Company Quick10K Filing
Carnival
Price52.28 EPS4
Shares694 P/E15
MCap36,282 P/FCF8
Net Debt9,479 EBIT2,695
TEV45,761 TEV/EBIT17
TTM 2019-05-31, in MM, except price, ratios
10-Q 2020-08-31 Filed 2020-10-08
10-Q 2018-05-31 Filed 2018-06-25
10-Q 2017-08-31 Filed 2017-09-29
10-Q 2017-02-28 Filed 2017-03-30
10-K 2016-11-30 Filed 2017-01-30
10-Q 2016-08-31 Filed 2016-09-30
10-Q 2016-02-29 Filed 2016-03-31
10-Q 2015-05-31 Filed 2015-07-01
10-Q 2013-05-31 Filed 2013-07-02
8-K 2020-10-08 Earnings, Exhibits
8-K 2020-09-15 Other Events, Exhibits
8-K 2020-09-15 Earnings, Regulation FD
8-K 2020-08-15 Other Events
8-K 2020-04-08
8-K 2020-04-06
8-K 2020-04-01
8-K 2020-04-01
8-K 2020-03-31
8-K 2020-03-31
8-K 2020-03-19
8-K 2020-03-13
8-K 2019-10-28
8-K 2019-09-26
8-K 2019-08-06
8-K 2019-04-16
8-K 2019-03-26
8-K 2015-09-22
8-K 2015-06-23
8-K 2015-05-01
8-K 2015-04-23
8-K 2015-04-14
8-K 2015-03-27

CCL 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Note 1 - General
Note 2 - Revenue and Expense Recognition
Note 3 - Debt
Note 4 - Contingencies and Commitments
Note 5 - Fair Value Measurements, Derivative Instruments and Hedging Activities and Financial Risks
Note 6 - Leases
Note 7 - Segment Information
Note 8 - Earnings per Share
Note 9 - Supplemental Cash Flow Information
Note 10 - Other Assets
Note 11 - Defined Benefit Pension Plans and Restructuring Costs
Note 12 - Property and Equipment
Note 13 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 6. Exhibits.
EX-10.1 ex101q32020.htm
EX-10.2 ex102q32020.htm
EX-10.3 ex103q32020.htm
EX-10.4 ex104q32020.htm
EX-10.5 ex105q32020.htm
EX-10.6 ex106q32020.htm
EX-10.7 ex107q32020.htm
EX-31.1 ex311q32020.htm
EX-31.2 ex312q32020.htm
EX-31.3 ex313q32020.htm
EX-31.4 ex314q32020.htm
EX-32.1 ex321q32020.htm
EX-32.2 ex322q32020.htm
EX-32.3 ex323q32020.htm
EX-32.4 ex324q32020.htm

Carnival Earnings 2020-08-31

Balance SheetIncome StatementCash Flow
45362718902012201420172020
Assets, Equity
10.08.06.04.02.00.02015201620182020
Rev, G Profit, Net Income
2.11.30.4-0.4-1.3-2.12012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 2020
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: 001-9610                             Commission file number: 001-15136
Carnival Corporation
ccl-20200831_g1.jpg
Carnival plc
(Exact name of registrant as
specified in its charter)
(Exact name of registrant as
specified in its charter)
Republic of Panama
England and Wales
(State or other jurisdiction of
incorporation or organization)
(State or other jurisdiction of
incorporation or organization)
59-156297698-0357772
(I.R.S. Employer Identification No.)(I.R.S. Employer Identification No.)
3655 N.W. 87th AvenueCarnival House, 100 Harbour Parade
Miami,Florida33178-2428SouthamptonSO15 1STUnited Kingdom
(Address of principal
executive offices)
(Zip Code)
(Address of principal
executive offices)
(Zip Code)

(305)599-260001144 23 8065 5000
(Registrant’s telephone number,
including area code)
(Registrant’s telephone number,
including area code)
NoneNone
(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)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading 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 TrustCUK
New York Stock Exchange, Inc.
1.625% Senior Notes due 2021CCL21New York Stock Exchange LLC
1.875% Senior Notes due 2022CUK22New York Stock Exchange LLC
1.000% Senior Notes due 2029CUK29New York Stock Exchange LLC

