false0000815097000112525900008150972021-01-112021-01-110000815097ccl:CarnivalPublicLimitedCompanyMember2021-01-112021-01-110000815097us-gaap:CommonStockMember2021-01-112021-01-110000815097ccl:OrdinarySharesMemberccl:CarnivalPublicLimitedCompanyMember2021-01-112021-01-110000815097ccl:A1625SeniorNotesDue2021Member2021-01-112021-01-110000815097ccl:A1875SeniorNotesDue2022Memberccl:CarnivalPublicLimitedCompanyMember2021-01-112021-01-110000815097ccl:A1000SeniorNotesDue2029Memberccl:CarnivalPublicLimitedCompanyMember2021-01-112021-01-11
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of
1934
Date of Report (Date of earliest event reported) January 11,
2021
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Carnival Corporation |
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Carnival plc |
(Exact name of registrant as
specified in its charter) |
(Exact name of registrant as
specified in its charter) |
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Republic of Panama
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England and Wales |
(State or other jurisdiction of
incorporation) |
(State or other jurisdiction of
incorporation) |
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001-9610 |
001-15136 |
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(Commission File Number) |
(Commission File Number) |
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59-1562976 |
98-0357772 |
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(IRS Employer Identification No.) |
(IRS Employer Identification No.) |
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3655 N.W. 87th Avenue
Miami, Florida 33178-2428
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Carnival House, 100 Harbour Parade
Southampton SO15 1ST, United Kingdom
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(Address of principal
executive offices)
(Zip Code) |
(Address of principal
executive offices)
(Zip Code) |
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(305) 599-2600
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011 44 23 8065 5000
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(Registrant’s telephone number,
including area code) |
(Registrant’s telephone number,
including area code) |
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None |
None |
(Former name or former address,
if changed since last report.) |
(Former name, former address,
if changed since last report.) |
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Check the appropriate box below if the Form 8-K
filing is intended to simultaneously satisfy the filing obligation
of the registrants under any of the following
provisions:
☐
Written communications pursuant to Rule 425 under the Securities
Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
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Common Stock ($0.01 par value) |
CCL |
New York Stock Exchange,
Inc.
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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
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CUK |
New York Stock Exchange,
Inc.
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1.625% Senior Notes due 2021 |
CCL21 |
New York Stock Exchange LLC |
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1.875% Senior Notes due 2022 |
CUK22 |
New York Stock Exchange LLC |
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1.000% Senior Notes due 2029 |
CUK29 |
New York Stock Exchange LLC |
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Indicate by check mark whether the registrants are emerging growth
companies as defined in Rule 405 of the Securities Act of 1933
(§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange
Act of 1934 (§240.12b-2) of this chapter).
Emerging growth companies
☐
If emerging growth companies, indicate by check mark if the
registrants have elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange
Act.
o
Section 2 -
Financial Information
Item 2.02
Results of Operations and Financial Condition.
On January 11, 2021, Carnival Corporation & plc (the "company")
disclosed summary preliminary financial information for the fourth
quarter ended November 30, 2020. The information set forth in Item
7.01 below concerning the fourth quarter ended November 30, 2020 is
incorporated herein.
Section 7 -
Regulation FD
Item 7.01
Regulation FD Disclosure.
The company is furnishing this Form 8-K to provide a business
update.
FOURTH QUARTER 2020 SUMMARY PRELIMINARY FINANCIAL
INFORMATION
•U.S.
GAAP net loss of $2.2 billion and adjusted net loss of $1.9 billion
for the fourth quarter of 2020.
•Fourth
quarter 2020 ended with $9.5 billion of cash and cash
equivalents.
•Cash
burn rate in the fourth quarter 2020 was slightly better than
expected due to the timing of capital expenditures.
•The
company has accelerated the removal of 19 less efficient ships, 15
of which have already left the fleet.
•Cumulative
advanced bookings for the first half of 2022 are ahead of 2019,
despite minimal advertising or marketing.
Carnival Corporation & plc President and Chief Executive
Officer Arnold Donald noted, "2020 has proven to be a true
testament to the resilience of our company. We took aggressive
actions to implement and optimize a complete pause in our guest
cruise operations across all brands globally, and developed
protocols to begin our staggered resumption, first in Italy for our
Costa brand, then followed by Germany for our AIDA brand. We are
now working diligently towards resuming operations in Asia,
Australia, the UK and the U.S. over the course of
2021."
