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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 1996
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
CARNIVAL CORPORATION
(Exact name of registrant as specified in its charter)
Republic of Panama 59-1562976
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3655 N.W. 87th Avenue, Miami, Florida 33178-2428
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 599-2600
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of each class which registered
Class A Common Stock New York Stock
($.01 par value) Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No ___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Registrant's knowledge, in any definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ X ].
The aggregate market value of the voting stock held by non-affiliates
of the Registrant is approximately $5,250,000,000 based upon the closing
market price on February 14, 1997 of a share of Class A Common Stock on the
New York Stock Exchange as reported by the Wall Street Journal.
At February 14, 1997, the Registrant had outstanding 242,078,952 shares
of its Class A Common Stock, $.01 par value and 54,957,142 shares of its
Class B Common Stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
The information described below and contained in the Registrant's 1996
annual report to shareholders to be furnished to the Commission pursuant to
Rule 14a-3(b) of the Exchange Act is shown in Exhibit 13 and is incorporated
by reference into this Form 10-K.
Part and Item of the Form 10-K
Part II
Item 5(a) and (b). Market for the Registrant's Common Stock and Related
Stockholder Matters - Market Information and Holders.
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Item 8. Financial Statements and Supplementary Data
The information described below and contained in the Registrant's 1997
definitive Proxy Statement, to be filed with the Commission is incorporated
by reference into this Form 10-K.
Part and Item of the Form 10-K
Part III
Item 10. Directors and Executive Officers of the Registrant.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Item 13. Certain Relationships and Related Transactions.
PART I
Item 1. Business
A. General
Carnival Corporation was incorporated under the laws of the Republic of
Panama in November 1974. Carnival Corporation, including its 100% owned
subsidiaries (the "Company"), is the world's largest multiple-night cruise
company based on the number of passengers carried, revenues generated, and
available capacity. The Company offers a broad range of cruise products,
serving the contemporary cruise market through Carnival Cruise Lines
("Carnival"), the premium cruise market through Holland America Line ("HAL")
and the luxury cruise market through Windstar Cruises. In total the Company
owns and operates 22 cruise ships with an aggregate capacity of 30,837
passengers based on two passengers per cabin*. The Company also owns 50% of
Seabourn Cruise Line ("Seabourn"), which serves the luxury market with two
ships, and 29.5% of Airtours plc ("Airtours"), a leisure travel company with
two cruise ships marketed primarily in Europe. Together, Seabourn and
Airtours have a total capacity of approximately 2,350 passengers. In
addition, Airtours will begin operation of a third ship commencing in May
1997.
The eleven Carnival ships have an aggregate capacity of 20,332
passengers with itineraries in the Caribbean, the Mexican Riviera and
Alaska. The eight HAL ships have an aggregate capacity of 10,061
passengers, with itineraries in the Caribbean, the Mediterranean and Alaska
and through the Panama Canal, as well as other worldwide itineraries. The
three Windstar ships have an aggregate capacity of 444 passengers with
itineraries in the Caribbean, the South Pacific, the Mediterranean and the
Far East. The three Seabourn ships have an aggregate capacity of 612
passengers, and have itineraries throughout the world. The two Airtours
ships have itineraries in the Mediterranean, the Canary Islands and the
Caribbean.
The Company has signed agreements with various shipyards providing for
the construction of additional cruise ships. The following table reflects a
summary of these vessels under construction:
EXPECTED PASSENGER
VESSEL DELIVERY SHIPYARD CAPACITY
Carnival Cruise Lines
Elation 02/98 Masa-Yards 2,040
Paradise 11/98 Masa-Yards 2,040
Carnival Triumph 06/99 Fincantieri 2,640
Carnival Newbuild 07/00 Fincantieri 2,640
Total Carnival Cruise Lines 9,360
Holland America Line
Rotterdam VI 09/97 Fincantieri 1,320
HAL Newbuild 02/99 Fincantieri 1,440
HAL Newbuild 09/99 Fincantieri 1,440
Total Holland America Line 4,200
13,560
* In accordance with industry practice all capacities indicated within this
document are calculated based on two passengers per cabin even though some
cabins can accommodate three or four passengers.
As a result of this shipbuilding program and planned ship sales and
retirements, the Company currently expects its passenger capacity to
increase by 37% to 42,300 in mid-2000 (excluding Seabourn and Airtours).
The Company also operates a tour business, through Holland America
Westours, which markets sight-seeing tours and cruise/tour packages to
Alaska. HAL-Westours operates 16 hotels in Alaska and the Canadian Yukon,
two luxury dayboats offering tours to the glaciers of Alaska and the Yukon
River, over 290 motor coaches used for sight-seeing and charters in the
states of Washington and Alaska and twelve private domed rail cars which are
run on the Alaskan railroad between Anchorage and Fairbanks.
Historically, the Company's products have been marketed primarily in
North America through Carnival, HAL, Windstar Cruises, HAL-Westours, and
Seabourn. During 1996, the Company took steps to expand its markets into
Europe and Asia which are described below. The existing cruise markets in
Europe and Asia are much smaller and less developed than the North American
market. Cruise passengers carried in Europe and Asia in 1996 are estimated
to be approximately 1.0 million and 0.5 million, respectively, compared to
approximately 4.6 million in North America.
In April 1996, the Company acquired a 29.5% interest in Airtours, a
leisure travel company publicly traded on the London Stock Exchange that
provides air inclusive packaged holidays to the British, Scandinavian and
North American markets. In addition, in September 1996 the Company and
Hyundai Merchant Marine Co. Ltd. ("HMM") signed an agreement to form a 50/50
joint venture to develop the Asian cruise vacation market. See Part I,
"Item 1. Business, G. Investments in Affiliates", for a further description
of these businesses.
In December 1996, the Company and Airtours signed a letter of intent
with the controlling shareholders (the "Syndicate") of Costa Crociere SpA
("Costa"), a publicly traded cruise company headquartered in Italy to
acquire all of the equity securities of Costa held by the Syndicate and to
launch a tender offer for the remaining outstanding equity securities of
Costa. Costa markets its cruise products primarily in Europe. The cost of
acquisition, assuming all of the outstanding equity securities are tendered,
would be approximately $300 million cash, with the Company and Airtours each
contributing 50% of that amount. The letter of intent provides that the
commencement of the tender offer is conditioned on the successful conclusion
of a due diligence review by the Company and Airtours, the signing of a
definitive agreement with the Syndicate, the receipt of all corporate and
regulatory and government approvals, certain minimum levels of acceptance on
the tender offer and other customary conditions found in transactions of
this type.
B. Cruise Ship Segment
Industry
The passenger cruise industry as it exists today began in approximately
1970. Over time, the industry has evolved from a trans-ocean carrier service
into a vacation alternative to land-based resorts and sight-seeing
destinations. According to Cruise Lines International Association ("CLIA"),
an industry trade group, in 1970 approximately 500,000 North American
passengers took cruises for three consecutive nights or more. CLIA
estimates that this number reached 4.6 million passengers in 1996, an
average compound annual growth rate of 8.9% since 1970. Also, according to
CLIA, by the end of 1996 the number of ships in service totaled 129 with an
aggregate capacity of approximately 110,000 berths. CLIA estimates that the
number of passengers carried in North America increased from 4.38 million in
1995 to 4.6 million in 1996 or approximately 5.0%. There was no growth in
the number of passengers carried in North America during 1994 and 1995. The
Company nevertheless has been able to increase the number of passengers it
carried by approximately 200,000 in each of the past three years, or an
average of 15.2% per year.
CLIA estimates that the number of cruise passengers will grow to
approximately 4.9 million in 1997. CLIA also projects that by the end of
1997, North America will be served by 135 vessels having an aggregate
capacity of approximately 124,000 berths.
The following table sets forth the North American industry and Company
growth over the past five years based on passengers carried for at least
three consecutive nights:
NORTH AMERICAN COMPANY CRUISE
CRUISE PASSENGERS
YEAR PASSENGERS* CARRIED
(Calendar) (Fiscal)
1996 4,600,000(est) 1,764,000
1995 4,378,000 1,543,000
1994 4,448,000 1,354,000
1993 4,480,000 1,154,000
1992 4,136,000 1,153,000
*Source: CLIA.
From 1992 through 1996, the Company's average compound annual growth
rate in number of passengers carried was 11.2% versus the industry average
of 2.7%.
The Company's passenger capacity has grown from 17,973 at November 30,
1992 to 30,837 at November 30, 1996. The delivery of the Statendam,
Sensation and Maasdam in 1993 increased capacity by 4,572 berths, more than
offsetting a decrease of 906 berths related to the sale of the Mardi Gras.
During 1994, net capacity increased by 2,369 berths due to the delivery of
the Fascination and Ryndam, net of the 937 decrease in berths related to the
sale of the Carnivale. In 1995, with the delivery of the Imagination,
capacity increased by 2,040 berths. During 1996, net capacity increased by
4,802 berths due to delivery of the Inspiration, the Veendam and the
Carnival Destiny, net of the 1,146 decrease in passenger capacity related to
the sale of the Festivale.
In spite of the cruise industry's growth since 1970, the Company
believes cruises represent only approximately 2% of the applicable North
American vacation market, defined as persons who travel for leisure purposes
on trips of three nights or longer involving at least one night's stay in a
hotel. Only an estimated 7% of the North American population has ever taken
a cruise.
Cruise Ships and Itineraries
Under the Carnival Cruise Lines name, the Company serves the
contemporary market with eleven ships (the "Carnival Ships"). All of the
Carnival Ships were designed by and built for Carnival, including ten
SuperLiners which are among the largest in the cruise industry. Nine of the
Carnival Ships operate in the Caribbean and two Carnival Ships call on ports
in the Mexican Riviera. During 1996, the Carnival Ship Tropicale began
operating in Alaska during the summer season. Carnival also offers cruises
through the Panama Canal and to the Hawaiian Islands. See "Sales and
Marketing".