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 ☑ No ☐
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filers
Accelerated filers
Non-accelerated filers
Smaller reporting companies
Emerging growth companies
1


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. ☐
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act). Yes No ☑

At October 2, 2020, Carnival Corporation had outstanding 720,568,437 shares of Common Stock, $0.01 par value.
At October 2, 2020, Carnival plc had outstanding 182,672,360 Ordinary Shares $1.66 par value, one Special Voting Share, GBP 1.00 par value and 720,568,437 Trust Shares of beneficial interest in the P&O Princess Special Voting Trust.


2

Table of Contents
CARNIVAL CORPORATION & PLC
TABLE OF CONTENTS
Page
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.

2

Table of Contents
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(UNAUDITED)
(in millions, except per share data)
 
 Three Months Ended August 31,Nine Months Ended
August 31,
 2020201920202019
Revenues
Passenger ticket$ $4,477 $3,680 $10,934 
Onboard and other31 2,056 1,881 5,110 
31 6,533 5,561 16,043 
Operating Costs and Expenses
Commissions, transportation and other34 803 1,098 2,125 
Onboard and other9 668 593 1,620 
Payroll and related248 548 1,563 1,671 
Fuel121 401 718 1,204 
Food19 284 404 821 
Ship and other impairments910 23 1,829 24 
Other operating208 805 1,349 2,367 
1,549 3,532 7,556 9,833 
Selling and administrative265 563 1,435 1,813 
Depreciation and amortization551 548 1,698 1,607 
Goodwill impairment  2,096  
2,364 4,643 12,784 13,252 
Operating Income (Loss)(2,333)1,890 (7,223)2,791 
Nonoperating Income (Expense)
Interest income3 8 15 16 
Interest expense, net of capitalized interest(310)(52)(547)(157)
Other income (expense), net(221)(19)(260)(27)
(528)(63)(793)(168)
Income (Loss) Before Income Taxes(2,861)1,827 (8,016)2,624 
Income Tax Benefit (Expense), Net2 (47)2 (56)
Net Income (Loss)$(2,858)$1,780 $(8,014)$2,567 
Earnings Per Share
Basic$(3.69)$2.58 $(11.03)$3.72 
Diluted$(3.69)$2.58 $(11.03)$3.71 

The accompanying notes are an integral part of these consolidated financial statements.
3

Table of Contents
CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
(in millions)
 
 Three Months Ended August 31,Nine Months Ended
August 31,
 2020201920202019
Net Income (Loss)$(2,858)$1,780 $(8,014)$2,567 
Items Included in Other Comprehensive Income (Loss)
Change in foreign currency translation adjustment519 (101)567 (215)
Other4 (6)60 (19)
Other Comprehensive Income (Loss)524 (107)627 (234)
Total Comprehensive Income (Loss)$(2,335)$1,674 $(7,387)$2,333 
The accompanying notes are an integral part of these consolidated financial statements.

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CARNIVAL CORPORATION & PLC
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except par values)
 
 August 31,
2020
November 30, 2019
ASSETS
Current Assets
Cash and cash equivalents$8,176 $518 
Trade and other receivables, net376 444 
Inventories349 427 
Prepaid expenses and other367 671 
  Total current assets9,268 2,059 
Property and Equipment, Net36,926 38,131 
Operating Lease Right-of-Use Assets (a)1,379 — 
Goodwill807 2,912 
Other Intangibles 1,186 1,174 
Other Assets1,252 783 
$50,818 $45,058 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings$3,374 $231 
Current portion of long-term debt2,621 1,596 
Current portion of operating lease liabilities (a)150 — 
Accounts payable691 756 
Accrued liabilities and other1,199 1,809 
Customer deposits2,150 4,735 
  Total current liabilities10,184 9,127 
Long-Term Debt18,916 9,675 
Long-Term Operating Lease Liabilities (a)
1,281 — 
Other Long-Term Liabilities934 890 
Contingencies and Commitments
Shareholders’ Equity
Common stock of Carnival Corporation, $0.01 par value; 1,960 shares authorized; 830 shares at 2020 and 657 shares at 2019 issued
8 7 
Ordinary shares of Carnival plc, $1.66 par value; 217 shares at 2020 and 2019 issued
361 358 
Additional paid-in capital10,680 8,807 
Retained earnings18,297 26,653 
Accumulated other comprehensive income (loss) (“AOCI”)(1,439)(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’ equity19,503 25,365 
$50,818 $45,058 

