital		Retained earnings		AOCI		Treasury stock		Total shareholders’ equity
At February 28, 2019	$	7	$	358	$	8,776	$	25,033	$	(1,869)	$	(8,063)	$	24,241
Net income (loss)	—		—		—		451		—		—		451
Other comprehensive income (loss)	—		—		—		—		(207)		—		(207)
Cash dividends declared ($0.50 per share)	—		—		—		(346)		—		—		(346)
Purchases of treasury stock under the Repurchase Program and other	—		—		9		—		—		(41)		(32)
At May 31, 2019	$	7	$	358	$	8,785	$	25,138	$	(2,076)	$	(8,104)	$	24,108

At February 29, 2020	$	7	$	358	$	8,829	$	25,527	$	(2,028)	$	(8,404)	$	24,290
Net income (loss)	—		—		—		(4,374)		—		—		(4,374)
Other comprehensive income (loss)	—		—		—		—		65		—		65
Issuance of common stock through underwritten public offering (net of offering expenses and underwriters’ discount)	1		—		555		—		—		—		556
Equity component of Convertible Senior Notes	—		—		286		—		—		—		286
Purchases of treasury stock under the Repurchase Program and other	—		2		12		2		—		—		16
At May 31, 2020	$	7	$	360	$	9,683	$	21,155	$	(1,962)	$	(8,404)	$	20,840


	Six Months Ended
	Common stock		Ordinary shares		Additional paid-in capital		Retained earnings		AOCI		Treasury stock		Total shareholders’ equity
At November 30, 2018	$	7	$	358	$	8,756	$	25,066	$	(1,949)	$	(7,795)	$	24,443
Changes in accounting principles (a)	—		—		—		(24)		—		—		(24)
Net income (loss)	—		—		—		787		—		—		787
Other comprehensive income (loss)	—		—		—		—		(127)		—		(127)
Cash dividends declared ($1.00 per share)	—		—		—		(691)		—		—		(691)
Purchases of treasury stock under the Repurchase Program and other	—		—		29		—		—		(310)		(280)
At May 31, 2019	$	7	$	358	$	8,785	$	25,138	$	(2,076)	$	(8,104)	$	24,108

At November 30, 2019	$	7	$	358	$	8,807	$	26,653	$	(2,066)	$	(8,394)	$	25,365
Net income (loss)	—		—		—		(5,155)		—		—		(5,155)
Other comprehensive income (loss)	—		—		—		—		103		—		103
Cash dividends declared ($0.50 per share)	—		—		—		(342)		—		—		(342)
Issuance of common stock through underwritten public offering (net of offering expenses and underwriters’ discount)	1		—		555		—		—		—		556
Equity component of Convertible Senior Notes	—		—		286		—		—		—		286
Purchases of treasury stock under the Repurchase Program and other	—		2		35		—		—		(10)		27
At May 31, 2020	$	7	$	360	$	9,683	$	21,155	$	(1,962)	$	(8,404)	$	20,840


(in millions)	May 31, 2020
Principal	$	2,013
Less: Unamortized debt discount and transaction costs	(333)
	$	1,680


(in millions)	Three and Six Months ended May 31, 2020
Contractual interest expense	$	17
Amortization of debt discount and transaction costs	15
	$	32


	May 31, 2020																		November 30, 2019
	Carrying Value		Fair Value														Carrying Value		Fair Value
(in millions)					Level 1			Level 2			Level 3					Level 1					Level 2	Level 3
Assets
Long-term other assets (a)	$	94	$	—		$	30		$	62		$	181	$	—		$	31	$	149
Total	$	94	$	—		$	30		$	62		$	181	$	—		$	31	$	149
Liabilities
Fixed rate debt (b)	$	13,061	$	—		$	12,901		$	—		$	7,438	$	—		$	7,782	$	—
Floating rate debt (b)	8,362		—			7,112			—			4,195		—			4,248		—
Total	$	21,422	$	—		$	20,013		$	—		$	11,634	$	—		$	12,030	$	—


	Goodwill
(in millions)	NAA Segment		EA Segment		Total
At November 30, 2019	$	1,898	$	1,014	$	2,912
Impairment charges	(1,319)		(777)		(2,096)
Foreign currency translation adjustment	—		(26)		(26)
At May 31, 2020	$	579	$	211	$	790


	Trademarks
(in millions)	NAA Segment		EA Segment		Total
At November 30, 2019	$	927	$	240	$	1,167
Foreign currency translation adjustment	—		(6)		(6)
At May 31, 2020	$	927	$	234	$	1,162