Donald added, "With the aggressive actions we have taken, managing
the balance sheet and reducing capacity, we are well positioned to
capitalize on pent up demand and to emerge a leaner, more efficient
company, reinforcing our industry leading position."
Resumption of Guest Operations
Costa Cruises ("Costa") and AIDA Cruises ("AIDA") have resumed
limited guest cruise operations and other brands and ships are
expected to return to service over time to provide guests with
unmatched joyful vacations in a manner consistent with the
company's highest priorities, which are compliance, environmental
protection and the health, safety and well-being of its guests,
crew, shoreside employees and the people in the communities its
ships visit. The initial cruises will continue to take place with
adjusted passenger capacity and enhanced health protocols developed
with government and health authorities, and guidance from our
roster of medical and scientific experts. Many of the company's
brands source the majority of their guests from the geographical
region in which they operate. In the current environment, the
company believes this will benefit it in resuming guest cruise
operations.
Health and Safety Protocols
The company has been working with a number of world-leading public
health, epidemiological and policy experts to support its ongoing
efforts with enhanced protocols and procedures to help protect
against and mitigate the impact of COVID-19 during cruise
vacations. These advisors will continue to provide guidance based
on the latest scientific evidence and best practices for protection
and mitigation.
Working with governments, national health authorities and medical
experts, Costa and AIDA have a comprehensive set of health and
hygiene protocols that has helped facilitate a safe and healthy
return to cruise vacations. These enhanced protocols are modeled
after shoreside health and mitigation guidelines as provided by
each brand's respective country, and approved by all relevant
regulatory authorities of the flag state, Italy. Protocols will be
updated based on evolving scientific and medical knowledge related
to mitigation strategies. Costa is the first cruise company to earn
the Biosafety Trust Certification from Registro Italiano Navale
("RINA"). The certification process examined all aspects of life
onboard and ashore and assessed the compliance of the system with
procedures aimed at the prevention and control of
infections.
The company is also working directly with the Centers for Disease
Control and Prevention (“CDC”) on the development of protocols
necessary to resume cruising from the United States. The company,
in conjunction with its advisors, is currently evaluating the
requirements set forth in the CDC’s Framework for Conditional
Sailing Order effective as of October 30, 2020. The framework
consists of several initial requirements that cruise ship operators
will need to follow prior to resuming guest operations. Further,
the framework is subject to additional technical instructions and
orders from the CDC and may change based on public health
considerations. While the framework represents an important step in
our return to service, many uncertainties remain as to the
specifics, timing, and cost of implementing the requirements. The
company continues to work closely with governments and health
authorities in other parts of the world to ensure that its health
and safety protocols will also comply with the requirements of each
location.
Optimizing the Future Fleet
The company expects future capacity to be moderated by the phased
re-entry of its ships, the removal of capacity from its fleet and
delays in new ship deliveries. Since the pause in guest operations,
the company has accelerated the removal of ships in fiscal 2020
which were previously expected to be sold over the ensuing years.
The company now expects to dispose of 19 ships, 15 of which have
already left the fleet. In total, the 19 ships represent
approximately 13 percent of pre-pause capacity and only three
percent of operating income in 2019. The sale of less efficient
ships will result in future operating expense efficiencies of
approximately two percent per available lower berth day ("ALBD")
and a reduction in fuel consumption of approximately one percent
per ALBD. The company recently took delivery of two ships and
expects only one more ship to be delivered in fiscal 2021 compared
to five ships that were originally scheduled for delivery in fiscal
2021.
Based on the actions taken to date and the scheduled newbuild
deliveries through 2022, the company's fleet will be more efficient
with a roughly 14 percent larger average berth size per ship and an
average age of 12 years in 2022 versus 13 years, in each case as
compared to 2019.
Update on Bookings
Carnival Corporation & plc President and Chief Executive
Officer
Arnold Donald noted, "The booking trends that we have consistently
experienced throughout this period affirm the strong fundamental
demand for our brands which will facilitate our staggered
resumption and support the long-term growth of our
company."