Through its subsidiary, HAL, the Company operates eleven ships offering
premium or luxury specialty vacations. Eight of these ships, the Rotterdam,
the Nieuw Amsterdam, the Noordam, the Westerdam, the Statendam, the Maasdam,
the Ryndam and the Veendam are operated under the Holland America Line name
(the "HAL Ships"). The remaining three ships, the Wind Star, the Wind Song
and the Wind Spirit, are operated under the Windstar Cruises name (the
"Windstar Ships").
The HAL Ships offer premium cruises of various lengths, in the
Caribbean, Alaska, Panama Canal, Europe, the Mediterranean, Hawaii, Mexico,
South Pacific, South America and the Orient. Cruise lengths vary from one
to 99 days, with a large proportion of cruises being seven or ten days in
length. Periodically, the HAL Ships make longer grand cruises or operate on
short-term special itineraries. For example, in 1996, the Rotterdam made a
99-day world cruise, and a 50-day Grand South America voyage. HAL will
continue to offer these special and longer itineraries in order to increase
travel opportunities for its customers and strengthen its cruise offerings
in view of the fleet expansion. The majority of the HAL Ships operate in
the Caribbean during fall to early spring and in Alaska during late spring
to early fall. The three Windstar Ships currently operate in the Caribbean,
the Mediterranean and the South Pacific.
The following table presents summary information concerning the
Company's ships. Areas of operation are based on current itineraries and
are subject to change.
YEAR
FIRST IN GROSS LENGTH PRIMARY
COMPANY PAX REGISTERED & AREAS OF
NAME REGISTRY BUILT SERVICE CAP* TONS WIDTH OPERATION
Carnival Cruise Lines
Carnival Destiny Panama 1996 1997 2,642 101,000 893/116 Caribbean
Inspiration Panama 1996 1996 2,040 70,367 855/104 Caribbean
Imagination Panama 1995 1995 2,040 70,367 855/104 Caribbean
Fascination Panama 1994 1994 2,040 70,367 855/104 Caribbean
Sensation Panama 1993 1993 2,040 70,367 855/104 Caribbean
Ecstasy Liberia 1991 1991 2,040 70,367 855/104 Caribbean
Fantasy Liberia 1990 1990 2,044 70,367 855/104 Bahamas
Celebration Liberia 1987 1987 1,486 47,262 738/92 Caribbean
Jubilee Panama 1986 1986 1,486 47,262 738/92 Mexican
Riviera
Holiday Panama 1985 1985 1,452 46,052 727/92 Mexican
Riviera
Tropicale** Liberia 1982 1982 1,022 36,674 660/85 Alaska,
Caribbean
Total Carnival Ships Capacity......... 20,332
Holland America Line
Veendam Bahamas 1996 1996 1,266 55,451 720/101 Alaska,
Caribbean
Ryndam Netherlands 1994 1994 1,266 55,451 720/101 Alaska,
Caribbean
Maasdam Netherlands 1993 1993 1,266 55,451 720/101 Europe,
Caribbean
Statendam Netherlands 1993 1993 1,266 55,451 720/101 Alaska,
Caribbean
Westerdam Netherlands 1986 1988 1,494 53,872 798/95 Canada,
Caribbean
Noordam Netherlands 1984 1984 1,214 33,930 704/89 Alaska,
Caribbean
Nieuw Amsterdam Netherlands 1983 1983 1,214 33,930 704/89 Alaska,
Caribbean
Rotterdam V** Netherlands 1959 1959 1,075 37,783 749/94 Alaska,
Worldwide
Total HAL Ships Capacity.............. 10,061
Windstar Cruises
Wind Spirit Bahamas 1988 1988 148 5,736 440/52 Caribbean,
Mediterranean
Wind Song Bahamas 1987 1987 148 5,703 440/52 South
Pacific
Wind Star Bahamas 1986 1986 148 5,703 440/52 Caribbean,
Mediterranean
Total Windstar Ships Capacity........ 444
Total Capacity.......................... 30,837
* In accordance with industry practice passenger capacity is calculated
based on two passengers per cabin even though some cabins can accommodate
three or four passengers.
** In November 1996, Carnival Cruise Lines' cruise ship Tropicale was sold
to the joint venture with HMM and the Company chartered the vessel back
until the vessel enters service with the joint venture in the spring of
1998. Holland America Line's Rotterdam V is expected to be replaced in
September 1997 by the Rotterdam VI, which is currently under construction.
__________________________
Cruise Ship Construction
The Company is currently constructing four cruise ships to be operated
under the Carnival name and three cruise ships to be operated under the
Holland America Line name. The following table presents summary information
concerning ships under construction:
EXPECTED PAX ESTIMATED REMAINING
VESSEL DELIVERY SHIPYARD CAP (1) TONS COST TO BE PAID
(In millions)
Carnival Cruise Lines
Elation 02/98 Masa-Yards 2,040 70,367 $ 300 $ 281
Paradise 11/98 Masa-Yards 2,040 70,367 300 283
Carnival Triumph 06/99 Fincantieri(2) 2,640 101,000 400 372
Carnival Newbuild 07/00 Fincantieri 2,640 101,000 430 430
Total Carnival Ships Capacity 9,360 1,430 1,366
Holland America Line
Rotterdam VI 09/97 Fincantieri(2) 1,320 62,000 270 199
HAL Newbuild 02/99 Fincantieri(2) 1,440 63,000 300 286
HAL Newbuild 09/99 Fincantieri(2) 1,440 63,000 300 286
Total HAL Ships Capacity 4,200 870 771
Total 13,560 $2,300 $2,137
(1) In accordance with cruise industry practice, passenger capacity is
calculated based on two passengers per cabin even though some cabins can
accommodate three or four passengers.
(2) The construction contracts with such shipyards are denominated in
Italian Lire. Contracts denominated in a foreign currency have been fixed
into U.S. Dollars through the utilization of forward currency contracts.
Cruise Tariffs
The table below sets forth certain price information for the Company's
cruises. Brochure prices vary depending upon size and location of cabin,
the time of year that the voyage takes place, and when the booking is made.
The cruise brochure price includes a wide variety of activities and
facilities, such as a fully equipped casino, nightclubs, theatrical shows,
movies, parties, a discotheque, a health club and swimming pools on each
ship. The brochure price also includes numerous dining opportunities daily.
Brochure pricing information below is per person based on double
occupancy:
AREA OF OPERATION CRUISE LENGTH PRICE RANGE
Carnival Cruise Lines
Caribbean 3-day $ 519--939
4-day 599--1,169
7-day 999--2,599
Mexico 3-day 519--939
4-day 599--1,099
7-day 999--2,049
Alaska 7-day 1,399--2,749
Holland America Line
Alaska 7-day $ 1,025--7,000
Caribbean 7-day 1,262--5,775
10-day 2,032--6,000
Europe 10- to 12-day 3,375--14,045
Panama Canal 10- to 22-day 2,795--15,400
Windstar Cruises
Caribbean 7-day $ 3,195--3,295
Mediterranean 7- to 16-day 2,695--6,095
South Pacific 7-day 3,195--3,495
Brochure prices are regularly discounted through the Company's early
booking discount program and other promotions.
On-Board and Other Revenues
The Company derives revenues from certain on-board activities and
services including casino gaming, liquor sales, gift shop sales, shore
tours, photography and promotional advertising by merchants located in ports
of call.
The casinos, which contain slot machines and gaming tables including
blackjack, craps, roulette and stud poker, are generally open only when the
ships are at sea in international waters. The Company also earns revenue
from the sale of alcoholic and other beverages. Certain onboard activities
are managed by independent concessionaires from which the Company collects a
percentage of revenues, while certain other activities are managed by the
Company.
The Company receives additional revenue from the sale to its passengers
of shore excursions at each ship's ports of call. On the Carnival Ships,
such shore excursions are operated by independent tour operators and include
bus and taxi sight-seeing excursions, local boat and beach parties, and
nightclub and casino visits. On the HAL Ships, shore excursions are
operated by Holland America Westours and independent parties.
In conjunction with its cruise vacations on the Carnival Ships, the
Company sells pre-cruise and post-cruise land packages. Such packages
generally include one, two or three-night vacations at locations such as
Walt Disney World in Orlando, Florida or resorts in the South Florida and
the San Juan, Puerto Rico areas.
In conjunction with its cruise vacations on the HAL Ships, HAL sells
pre-cruise and post-cruise land packages which are more fully described
below. (See "Item 1. Business - Tour Segment")
Passengers
The following table sets forth the aggregate number of passengers
carried and percentage occupancy for the Company's ships for the periods
indicated:
FISCAL YEAR ENDED NOVEMBER 30,
1996 1995 1994
Number of Passengers 1,764,000 1,543,000 1,354,000
Occupancy Percentage* 107.6% 105.0% 104.0%
- -----------------------------------------
*In accordance with cruise industry practice, total capacity is
calculated based on two passengers per cabin even though some cabins can
accommodate three or four passengers. Occupancy percentages in excess of
100% indicate that more than two passengers occupied some cabins.
- -----------------------------------------
The following table sets forth the actual occupancy percentage for all
cruises on the Company's ships during each quarter for the fiscal years
ended November 30, 1995 and November 30, 1996:
OCCUPANCY
QUARTER ENDING PERCENTAGE
February 28, 1995 99.9
May 31, 1995 100.3
August 31, 1995 114.6
November 30, 1995 104.6
February 29, 1996 107.1
May 31, 1996 107.2
August 31, 1996 114.5
November 30, 1996 101.1
Sales and Marketing
The Company's products are positioned to appeal to the contemporary,
premium and luxury-specialty segments. The luxury-specialty segment, which
is not as large as the other segments, is served by cruises with per diems
of $300 or higher. The premium segment typically is served by cruises that
last for 7 to 14 days or more at per diems of $250 or higher, and appeal
principally to more affluent customers. The contemporary segment, on the
other hand, is served typically by cruises that are 7 days or shorter in
length, are priced at per diems of $200 or less, and feature a casual
ambiance. The Company believes that the success and growth of the Carnival
cruises is attributable in large part to its early recognition of this
market segmentation and its efforts to reach and promote the expansion of
the contemporary segment.