	Six Months Ended May 31,
	2020		2019
OPERATING ACTIVITIES
Net income (loss)	$	(5,155)	$	787
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization	1,147		1,059
Impairments	3,015		2
Share-based compensation	38		27
Gain on ship sales and other, net	56		7
	(900)		1,883
Changes in operating assets and liabilities
Receivables	(202)		(50)
Inventories	58		5
Prepaid expenses and other	171		(302)
Accounts payable	1,052		68
Accrued liabilities and other	3		48
Customer deposits	(1,987)		1,516
Net cash provided by (used in) operating activities	(1,804)		3,169
INVESTING ACTIVITIES
Purchases of property and equipment	(1,668)		(3,021)
Proceeds from sales of ships	236		6
Payments of fuel derivative settlements	—		(6)
Purchase of minority interest	(81)		—
Derivative settlements and other, net	257		103
Net cash provided by (used in) investing activities	(1,256)		(2,918)
FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings, net	3,333		(357)
Principal repayments of long-term debt	(383)		(338)
Proceeds from issuance of long-term debt	6,674		1,722
Dividends paid	(689)		(694)
Purchases of treasury stock	(12)		(316)

Issuance of common stock, net	558		2
Other, net	(56)		(45)
Net cash provided by (used in) financing activities	9,425		(26)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	1		(5)
Net increase (decrease) in cash, cash equivalents and restricted cash	6,366		220
Cash, cash equivalents and restricted cash at beginning of period	530		996
Cash, cash equivalents and restricted cash at end of period	$	6,896	$	1,215


	May 31, 2020
(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet		Net Amounts
Assets	$	—	$	—	$	—	$	—	$	—
Liabilities	$	12	$	—	$	12	$	—	$	12

	November 30, 2019
(in millions)	Gross Amounts		Gross Amounts Offset in the Balance Sheet		Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet		Net Amounts
Assets	$	58	$	—	$	58	$	(4)	$	54
Liabilities	$	25	$	—	$	25	$	(4)	$	21


	Three Months Ended May 31,						Six Months Ended May 31,
(in millions)	2020		2019		2020		2019
Gains (losses) recognized in AOCI:
Cross currency swaps - net investment hedges - included component	$	133	$	18	$	131	$	20
Cross currency swaps - net investment hedges - excluded component	$	(43)	$	10	$	(1)	$	(1)
Foreign currency zero cost collars - cash flow hedges	$	1	$	(1)	$	(1)	$	(1)
Foreign currency forwards - cash flow hedges	$	38	$	—	$	53	$	—
Interest rate swaps - cash flow hedges	$	4	$	—	$	4	$	1
Gains (losses) reclassified from AOCI - cash flow hedges:
Interest rate swaps - Interest expense, net of capitalized interest	$	(1)	$	(2)	$	(3)	$	(4)
Gains (losses) recognized on derivative instruments (amount excluded from effectiveness testing – net investment hedges)
Cross currency swaps - Interest expense, net of capitalized interest	$	2	$	6	$	12	$	11


	Entered Into	Matures In	Weighted-Average Floor Rate		Weighted- Average Ceiling Rate
Foreign currency zero cost collars
Enchanted Princess	2019	June 2020	$	1.04	$	1.28
Mardi Gras	2019	October 2020	$	1.05	$	1.28


(in millions)	Balance Sheet Location	May 31, 2020		November 30, 2019
Derivative assets
Derivatives designated as hedging instruments
Cross currency swaps (a)	Prepaid expenses and other	$	—	$	32
	Other assets	—		25
Total derivative assets		$	—	$	58
Derivative liabilities
Derivatives designated as hedging instruments

Cross currency swaps (a)	Accrued liabilities and other	$	—	$	1
	Other long-term liabilities	—		9
Foreign currency zero cost collars (b)	Accrued liabilities and other	2		1
Interest rate swaps (c)	Accrued liabilities and other	5		6
	Other long-term liabilities	6		9
Total derivative liabilities		$	12	$	25


(in millions)	Three months ended May 31, 2020		Six months ended May 31, 2020
Operating lease expense	$	55	$	103
Variable lease expense (a) (b)	$	(21)	$	10


	May 31, 2020
Weighted average remaining lease term - operating leases (in years)	13
Weighted average discount rate - operating leases	3.2	%


(in millions) Year
Remainder of 2020	$	92
2021	191
2022	159
2023	153
2024	145
Thereafter	1,066
Total lease payments	1,806
Less: Present value discount	(360)
Present value of lease liabilities	$	1,445


	Three Months Ended May 31,						Six Months Ended May 31,
(in millions)	2020		2019		2020		2019
North America	$	404	$	2,639	$	3,051	$	5,159
Europe	250		1,350		1,616		2,749
Australia and Asia	65		741		680		1,324
Other	21		108		182		279
	$	740	$	4,838	$	5,529	$	9,511


