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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, 1998
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
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. [ ].
The aggregate market value of the voting stock held by
non-affiliates of the Registrant is approximately
$14,371,000,000 based upon the closing market price on
February 12, 1999 of a share of Common Stock on the New York
Stock Exchange as reported by the Wall Street Journal.
At February 12, 1999, the Registrant had outstanding
612,903,484 shares of its Common Stock, $.01 par value.
DOCUMENTS INCORPORATED BY REFERENCE
The information described below and contained in the
Registrant's 1998 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
Annual Report on Form 10-K.
Part and Item of the Form 10-K
Part II
Item 5(a) and (b). Market for the Registrant's Common Equity 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 7A. Quantitative and Qualitative Disclosures About
Market Risk
Item 8. Financial Statements and Supplementary Data
The information described below and contained in the
Registrant's 1999 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 wholly and majority owned subsidiaries (referred to collectively as
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 leading cruise
brands serving the contemporary cruise market through Carnival Cruise
Lines ("Carnival"), the premium cruise market through Holland America
Line ("Holland America") and the luxury cruise market through Cunard
Line ("Cunard"), Seabourn Cruise Line ("Seabourn") and Windstar Cruises
("Windstar") (collectively the "Majority Owned Cruise Operations"). The
Company also owns equity interests in Costa Crociere S.p.A. ("Costa"),
an Italian cruise company, and Airtours plc ("Airtours"), an integrated
leisure travel group of companies which also operates cruise ships
(collectively the "Affiliated Cruise Operations"). Costa and Airtours'
Sun Cruises target the contemporary cruise market.
A summary of the cruise operations of the Company and its affiliates
is as follows:
Percentage
Owned by Primary
Cruise Carnival Number Passenger Geographic
Brand Corporation of Ships Capacity(1) Market
Majority Owned Cruise
Operations:
Carnival 100% 13 24,404 North America
Holland America 100% 8 10,302 North America
Windstar 100% 4 756 North America
Cunard (2) 68% 5 3,380 Worldwide
Seabourn (2) 68% 3 624 North America
33 39,466
Affiliated Cruise
Operations:
Costa 50%(3) 7 7,644 Europe
Airtours' Sun Cruises 26% 3 2,924 Europe
10 10,568
43 50,034
(1) In accordance with cruise industry practice, all passenger capacities
indicated within this document are calculated based on two passengers per
cabin even though some cabins can accommodate three or four passengers.
(2) In May 1998, the Company and a group of investors acquired the assets
of Cunard, a cruise company operating five luxury ships, for $500 million,
as adjusted. Simultaneous with the acquisition, Seabourn Cruise Line
Limited, a luxury cruise line in which the Company owned a 50% interest,
was combined with Cunard. The Company now owns 68% of the combined entity,
which is named Cunard Line Limited. See Note 13 to the Financial Statements
as included in Exhibit 13 to this Form 10-K.
(3) The 50% equity interest of Costa not owned by the Company is owned by
Airtours. Including the Company's interest in Airtours, it beneficially
owns 63% of Costa.
Historically, the Company's cruise brands have been marketed primarily
in North America. The Company began to globalize its cruise business by
expanding its markets into Europe through the acquisition of its interest
in Airtours in April 1996, Costa in June 1997 and Cunard in May 1998.
Airtours, which is headquartered in Manchester, England, is the largest air
inclusive tour operator in the world, selling packaged tours in the
Austrian, British, Belgian, Dutch, French, German, Irish, Polish,
Scandinavian, Swiss and North American markets. Additionally, it operates
three cruise ships (a fourth ship is expected to enter service in April
1999) under the Sun Cruises name. Costa, which is headquartered in Genoa,
Italy, has sales offices in Argentina, Brazil, England, Florida, France,
Italy, Spain and Switzerland and sells the majority of its cruises in
Southern Europe, primarily in Italy, France and Spain. Cunard Line Limited,
which is headquartered in Miami, Florida, has Cunard and Seabourn sales
offices in Miami, New York City, England, Germany and Australia, and sells
a substantial number of its cruises in Europe, primarily in the United
Kingdom and Germany. The cruise markets in Europe are much smaller than the
North American market. Industry-wide European cruise passengers carried in
1998 are estimated to be approximately 1.3 million compared to
approximately 5.4 million from North America.
The Company has signed agreements with two shipyards providing for the
construction of additional cruise ships. A summary of new ship agreements
for the Company's Majority Owned Cruise Operations is as follows:
EXPECTED
SERVICE PASSENGER
VESSEL DATE(1) CAPACITY
Carnival:
Carnival Triumph 7/99 2,758
Carnival Victory 8/00 2,758
Newbuild 4/01 2,100
Carnival Conquest 12/02 2,758
Carnival Glory 8/03 2,758
Total Carnival 13,132(2)
Holland America:
Volendam 8/99 1,440
Zaandam 3/00 1,440
Newbuild 11/00 1,380
Total Holland America 4,260
Total 17,392
(1) The expected service date is the date the vessel is expected to begin
revenue generating activities.
(2) The Company also has options for the construction of two additional
vessels each with a passenger capacity of 2,100. No assurance can be given
that the options to construct the vessels will be exercised.
As a result of this shipbuilding program the Company currently expects
the passenger capacity for its Majority Owned Cruise Operations to increase
from 39,466 to 56,858, or by 44.1%, by the summer of 2003, assuming none of
the Company's existing fleet is retired, no new contracts are entered into
and the options described above are not exercised.
During 1997, the Company announced that it was in negotiations with
shipyards to build a new class of ships for each of its Carnival, Holland
America and Costa brands. The first of these orders has been placed by
Costa to construct the Costa Atlantica, a 2,112 passenger capacity, 82,000
gross registered ton vessel, which is expected to enter service in the
spring of 2000. In February 1998, the Company announced agreements for this
new class of vessel for the Carnival brand, which include a contract to
purchase one vessel for delivery in 2001 and options to acquire two
additional vessels. Additionally, although no assurances can be made, the
Company hopes to finalize orders for a new class of vessel for Holland
America and an ocean liner for Cunard, known as the Queen Mary Project, in
1999.