(a)We adopted the provisions of Leases on December 1, 2019.
The accompanying notes are an integral part of these consolidated financial statements.
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CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in millions)
 
 Nine Months Ended
August 31,
 20202019
OPERATING ACTIVITIES
Net income (loss)$(8,014)$2,567 
Adjustments to reconcile net income (loss) to net cash provided by operating activities
Depreciation and amortization1,698 1,607 
Impairments3,925 26 
Loss on repurchase of Convertible Notes224  
Share-based compensation52 38 
(Gain) loss on ship sales and other, net164 29 
(1,951)4,266 
Changes in operating assets and liabilities
Receivables25 (101)
Inventories71 22 
Prepaid expenses and other9 (220)
Accounts payable(97)(25)
Accrued liabilities and other(169)63 
Customer deposits(2,539)409 
Net cash provided by (used in) operating activities(4,649)4,414 
INVESTING ACTIVITIES
Purchases of property and equipment(1,899)(3,448)
Proceeds from sales of ships271 15 
Purchase of minority interest(81) 
Derivative settlements and other, net257 116 
Net cash provided by (used in) investing activities(1,452)(3,317)
FINANCING ACTIVITIES
Proceeds from (repayments of) short-term borrowings, net3,141 (600)
Principal repayments of long-term debt(896)(472)
Proceeds from issuance of long-term debt11,468 1,722 
Dividends paid(689)(1,041)
Purchases of treasury stock(12)(472)
Issuance of common stock, net778 4 
Other, net(91)(53)
Net cash provided by (used in) financing activities13,699 (912)
Effect of exchange rate changes on cash, cash equivalents and restricted cash63 (11)
Net increase (decrease) in cash, cash equivalents and restricted cash7,661 174 
Cash, cash equivalents and restricted cash at beginning of period530 996 
Cash, cash equivalents and restricted cash at end of period$8,191 $1,170 

The accompanying notes are an integral part of these consolidated financial statements.


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CARNIVAL CORPORATION & PLC
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(UNAUDITED)
(in millions)

Three Months Ended
Common
stock
Ordinary
shares
Additional
paid-in
capital
Retained
earnings
AOCITreasury
stock
Total shareholders’ equity
At May 31, 2019$7 $358 $8,785 $25,138 $(2,076)$(8,104)$24,108 
Net income (loss)— — — 1,780 — — 1,780 
Other comprehensive income (loss)— — — — (107)— (107)
Cash dividends declared ($0.50 per share)
— — — (342)— — (342)
Purchases of treasury stock under the Repurchase Program and other— — 13 — — (157)(144)
At August 31, 2019$7 $358 $8,798 $26,576 $(2,183)$(8,261)$25,295 
At May 31, 2020$7 $360 $9,683 $21,155 $(1,962)$(8,404)$20,840 
Net income (loss)— — — (2,858)— — (2,858)
Other comprehensive income (loss)— — — — 524 — 524 
Issuance of common stock related to the repurchase of Convertible Notes— — 222 — — — 222 
Repurchase of Convertible Notes 1 — 765 — — — 766 
Other— — 9 — — — 9 
At August 31, 2020$8 $361 $10,680 $18,297 $(1,439)$(8,404)$19,503 