Carnival Cruise Lines
Carnival believes that its success is due in large part to its unique
product positioning within the industry. Carnival markets the Carnival Ship
cruises not only as alternatives to competitors' cruises, but as vacation
alternatives to land-based resorts and sight-seeing destinations. Carnival
seeks to attract passengers from the broad vacation market, including those
who have never been on a cruise ship before and who might not otherwise
consider a cruise as a vacation alternative. Carnival's strategy has been to
emphasize the cruise experience itself rather than particular destinations,
as well as the advantages of a prepaid, all-inclusive vacation package.
Carnival markets the Carnival Ship cruises as the "Fun Ships " experience,
which includes a wide variety of shipboard activities and entertainment,
such as full-scale casinos and nightclubs, an atmosphere of pampered service
and high quality food.
The Company markets the Carnival Ships as the "Fun Ships " and uses the
themes "Carnival's Got the Fun " and "The Most Popular Cruise Line in the
World ", among others. Carnival advertises nationally directly to consumers
on network television and through extensive print media utilizing its
spokesperson, Kathie Lee Gifford. Carnival believes its advertising
generates interest in cruise vacations generally and results in a higher
degree of consumer awareness of the "Fun Ships " concept and the "Carnival "
name. Substantially all of Carnival's cruise bookings are made through
travel agents, which arrangement is encouraged as a matter of policy. In
fiscal 1996, Carnival took reservations from about 31,000 of approximately
48,000 travel agencies in the United States and Canada. Travel agents
receive a standard commission of 10% (15% in the State of Florida), plus the
potential of an additional commission based on sales volume. Moreover,
because cruise vacations are substantially all-inclusive, sales of Carnival
cruise vacations yield a significantly higher commission to travel agents
than selling air tickets and hotel rooms. During fiscal 1996, no one travel
agency accounted for more than 2% of Carnival's revenues.
Carnival engages in substantial promotional efforts designed to
motivate and educate retail travel agents about its "Fun Ships " cruise
vacations. Carnival employs approximately 90 business development managers
and 30 in-house service representatives to motivate independent travel
agents and promote its cruises. Carnival believes it has one of the largest
sales forces in the industry.
To facilitate access and to simplify the reservation process, Carnival
employs approximately 360 reservation agents to take bookings from
independent travel agents. Carnival's fully-automated reservation system
allows its reservation agents to respond quickly to book cabins on its
ships. In addition, through Leisure Shopper and Cruise Director, travel
agents have the ability to make reservations through computer terminals
directly into Carnival's computerized reservations system. Carnival has a
policy of pricing comparable cabins (based on cabin size, location, vessel
class and length of voyage) on its various ships at the same rate within its
brochures ("common rating"). Through common rating, Carnival is able to
offer customers a wider variety of voyages for the same price, which the
Company believes improves occupancy on all its cruises. However, discounts
from brochure prices may vary depending upon the ship, itinerary, time of
year and demand for each cruise.
Carnival's cruises generally are substantially booked several months in
advance of the sailing date. This lead time allows Carnival to adjust its
prices, if necessary, in relation to demand for available cabins, as
indicated by the level of advance bookings. Carnival's SuperSaver fares,
introduced several years ago, are designed to encourage potential passengers
to book cruise reservations earlier, which helps the Company to more
effectively manage yields (pricing and occupancy). Carnival's payment terms
require that a passenger pay approximately 15% of the cruise price within 7
days of the reservation date and the balance not later than 45 days before
the sailing date for 3- and 4-day cruises and 60 days before the sailing
date for 7-day cruises.
Holland America Line (HAL) and Windstar
The HAL and Windstar Ships cater to the premium and luxury-specialty
markets, respectively. The Company believes that the hallmarks of the HAL
experience are beautiful ships and gracious, attentive service. HAL
communicates this difference as "A Tradition of Excellence ", a reference to
its long standing reputation as a first class and grand cruise line.
Substantially all of HAL's bookings are made through travel agents,
which arrangement HAL encourages as a matter of policy. In fiscal 1996, HAL
took reservations from about 22,000 of approximately 48,000 travel agencies
in the United States and Canada. Travel agents receive a standard
commission of between 10% and 15%, depending upon the specific cruise
product sold, with the potential for override commissions based upon sales
volume. During 1996, no one travel agency accounted for more than 1% of
HAL's total revenue.
HAL has focused much of its recent sales effort at creating an
excellent relationship with the travel agency community. This is related to
the HAL marketing philosophy that travel agents have a large impact on the
consumer cruise selection process and will recommend HAL more often because
of its excellent reputation for service to both consumers and independent
travel agents. HAL solicits continuous feedback from consumers and the
independent travel agents making bookings with HAL to insure they are
receiving excellent service.
HAL's marketing communication strategy is primarily composed of
newspaper and magazine advertising, large scale brochure distribution and
direct mail solicitations to past passengers (referred to as "alumni") and
television. HAL engages in substantial promotional efforts designed to
motivate and educate retail travel agents about its products. HAL employs
approximately 50 field sales representatives, 25 teleaccount sales
representatives and 15 sales and service representatives to support the
field sales force. To facilitate access to HAL and to simplify the
reservation process for the HAL ships, HAL employs approximately 260
reservation agents to take bookings from travel agents. In addition,
through Leisure Shopper and Cruise Director, travel agents have the ability
to make reservations directly into HAL's reservations system. HAL's cruises
generally are booked several months in advance of the sailing date.
Windstar Cruises has its own marketing and reservations staff. Field
sales representatives for both HAL and Carnival act as field sales
representatives for Windstar. Marketing efforts are primarily devoted to a)
travel agent support and awareness, b) direct mail solicitation of past
passengers and c) distribution of brochures. The marketing features the
distinctive nature of the graceful, modern sail ships and the distinctive
"casually elegant" experience on "intimate itineraries" (apart from the
normal cruise experience). Windstar's cruise market positioning is embodied
in the phrase "180 degrees from ordinary ".
Seasonality
The Company's different businesses experience varying degrees of
seasonality. The Company's revenue from the sale of passenger tickets for
Carnival Cruise Lines' ("Carnival") ships is moderately seasonal.
Historically, demand for Carnival cruises has been greater during the
periods from late June through August and lower during the fall months. HAL
cruise revenues are more seasonal than Carnival's cruise revenues. Demand
for HAL cruises is strongest during the summer months when HAL ships operate
in Alaska and Europe for which HAL obtains higher pricing. Demand for HAL
cruises is lower during the winter months when HAL ships sail in more
competitive markets.
Competition
In addition to competing with each other, cruise lines compete for
consumer disposable leisure time dollars with other vacation alternatives
such as land-based resort hotels and sight-seeing destinations, and public
demand for such activities is influenced by general economic conditions.
As described under Part I, Item 1. Business, B. Cruise Ship Segment,
Industry, the North American cruise industry had an aggregate of 129 ships
and 110,000 berths at the end of 1996. From the end of 1996 through the end
of 1999, the Company currently estimates 22 new ships will be introduced
into the North American market with a capacity of approximately 35,000
berths. The estimate of new ship introductions is based on scheduled ship
deliveries and could increase. The lead time for design, construction and
delivery of a typical cruise ship is approximately two to three years. Over
the last several years as new vessels were introduced by the Company and
some of its competitors a number of older vessels were removed from service
in the North American market due to age or lack of profitability. The
Company believes that this trend may continue in the future. Nonetheless,
net capacity in the North American cruise market will most likely increase
over the next several years and thus may increase the levels of competition
within the industry.
The Company, including all its cruise products, is the largest cruise
company in the world based on passengers carried, revenues generated and
available capacity. The primary methods of competition among cruise lines
are in the areas of cruise pricing, cruise product and cruise destination.
A discussion of each of the Company's cruise products and its primary cruise
competition is included below.
The Carnival ships compete with cruise ships operated by six different
cruise lines which operate year round from Florida, California and Puerto
Rico with similar itineraries and with ten other cruise lines operating
seasonally from other ports in Florida, California and Puerto Rico,
including cruise ships operated by HAL. Competition for cruise passengers
is substantial. Ships operated by Royal Caribbean Cruise Line and Norwegian
Cruise Line sail regularly from Miami and Celebrity Cruises sails regularly
from Ft. Lauderdale on itineraries similar to those of the Carnival Ships.
Carnival competes year round with ships operated by Royal Caribbean Cruise
Line embarking from Los Angeles to the west coast of Mexico. Cruise lines
such as Norwegian Cruise Line, Royal Caribbean Cruise Line and Princess
Cruises offer voyages competing with Carnival from San Juan to the
Caribbean. The Walt Disney Co. has announced that it intends to enter the
cruise market with two ships in 1998.
In Alaska, HAL and Carnival compete directly with cruise ships operated
by ten different cruise lines with the largest competitors being Princess
Cruises and Royal Caribbean Cruise Line. Over the past several years, there
has been a steady increase in the available capacity among all cruise lines
operating in Alaska. In the Caribbean, HAL competes with cruise ships
operated by 16 different cruise lines, its primary competitors being
Princess Cruises, Royal Caribbean Cruise Line, Celebrity Cruises and
Norwegian Cruise Line, as well as the Carnival Ships.