In addition to its cruise operations, the Company operates a tour
business, through Holland America Line-Westours Inc. ("Holland America
Westours"), which markets sightseeing tours both separately and as a part
of Holland America cruise/tour packages. Holland America Westours operates
14 hotels in Alaska and the Canadian Yukon, two luxury dayboats offering
tours to the glaciers of Alaska and the Yukon River, over 280 motor coaches
used for sightseeing and charters in the states of Washington and Alaska
and in the Canadian Rockies and 13 private domed rail cars which are run on
the Alaska Railroad between Anchorage and Fairbanks.
B. Cruise Ship Segment - Majority Owned Cruise Operations
North American Cruise 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
sightseeing 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 5.4 million passengers in
1998, an average compound annual growth rate of 8.9% since 1970. Also,
according to CLIA, by the end of 1998 the number of ships in service
totaled 145 with an aggregate capacity of approximately 140,000 lower
berths. CLIA estimates that the number of passengers carried in North
America increased from 5.051 million in 1997 to 5.4 million in 1998 or
6.9%.
CLIA estimates that the number of cruise passengers will grow to
approximately 6.0 million in 1999. CLIA projections (updated for recently
announced shipbuilding contracts) indicate that by the end of 1999, 2000
and 2001 North America will be served by 155, 167 and 174 vessels,
respectively, having an aggregate capacity of approximately 155,000,
172,000 and 185,000 lower berths, respectively. CLIA estimates of new ship
introductions are based on scheduled ship deliveries and could change. The
lead time for design, construction and delivery of a typical large cruise
ship is approximately two to three years. Additionally, CLIA's estimates of
capacity do not include assumptions related to unannounced ship withdrawals
due to age or changes in itineraries and, accordingly, could indicate a
higher percentage growth in capacity than will actually occur. Nonetheless,
management believes net capacity serving North American cruise passengers
will increase over the next several years, barring unforeseen events.
A comparison of CLIA's North American cruise passengers and Company
total worldwide passenger growth over the last five years based on
passengers carried for at least three consecutive nights is as follows:
NORTH AMERICAN COMPANY
CRUISE CRUISE
YEAR PASSENGERS(1) PASSENGERS(2)
(Calendar Year) (Fiscal Year)
1998 5,400,000(est.) 2,045,000
1997 5,051,000 1,945,000
1996 4,659,000 1,764,000
1995 4,378,000 1,543,000
1994 4,448,000 1,354,000
(1) Source: CLIA
(2) Represents the Company's worldwide cruise passengers.
From 1994 through 1998, the Company's average compound annual growth
rate in total number of passengers carried worldwide was 10.9% versus the
industry average of 5.1% for North America.
The Company's passenger capacity has grown from 23,995 at November 30,
1994 to 39,466 at November 30, 1998. 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 berth decrease due to the sale
of the Festivale. In 1997 net capacity increased 241 berths due to the
delivery of the Rotterdam VI net of the 1,075 berth decrease due to the
sale of the Rotterdam V. During 1998, with the delivery of the Elation and
the Paradise, the purchase of the Wind Surf, the acquisition of Cunard and
the consolidation of Seabourn, capacity increased by 8,396 berths.
In spite of the cruise industry's growth since 1970, management
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 9.0% of the North American population
has ever taken a cruise.
Cruise Ships and Itineraries
Under the Carnival name, the Company serves the contemporary market
with 13 ships (the "Carnival Ships"). All of the Carnival Ships were
designed by and built for Carnival, including 12 SuperLiners, which are
among the largest in the cruise industry. Nine of the Carnival Ships
operate in the Caribbean during all or a portion of the year and two
Carnival Ships call on ports on the Mexican Riviera year round. Carnival
Ships also offer cruises to Alaska, Canada, the Hawaiian Islands, the
Bahamas and the Panama Canal. See "Sales and Marketing".
Through its wholly owned subsidiary, HAL Antillen, N.V. ("HAL"), the
Company operates 12 ships offering premium or luxury vacations. Eight of
these ships, the Rotterdam, Nieuw Amsterdam, Noordam, Westerdam, Statendam,
Maasdam, Ryndam and Veendam, are operated under the Holland America name
(the "Holland America Ships"). The remaining four ships, the Wind Star,
Wind Song, Wind Spirit and Wind Surf, are operated under the Windstar name
(the "Windstar Ships").
The Holland America Ships offer premium cruises of various lengths in
Alaska, the Caribbean, Panama Canal, Europe, Hawaii, South America and
other worldwide itineraries. Cruise lengths vary from seven to 97 days,
with a large proportion of cruises being seven or ten days in length.
Periodically, the Holland America Ships make longer grand cruises or
operate on special itineraries. For example, in 1998, the Rotterdam made a
97-day world cruise and the Nieuw Amsterdam made a series of 15-day South
China Sea Explorer cruises. Holland America 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 Holland America Ships operate in the
Caribbean during fall to spring and in Alaska and Europe during spring to
fall. In order to offer a unique destination and compete with other cruise
lines more effectively while operating in the Caribbean, in December 1997
Holland America introduced into its Caribbean itineraries a private island,
Half Moon Cay. Half Moon Cay is a 2400-acre island acquired by Holland
America in December 1996. Facilities were constructed on the island on 45
acres along a crescent-shaped white sand beach. The remainder of the island
remains undeveloped. The facilities on Half Moon Cay include bars, shops,
restrooms, a post office, a chapel and an ice cream shop, as well as a
food pavilion with open-air dining shelters and a bandstand.