At December 20, 2020, cumulative advanced bookings for the second
half of 2021 are within the historical range. Additionally, the
cumulative advanced bookings for the first half of 2022 are ahead
of 2019. (Due to the pause in guest cruise operations in 2020, the
company's future booking trends will be compared to 2019.) The
company believes the continued build in cumulative advanced
bookings for this twelve month period ending May 2022 demonstrates
the long-term demand for cruising. The company highlights this
level of bookings was achieved with minimal advertising and
marketing.
The company is providing flexibility to guests with bookings on
sailings cancelled by allowing guests to receive enhanced future
cruise credits ("FCCs") or elect to receive refunds in cash.
Enhanced FCCs increase the value of the guest's original booking or
provide incremental onboard credits. As of November 30, 2020,
approximately 45 percent of guests affected by the company's
schedule changes have received enhanced FCCs and approximately 55
percent have requested refunds.
Total customer deposits balance at November 30, 2020, was
$2.2 billion,
the majority of which are FCCs, compared to the total customer
deposits balance of $2.4 billion at August 31, 2020. The decline in
customer deposits is less than previous expectations. As of
November 30, 2020, the current portion of customer deposits
was
$1.9 billion
with minimal bookings relating to first quarter of 2021 sailings.
Approximately 60 percent of bookings taken during the quarter ended
November 30, 2020
for fiscal year 2021 were new bookings as opposed to FCCs
re-bookings, despite minimal advertising or marketing.
Increasing Liquidity
Carnival Corporation & plc Chief Financial Officer David
Bernstein noted, "We ended the year with $9.5 billion in cash and
have the liquidity in place to sustain ourselves throughout 2021,
even in a zero-revenue environment. While we raised capital mainly
through debt this year, in the last few months we opportunistically
strengthened our capital structure by raising $2.5 billion through
at-the-market equity offering programs and by the early conversion
of $1.5 billion of convertible debt. As we return to full
operations, our cash flow will be the primary driver to return to
investment grade credit over time, creating greater shareholder
value."
Due to the pause in guest operations, the company has taken
significant actions to preserve cash and secure additional
financing to increase its liquidity. Since
March, the company has raised $19 billion through a series of
transactions, including the following transactions since August 31,
2020:
•Borrowed
$3.0 billion under export credit facilities in September, October
and December 2020.
•Completed
$1.0 billion “at-the-market” equity offering program (“ATM”) that
was announced in September 2020.
•Completed
$1.5 billion ATM that was announced in November 2020.
•Retired
$590 million of its convertible notes through the issuance of
common stock in November 2020.
•Issued
$2.0 billion of senior unsecured notes in November
2020.
As of November 30, 2020, the company has a total of
$9.5 billion of cash and cash equivalents. During fiscal 2021,
the company expects to enter into financial transactions to
optimize its capital structure which may include opportunistically
enhancing liquidity.
Currently, the company is unable to predict when the entire fleet
will return to normal operations, and as a result, unable to
provide an earnings forecast. The pause in guest operations
continues to have a material negative impact on all aspects of the
company's business, including the company’s liquidity, financial
position and results of operations. The company expects a net loss
on both a U.S. GAAP and adjusted basis for the first quarter and
full year ending November 30, 2021.
The company's monthly average cash burn rate for the fourth quarter
2020 was $500 million, which was slightly better than expected due
to the timing of capital expenditures. The company expects the
monthly average cash burn rate for the first quarter 2021 to be
approximately $600 million. This rate includes ongoing ship
operating and administrative expenses, working capital changes
(excluding changes in customer deposits), interest expense and
capital expenditures (net of unfunded export credit facilities) and
also excludes scheduled debt maturities as well as other cash
collateral to be provided (which may increase in the future). The
company continues to explore opportunities to reduce its monthly
cash burn rate.
As of November 30, 2020, the company's outstanding debt maturities
are as follows:
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(in billions) |
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1Q 2021 |
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2Q 2021 |
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3Q 2021 |
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4Q 2021 |
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Principal payments on outstanding debt (a) |
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$ |
0.5 |
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$ |
0.4 |
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$ |
0.6 |
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$ |
0.3 |
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Principal payments on expected export credits |
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$ |
— |
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$ |
— |
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$ |
0.1 |
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$ |
— |
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$ |
0.5 |
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$ |
0.4 |
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$ |
0.7 |
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$ |
0.3 |
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(a)Excluding
the revolving facility. As of November 30, 2020, borrowings under
the revolving facility were $3.0 billion and mature through March
2021. We may re-borrow such amounts subject to satisfaction of the
conditions in the revolving facility agreement.