Governmental Regulation
The Ecstasy, Fantasy, Celebration and Tropicale are Liberian flagged
ships and the balance of the Carnival Ships are registered in Panama. The
Ryndam, Maasdam, Statendam, Westerdam, Noordam, Nieuw Amsterdam and the
Rotterdam are registered in the Netherlands, while the Veendam is flagged in
the Bahamas. The Windstar Ships are registered in the Bahamas. The ships
are subject to inspection by the United States Coast Guard for compliance
with the Convention for the Safety of Life at Sea and by the United States
Public Health Service for sanitary standards. The Company is also regulated
by the Federal Maritime Commission, which, among other things, certifies
ships on the basis of the ability of the Company to meet obligations to
passengers for refunds in case of nonperformance. The Company believes it
is in compliance with all material regulations applicable to its ships and
has all licenses necessary to the conduct of its business. In connection
with a significant portion of its Alaska cruise operations, HAL relies on a
concession permit from the National Park Service, which is periodically
renewed, to operate its cruise ships in Glacier Bay National Park. There
can be no assurance that the permits will continue to be renewed or that
regulations relating to the renewal of such permits, including preference
rights, will remain unchanged in the future.
The International Maritime Organization has adopted safety standards as
part of the "Safety of Life at Sea" ("SOLAS") Convention, applicable
generally to all passenger ships carrying 36 or more passengers.
Generally, SOLAS imposes enhanced vessel structural requirements designed to
improve passenger safety. The SOLAS requirements are phased in through the
year 2010. However, certain stringent SOLAS fire safety requirements must
be implemented by October 1997. The Company believes that its ships,
excluding the Rotterdam V which is scheduled for removal from service in
September 1997, either currently meet or will meet the 1997 SOLAS
requirements without significant additional expenditures.
Public Law 89-777 administered by the Federal Maritime Commission
("FMC") requires most cruise line operators to establish financial
responsibility for nonperformance of transportation. The FMC's regulations
require that a cruise line demonstrate its financial responsibility through
a guaranty, escrow arrangement, surety bond, insurance or self-insurance.
Currently, the amount required must equal 110% of the cruise line's highest
amount of customer deposits over a two-year period up to a maximum coverage
level of $15 million, subject to a sliding scale. The FMC has proposed
increasing the coverage requirements under the FMC regulations. The
proposed new regulations are viewed favorably by the Company and are not
expected to have a material effect on the Company. The FMC has received
public comments regarding the proposed regulations and may take final action
at any time.
From time to time, various other regulatory and legislative changes
have been or may in the future be proposed that could have an effect on the
cruise industry in general.
Financial Information
For financial information about the Company's cruise ship segment with
respect to the three fiscal years ended November 30, 1996, see Note 10
"Segment Information" to the Company's Consolidated Financial Statements in
Exhibit 13 incorporated by reference into this Annual Report on Form 10-K.
C. Tour Segment
In addition to its cruise business, HAL markets sight-seeing tours
separately and as a part of cruise/tour packages under the Holland America
Westours name. Tour operations are based in Alaska, Washington State and
western Canada. Since a substantial portion of Holland America Westours'
business is derived from the sale of tour packages in Alaska during the
summer tour season, tour operations are highly seasonal.
Holland America Westours
Holland America Line-Westours Inc. ("Holland America Westours") is a
wholly-owned subsidiary of HAL. The group of subsidiaries which together
comprise the tour operations perform three independent yet interrelated
functions. During 1996, as part of an integrated travel program to
destinations in Alaska, the tour service group offered 43 different tour
programs varying in length from 7 to 21 days. The transportation group and
hotel group support the tour service group by supplying facilities needed to
conduct tours. Facilities include dayboats, motor coaches, rail cars and
hotels.
Two luxury dayboats perform an important role in the integrated Alaska
travel program offering tours to the glaciers and fjords of Alaska and the
Yukon River. The Yukon Queen cruises the Yukon River between Dawson City,
Yukon Territory and Eagle, Alaska and the Ptarmigan operates on Portage Lake
in Alaska. The two dayboats have a combined capacity of 249 passengers.
A fleet of over 290 motor coaches using the trade name Gray Line
operates in Alaska, Washington and western Canada. These motor coaches are
used for extended trips, city sight-seeing tours and charter hire. HAL
conducts its tours both as part of a cruise/tour package and as individual
sight-seeing products sold under the Gray Line name. In addition, HAL
operates express Gray Line motor coach service between downtown Seattle and
the Seattle-Tacoma International Airport.
Twelve private domed rail cars, which are called "McKinley Explorers",
run on the Alaska railroad between Anchorage and Fairbanks, stopping at
Denali National Park.
In connection with its tour operations, HAL owns or leases motor coach
maintenance shops in Seattle, and at Juneau, Fairbanks, Anchorage, Skagway
and Ketchikan in Alaska. HAL also owns or leases service offices at
Anchorage, Denali Park, Fairbanks, Juneau, Ketchikan and Skagway in Alaska,
at Whitehorse in the Yukon Territory, in Seattle and at Vancouver in British
Columbia. Certain real property facilities on federal land are used in HAL's
tour operations pursuant to permits from the applicable federal agencies.
Westmark Hotels
HAL owns and/or operates 16 hotels in Alaska and the Canadian Yukon
under the name Westmark Hotels. Four of the hotels are located in Canada's
Yukon Territory and offer a combined total of 585 rooms. The remaining 12
hotels, all located throughout Alaska, provide a total of 1,649 rooms,
bringing the total number of hotel rooms to 2,234.
The hotels play an important role in HAL's tour program during the
summer months when they provide accommodations to the tour passengers. The
hotels located in the larger metropolitan areas remain open during the
entire year, acting during the winter season as centers for local community
activities while continuing to accommodate the traveling public. HAL hotels
include dining, lounge and conference or meeting room facilities. Certain
hotels have gift shops and other tourist services on the premises.
The hotels are summarized in the following table:
OPEN DURING
HOTEL NAME LOCATION ROOMS 1996 SEASON
Alaska Hotels:
Westmark Anchorage Anchorage 198 year-round
Westmark Inn Anchorage 90 seasonal
Westmark Inn Fairbanks 173 seasonal
Westmark Fairbanks Fairbanks 238 year-round
Westmark Juneau Juneau 105 year-round
The Baranof Juneau 193 year-round
Westmark Cape Fox Ketchikan 72 year-round
Westmark Kodiak Kodiak 81 year-round
Westmark Shee Atika Sitka 101 year-round
Westmark Inn Skagway Skagway 209 seasonal
Westmark Tok Tok 92 seasonal
Westmark Valdez Valdez 97 year-round
Canadian Hotels (Yukon Territory):
Westmark Inn Beaver Creek 174 seasonal
Westmark Klondike Inn Whitehorse 99 seasonal
Westmark Whitehorse Whitehorse 181 year-round
Westmark Inn Dawson 131 seasonal
Thirteen of the hotels are owned by a HAL subsidiary. The remaining
three hotels, Westmark Anchorage, Westmark Cape Fox and Westmark Shee Atika,
are operated by Westmark under arrangements involving third parties such as
management agreements and leases.
For the hotels that operate year-round, the occupancy percentage for
1996 was 58%, and for the hotels that operate only during the summer months,
the occupancy percentage for 1996 was 79%.
Seasonality
The Company's tour revenues are extremely seasonal with a large
majority generated during the late spring and summer months in connection
with the Alaska cruise season. Holland America Westours' tours are
conducted in Washington State, Canada and Alaska. The Alaska tours coincide
to a great extent with the Alaska cruise season, May through September.
Washington tours are conducted year-round although demand is greatest during
the summer months. During periods in which tour demand is low, HAL seeks to
maximize its motor coach charter activity such as operating charter tours to
ski resorts in Washington and Canada.
Sales and Marketing
HAL tours are marketed both separately and as part of cruise-tour
packages. Although most HAL cruise-tours include a HAL cruise as the cruise
segment, other cruise lines also market HAL tours as a part of their cruise-
tour packages and sight-seeing excursions. Tours sold separately are
marketed through independent travel agents and also directly by HAL,
utilizing sales desks in major hotels. General marketing for the hotels is
done through various media in Alaska, Canada and the continental United
States. Travel agents, particularly in Alaska, are solicited, and displays
are used in airports in Seattle, Washington, Portland, Oregon and various
Alaskan cities. Rates at Westmark Hotels are on the upper end of the scale
for hotels in Alaska and the Canadian Yukon.
Concessions
Certain tours in Alaska are conducted on federal property requiring
concession permits from the applicable federal agencies such as the National
Park Service or the United States Forest Service.
Competition
Holland America Westours competes with independent tour operators and
motor coach charter operators in Washington, Alaska and the Canadian
Rockies. The primary competitors in Alaska are Princess Tours (which owns
approximately 130 motor coaches and three hotels) and Alaska
Sightseeing/Trav-Alaska (which owns approximately 40 motor coaches). The
primary competitor in Washington is Gazelle (with approximately 18 motor
coaches).
Westmark Hotels compete with various hotels throughout Alaska,
including the Super 8 national motel chain, many of which charge prices
below those charged by HAL. Dining facilities in the hotels also compete
with the many restaurants in the same geographic areas.
Government Regulation
HAL's motor coach operations are subject to regulation both at the
federal and state levels, including primarily the U.S. Department of
Transportation, the Washington Utilities Department of Transportation, the
British Columbia Motor Carrier Commission and the Alaska Department of
Transportation. Certain of HAL's tours involve federal properties and are
subject to regulation by various federal agencies such as the National Park
Service, the Federal Maritime Administration and the U.S. Forest Service.
In connection with the operation of its beverage facilities in the
Westmark Hotels, HAL is required to comply with state, county and/or city
ordinances regulating the sale and consumption of alcoholic beverages.
Violations of these ordinances could result in fines, suspensions or
revocation of such licenses and preclude the sale of any alcoholic beverages
by the hotel involved.
In the operation of its hotels, HAL is required to comply with
applicable building and fire codes. Changes in these codes have in the past
and may in the future, require substantial capital expenditures to insure
continuing compliance such as the installation of sprinkler systems.
Financial Information
For financial information about the Company's tour segment with respect
to the three fiscal years ended November 30, 1996, see Note 10 "Segment
Information" to the Company's Consolidated Financial Statements in Exhibit
13 incorporated by reference into this Annual Report on Form 10-K.