The four Windstar Ships currently operate in the Caribbean, Europe and
Costa Rica and offer a casual, yet luxurious, cruise experience onboard
these modern sail ships.
Through Cunard Line Limited, the Company operates eight ships. Five of
these ships currently operate under the Cunard brand (the "Cunard Ships")
and three operate under the Seabourn brand (the "Seabourn Ships"). The
Cunard and Seabourn Ships offer luxury cruises of varying lengths in the
Caribbean, Panama Canal, Europe, Transatlantic, South America, Asia and
other worldwide itineraries. Cruise length varies from six to 104 days,
with many of the cruises being six to 14 days in length. Periodically,
these ships make longer grand cruises or operate on special itineraries.
For example, Cunard offers two world cruises and a New England Autumn
cruise.
Summary information concerning the Company's ships is as follows
(primary areas of operation reflect 1998 itineraries and are subject to
change in future years).
1998
GROSS PRIMARY
YEAR PAX REGISTERED AREAS OF
NAME REGISTRY BUILT CAP TONS OPERATION
Carnival:
Paradise Panama 1998 2,040 70,367 (1)
Elation Panama 1998 2,040 70,367 Mexican Riviera
Carnival Destiny Panama 1996 2,642 101,350 Caribbean
Inspiration Panama 1996 2,040 70,367 Caribbean
Imagination Panama 1995 2,040 70,367 Caribbean
Fascination Panama 1994 2,040 70,367 Caribbean
Sensation Panama 1993 2,044 70,367 Caribbean
Ecstasy Liberia 1991 2,040 70,367 Caribbean
Fantasy Liberia 1990 2,044 70,367 Bahamas
Celebration Liberia 1987 1,486 47,262 Caribbean
Jubilee Panama 1986 1,486 47,262 Alaska, Hawaii,
Mexican Riviera,
Panama Canal
Holiday Panama 1985 1,448 46,052 Mexican Riviera
Tropicale Liberia 1982 1,014 36,674 Caribbean
Total Carnival Ships Capacity......... 24,404
Holland America:
Rotterdam Netherlands 1997 1,316 62,000 Europe, Worldwide
Veendam Bahamas 1996 1,266 55,451 Eastern Canada,
Caribbean
Ryndam Netherlands 1994 1,266 55,451 Alaska, Caribbean
Maasdam Netherlands 1993 1,266 55,451 Alaska,
Panama Canal
Statendam Netherlands 1993 1,266 55,451 Alaska, Hawaii,
Caribbean
Westerdam Netherlands 1986 1,494 53,872 Alaska, Caribbean
Noordam Netherlands 1984 1,214 33,930 Alaska, Caribbean
Nieuw Amsterdam Netherlands 1983 1,214 33,930 Alaska, South
America, Asia/Pacific
Total Holland America
Ships Capacity....................... 10,302
Windstar Cruises:
Wind Surf Bahamas 1990 312 14,745 Caribbean, Europe
Wind Spirit Bahamas 1988 148 5,736 Caribbean, Europe
Wind Song Bahamas 1987 148 5,703 Costa Rica, Europe
Wind Star Bahamas 1986 148 5,703 Caribbean, Europe
Total Windstar Ships Capacity......... 756
Cunard:
Royal Viking Sun Bahamas 1988 758 37,845 Worldwide (2)
Sea Goddess II Bahamas 1985 116 4,253 Asia, Europe (2)
Sea Goddess I Bahamas 1984 116 4,253 Caribbean,
Europe (2)
Vistafjord Bahamas 1973 675 24,492 Worldwide (3)
Queen Elizabeth 2 England 1969 1,715 70,327 Transatlantic,
Worldwide
Total Cunard Ships Capacity........... 3,380
Seabourn:
Seabourn Legend Norway 1992 208 9,975 Pacific, Europe
Seabourn Spirit Norway 1989 208 9,975 Asia, Europe
Seabourn Pride Norway 1988 208 9,975 South America,
Europe, Caribbean
Total Seabourn Ships Capacity......... 624
Total Capacity........................... 39,466
(1) The Paradise was in service for only five days during fiscal
1998. During fiscal 1999, the primary area of operation is expected to be
the Caribbean.
(2) In late 1999, these ships will be transferred to Seabourn.
(3) In late 1999, this ship's name will be changed to the Caronia.
__________________________
Cruise Ship Construction
The Company has signed agreements with two shipyards providing for the
construction of additional cruise ships. A summary of new ship agreements
for the Company's Majority Owned Cruise Operations is as follows:
EXPECTED GROSS ESTIMATED REMAINING
SERVICE PAX REGISTERED TOTAL COST
VESSEL DATE(1) SHIPYARD CAP TONS COST(2) TO BE PAID
(In millions)
Carnival
Carnival Triumph 7/99 Fincantieri(3) 2,758 101,000 $ 410 $ 299
Carnival Victory 8/00 Fincantieri 2,758 101,000 440 434
Newbuild 4/01 Masa-Yards 2,100 82,000 375 357
Carnival Conquest 12/02 Fincantieri 2,758 101,000 450 429
Carnival Glory 8/03 Fincantieri 2,758 101,000 450 429
Total Carnival Ships 13,132 2,125 1,948
Holland America
Volendam 8/99 Fincantieri(3) 1,440 63,000 300 240
Zaandam 3/00 Fincantieri(3) 1,440 63,000 300 256
Newbuild 11/00 Fincantieri 1,380 61,000 300 55
Total Holland America Ships 4,260 900 551
Total (4) 17,392 $3,025 $2,499
(1) No assurances can be made that the vessels under construction will be
introduced into service by the expected service dates.
(2) Estimated total cost is the total cost of the completed vessel
and includes the contract price with the shipyard, design and
engineering fees, estimated capitalized interest, various owner
supplied items and construction oversight costs.