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Nine Months Ended
Common
stock
Ordinary
shares
Additional
paid-in
capital
Retained
earnings
AOCITreasury
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)— — — 2,567 — — 2,567 
Other comprehensive income (loss)— — — — (234)— (234)
Cash dividends declared ($1.50 per share)
— — — (1,034)— — (1,034)
Purchases of treasury stock under the Repurchase Program and other— — 42 — — (467)(424)
At August 31, 2019$7 $358 $8,798 $26,576 $(2,183)$(8,261)$25,295 
At November 30, 2019$7 $358 $8,807 $26,653 $(2,066)$(8,394)$25,365 
Net income (loss)— — — (8,014)— — (8,014)
Other comprehensive income (loss)— — — — 627 — 627 
Cash dividends declared ($0.50 per share)
— — — (342)— — (342)
Issuance of common stock1 — 777 — — — 778 
Issuance and repurchase of Convertible Notes
1 — 1,051 — — — 1,052 
Purchases of treasury stock under the Repurchase Program and other— 2 44 — — (10)36 
At August 31, 2020$8 $361 $10,680 $18,297 $(1,439)$(8,404)$19,503 

(a)We adopted the provisions of Revenue from Contracts with Customers and Derivatives and Hedging on December 1, 2018.
The accompanying notes are an integral part of these consolidated financial statements.

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CARNIVAL CORPORATION & PLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – General

The 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.”

Liquidity and Management’s Plans

Due to the spread of COVID-19, we paused our global cruise operations in mid-March 2020. In September 2020 we began the resumption of limited guest operations as part of our anticipated phased-in return to service. Significant events affecting travel, including COVID-19, typically have an impact on booking patterns, with the full extent of the impact generally determined by the length of time the event influences travel decisions. We believe that the ongoing effects of COVID-19 on our operations and global bookings will continue to have a material negative impact on our financial results and liquidity, and such negative impact may continue well beyond the containment of such outbreak.

We cannot assure you that our assumptions used to estimate our liquidity requirements will be correct because we have never previously experienced a complete cessation of our guest cruise operations, and as a consequence, our ability to be predictive is uncertain. In addition, the magnitude, duration and speed of the global pandemic are uncertain. As a consequence, we cannot estimate the impact on our business, financial condition or near- or longer-term financial or operational results with reasonable certainty, but we continue to expect a net loss on both a U.S. GAAP and adjusted basis for the quarter and year ending November 30, 2020. We have taken and continue to take actions to improve our liquidity, including capital expenditure and operating expense reductions, accelerating the removal of certain ships from our fleet, suspending dividend payments on, and the repurchase of, common stock of Carnival Corporation and ordinary shares of Carnival plc and pursuing various capital market transactions.

Based on these actions and assumptions regarding the impact of COVID-19, we have concluded that we will be able to generate sufficient liquidity to satisfy our obligations for at least the next twelve months.

Basis of Presentation
The Consolidated Statements of Income (Loss), the Consolidated Statements of Comprehensive Income (Loss), and the Consolidated Statements of Shareholders’ Equity for the three and nine months ended August 31, 2020 and 2019, Consolidated Statement of Cash Flows for the nine months ended August 31, 2020 and 2019, and the Consolidated Balance Sheet at August 31, 2020 are unaudited and, in the opinion of our management, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement. 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 2019 joint Annual Report on Form 10-K and Form 10-K/A (“Form 10-K”) filed with the U.S. Securities and Exchange Commission on January 28, 2020 and March 31, 2020, respectively.
For the three and nine months ended August 31, 2019, we reclassified $200 million and $299 million from tour and other revenues to onboard and other revenues as well as $109 million and $198 million from tour and other costs and expenses to other operating cost and expenses in order to conform to the current year presentation.
COVID-19 Use of Estimates and Risks and Uncertainty

The preparation of our interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported and disclosed. The full extent to which the effects of COVID-19 will directly or indirectly impact our business, operations, results of operations and financial condition, including our valuation of goodwill and trademarks, impairment of ships, collectability of trade and notes receivables as well as provisions for pending litigation, will depend on future developments that are highly uncertain. We believe that we have made reasonable estimates and judgments of the impact of COVID-19 within our financial statements and there may be changes to those estimates in future periods.
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Accounting Pronouncements

On December 1, 2019, we adopted the FASB issued guidance, Leases, using the modified retrospective approach, which allows entities to either apply the new lease standard to the beginning of the earliest period presented or only to the consolidated financial statements in the period of adoption without restating prior periods. We have elected to apply the new guidance at the date of adoption without restating prior periods.