D. Employees
The Company's Carnival operations have approximately 1,400 full-time
and 300 part-time employees engaged in shoreside operations. Carnival also
employs approximately 360 officers and 8,900 crew and staff on the Carnival
Ships.
The Company's HAL operations have approximately 3,200 employees engaged
in shoreside, tour and hotel operations, of which approximately 1,500
employees hold part-time/seasonal positions. HAL also employs approximately
250 officers and 3,700 crew and staff on the HAL Ships and Windstar Ships.
Due to the seasonality of its Alaska and Canadian operations, HAL tends to
increase its work force during the summer months, employing significant
additional full-time and part-time personnel. HAL has entered into
agreements with unions covering employees in certain of its hotels and
certain of its tour and ship employees.
The Company considers its employee relations generally to be good.
E. Suppliers
The Company's largest purchases are for airfare, advertising, fuel,
food and related items, hotel supplies and products related to passenger
accommodation. Although the Company chooses to use a limited number of
suppliers for most of its food and fuel purchases, most of the necessary
supplies are available from numerous sources at competitive prices. The use
of a limited number of suppliers enables the Company to obtain volume
discounts.
F. Insurance
The Company maintains insurance covering legal liabilities related to
crew, passengers and other third parties on the Carnival Ships and the HAL
Ships in operation through The Standard Steamship Owners Protection &
Indemnity Association (Europe) Limited (the "SSOPIA") and the Steamship
Mutual Underwriting Association Ltd. (the "SMUAL"). The amount and terms of
these insurances are governed by the rules of the foregoing associations.
The Company currently maintains insurance on the hull and machinery of
each vessel in amounts equal to the approximate market value of each vessel.
The Company maintains war risk insurance on each vessel which includes legal
liability to crew and passengers including terrorist risks for which
coverage would be excluded from SSOPIA or SMUAL. The coverage for hull and
machinery and war risks is effected with international markets, including
underwriters at Lloyds. The Company, as currently required by the FMC,
maintains at all times two $15 million performance bonds for the Carnival
Ships, and the HAL and Windstar Ships, respectively, to cover passenger
ticket liabilities in the event of a canceled or interrupted cruise. See
"CRUISE SHIP SEGMENT - Government Regulation" for a discussion of changes to
the performance bond requirements proposed by the FMC.
The Company maintains certain levels of self insurance for liabilities
and hull and machinery through the use of substantial deductibles. Such
deductibles may be increased in the future. The Company does not carry
coverage related to loss of earnings or revenues for its cruise operations.
The Company also maintains various insurance policies to protect the
assets, earnings and liabilities arising from the operation of Holland
America Westours.
G. Investments in Affiliates
Seabourn Cruise Line
In April 1992, the Company acquired 25% of the capital stock of
Seabourn. As part of the transaction, the Company also made a subordinated
secured ten-year loan of $15 million to Seabourn and a $10 million
convertible loan to Seabourn. In December 1995, the $10 million convertible
loan was converted by the Company into an additional 25% equity interest in
Seabourn. Seabourn operates three ultra-luxury ships, which have an
aggregate capacity of 612 passengers and have itineraries in the Caribbean,
the Baltic, the Mediterranean and the Far East. The Seabourn product is
primarily marketed in North America.
Airtours plc
In April 1996, the Company acquired a 29.5% interest in Airtours for
approximately $307 million. Airtours and subsidiaries is the largest air
inclusive tour operator in the world and is publicly traded on the London
Stock Exchange. Airtours provides air inclusive packaged holidays to the
British, Scandinavian and North American markets. Airtours provides
holidays to approximately 5 million people per year and owns or operates 32
hotels, two cruise ships and 31 aircraft.
Airtours was founded in the United Kingdom in 1972 and is currently the
second largest provider of air inclusive packages in the United Kingdom. In
1994, Airtours entered the Scandinavian market via the acquisition of the
Scandinavian Leisure Group and expanded its share of this market in 1996
with the acquisition of Spies. In 1995, Airtours acquired Sunquest
Vacations, a Canadian tour operator. During 1996, Airtours acquired Alba
Tours International located in Canada, began operations in Los Angeles,
California with Sunquest Holidays, and began construction of a time share
facility in Orlando, Florida. Today Airtours is the market leader in
Scandinavia and is one of Canada's leading tour operators.
Airtours operates 18 aircraft (one additional aircraft is scheduled to
enter service in the spring of 1997) exclusively for its U.K. tour operators
providing a large proportion of their flying requirements. In addition,
Airtours' subsidiary Premiair operates a fleet of 13 aircraft (one additional
aircraft is also scheduled to enter service with Premiar in the spring of
1997), which provides most of the flying requirements for Airtours'
Scandinavian tour operators.
Airtours owns or operates 32 hotels (6,500 rooms) which provide rooms
to Airtours' tour operators principally in the Mediterranean and the Canary
Islands. In addition, Airtours has a 50% interest in Tenerife Sol, a joint
venture with Sol Hotels Group of Spain, which owns and operates three
additional hotels in the Canary Islands providing 1,300 rooms.
Through its subsidiary Sun Cruises, Airtours owns and operates two
cruise ships. Both the 800-berth MS Seawing and the 1,062-berth MS Carousel
commenced operations in 1995. Recently, Airtours acquired a third ship, the
MS Sundream, which is the sister ship of the MS Carousel. The MS Sundream
is expected to commence operations in May 1997. The ships operate in the
Mediterranean, the Caribbean and around the Canary Islands and are sold
exclusively by Airtours' tour operators.
Joint Venture with Hyundai Merchant Marine Co. Ltd.
In September 1996, the Company and Hyundai Merchant Marine Co. Ltd.
("HMM") signed an agreement to form a 50/50 joint venture to develop the
Asian cruise vacation market (the "Joint Venture"). The Company and HMM
each have contributed $4.8 million as the initial capital of the Joint
Venture. In addition, in November 1996 the Company sold Carnival Cruise
Lines' cruise ship Tropicale to the Joint Venture for approximately $95.5
million cash. The Company then chartered the vessel from the Joint Venture
until the Joint Venture is ready to begin cruise operations in the Asian
market in or around the spring of 1998. The Joint Venture borrowed the
$95.5 million purchase price from a financial institution and the Company
and HMM each guaranteed 50% of the borrowing.
Seasonality
The Company's investments in affiliates are accounted for using the
equity method of accounting. Starting with the Company's quarter ending
August 31, 1996, the Company's portion of Airtours' operating results are
being recorded by the Company on a two month lag basis. Airtours' earnings
are very seasonal due to the seasonal nature of the European leisure travel
industry. During the last two fiscal years, Airtours' third and fourth
fiscal quarters, ending June 30 and September 30, respectively, have been
profitable, with the fourth quarter being its most profitable quarter.
During this same period, Airtours experienced seasonal losses in its first
and second fiscal quarters ending on December 31 and March 31, respectively.
Item 2. Properties
The Company's cruise ships are described in Section B of Item 1 under
the heading "Cruise Ship Segment". The properties associated with HAL's
tour operations are described in Section C of Item 1 under the heading "Tour
Segment".
Carnival's shoreside operations and the Company's corporate
headquarters are located at 3655 N.W. 87th Avenue, Miami, Florida. These
facilities consist of approximately 231,000 square feet of office facility
which the Company purchased in December 1994 and approximately 225,000
square feet of office facility recently constructed next to the existing
facility. Carnival is also leasing approximately 60,000 square feet of
office space at 5225 N.W. 87th Avenue, Miami, Florida until September 1997.
HAL headquarters are at 300 Elliott Avenue West in Seattle, Washington
in leased space in an office building. The lease is for approximately
125,000 square feet.
The Company's cruise ships, tour properties and shoreside operations
facilities are well maintained and in good condition.
Item 3. Legal Proceedings
In April 1996 and October 1996, four complaints were filed in the
Circuit Court of the Eleventh Judicial Circuit, Dade County, Florida,
against the Company (the "Florida Actions"). In April 1996, a complaint was
filed in the Superior Court of Washington for King County against Holland
America Westours (the "Washington Action"). In November 1996, a complaint
was filed against the Company in the 18th Judicial District Court, Parish of
Iberville, Louisiana (the "Louisiana Action"). These actions (collectively
the "Port Charges Complaints"), brought on behalf of purported classes of
persons who traveled on a Company ship and paid port charges to the Company,
allege that statements made by the Company in advertising and promotional
materials concerning port charges were false and misleading.
The Florida Actions allege claims of negligent misrepresentation,
unjust enrichment, violation of the Florida Deceptive and Unfair Trade
Practices Act, fraud, negligence, breach of fiduciary duties, breach of
implied covenants of good faith and fair dealing, fraudulent
misrepresentations and/or omission, restitution, conversion, money had and
received, resulting trust and constructive trust. The Washington Action
alleges claims of negligent misrepresentation, unjust enrichment and
violation of the Washington Consumer Protection Act. The Louisiana Action
alleges violation of the Louisiana Unfair Trade Practices and Consumer
Protection Law, fraud and breach of express contractual obligations. The
Company has removed the Louisiana Action to federal court, and a hearing on
the Company's motion to dismiss is presently scheduled for August 1997.
In one of the Florida Actions, Sutton v. Carnival, the plaintiffs seek
damages "in excess of fifteen thousand dollars, (but less than $50,000 per
individual class member)" for each of eight separate grounds for relief.
The remaining Port Charges Complaints seek unspecified compensatory damages
on behalf of the purported class (or, alternatively, refunds of port charges
allegedly in excess of certain charges levied by governmental authorities),
attorneys' fees, costs, punitive damages and injunctive relief.