(3) These construction contracts are denominated in Italian Lira and have
been fixed into U.S. dollars through the utilization of forward foreign
currency contracts.
(4) The Company has options for the construction of two additional 82,000
gross registered ton vessels, each with a passenger capacity of 2,100. The
estimated total cost of approximately $400 million each is denominated
principally in German Marks and has not been fixed into U.S. dollars. No
assurance can be given that the options to construct the vessels will be
exercised.
During 1997, the Company announced that it was in negotiations with
shipyards to build a new class of ships for each of its Carnival, Holland
America and Costa brands. The first of these orders has been placed by
Costa to construct the Costa Atlantica, a 2,112 passenger, 82,000 gross
registered ton vessel for approximately 700 billion Lira (approximately
U.S. $410 million), which is expected to enter service in the spring of
2000. In February 1998, the Company announced other agreements for this new
class of vessel for the Carnival brand, which include a contract to
purchase one vessel for delivery in 2001 and options to acquire two
additional vessels described above. Additionally, although no assurances
can be made, the Company hopes to finalize orders for a new class of vessel
for Holland America and an ocean liner for Cunard in 1999.
Cruise Pricing
Each of the Company's cruise brands publishes brochures with prices
for the upcoming seasons. Brochure prices vary by cruise line, by category
of cabin, by ship and itinerary. Brochure prices are regularly discounted
through the Company's early booking discount program and other promotions.
The cruise price includes all meals and entertainment onboard and use of,
or admission to, 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.
On-Board and Other Revenues
The Company derives revenues from certain on-board activities and
services including casino gaming, bar sales, gift shop sales, entertainment
arcades, shore tours, art auctions, photography, spa services and
promotional advertising by merchants located in ports of call.
The casinos, which contain slot machines and gaming tables including
blackjack, and in most cases 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.
On-board activities are either performed directly by the Company or by
independent concessionaires, from which the Company collects a percentage
of revenues.
The Company receives additional revenue from the sale to its
passengers of shore excursions at each ship's ports of call. They include
bus and taxi sightseeing excursions, local boat and beach parties, and
nightclub and casino visits. On the Carnival, Windstar, Cunard and Seabourn
Ships, such shore excursions are primarily operated by independent tour
operators. On the Holland America Ships, shore excursions are operated by
Holland America Westours and independent parties.
In conjunction with its cruise vacations on its ships, all of the
Company's cruise operations sell pre-cruise and post-cruise land packages.
Carnival packages generally include one, two or three-night vacations near
attractions, such as Universal Studios and Walt Disney World in Orlando,
Florida, or in proximity to other vacation destinations in Central and
South Florida, Los Angeles, California and San Juan, Puerto Rico. Holland
America packages outside of Alaska generally include one, two or three-
night vacations, including stays in unique European port cities or near
attractions in Central and South Florida. Cunard and Seabourn packages
include numerous luxury and/or exotic packages, such as world class golf
programs, wine tastings and tours of the Galapagos Islands and the Hidden
Kingdoms of Nepal.
In conjunction with its Alaskan cruise vacations on its Holland
America and Carnival Ships, the Company sells pre- and post-cruise land
packages which are more fully described below (see Part I, Item 1.
Business, C. Tour Segment).
Passengers
The aggregate number of passengers carried and occupancy percentage for
the Company's ships is as follows:
YEARS ENDED NOVEMBER 30,
1998 1997 1996
Passengers Carried 2,045,000 1,945,000 1,764,000
Occupancy Percentage (1) 106.3% 108.3% 107.6%
(1) In accordance with cruise industry practice, occupancy percentage
is calculated based on two passengers per cabin even though some cabins can
accommodate three or four passengers. The percentages in excess of 100%
indicate that more than two passengers occupied some cabins.
The actual occupancy percentage for all cruises on the Company's ships
during each quarter of fiscal 1997 and 1998 was as follows:
OCCUPANCY
QUARTERS ENDED PERCENTAGE
February 28, 1997 106.4%
May 31, 1997 108.0
August 31, 1997 114.3
November 30, 1997 104.2
February 28, 1998 105.9
May 31, 1998 105.4
August 31, 1998 111.5
November 30, 1998 102.1
Sales and Marketing
The Company's brands are positioned to appeal to each of the three
major market segments (contemporary, premium and luxury). The
contemporary segment is served typically by cruises that are seven 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 brand 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. The premium segment
typically is served by cruises that last for seven to 14 days or more
at per diems of $250 or higher, and appeal principally to more affluent
customers. The luxury segment, which is not as large as the other
segments, is served by cruises with per diems of $300 or higher.
During 1998, the Company created a marketing association called
"The World's Leading Cruise Lines" for its family of six cruise
brands, including Costa, in order to both educate the consumer about
the overall breadth of the Company's cruise brands, as well as to
increase the effectiveness and efficiency of marketing the brands. This
initiative is meant to supplement the existing marketing programs of
each individual brand.
The Company's various cruise lines employ over 300 personnel,
excluding reservation agents, in the sales and sales support area, who
among other things, focus on motivating, training and supporting the retail
travel agent community which sells substantially all of the Company's
cruises, which arrangement is encouraged as a matter of policy. Travel
agents generally receive a standard commission of 10% plus the potential of
additional commissions based on sales volume. Commission rates on cruise
vacations are often higher than commission rates earned by travel agents on
sales of airline tickets and hotel rooms. Moreover, since cruise vacations
are substantially all-inclusive, sales of the Company's cruise vacations
generally yield higher commissions to travel agents than commissions earned
on selling airline tickets and hotel rooms. During fiscal 1998, no
controlled group of travel agencies accounted for more than 10% of the
Company's consolidated revenues.