We have implemented changes to our internal controls to address the collection, recording, and accounting for leases in accordance with the new guidance. Upon adoption of the new guidance, the most significant impact was the recognition of $1.4 billion of right-of-use assets and lease liabilities relating to operating leases, reported within operating lease right-of-use assets and long-term operating lease liabilities, with the current portion of the liability reported within current portion of operating lease liabilities, in our Consolidated Balance Sheet as of December 1, 2019. There was no cumulative effect of applying the new standard and accordingly there was no adjustment to our retained earnings upon adoption. This guidance had an immaterial impact on our Consolidated Statements of Income (Loss), Consolidated Statements of Comprehensive Income (Loss), Consolidated Statements of Cash Flows and the compliance with debt covenants under our current agreements.

The FASB issued amended guidance, Intangibles - Goodwill and Other - Internal-Use Software, which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance to determine which implementation costs to capitalize as assets or expense as incurred. The expense related to deferred implementation costs is required to be presented in the same net income (loss) line item as the related hosting fees. Additionally, the payments for deferred implementation costs are required to be presented in the same line item in the Consolidated Statements of Cash Flows as payments for the related hosting fees. This guidance is required to be adopted by us in the first quarter of 2021 and we have elected to apply the guidance using a prospective approach. We do not expect the adoption of this guidance to have a significant impact on our consolidated financial statements.

The FASB issued amended guidance, Financial Instruments - Credit Losses, which requires an entity to present the net amount expected to be collected for certain financial assets, including trade receivables. On initial recognition and at each reporting period, this guidance will require an entity to recognize an allowance that reflects the entity's current estimate of credit losses expected to be incurred over the life of the financial instrument. This guidance is required to be adopted by us in the first quarter of 2021 and will be applied prospectively with a cumulative-effect adjustment to retained earnings. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

The FASB issued guidance, Debt - Debt with Conversion and Other Options and Derivative and Hedging - Contracts in Entity's Own Equity, which simplifies the accounting for convertible instruments. This guidance eliminates certain models that require separate accounting for embedded conversion features, in certain cases. Additionally, among other changes, the guidance eliminates certain of the conditions for equity classification for contracts in an entity’s own equity. The guidance also requires entities to use the if-converted method for all convertible instruments in the diluted earnings per share calculation and include the effect of share settlement for instruments that may be settled in cash or shares, except for certain liability-classified share-based payment awards. This guidance is required to be adopted by us in the first quarter of 2023 and must be applied using either a modified or full retrospective approach. We are currently evaluating the impact this guidance will have on our consolidated financial statements.

NOTE 2 – Revenue and Expense Recognition

Guest cruise deposits are initially included in customer deposit liabilities when received. Customer deposits are subsequently recognized as cruise revenues, together with revenues from onboard and other activities, and all associated direct costs and expenses of a voyage are recognized as cruise costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata basis for voyages in excess of ten nights. The impact of recognizing these shorter duration cruise revenues and costs and expenses on a completed voyage basis versus on a pro rata basis is not significant. Certain of our product offerings are bundled and we allocate the value of the bundled services and goods between passenger ticket revenues and onboard and other revenues based upon the estimated standalone selling prices of those goods and services. Guest cancellation fees, when applicable, are recognized in passenger ticket revenues at the time of cancellation.

Our sales to guests of air and other transportation to and from airports near the home ports of our ships are included in passenger ticket revenues, and the related costs of purchasing these services are included in transportation costs. The proceeds that we collect from the sales of third-party shore excursions are included in onboard and other revenues and the related costs are included in onboard and other costs. The amounts collected on behalf of our onboard concessionaires, net of the amounts
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remitted to them, are included in onboard and other revenues as concession revenues. All of these amounts are recognized on a completed voyage or pro rata basis as discussed above.