In June and August 1996, respectively, two complaints were filed
against both the Company and Holland America Westours in the Superior Court
for the State of California, Los Angeles County (the "California Actions")
and in January 1997, a complaint was filed against the Company in the Fourth
Judicial District Court, Hennepin County, Minnesota (the "Minnesota
Action"). These actions (collectively the "Travel Agent Complaints"),
brought on behalf of purported classes of all travel agencies who during the
past four years (California Actions) or the past six years (Minnesota
Action) booked a cruise with the Company, contain allegations that the
Company's advertising practices regarding port charges resulted in an
improper and concealed form of commission bypass. The Travel Agent
Complaints allege claims of breach of contract, negligent misrepresentation,
unjust enrichment, unlawful business practices and common law fraud and seek
unspecified compensatory damages (or alternatively, the payment by the
Company of usual and customary commissions on port charges in excess of
certain charges levied by government authorities), an accounting, attorneys'
fees and costs, punitive damages and injunctive relief.
The Port Charges Complaints and the Travel Agent Complaints are in
preliminary stages and it is not now possible to determine the ultimate
outcome of the lawsuits. Management believes that the Company has
substantial and meritorious defenses to the claims and intends to vigorously
defend the lawsuits. Management understands that purported class action
lawsuits similar to the Port Charges Complaints and the Travel Agent
Complaints have been filed against five other cruise lines.
The United States Attorney for the District of Alaska has commenced an
investigation to determine if a Holland America Line vessel discharged bilge
water, alleged to have contained oil or oily mixtures, at various locations
allegedly within the United States territorial waters at various times
during the summer and early fall of 1994. It is unknown whether any
proceedings will be initiated and, if so, what violations will be alleged.
To date, no penalties have been sought or imposed. Management does not
believe that the amount of potential penalties will have a material impact
on the Company.
Wartsila Marine Industries Incorporated ("Wartsila") operated a Finnish
shipyard and had contracted to build three ships for the Company in the late
1980's. Wartsila filed for bankruptcy in 1989 without completing
construction of the vessels, causing the Company to incur incremental costs
to complete the ships and to lose profits because of the delay in their
delivery. During 1995, the Company received $40 million in cash from the
settlement of litigation with Metra Oy, the former parent company of
Wartsila, related to losses suffered in connection the construction of these
three ships. Of the $40 million received, $6.2 million was used to pay
related legal fees, $14.4 million was recorded as other income and $19.4
million was used to reduce the cost basis of certain ships which had been
the subject of the Company's lawsuit against Metra Oy.
On June 25, 1996, the Company reached an agreement with the trustees of
Wartsila and creditors for the bankruptcy which resulted in an additional
cash payment of approximately $80 million. Of the $80 million received, $5
million was used to pay certain costs, $32 million was recorded as other
income and $43 million was used to reduce the cost basis of certain ships
which had been affected by the bankruptcy.
In the normal course of business, various other claims and lawsuits
have been filed or are pending against the Company. The majority of these
claims and lawsuits are covered by insurance. Management believes the
outcome of such suits which are not covered by insurance would not have a
material adverse effect on the Company's financial condition or results of
operations.
Item 4. Submission of Matters to a Vote or Security Holders
None.
Executive Officers of the Registrant
Pursuant to General Instruction G(3), the information regarding
executive officers of the Company called for by Item 401(b) of Regulation
S-K is hereby included in Part 1 of this report.
The following table sets forth the name, age and title of each
executive officer. Titles listed relate to positions within Carnival
Corporation unless otherwise noted.
NAME AGE POSITION
Micky Arison 47 Chairman of the Board and Chief Executive
Officer
Gerald R. Cahill 45 Vice President-Finance
Pamela C. Conover 40 Vice President-Strategic Planning
Robert H. Dickinson 54 President and Chief Operating Officer
of Carnival and Director
Howard S. Frank 55 Vice-Chairman, Chief Financial Officer
and Director
A. Kirk Lanterman 65 President and Chief Executive Officer of
Holland America Line-Westours Inc. and
Director
Lowell Zemnick 53 Vice President and Treasurer
Meshulam Zonis 63 Senior Vice President-Operations of
Carnival and Director
Business Experience of Officers
Micky Arison, age 47, has been Chief Executive Officer since 1979 and
Chairman of the Board since 1990. He was President from 1979 to May 1993
and has also been a director since June 1987. Prior to 1979, he served
Carnival for successive two-year periods as sales agent, reservations
manager and as Vice President in charge of passenger traffic. He is the son
of Ted Arison, Carnival Corporation's founder.
Gerald R. Cahill, age 45, is a Certified Public Accountant and has been
Vice President-Finance since September 1994. Mr. Cahill was the chief
financial officer from 1988 to 1992 and the chief operating officer from
1992 to 1994 of Safecard Services, Inc. From 1979 to 1988 he held financial
positions at Resorts International Inc. and, prior to that, spent six years
with Price Waterhouse LLP.
Pamela C. Conover, age 40, has been Vice President-Strategic Planning
since May 1995. Ms. Conover was the chief executive officer of Epirotiki
Cruise Line from May 1994 through April 1995. From 1985 through 1994 Ms.
Conover worked as a Vice President of Citibank N.A. New York and
subsequently as a Managing Director of Citicorp Securities Inc.
Robert H. Dickinson, age 54, has been President and Chief Operating
Officer of Carnival since May 1993. From 1979 to May 1993, he was Senior
Vice President--Sales and Marketing of Carnival. He has also been a
director since June 1987.
Howard S. Frank, age 55, has been Vice-Chairman of the Board since
October 1993 and has been Chief Financial Officer and Chief Accounting
Officer since July 1, 1989 and a director since 1992. From July 1989 to
October 1993 he was Senior Vice President-Finance. From July 1975 through
June 1989, he was a partner with Price Waterhouse LLP.
A. Kirk Lanterman, age 65, is a Certified Public Accountant and has
been President and Chief Executive Officer of Holland America Line-Westours
Inc. since January 1989 and a director since 1992. From 1983 to January
1989, he was President and Chief Operating Officer of Holland America
Line-Westours Inc. From 1979 to 1983, he was President of Westours which
merged in 1983 with Holland America Line.
Lowell Zemnick, age 53, is a Certified Public Accountant and has been
Vice President since 1980 and Treasurer since September 1990. Mr. Zemnick
was the chief financial officer of Carnival Cruise Lines from 1980 to
September 1990 and was the chief financial officer of Carnival Corporation
from May 1987 through June 1989.
Meshulam Zonis, age 63, has been Senior Vice President-Operations of
Carnival since 1979. He has also been a director since June 1987. From
1974 through 1979, Mr. Zonis was Vice President-Operations of Carnival.
Special Note Regarding Forward-Looking Statements
Certain statements under the headings "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business"
and elsewhere in this Form 10-K constitute "forward-looking statements"
within the meaning of the reform act. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors, which may
cause the actual results, performance or achievements of the Company to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, among others, the following: general economic and business
conditions which may impact levels of disposable income of consumers and
pricing and passenger yields for the Company's cruise products; increases in
cruise industry capacity in the Caribbean and Alaska; changes in tax laws
and regulations (especially any change affecting the Company's status as a
"controlled foreign corporation" as defined in Section 957(a) of the Internal
Revenue Code (see "Taxation of the Company")); the ability of the Company to
implement its shipbuilding program and to expand its business outside the
North American market where it has less experience; delivery of new vessels on
schedule and at the contracted price; weather patterns in the Caribbean;
unscheduled ship repairs and drydocking; incidents involving cruise vessels
at sea; and changes in laws and government regulations applicable to the
Company (including the implementation of the "Safety of Life at Sea
Convention" and changes in FMC surety and guaranty arrangements).
PART II
Item 5. Market for the Registrant's Common Stock and Related Stockholders
Matters
A. Market Information
The information required by Item 201(a) of Regulation S-K, market
information, is shown in Exhibit 13 and is incorporated by reference into
this Annual Report on Form 10-K.
B. Holders
The information required by Item 201(b) of Regulation S-K, holders of
common stock, is shown in Exhibit 13 and is incorporated by reference into
this Annual Report on Form 10-K.
C. Dividends
Any dividend declared by the Board of Directors on the Company's Common
Stock will be paid concurrently at the same rate on the Class A Common Stock
and the Class B Common Stock. For its Class A Common Stock and Class B
Common Stock (collectively, the "Common Stock"), the Company declared cash
dividends of $.075 per share in each of the first three quarters of fiscal
1995, $.09 in the fourth quarter of fiscal 1995 and $.09 in the first three
quarters of fiscal 1996, and $.11 in the fourth quarter of fiscal 1996 and
first quarter of fiscal 1997. Payment of future quarterly dividends on the
Common Stock will depend, among other factors, upon the Company's earnings,
financial condition and capital requirements and certain tax considerations
of certain members of the Arison family and trusts for the benefit of Mr.
Ted Arison's children (the "Principal Shareholders"), some of whom are
required to include a portion of the Company's earnings in their taxable
income, whether or not the earnings are distributed (see "D. Taxation of the
Company"). The Company may also declare special dividends to all
stockholders in the event that the Principal Shareholders are required to
pay additional income taxes by reason of their ownership of the Common
Stock, either because of an income tax audit of the Company or the Principal
Shareholders or because of certain actions by the Company (such as a failure
by the Company to maintain its investment in shipping assets at a certain
level) that would trigger adverse tax consequences to the Principal
Shareholders under the special tax rules applicable to them.
While no tax treaty currently exists between the Republic of Panama and
the United States, under current law the Company believes that distributions
to its shareholders are not subject to taxation under the laws of the
Republic of Panama. Dividends paid by the Company will be taxable as
ordinary income for United States Federal income tax purposes to the extent
of the Company's current or accumulated earnings and profits, but generally
will not qualify for any dividends-received deduction.
The payment and amount of any dividend is within the discretion of the
Board of Directors, and it is possible that the amount of any dividend may
vary from the levels discussed above. If the law regarding the taxation of
the Company's income to the Principal Shareholders were to change so that
the amount of tax payable by the Principal Shareholders were increased or
reduced, the amount of dividends paid by the Company might be more or less
than is currently contemplated.