Carnival
Carnival believes that its success is due in large part to its unique
brand 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 sightseeing 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,
among others, the themes "Carnival's Got the Fun" and "The Most Popular
Cruise Line in the World!". Carnival advertises nationally directly to
consumers on network television and through extensive print media. 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 in particular. Substantially all of
Carnival's cruise bookings are made through travel agents. In fiscal 1998,
Carnival took reservations from about 29,000 of approximately 49,000 travel
agency locations known to the Company in the United States and Canada.
Travel agents generally receive a standard commission of 10% plus the
potential of additional commissions based on sales volume.
Carnival engages in substantial promotional efforts designed to
motivate and educate retail travel agents about its "Fun Ships" cruise
vacations. Carnival employs approximately 110 business development managers
and 50 in-house service representatives to motivate independent travel
agents and to 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 700 reservation agents to take bookings from
independent travel agents. Carnival's fully-automated reservation system
allows its reservation agents to respond quickly to book staterooms on its
ships. Additionally, through Leisure Shopper and Cruise Director, travel
agents have the ability to make reservations through their own computer
terminals directly into Carnival's computerized reservations system.
Substantially all of Carnival's cruises are generally 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 overall yields (pricing and occupancy).
Carnival's payment terms require that a passenger pay approximately 20% of
the cruise price within seven days of the reservation date and the balance
not later than 45 days before the sailing date for three, four and five day
cruises and 70 days before the sailing date for seven-day cruises.
Holland America and Windstar
The Holland America and Windstar Ships cater to the premium and luxury
markets, respectively. The Company believes that the hallmarks of the
Holland America experience are beautiful ships and gracious, attentive
service. Holland America communicates this difference as "A Tradition of
Excellence", a reference to its long-standing reputation for "world class"
service and cruise itineraries.
Substantially all of Holland America's bookings are made through
travel agents. In fiscal 1998, Holland America took reservations from about
20,000 of approximately 49,000 travel agency locations known to the Company
in the United States and Canada. Travel agents generally receive a standard
commission of 10% plus the potential of additional commissions based on
sales volume.
Holland America has focused much of its sales effort at creating an
excellent relationship with the travel agency community. This is related to
its marketing philosophy that travel agents have a large impact on the
consumer cruise selection process and will recommend Holland America more
often because of its excellent reputation for service to both consumers and
independent travel agents. Holland America solicits continuous feedback
from consumers and the independent travel agents making bookings with
Holland America to ensure they are receiving excellent service.
Holland America's marketing communication strategy is primarily
composed of newspaper and magazine advertising, large scale brochure
distribution, direct mail solicitations to past passengers (referred to as
"alumni") and television and radio spots. Holland America engages in
substantial promotional efforts designed to motivate and educate retail
travel agents about its products. Holland America employs approximately 45
field sales representatives, 23 inside sales representatives and 16 sales
and service representatives to support the field sales force. To facilitate
access to Holland America and to simplify the reservation process for the
Holland America Ships, Holland America employs approximately 260
reservation agents to take bookings from travel agents. Additionally,
through Leisure Shopper and Cruise Director, travel agents have the ability
to make reservations directly into Holland America's reservations system.
Holland America's cruises generally are booked several months in advance of
the sailing date.
Windstar has its own marketing and reservations staff. Field sales
representatives for both Holland America and Carnival act as field sales
representatives for Windstar. Marketing efforts are devoted primarily to
i) travel agent support and awareness, ii) direct mail solicitation of past
passengers and iii) 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".
Cunard and Seabourn
Since December 1995, the Company has owned a 50% equity interest in
Seabourn Cruise Line Limited. Simultaneously with the Company's acquisition
of the assets of Cunard in May 1998, Cunard and Seabourn were combined to
form Cunard Line Limited, in which the Company owns a 68% equity interest.
Cunard Line Limited currently operates eight ships in its Cunard and
Seabourn brands.
The Cunard brand currently operates five ships in the luxury
market segment. Cunard's most visible asset is the Queen Elizabeth 2
(the "QE2"). The QE2 is the only active passenger ship of its size
built specifically for navigating ocean waters and currently offering
Transatlantic cruises, and thus enjoys a unique standing among modern
passenger ships. Since being acquired by the Company, Cunard has
redefined itself as the brand that offers classic "Old World" cruising
with a British essence.
The Seabourn brand currently operates three ships, which offer ultra-
luxury cruising with an intense focus on service and cuisine, which
management believes enables Seabourn to be marketed as the "Best of the
Best" in luxury worldwide cruising.
Seabourn and Cunard currently market and sell their products through
one combined sales and marketing organization. This combined organization
has sales offices in Miami, New York City, England, Germany and Australia.
Marketing efforts are devoted primarily to i) travel agent support and
awareness, ii) direct mail solicitation of past passengers and iii)
targeted print media campaigns and brochure distribution. Cunard Line
Limited has consolidated and streamlined its entire organization, including
its sales and marketing activities, and implemented a new pricing program
called "Simplicity Pricing", a less complicated pricing structure than
previously used.
Cunard Line Limited employs approximately 47 field sales
representatives, 25 inside sales representatives and seven sales and
service representatives to support its field sales force. They also employ
approximately 99 Cruise Sales Consultants to take bookings, substantially
all of which come from travel agents. Travel agents generally receive a
standard commission of approximately 10% plus the potential for additional
commissions based upon sales volume.
During late 1999, Cunard will be refurbishing the Royal Viking Sun and
will transfer it along with the Sea Goddess I and II ships to the Seabourn
brand. Management believes these ships more appropriately fit within the
Seabourn brand. Additionally, after a major refurbishment in late 1999,
Cunard's Vistafjord will be renamed the "Caronia", the name once used by
two of Cunard's former "Old World" ships. The QE2 will also undergo a major
refurbishment in late 1999. Management is currently revising cruising
itineraries and schedules for the year 2000 in order to more appropriately
coordinate individual ship itineraries with their new branding strategies.