Passenger ticket revenues include fees, taxes and charges collected by us from our guests. A portion of these fees, taxes and charges vary with guest head counts and are directly imposed on a revenue-producing arrangement. This portion of the fees, taxes and charges is expensed in commissions, transportation and other costs when the corresponding revenues are recognized. For the three and nine months ended August 31, fees, taxes, and charges included in commissions, transportation and other costs were not significant and $213 million in 2020 and $186 million and $503 million in 2019. The remaining portion of fees, taxes and charges are expensed in other operating expenses when the corresponding revenues are recognized.

Revenues and expenses from our hotel and transportation operations, which are included in our Tour and Other segment, are recognized at the time the services are performed. Revenues from the long-term leasing of ships, which are also included in our Tour and Other segment, are recognized ratably over the term of the agreement.

Customer Deposits

Our payment terms generally require an initial deposit to confirm a reservation, with the balance due prior to the voyage. Cash received from guests in advance of the cruise is recorded in customer deposits and in other long-term liabilities on our Consolidated Balance Sheets. These amounts include refundable deposits. We are providing flexibility to guests with bookings on sailings cancelled due to the pause in cruise operations by allowing guests to receive enhanced future cruise credits ("FCC") or elect to receive refunds in cash. We have paid and expect to continue to pay cash refunds of customer deposits with respect to a portion of these cancelled cruises. The amount of cash refunds to be paid may depend on the level of guest acceptance of FCCs and future cruise cancellations. We record a liability for FCCs to the extent we have received cash from guests with bookings on cancelled sailings. We had customer deposits of $2.4 billion as of August 31, 2020 and $4.9 billion as of November 30, 2019. The current portion of our customer deposits was $2.1 billion as of August 31, 2020, the majority of which are FCCs. These amounts include deposits related to cancelled cruises prior to the election of a cash refund by guests. Refunds payable to guests who have elected cash refunds are recorded in accounts payable. Due to the uncertainty associated with the duration and extent of COVID-19, we are unable to estimate the amount of the August 31, 2020 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel. During the nine months ended August 31, 2020 and 2019, we recognized revenues of $3.3 billion and $4.1 billion related to our customer deposits as of November 30, 2019 and December 1, 2018. Historically, our customer deposits balance changes due to the seasonal nature of cash collections, the recognition of revenue, refund of customer deposits and foreign currency translation.

Contract Receivables

Although we generally require full payment from our customers prior to or concurrently with their cruise, we grant credit terms to a relatively small portion of our revenue source. We also have receivables from credit card merchants for cruise ticket purchases and onboard revenue. These receivables are included within trade and other receivables, net.

Contract Assets

Contract assets are amounts paid prior to the start of a voyage, which we record as an asset within prepaid expenses and other and which are subsequently recognized as commissions, transportation and other at the time of revenue recognition or at the time of voyage cancellation. We have contract assets of $17 million and $154 million as of August 31, 2020 and November 30, 2019.

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NOTE 3 – Debt

Short-Term Borrowings

At August 31, 2020, our short-term borrowings consisted primarily of $3.0 billion borrowing under our multicurrency revolving credit facility (the “Revolving Facility”), $314 million of commercial paper, $20 million of euro-denominated commercial paper and $33 million of sterling-denominated commercial paper. For the nine months ended August 31, 2020, we had borrowings of $525 million and repayments of $192 million of commercial paper with original maturities greater than three months. For the nine months ended August 31, 2019, there were no borrowings or repayments of commercial paper with original maturities greater than three months.

Export Credit Facility Borrowings

In December 2019, we borrowed $823 million under an export credit facility due in semi-annual installments through 2032.

In September 2020, we borrowed $610 million under an export credit facility due in semi-annual installments through 2032.

2023 Secured Notes

In April 2020, we issued $4.0 billion aggregate principal amount of 11.5% first-priority senior secured notes due in 2023 (the “2023 Secured Notes”). The 2023 Secured Notes mature on April 1, 2023 unless earlier redeemed or repurchased. They are guaranteed by Carnival plc and certain of our subsidiaries that own or operate our vessels and material intellectual property, and are secured by collateral, which includes vessels and material intellectual property with a net book value of $27.9 billion as of August 31, 2020 and certain other assets. Upon the occurrence of certain change of control events, we are required to offer to repurchase the 2023 Secured Notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest to the purchase date.