D. Taxation of the Company
The following discussion summarizes the expected United States Federal
income taxation of the Company's current operations. State and local taxes
are not discussed. The discussion is based upon currently existing
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
existing and proposed regulations thereunder and current administrative
rulings and court decisions. All of the foregoing are subject to change and
any such change could affect the continuing validity of this discussion. In
connection with the foregoing, investors should be aware that the Tax Reform
Act of 1986 (hereinafter, the "1986 Tax Act") changed significantly the
United States Federal income tax rules applicable to the Company and certain
holders of its stock (including the Principal U.S. Shareholders). Although
the relevant provisions of the 1986 Tax Act are discussed herein, they have
not yet been the subject of extensive administrative or judicial
interpretation.
United States
Carnival Corporation is a Panamanian corporation, and its material
subsidiaries (other than subsidiaries engaged in the bus, hotel and tour
business of Holland America Line) are Panamanian, Liberian, Netherlands
Antilles and Bahamian corporations. Accordingly, the Company's income from
sources outside of the United States ("foreign source income") generally is
not subject to United States tax. Moreover, the Company anticipates that,
under current law, all or virtually all of its income from sources within
the United States ("United States Source Income") that constitutes Shipping
Income (as defined below) will be exempt from United States corporate income
taxation for as long as Carnival Corporation and its subsidiaries meet the
requirements of Section 883 of the Code. Section 883 of the Code provides
that income of a foreign corporation derived from the international
operation, or from the rental on a full or bareboat basis, of ships
("Shipping Income") is exempt from United States taxation if (1) the foreign
country in which the foreign corporation is organized grants an equivalent
exemption to citizens of the United States and to corporations organized in
the United States (an "equivalent exemption jurisdiction") and (2) the
foreign corporation is a controlled foreign corporation ("CFC") as defined
in Section 957(a) of the Code (the "CFC Test"). The Company believes that
substantially all of its United States Source Income other than Holland
America Line's income from its bus, hotel and tour operations, currently
qualifies as Shipping Income, and that Panama, the Netherlands Antilles,
the Bahamas and Liberia are equivalent exemption jurisdictions. (Holland
America Line's income from its hotel and tour operations, is not Shipping
Income, and, accordingly, is subject to United States corporate income tax).
If, however, Panamanian, Netherlands Antilles, Bahamian or Liberian law were
to change adversely, the Company would consider taking appropriate steps
(including reincorporating in another jurisdiction) so as to remain eligible
for the exemption from United States Federal income tax provided by Section
883 of the Code.
A foreign corporation is a CFC when stock representing more than 50% of
such corporation's voting power or equity value is owned (or considered as
owned) on any day of its fiscal year by United States persons who each own
(or are considered as owning) stock representing 10% or more of the
corporation's voting power ("Ten Percent Shareholders"). Stock of the
Company representing more than 50% of the total combined voting power of all
classes of stock is owned by the Micky Arison 1994 "B" Trust (the "B
Trust"),which is a "United States Person", and thus the Company meets the
definition of a CFC. The B Trust is a U.S. trust whose primary beneficiary
is Micky Arison, the Company's Chairman of the Board. Accordingly, at the
corporate level, the Company expects that virtually all of its income (with
the exception of its United States source income from the operation of
transportation, hotel and tour business of HAL) will remain exempt from
United States income taxes. The B Trust has entered into an agreement with
the Company that is designed to ensure, except under certain limited
circumstances, that stock possessing more than 50% of the Company's voting
power will be held by Ten Percent Shareholders until at least July 1, 1997.
Because the Company is a CFC, a pro rata share of the shipping earnings of
the Company, as well as certain other amounts, is includable in the taxable
income of any "Ten Percent Shareholder", as defined above.
A substantial portion of the Company's income will, as discussed below,
be treated as United States Source Income. If the Company were to fail to
meet the requirements of Section 883 of the Code with respect to any of its
United States Source Income (or if Section 883 of the Code were repealed),
some or all of the Company's Shipping Income that is United States Source
Income would become subject to a significant United States tax burden, the
amount of which would depend, in part, on the extent to which the Company's
income is effectively connected with the conduct of a United States trade or
business. Any such United States Source Income that is considered to be
"effectively connected" with the conduct of a United States trade or
business would be subject not only to general United States Federal
corporate income tax, but also to a 30% "branch level" tax on effectively
connected earnings and profits (generally, adjusted taxable income reduced
by taxes and adjusted for the amount of the Company's earnings treated as
reinvested in the Company's United States business). Any such United States
Source Income that is not considered to be effectively connected with a
United States trade or business will instead be subject to a 4% tax on
United States source gross transportation income (or, possibly, to a 30% tax
if any such income were considered to be 100% United States Source Income
under the rules described below, which, the Company does not believe to be
the case with respect to any significant portion of its Shipping Income).
The Company believes that at least a significant portion of its United
States Source Income would probably be considered to be effectively
connected with a United States trade or business for this purpose.
Under amendments to the Code enacted as part of the 1986 Tax Act, the
Company's United States Source Income will include 50% of all transportation
income (including income derived from, or in connection with, the use or
hiring, or leasing for use of a cruise ship, or the performance of services
directly related to such use) attributable to transportation that begins or
ends in the United States, and 100% of such transportation income with
respect to transportation which begins and ends in the United States. The
legislative history of these rules suggests that a cruise which begins and
ends in United States ports, but which calls on one or more foreign ports
(including ports in possessions of the United States), will be treated as
transportation that begins or ends in the United States, rather than as
transportation that begins and ends in the United States, thus resulting in
no more (and, with respect to a cruise that calls on more than one foreign
port, possibly less) than 50% United States Source Income. There are,
however, no regulations or other authoritative interpretations of these new
rules, and, accordingly, the matter is not entirely free from doubt.
Under a provision of the Technical and Miscellaneous Revenue Act of
1988, Section 883 of the Code applies only to income derived from the
international operation of ships. The legislative history of that provision
indicates that Section 883 of the Code does not apply to Shipping Income
that is treated as 100% United States Source Income under the source of
income rules discussed in the preceding paragraph since it does not
constitute income from the international operation of a ship because it
results from transportation that is considered to begin and end in the
United States; accordingly, any such income may well be subject to United
States corporate tax unless another exception was applicable. As discussed
in the preceding paragraph, although the matter is not entirely free from
doubt, the Company does not believe that any significant portion of its
Shipping Income from its current operations is 100% United States Source
Income under the applicable provisions of the Code. Accordingly, the
Company does not believe that the 1988 legislation significantly increases
its United States corporate tax with respect to its current operations.
Other Jurisdictions
The Company anticipates that its income will not be subject to
significant taxation under the laws of the Republic of Panama, Liberia, the
Netherlands Antilles, the British Virgin Islands or the Bahamas.
Item 6. Selected Financial Data
The information required by Item 6, selected financial data for the
five years ended November 30, 1996, is shown in Exhibit 13 and is
incorporated by reference into this Annual Report on Form 10-K.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of operations
The information required by Item 7, Management's Discussion and
Analysis of Financial Condition and Results of Operation, is shown in
Exhibit 13 and is incorporated by reference into this Annual Report on Form
10-K.
Item 8. Financial Statements and Supplementary Data
The financial statements, together with the report thereon of Price
Waterhouse LLP dated January 15, 1997, is shown in Exhibit 13 and is hereby
incorporated by reference into this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
Items 10, 11, 12 and 13. Directors and Executive Officers of the
Registrant, Executive Compensation, Security Ownership of Certain
Beneficial Owners and Management, and Certain Relationships and
Related Transactions
The information required by Items 10, 11, 12 and 13 is incorporated by
reference to the Registrant's definitive Proxy Statement to be filed with
the Commission not later than 120 days after the close of the fiscal year
except that the information concerning the Registrant's executive officers
called for by Item 401(b) of Regulation S-K has been included in Part I of
this Annual Report on Form 10-K.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) (1)-(2) Financial Statements and Schedules:
The financial statements shown in Exhibit 13 are hereby incorporated
herein by reference.
(3) Exhibits:
The exhibits listed on the accompanying Exhibit Index are filed or
incorporated by reference as part of this Annual Report on Form 10-K and
such Exhibit Index is hereby incorporated herein by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
November 30, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Miami, and the State of Florida on this 21 day of February 1997.
CARNIVAL CORPORATION
By /s/ Micky Arison
Micky Arison
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Micky Arison Chairman of the Board, Chief February 21, 1997
Micky Arison Executive Officer and Director
/S/ Howard S. Frank Vice-Chairman, Chief Financial February 27, 1997
Howard S. Frank and Accounting Officer and Director
/s/ Maks L. Birnbach Director February 21, 1997
Maks L. Birnbach
/s/ Richard G. Capen, Jr.Director February 27, 1997
Richard G. Capen, Jr.
/s/ David Crossland Director February 27, 1997
David Crossland
/s/ Robert H. Dickinson Director February 25, 1997
Robert H. Dickinson
/s/ Shari Arison Dorsman Director February 27, 1996
Shari Arison Dorsman
/s/ James Dubin Director February 22, 1997
James Dubin
/s/ A. Kirk Lanterman Director February 25, 1997
A. Kirk Lanterman
/s/ Modesto Maidique Director February 27, 1997
Modesto Maidique
/s/ William S. Ruben Director February 25, 1997
William S. Ruben
/s/ Stuart Subotnick Director February 22, 1997
Stuart Subotnick
/s/ Sherwood M. Weiser Director February 25, 1997
Sherwood M. Weiser
/s/ Meshulam Zonis Director February 27, 1997
Meshulam Zonis
/s/ Uzi Zucker Director February 25, 1997
Uzi Zucker
INDEX TO EXHIBITS
Page No. in
Sequential
Numbering
System
Exhibits
3.1-Form of Amended and Restated Articles of Incorporation of the
Company.(1)
3.2-Form of By-laws of the Company.(2)
4.1-Revolving Credit Agreement dated as of July 1, 1993, Amended and
Restated as of December 17, 1996, by and among Carnival Corporation,
Citibank, N.A. and various other lenders.