Seasonality
The Company's different businesses experience varying degrees of
seasonality. The Company's revenue from the sale of passenger tickets for
Carnival, Cunard, Seabourn and Windstar ships is moderately seasonal.
Historically, revenues for Carnival, Cunard, Seabourn and Windstar cruises
have been greater during the periods from late June through August and
lower during the fall months. Holland America cruise revenues are more
seasonal than the Company's other brands' cruise revenues. Revenues for
Holland America cruises are highest during the summer months when Holland
America ships operate in Alaska and Europe for which it obtains higher
pricing. Revenues for Holland America cruises are lower during the winter
months when Holland America 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 sightseeing destinations, and consumer
demand for such activities is typically influenced by general economic
conditions.
As described under Part I, Item 1. Business, B. Cruise Ship Segment,
North American Cruise Industry, the North American cruise industry had an
aggregate of 145 ships and 140,000 lower berths at the end of 1998. From
the end of 1998 through the end of 2001, CLIA currently estimates that 29
new ships will be introduced into the North American market with a capacity
of approximately 45,000 lower berths. These estimates of new ship
introductions are based on scheduled ship deliveries and the actual number
of ships could change. The lead time for design, construction and delivery
of a typical large cruise ship is approximately two to three years.
Additionally, these estimates of capacity do not include assumptions
related to unannounced ship withdrawals due to age or changes in
itineraries and, accordingly, could indicate a higher percentage growth in
capacity than will actually occur. Nonetheless, management believes net
capacity serving North American cruise passengers will increase over the next
several years, barring unforeseen events, and thus may increase the levels
of competition within the industry.
The Company 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. Each of the Company's
cruise brands and its primary cruise competition is discussed below.
The Carnival Ships compete with cruise ships operated by five
different cruise lines which operate year round from Florida, California or
Puerto Rico with similar itineraries and with nine other cruise lines
operating seasonally from ports in Florida, California or Puerto Rico,
including cruise ships operated by Holland America and Costa. Competition
for cruise passengers is substantial. Ships operated by Royal Caribbean
International and Norwegian Cruise Line sail regularly from Miami and ships
operated by Celebrity Cruises, owned by Royal Caribbean Cruises Ltd., and
Princess Cruises sail regularly from Ft. Lauderdale on itineraries similar
to those of the Carnival Ships. Carnival competes year round with ships
operated by Royal Caribbean International embarking from Los Angeles to the
west coast of Mexico. Cruise lines such as Norwegian Cruise Line, Royal
Caribbean International and Princess Cruises offer voyages competing with
Carnival from San Juan to the Caribbean.
In 1998, the Walt Disney Co. entered the cruise market with the
introduction of the first of two new cruise ships. The Disney ship competes
primarily with Carnival in the Caribbean and Bahamian marketplaces.
In Alaska, Holland America and Carnival compete directly with cruise
ships operated by nine different cruise lines with the largest competitors
being Princess Cruises, Royal Caribbean International and Celebrity
Cruises. Over the past several years, there has been a steady increase in
the available capacity among cruise lines operating in Alaska. In the
Caribbean, Holland America competes with cruise ships operated by 16
different cruise lines, its primary competitors being Princess Cruises,
Royal Caribbean International, Celebrity Cruises and Norwegian Cruise Line,
as well as Carnival and Costa.
The Windstar, Cunard and Seabourn ships' primary unaffiliated
competitors within the cruise industry include: Crystal Cruises, Radisson
Seven Seas, Renaissance Cruises and Silversea Cruises.
Governmental Regulations
The Company's ships are registered in the Bahamas, England, Liberia,
Netherlands, Norway or Panama, as more fully described under Part I, Item
1. Business, B. Cruise Ships and Itineraries and, accordingly, are
regulated by these jurisdictions. The Company's ships that call on United
States ports 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 ("FMC"), which, among
other things, certifies the Company on the basis of its ability 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 the necessary licenses to conduct its
business. In connection with a significant portion of its Alaska cruise
operations, Holland America relies on concession permits from the National
Park Service, which are periodically renewed, to operate its cruise ships
in Glacier Bay National Park. There can be no assurance that these 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 (the "IMO"), which operates
under the United Nations, has adopted safety standards as part of the
"Safety of Life at Sea" ("SOLAS") Convention, generally applicable to all
passenger ships carrying 36 or more passengers. Generally, SOLAS
establishes vessel design, structural features, materials, construction and
life saving equipment requirements to improve passenger safety. The current
SOLAS requirements are phased in through the year 2010.
In 1993, SOLAS was amended to adopt the "International Safety
Management Code" (the "ISM Code"). The ISM Code provides an international
standard for the safe management and operation of ships and for pollution
prevention. The ISM Code became mandatory for passenger vessel operators,
such as the Company, on July 1, 1998. All of the Company's Majority Owned
Cruise Operations and Affiliated Cruise Operations have obtained the
required certificates demonstrating compliance with the ISM Code.
Public Law 89-777 administered by the 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. In 1995, the FMC introduced proposals to increase the coverage
requirements under the FMC regulations. These proposed changes to the
regulations are viewed favorably by the Company and, if enacted, are not
expected to have a material effect on the Company.
Management believes that virtually all of the Company's income (with
the exception of the United States source income from the transportation,
hotel and tour business of Holland America Westours) is exempt from United
States federal income taxes. If the Company was found not to meet certain
tests under the Internal Revenue Code or if the Internal Revenue Code were
to be changed in a manner adverse to the Company, much of the Company's
income would become subject to taxation by the U.S. at higher than normal
corporate tax rates. For an additional discussion of the Company's
taxation, see Note 2 to the Company's Consolidated Financial Statements in
Exhibit 13 incorporated by reference into this Annual Report on Form 10-K.