The indenture governing the 2023 Secured Notes contains covenants that limit our ability to, among other things: (i) incur additional indebtedness or issue certain preferred shares; (ii) make dividend payments on or make other distributions in respect of our capital stock or make other restricted payments; (iii) make certain investments; (iv) sell certain assets; (v) create liens on assets; (vi) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; and (vii) enter into certain transactions with our affiliates. These covenants are subject to a number of important limitations and exceptions.

Convertible Notes

In April 2020, we issued $2.0 billion aggregate principal amount of 5.75% convertible senior notes due 2023 (the “Convertible Notes”). The Convertible Notes mature on April 1, 2023, unless earlier repurchased or redeemed by us or earlier converted in accordance with their terms prior to the maturity date. The Convertible Notes are guaranteed on a senior unsecured basis by Carnival plc, Carnival Finance, LLC and our subsidiaries that guarantee the 2023 Secured Notes.

The Convertible Notes are convertible by holders, subject to the conditions described below, into cash, shares of Carnival Corporation common stock, or a combination thereof, at our election. The Convertible Notes have an initial conversion rate of 100 shares of Carnival Corporation common stock per $1,000 principal amount of the Convertible Notes, equivalent to an initial conversion price of $10 per share of common stock. The initial conversion price is subject to certain anti-dilutive adjustments and may also increase if the Convertible Notes are converted in connection with a tax redemption or certain corporate events.

The Convertible Notes are convertible at any time prior to the close of business on the business day immediately preceding January 1, 2023, only under the following circumstances:

during any fiscal quarter, (and only during such fiscal quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day;
during the five business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of Convertible Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of common stock and the conversion rate on each such trading day;
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prior to the close of business on the second scheduled trading day immediately preceding any tax redemption date; or
upon the occurrence of specified corporate events.

On or after January 1, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert their Convertible Notes at any time.

If we undergo certain corporate events (each, a “fundamental change”), subject to certain conditions, holders may require us to
repurchase for cash all or any portion of their Convertible Notes at a price equal to 100% of the principal amount of the
Convertible Notes to be repurchased, plus accrued and unpaid interest to the fundamental change repurchase date.

We may redeem the Convertible Notes, in whole but not in part, at any time on or prior to December 31, 2022 at a redemption price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the redemption date, if we or any guarantor would have to pay any additional amounts on the Convertible Notes due to a change in tax laws, regulations or rulings or a change in the official application, administration or interpretation thereof.

As of August 31, 2020, a condition allowing holders of the Convertible Notes to convert has been met and therefore the notes are convertible. The holders are entitled to convert all or any portion of their Convertible Notes at any time during the three months starting on September 1, 2020 and ending on November 30, 2020, at the conversion rate of 100 shares of Carnival Corporation common stock per $1,000 principal amount of Convertible Notes.

In August 2020, we completed a registered direct offering of 99.2 million shares of Carnival Corporation common stock at a price of $14.02 per share to a limited number of holders of the Convertible Notes. We used the proceeds of the stock offering to repurchase from such holders $886 million aggregate principal amount of the Convertible Notes in privately negotiated transactions, (such registered direct offering and the use of proceeds to repurchase the Convertible Notes, the “Convertible Notes Repurchase Transaction”). We recognized a $224 million extinguishment loss as a result of these transactions in other income (expense), net.

We account for the Convertible Notes as separate liability and equity components. We determined the carrying amount of the liability component as the present value of its cash flows.

The carrying amount of the equity component representing the conversion option was $286 million on the date of issuance and was calculated by deducting the carrying value of the liability component from the initial proceeds from the Convertible Notes. The excess of the principal amount of the Convertible Notes over the carrying amount of the liability component represents a debt discount that is amortized to interest expense over the term of the Convertible Notes under the effective interest rate method using an effective interest rate of 12.9%. The carrying amount of the equity component was reduced to $0 in conjunction with the partial repurchase of Convertible Notes in August 2020 because at the time of repurchase, the fair value of the equity component for the portion of the Convertible Notes that was repurchased, exceeded the total amount of the equity component recorded at the time the Convertible Notes were issued.