	Three Months Ended May 31,						Six Months Ended May 31,
(in millions, except per share data)	2020		2019		2020		2019
Net income (loss) for basic and diluted earnings per share	$	(4,374)	$	451	$	(5,155)	$	787
Weighted-average shares outstanding	721		691		702		692
Dilutive effect of equity plans	—		2		—		2
Diluted weighted-average shares outstanding	721		693		702		694
Basic earnings per share	$	(6.07)	$	0.65	$	(7.34)	$	1.14
Diluted earnings per share	$	(6.07)	$	0.65	$	(7.34)	$	1.13


(in millions)	Three Months Ended May 31, 2020	Six Months Ended May 31, 2020
Equity awards	—	1
Convertible senior notes	120	60
Total antidilutive securities	120	61


•Net revenue yields			•Estimates of ship depreciable lives and residual values
•Booking levels			•Goodwill, ship and trademark fair values
•Pricing and occupancy			•Liquidity
•Interest, tax and fuel expenses			•Adjusted earnings per share
•Currency exchange rates			•Impact of the COVID-19 coronavirus global pandemic on our financial condition and results of operations
•Net cruise costs, excluding fuel per available lower berth day


Consolidated
	Three Months Ended May 31,								% increase (decrease)			Six Months Ended May 31,								% increase (decrease)
(in millions)	2020		2019		Change						2020			2019			Change
Revenues
Passenger ticket	$	446	$	3,257	$	(2,811)	(86)	%	$	3,680		$	6,456		$	(2,776)		(43)	%
Onboard and other	294		1,580		(1,287)		(81)	%	1,849			3,054			(1,205)			(39)	%
	740		4,838		(4,098)		(85)	%	5,529			9,511			(3,981)			(42)	%
Operating Costs and Expenses
Commissions, transportation and other	297		613		(316)		(51)	%	1,064			1,322			(258)			(20)	%
Onboard and other	114		485		(371)		(77)	%	585			952			(367)			(39)	%
Payroll and related	705		566		139		24	%	1,315			1,123			192			17	%
Fuel	201		423		(222)		(52)	%	598			804			(206)			(26)	%
Food	108		269		(161)		(60)	%	385			538			(152)			(28)	%
Ship and other impairments	589		—		589		100	%	919			—			918			100	%
Other operating	471		803		(332)		(41)	%	1,142			1,562			(420)			(27)	%
	2,484		3,159		(675)		(21)	%	6,007			6,301			(294)			(5)	%

Selling and administrative	492		621		(129)		(21)	%	1,170			1,250			(80)			(6)	%
Depreciation and amortization	577		542		35		6	%	1,147			1,059			89			8	%
Goodwill impairment	1,364		—		1,364		100	%	2,096			—			2,096			100	%
	4,918		4,323		595		14	%	10,420			8,609			1,811			21	%
Operating Income (Loss)	$	(4,177)	$	515	$	(4,693)	(911)	%	$	(4,891)		$	902		$	(5,792)		(642)	%


	Three Months Ended						Six Months Ended
	May 31,						May 31,
(in millions, except per share data)	2020		2019		2020		2019
Net income (loss)
U.S. GAAP net income (loss)	$	(4,374)	$	451	$	(5,155)	$	787
(Gains) losses on ship sales and impairments	1,953		(16)		2,882		(14)
Restructuring expenses	39		—		39		—
Other	—		22		3		22
Adjusted net income (loss)	$	(2,382)	$	457	$	(2,231)	$	795
Interest expense, net of capitalized interest	182		54		237		105
Interest income	(6)		(5)		(11)		(9)
Income tax expense, net	(11)		8		—		10
Depreciation and amortization	577		542		1,147		1,059
Adjusted EBITDA	$	(1,640)	$	1,056	$	(859)	$	1,959
Weighted-average shares outstanding	721		693		702		694

Earnings per share
U.S. GAAP diluted earnings per share	$	(6.07)	$	0.65	$	(7.34)	$	1.13
(Gains) losses on ship sales and impairments	2.71		(0.02)		4.10		(0.02)
Restructuring expenses	0.05		—		0.06		—
Other	—		0.03		—		0.03
Adjusted earnings per share	$	(3.30)	$	0.66	$	(3.18)	$	1.15


(in billions)	2020		2021		2022		2023
Availability of committed future financing at May 31, 2020	$	2.8	$	2.8	$	2.3	$	0.9


	May 31, 2020
Fixed rate	49	%
EUR fixed rate	13	%
Floating rate	22	%
EUR floating rate	12	%
GBP floating rate	4	%



*			These items are furnished and not filed.
**			Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K.