From time to time, various other regulatory and legislative changes
have been or may 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 each of the three years in the period ended November 30, 1998,
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, the Company markets sightseeing
tours separately and as a part of cruise/tour packages under the Holland
America Westours and Gray Line names. 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 Westours is an indirect wholly owned subsidiary of
HAL, a wholly owned subsidiary of the Company. The group of companies which
together comprise the tour operations perform three independent yet
interrelated functions. During 1998, as part of an integrated travel
program to destinations in Alaska, the tour service group offered 38
different tour programs varying in length from 10 to 18 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 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 280 motor coaches using the trade name Gray Line
operate in Alaska, Washington and western Canada. These motor coaches are
used for extended trips, city sightseeing tours and charter hire. Holland
America Westours conducts its tours both as part of a cruise/tour package
and as individual sightseeing products sold under the Gray Line name.
Additionally, Holland America Westours operates express Gray Line motor
coach service between downtown Seattle and the Seattle-Tacoma International
Airport.
Thirteen 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, Holland America Westours owns
or leases motor coach maintenance shops in Seattle, Washington, and in
Juneau, Fairbanks, Anchorage, Skagway and Ketchikan, Alaska. Holland
America Westours 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, Washington, Vancouver, British Columbia
and Victoria, British Columbia. Certain real property facilities on federal
land are used in Holland America Westours' tour operations pursuant to
permits from the applicable federal agencies.
Westmark Hotels
Holland America Westours owns and/or operates 14 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 10 hotels, all located throughout Alaska, provide a
total of 1,455 rooms, bringing the total number of hotel rooms to 2,040.
The hotels play an important role in Holland America Westours tour
programs 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. Most of the Westmark 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 as follows:
OPEN DURING
NAME LOCATION ROOMS 1998 SEASON
Alaska Hotels:
Westmark Anchorage Anchorage 198 year-round
Westmark Inn Anchorage 91 seasonal
Westmark Inn Fairbanks 170 seasonal
Westmark Fairbanks Fairbanks 244 year-round
The Baranof Juneau 196 year-round
Westmark Cape Fox Ketchikan 72 year-round
Westmark Shee Atika Sitka 101 year-round
Westmark Inn Skagway Skagway 195 seasonal
Westmark Tok Tok 92 seasonal
Westmark Valdez Valdez 97 year-round
1,455
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
585
2,040
Eleven of the hotels are wholly owned by Holland America Westours
subsidiaries. Of the remaining three hotels, the Westmark Cape Fox and
Westmark Shee Atika are operated by Westmark under management or lease
arrangements involving third parties and the Westmark Anchorage is 90%
owned by a Holland America Westours subsidiary.
For the hotels that operate year-round, the occupancy percentage for
fiscal 1998 was 57.4% (55.9% for fiscal 1997), and for the hotels that
operate only during the summer months, the occupancy percentage for fiscal
1998 was 71.6% (71.4% for fiscal 1997).
Sales and Marketing
Holland America Westours has its own marketing staff devoted to i)
travel agent support and awareness, ii) direct mail solicitation of past
customers, iii) use of consumer magazine and newspaper advertising to
develop prospects and enhance awareness and iv) distribution of brochures.
Additionally, television and radio spots are used to market its tour and
cruise packages. The Westours marketing message leverages the company's 52
years of Alaska tourism leadership and its extensive array of hotel and
transportation assets to create a brand preference for Holland America
Westours. To the prospective vacationer the company endeavors to convince
them that "Westours is Alaska".
Holland America Westours tours are marketed both separately and as
part of cruise/tour packages. Although most Holland America Westours
cruise/tours include a Holland America cruise as the cruise segment, other
cruise lines also market Holland America Westours tours as a part of their
cruise/tour packages and sightseeing excursions. Tours sold separately are
marketed through independent travel agents and also directly by Holland
America Westours, utilizing sales desks in major hotels. General marketing
for the hotels is done through various media in Alaska, Canada and the
contiguous United States. Travel agents, particularly in Alaska, are
solicited, and displays are used in airports in Seattle, Washington,
Portland, Oregon and various Alaskan cities. Room 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 and the United States Forest Service.
Seasonality
Holland America Westours 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, western 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, Holland America Westours seeks to maximize its motor coach charter
activity such as operating charter tours to ski resorts in Washington and
western Canada.
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 and the Canadian Rockies are
Princess Tours (with approximately 150 motor coaches and three hotels) and
Alaska Sightseeing/Trav-Alaska (with approximately 30 motor coaches). The
primary competitor in Washington is Gazelle (with approximately 15 motor
coaches).
Westmark Hotels compete with various hotels throughout Alaska, many of
which charge prices below those charged by Westmark Hotels. Dining
facilities in the hotels also compete with the many restaurants in the same
geographic areas.
Government Regulations
Holland America Westours 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 Holland America Westours
tours involve federal properties and are subject to regulation by various
federal agencies, such as the National Park Service and the U.S. Forest
Service.
In connection with the operation of its beverage facilities in the
Westmark Hotels, Holland America Westours 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, Holland America Westours is required
to comply with applicable building and fire codes. Changes in these codes
have in the past and may in the future, require expenditures to ensure
continuing compliance such as the installation of sprinkler systems.
From time to time, various other regulatory and legislative changes
have been or may be proposed that could have an effect on the tour industry
in general.
Financial Information
For financial information about the Company's tour segment with
respect to each of the three years in the period ended November 30, 1998,
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 operations have approximately 3,800 full-time and 1,800
part-time/seasonal employees engaged in shoreside operations. The Company
also employs approximately 1,200 officers and 15,200 crew and staff on its
ships. Due to the seasonality of its Alaska and Canadian operations, HAL
and its subsidiaries increase their work force during the summer months,
employing additional full-time and part-time personnel. The Company has
entered into agreements with unions covering certain employees in its
hotel, motorcoach and ship operations. The Company considers its employee
and union 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, among other
things, obtain volume discounts.
Management believes that there are currently eight shipyards in the
world capable of the quality construction of large passenger cruise ships.