Other Information
The company is actively addressing an IT security incident
affecting two of its brands. Based on preliminary assessment and on
the information currently known, the company does not believe the
incident will have a material impact on its business, operations or
financial results.
Conference Call
The company has scheduled a conference call with analysts at 10:00
a.m. EDT (3:00 p.m. GMT) today to provide a business update. This
call can be listened to live, and additional information can be
obtained, via Carnival Corporation & plc’s website at
www.carnivalcorp.com
and
www.carnivalplc.com.
Carnival Corporation & plc is one of the world’s largest
leisure travel companies with a portfolio of nine of the world’s
leading cruise lines. With operations in North
America, Australia, Europe and Asia, its portfolio
features – Carnival Cruise Line, Princess Cruises, Holland America
Line, P&O Cruises (Australia), Seabourn, Costa
Cruises, AIDA Cruises, P&O Cruises (UK) and
Cunard.
Additional information can be found on
www.carnivalcorp.com,
www.carnivalsustainability.com,
www.carnival.com,
www.princess.com,
www.hollandamerica.com,
www.pocruises.com.au,
www.seabourn.com,
www.costacruise.com,
www.aida.de,
www.pocruises.com
and
www.cunard.com.
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MEDIA CONTACT |
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INVESTOR RELATIONS CONTACT |
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Roger Frizzell |
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Beth Roberts |
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+1 305 406 7862 |
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+1 305 406 4832 |
Cautionary Note Concerning Factors That May Affect Future
Results
Some of the statements, estimates or projections contained in this
document are “forward-looking statements” that involve risks,
uncertainties and assumptions with respect to us, including some
statements concerning future results, operations, outlooks, plans,
goals, reputation, cash flows, liquidity and other events which
have not yet occurred. These statements are intended to qualify for
the safe harbors from liability provided by Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. All statements other than statements of historical
facts are statements that could be deemed forward-looking. These
statements are based on current expectations, estimates, forecasts
and projections about our business and the industry in which we
operate and the beliefs and assumptions of our management. We have
tried, whenever possible, to identify these statements by using
words like “will,” “may,” “could,” “should,” “would,” “believe,”
“depends,” “expect,” “goal,” “anticipate,” “forecast,” “project,”
“future,” “intend,” “plan,” “estimate,” “target,” “indicate,”
“outlook,” and similar expressions of future intent or the negative
of such terms.
Forward-looking statements include those statements that relate to
our outlook and financial position including, but not limited to,
statements regarding:
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•Pricing
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•Estimates
of ship depreciable lives and residual values
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•Booking
levels
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•Goodwill,
ship and trademark fair values
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•Occupancy
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•Liquidity
and credit ratings
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•Interest,
tax and fuel expenses
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•Adjusted
earnings per share
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•Currency
exchange rates
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•Impact
of the COVID-19 coronavirus global pandemic on our financial
condition and results of operations
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Because forward-looking statements involve risks and uncertainties,
there are many factors that could cause our actual results,
performance or achievements to differ materially from those
expressed or implied by our forward looking statements. This note
contains important cautionary statements of the known factors that
we consider could materially affect the accuracy of our
forward-looking statements and adversely affect our business,
results of operations and financial position. Additionally, many of
these risks and uncertainties are currently amplified by and will
continue to be amplified by, or in the future may be amplified by,
the COVID-19 outbreak. It is not possible to predict or identify
all such risks. There may be additional risks that we consider
immaterial or which are unknown. These factors include, but are not
limited to, the following:
•COVID-19
has had, and is expected to continue to have, a significant impact
on our financial condition and operations, which impacts our
ability to obtain acceptable financing to fund resulting reductions
in cash from operations. The current, and uncertain future, impact
of the COVID-19 outbreak, including its effect on the ability or
desire of people to travel (including on cruises), is expected to
continue to impact our results, operations, outlooks, plans, goals,
reputation, litigation, cash flows, liquidity, and stock
price.