4.2-Agreement of the Company dated February 25, 1997 to furnish certain
debt instruments to the Securities and Exchange Commission.
4.3-Form of Indenture dated as of March 1, 1993 between Carnival Cruise
Lines, Inc. and First Trust National Association, as Trustee, relating to
the Debt Securities, including form of Debt Security.(3)
4.4-Second Amended and Restated Shareholder Agreement dated September 26,
1994 by and among Carnival Corporation, Ted Arison, TAMMS Investment
Company, The Ted Arison Family Holding Trust No. 4, The Micky Arison "B"
Trust, and T.A. Limited. (4)
4.5-Letter Agreement dated July 11, 1989 between the Company and the Ted
Arison Irrevocable Trust.(5)
10.1-Retirement and Consulting Agreement dated November 20, 1996 between A.
Kirk Lanterman and Carnival Corporation
10.2-Amendment to Consulting Agreement Dated August 5, 1996 between the
Company and Arison Investments Ltd.
10.3-Carnival Corporation Automatic Dividend Reinvestment Plan.
10.4-David Crossland Director's Agreement.
10.5-James M. Dubin Director's Agreement.
10.6-Modesto M. Maidique Director's Agreement.
10.7-Richard G. Capen Director's Agreement.
10.8-Shari Arison Dorsman Director's Agreement.
10.9-Carnival Cruise Lines, Inc. Stock Option Plan.(6)
10.10-Carnival Cruise Lines, Inc. Restricted Stock Plan.(7)
10.11-Carnival Cruise Lines, Inc. Retirement Plan.(8)
10.12-Carnival Cruise Lines, Inc. Non-Qualified Retirement Plan.(9)
10.13-Carnival Cruise Lines, Inc. Key Management Incentive Plan.(10)
10.14-1993 Outside Directors' Stock Option Plan.(11)
10.15-1993 Carnival Cruise Lines, Inc. Restricted Stock Plan.(12)
10.16-Holland America Line-Westours Inc. 1994-1996 Key Management Incentive
Plan.(13)
10.17-Amended and Restated Carnival Corporation 1992 Stock Option Plan.(14)
10.18-1994 Carnival Cruise Line Key Management Incentive Plan.(15)
10.19-Form of Deferred Compensation Agreement between the Company and each
of Harvey Levinson, Meshulam Zonis and Robert H. Dickinson.(16)
10.20-Stock Compensation Agreement dated February 1, 1991, between the
Company and Robert H. Dickinson.(17)
10.21-Consulting Agreement/Registration Rights Agreement dated June 14,
1991, between the Company and Ted Arison.(18)
10.22-Indemnity Agreement between the Company and Ted Arison.(19)
10.23-First Amendment to Consulting Agreement/Registration Rights
Agreement.(20)
10.24-Consulting Agreement dated July 31, 1992, between the Company and
Arison Investments Ltd.(21)
10.25-Assignment and Assumption Agreement dated March 20, 1995 among Ted
Arison, Cititrust (Jersey) Limited, Royal Bank of Scotland Trust Company
(Jersey) Limited and the Company.(22)
10.26-Shipbuilding Agreement dated January 12, 1993 between Futura Cruises,
Inc. and Fincantieri - Cantieri Navali Italiani S.p.A.*(23)
10.27-Shipbuilding Agreement dated December 23, 1993 between Kvaerner
Masa-Yards, Inc. and the Company.*(24)
10.28-Shipbuilding Agreement dated December 10, 1993 between Wind Surf
Limited and Fincantieri-Cantieri Navali Italiani S.p.A.*(25)
10.29-Shipbuilding Agreement dated January 14, 1995 between Utopia Cruises,
Inc. and Fincantieri-Cantieri Navali Italiani S.p.A.*(26)
10.30-Shipbuilding Agreement dated January 14, 1995 between Wind Surf
Limited and Fincantieri-Cantieri Navali Italiani S.p.A.*(27)
10.31-Shipbuilding Agreement dated December 7, 1994 between Carnival
Corporation and Kvaerner Masa-Yards, Inc.*(28)
10.32-Shipbuilding Agreement dated January 12, 1995 between Carnival
Corporation and Kvaerner Masa-Yards, Inc.*(29)
10.33-Shipbuilding Agreement dated March 25, 1992 between Carnival
Corporation and Kvaerner Masa-Yards, Inc.*(30)
10.34-Organization agreement dated February 25, 1994 between the Company and
the principals of The Continental Companies.(31)
10.35-Stock Purchase Agreement between Carnival Corporation and CHC
International.(32)
10.36-Stock Purchase Agreement between Carnival Corporation, Sherwood Weiser
and others.(33)
10.37-Letter dated February 21, 1996 to Carnival Corporation and CS First
Boston Limited from David Crossland.(34)
10.38-Letter dated February 21, 1996 to Carnival Corporation and CS First
Boston Limited from Thomas Trickett.(35)
10.39-Shareholders' Agreement dated February 21, 1996 between Carnival
Corporation and David Crossland.(36)
10.40-Subscription Agreement dated February 21, 1996 between Carnival
Corporation and Airtours plc.(37)
10.41-Maks L. Birnbach Director's Agreement.(38)
10.42-William S. Ruben Director's Agreement.(39)
10.43-Stuart Subotnick Director's Agreement.(40)
10.44-Sherwood M. Weiser Director's Agreement.(41)
10.45-Uzi Zucker Director's Agreement (42)
11.0-Statement regarding computation of per share earnings.
12.0-Ratio of Earnings to Fixed Charges
13.0-Portions of 1996 Annual Report incorporated by reference into 1996
Annual Report on Form 10-K
21-Subsidiaries of the Company.(43)
23.0-Consent of Price Waterhouse
27.0-Financial Data Schedule (for SEC use only)
* Portions of documents omitted pursuant to an order for confidential
treatment pursuant to Rule 24b-2 under the Securities Act of 1934, as
amended.
Sequential
Numbering
System
Exhibits
(1)Incorporated by reference to Exhibit No. 4.1 to the registrant's
Quarterly Report on Form 10-Q for the Quarter Ended February 28, 1995 (File
No. 1-9610), filed with the Securities and Exchange Commission.
(2)Incorporated by reference to Exhibit No. 3.2 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(3)Incorporated by reference to Exhibit No. 4 on Form S-3 to the
registrant's registration statement on Form S-3 (File No. 33-53136), filed
with the Securities and Exchange Commission.
(4)Incorporated by reference to Exhibit 4.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended August 31, 1994 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(5)Incorporated by reference to Exhibit No. 4.10 to the registrant's
registration statement on Form S-1 (File No. 33-31795), filed with the
Securities and Exchange Commission.
(6)Incorporated by reference to Exhibit No. 10.1 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(7)Incorporated by reference to Exhibit No. 10.2 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(8)Incorporated by reference to Exhibit No. 10.3 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1990 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(9)Incorporated by reference to Exhibit No. 10.4 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1990 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(10)Incorporated by reference to Exhibit No. 10.5 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1993 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(11)Incorporated by reference to Exhibit No. 10.6 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1993 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(12)Incorporated by reference to Exhibit No. 10.41 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1992
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(13)Incorporated by reference to Exhibit No. 10.8 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1996
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(14)Incorporated by reference to Exhibit No. 10.29 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(15)Incorporated by reference to Exhibit No. 10.30 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(16)Incorporated by reference to Exhibit No. 10.17 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(17)Incorporated by reference to Exhibit No. 10.43 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1991
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(18)Incorporated by reference to Exhibit No. 4.3 to post-effective amendment
no. 1 on Form S-3 to the registrant's registration statement on Form S-1
(File No. 33-24747), filed with the Securities and Exchange Commission.
(19)Incorporated by reference to Exhibit No. 10.18 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(20)Incorporated by reference to Exhibit No. 10.40 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1992
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(21)Incorporated by reference to Exhibit No. 10.39 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1992
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(22)Incorporated by reference to Exhibit No. 10.18 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1996
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(23)Incorporated by reference to Exhibit No. 10.42 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1992
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(24)Incorporated by reference to Exhibit No. 10.39 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1993
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(25)Incorporated by reference to Exhibit No. 10.40 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1993
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(26)Incorporated by reference to Exhibit No. 10.23 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(27)Incorporated by reference to Exhibit No. 10.24 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(28)Incorporated by reference to Exhibit No. 10.25 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(29)Incorporated by reference to Exhibit No. 10.26 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(30)Incorporated by reference to Exhibit No. 10.27 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(31)Incorporated by reference to Exhibit 10.1 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1994 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(32)Incorporated by reference to Exhibit No. 10.31 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(33)Incorporated by reference to Exhibit No. 10.32 to the registrant's
Annual Report on Form 10-K for the fiscal year ended November 30, 1994
(Commission File No. 1-9610), filed with the Securities and Exchange
Commission.
(34)Incorporated by reference to Exhibit 10.2 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1996 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(35)Incorporated by reference to Exhibit 10.3 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1996 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(36)Incorporated by reference to Exhibit 10.4 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1996 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(37)Incorporated by reference to Exhibit 10.5 to the registrant's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1996 (Commission File
No. 1-9610), filed with the Securities and Exchange Commission.
(38)Incorporated by reference to Exhibit No. 28.1 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1990 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.
(39)Incorporated by reference to Exhibit No. 28.2 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(40)Incorporated by reference to Exhibit No. 28.3 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(41)Incorporated by reference to Exhibit No. 28.4 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(42)Incorporated by reference to Exhibit No. 28.5 to the registrant's
registration statement on Form S-1 (File No. 33-14844), filed with the
Securities and Exchange Commission.
(43)Incorporated by reference to Exhibit No. 21 to the registrant's Annual
Report on Form 10-K for the fiscal year ended November 30, 1994 (Commission
File No. 1-9610), filed with the Securities and Exchange Commission.