The net carrying value of the liability component of the Convertible Notes was as follows:

(in millions)August 31, 2020
Principal$1,127 
Less: Unamortized debt discount and transaction costs(173)
$954 

The interest expense recognized related to the Convertible Notes was as follows:

(in millions)Three Months Ended August 31, 2020Nine Months Ended August 31, 2020
Contractual interest expense$26 $43 
Amortization of debt discount and transaction costs22 37 
$47 $80 

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We had no Convertible Notes in 2019.

2025 Secured Term Loan
In June 2020, we borrowed an aggregate principal amount of $2.8 billion in two tranches ($1.9 billion and €800 million), under a first-priority senior secured term loan facility that matures on June 30, 2025 (the “2025 Secured Term Loan”). The U.S. dollar tranche bears interest at a rate per annum equal to adjusted LIBOR (with a 1% floor) plus 7.5%. The euro tranche bears interest at a rate per annum equal to EURIBOR (with a 0% floor) plus 7.5%. The 2025 Secured Term Loan is guaranteed by Carnival plc and the same subsidiaries that currently guarantee, and are secured on a first-priority basis by substantially the same collateral that currently secures, the 2023 Secured Notes, the 2026 Secured Notes and the 2027 Secured Notes. The 2025 Secured Term Loan contains covenants that are substantially similar to the covenants in the indenture governing the 2023 Secured Notes. These covenants are subject to a number of important limitations and exceptions.

2026 Secured Notes

In July 2020, we issued an aggregate principal amount of $1.3 billion in two tranches ($775 million and €425 million), under second-priority senior secured notes that mature on February 1, 2026 (the “2026 Secured Notes”). The U.S. dollar tranche bears interest at a rate of 10.5% per year. The euro tranche bears interest at a rate of 10.1% per year. The 2026 Secured Notes are guaranteed by Carnival plc and the same subsidiaries that currently guarantee, and are secured on a second-priority basis by substantially the same collateral that currently secures, the 2023 Secured Notes, the 2025 Secured Term Loan and the 2027 Secured Notes. The indenture governing the 2026 Secured Notes contains covenants that are substantially similar to the covenants in the indenture governing the 2023 Secured Notes and the 2027 Secured Notes. These covenants are subject to a number of important limitations and exceptions.

2027 Secured Notes

In August 2020, we issued an aggregate principal amount of $900 million of second-priority senior secured notes that mature on August 1, 2027 (the “2027 Secured Notes”). The 2027 Secured Notes bear interest at a rate of 9.9% per year. The 2027 Secured Notes are guaranteed by Carnival plc and the same subsidiaries that currently guarantee, and are secured on a second-priority basis by substantially the same collateral that currently secures, the 2023 Secured Notes, the 2025 Secured Term Loan and the 2026 Secured Notes. The indenture governing the 2027 Secured Notes contains covenants that are substantially similar to the covenants in the indenture governing the 2023 Secured Notes and the 2026 Secured Notes. These covenants are subject to a number of important limitations and exceptions.

Modifications and Other

In February 2020, we extended a $452 million sterling-denominated floating rate bank loan, originally maturing in 2022, to 2025 with an option to extend to 2026.

In April 2020, we amended and extended a $166 million euro-denominated fixed rate bank loan, originally maturing in September 2020, to a floating rate loan maturing in March 2021.

In July 2020, we extended a $337 million euro-denominated floating rate bank loan originally maturing in 2021 to 2022.

As of August 31, 2020, we repurchased in the open market $86 million aggregate principal amount of our $700 million 4.0% notes due in 2020 and $123 million aggregate principal amount of our $555 million 1.6% euro notes due in 2021. We recognized a related gain on early extinguishment of debt of $5 million. This gain is included in other income (expense), net in the accompanying Consolidated Statements of Income (Loss).

Certain export credit agencies have offered 12-month debt amortization and a financial covenant holiday (the “Debt Hol