•As
a result of the COVID-19 outbreak, we may be out of compliance with
a maintenance covenant in certain of our debt facilities, for which
we have amendments for the period through November 30, 2021 with
the next testing date of February 28, 2022.
•World
events impacting the ability or desire of people to travel have and
may continue to lead to a decline in demand for
cruises.
•Incidents
concerning our ships, guests or the cruise vacation industry as
well as adverse weather conditions and other natural disasters have
in the past and may, in the future, impact the satisfaction of our
guests and crew and lead to reputational damage.
•Changes
in and non-compliance with laws and regulations under which we
operate, such as those relating to health, environment, safety and
security, data privacy and protection, anti-corruption, economic
sanctions, trade protection and tax have in the past and may, in
the future, lead to litigation, enforcement actions, fines,
penalties, and reputational damage.
•Breaches
in data security and lapses in data privacy as well as disruptions
and other damages to our principal offices, information technology
operations and system networks, including the recent ransomware
incidents, and failure to keep pace with developments in technology
may adversely impact our business operations, the satisfaction of
our guests and crew and may lead to reputational
damage.
•Ability
to recruit, develop and retain qualified shipboard personnel who
live away from home for extended periods of time may adversely
impact our business operations, guest services and
satisfaction.
•Increases
in fuel prices, changes in the types of fuel consumed and
availability of fuel supply may adversely impact our scheduled
itineraries and costs.
•Fluctuations
in foreign currency exchange rates may adversely impact our
financial results.
•Overcapacity
and competition in the cruise and land-based vacation industry may
lead to a decline in our cruise sales, pricing and destination
options.
•Inability
to implement our shipbuilding programs and ship repairs,
maintenance and refurbishments may adversely impact our business
operations and the satisfaction of our guests.
The ordering of the risk factors set forth above is not intended to
reflect our indication of priority or likelihood.
Forward-looking statements should not be relied upon as a
prediction of actual results. Subject to any continuing obligations
under applicable law or any relevant stock exchange rules, we
expressly disclaim any obligation to disseminate, after the date of
this document, any updates or revisions to any such forward-looking
statements to reflect any change in expectations or events,
conditions or circumstances on which any such statements are
based.
CARNIVAL CORPORATION & PLC
NON-GAAP FINANCIAL MEASURES
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Three Months Ended
November 30, |
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(in millions) |
2020 |
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2019 |
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Net income (loss) |
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U.S. GAAP net income
(loss) |
$ |
(2,222) |
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$ |
423 |
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(Gains) losses on ship sales and
impairments |
115 |
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(5) |
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Restructuring expenses |
5 |
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10 |
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Other |
239 |
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— |
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Adjusted net income
(loss) |
$ |
(1,862) |
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$ |
427 |
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Explanations of Non-GAAP Financial Measures
Non-GAAP Financial Measures
We use adjusted net income (loss) as a non-GAAP financial measure
of our cruise segments’ and the company’s financial performance.
This non-GAAP financial measure is provided along with U.S. GAAP
net income (loss).
We believe that gains and losses on ship sales, impairment charges,
restructuring costs and other gains and losses are not part of our
core operating business and are not an indication of our future
earnings performance. Therefore, we believe it is more meaningful
for these items to be excluded from our net income (loss), and
accordingly, we present adjusted net income (loss) excluding these
items.
The presentation of our non-GAAP financial information is not
intended to be considered in isolation from, as substitute for, or
superior to the financial information prepared in accordance with
U.S. GAAP. It is possible that our non-GAAP financial measures may
not be exactly comparable to the like-kind information presented by
other companies, which is a potential risk associated with using
these measures to compare us to other companies.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, each of the registrants has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
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CARNIVAL CORPORATION |
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CARNIVAL PLC |
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By: |
/s/ David Bernstein |
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By: |
/s/ David Bernstein |
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Name: |
David Bernstein |
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Name: |
David Bernstein |
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Title: |
Chief Financial Officer and Chief Accounting Officer |
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Title: |
Chief Financial Officer and Chief Accounting Officer |
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Date: |
January 11, 2021 |
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Date: |
January 11, 2021 |