The Company currently has contracts, including options, with two of these
shipyards for the construction of ten ships to enter service over the next
five years (see Part I, Item 1. Business, B. Cruise Ship Segment - Majority
Owned Cruise Operations - Cruise Ship Construction). The Company's primary
competitors also have contracts to construct new cruise ships (see Part I,
Item 1. Business, B. Cruise Ship Segment - Majority Owned Cruise Operations
- - Competition). If the Company elects to build additional ships in the
future, there is no assurance that any of these shipyards will have the
available capacity to build additional new ships for the Company at the
times desired by the Company or that the shipyards will agree to build
additional ships at a cost acceptable to the Company. Additionally, there
is no assurance that ships under contract for construction will be
delivered.
F. Insurance
The Company maintains insurance covering legal liabilities related to
crew, passengers and other third parties on its ships in operation through
The Standard Steamship Owners Protection & Indemnity Association Limited
(the "SSOPIA"), Steamship Mutual Underwriting Association Ltd. (the
"SMUAL") and Assurance Foreningen Gard (the "GARD"). The amount and terms
of this insurance is governed by the rules of the foregoing protection and
indemnity 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 under SSOPIA,
SMUAL or GARD. The coverage for hull and machinery and war risks is
provided by international markets, including underwriters at Lloyds.
The Company, as currently required by the FMC, maintains at all times
three $15 million performance bonds for all of the Company's ships, to
cover passenger ticket liabilities in the event of a canceled or
interrupted cruise. See Part I, Item 1. Business, B. Cruise Ship
Segment - Majority Owned Cruise Operations - Governmental Regulations
for a discussion of changes to the performance bond requirements
proposed by the FMC. The Company also maintains other performance bonds
as required by various foreign authorities who regulate certain of the
Company's operations in their jurisdictions.
The Company maintains certain levels of self insurance for the
above mentioned risks through the use of substantial deductibles. Such
deductibles may be increased in the future. The Company does not
currently carry coverage related to loss of earnings or revenues for
its cruise operations other than for the QE2.
The Company also maintains various other insurance policies to protect
the assets and earnings arising from the operations of Holland America
Westours and other activities.
G. Investments in Affiliates
Airtours plc
In April 1996, the Company acquired a 28% interest in Airtours for
approximately $307 million. In 1998, the Company's interest in Airtours was
reduced to approximately 26% as a result of the conversion of Airtours
preference shares into Airtours common stock and the issuance of Airtours
common stock in conjunction with two of its acquisitions. Airtours 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 Austrian, British, Belgian, Dutch, French, German, Irish,
Polish, Scandinavian, Swiss and North American markets. Airtours provided
holidays to approximately eight million people in fiscal 1998 and owns or
operates over 800 retail travel shops, 26 holiday hotels, three cruise
ships (an additional ship is scheduled to be delivered in 1999), 36
aircraft and develops and markets vacation ownership resorts in the Canary
Islands and Orlando, Florida. The cruise ships are operated under the Sun
Cruises brand. In 1997, Airtours acquired a 50% interest in Costa, as
discussed below. During 1998, Airtours made several acquisitions, including
a 36% interest in FTi, a German tour operator, and a 100% interest in
Direct Holidays, a direct to customer retail tour operator in the United
Kingdom. Airtours also acquired tour operations based in Ireland and
Atlanta, Georgia. In December 1998, Airtours successfully completed an
approximate $500 million convertible debenture offering, which will provide
Airtours with additional working capital to fund its operations and/or
future acquisitions, as required. If this convertible debt was converted
into Airtours common stock, the Company's interest in Airtours would be
reduced to approximately 23%.
Costa Crociere S.p.A.
In June 1997, the Company and Airtours completed a joint offer to
acquire the equity securities of Costa, an Italian cruise company. With the
completion of the offer, the Company and Airtours each own 50% of Il Ponte,
S.p.A. ("Il Ponte"), a holding company, which was purchased from the Costa
family. As a result of the acquisition, Il Ponte owns approximately 100% of
Costa. The cost of the Company's acquisition of its 50% direct interest was
approximately $141 million, of which approximately $103 million was paid by
Il Ponte and the balance was paid by the Company. The $103 million paid by
Il Ponte was funded through Il Ponte debt, which is guaranteed by the
Company.
Costa is headquartered in Genoa, Italy and is Europe's largest cruise
line based on number of passengers carried and available capacity. Costa is
primarily targeted to the contemporary market and has sales offices in
Argentina, Brazil, England, Florida, France, Italy, Spain and Switzerland,
and employs over 200 personnel in the sales and sales support area,
excluding reservation agents. Costa's ships' primary itineraries include
Europe, the Caribbean and South America. The major market for Costa cruises
is Southern Europe with the majority of Costa's cruises being sold in
Italy, Spain and France.
The itineraries of Costa's ships during the summer months consist
primarily of various locations in Europe. During the winter months, the
vessels operate primarily in the Caribbean and South America. See Part I,
Item 1. Business, B. Cruise Ship Segment for a discussion of competition
and certain government regulations, which affect Costa.
Costa operates six ships which are registered in Liberia and one
registered in the Bahamas which have an aggregate passenger capacity of
7,644 passengers. In January 1998, Costa signed an agreement to construct
an eighth ship, the Costa Atlantica, with a passenger capacity of 2,112 for
approximately 700 billion Lira (see "Cruise Ship Construction").
Seasonality
The Company's equity in the earnings of Airtours and Il Ponte are
recorded on a two-month lag basis using the equity method of accounting.
Costa's and Airtours' earnings are seasonal due to the nature of the
European leisure travel industry and European cruise season. Typically,
Airtours' and Costa's quarters ending June 30 and September 30 experience
higher earnings, with earnings in quarter ending September 30 being their
highest.
H. Trademarks
The Company owns numerous trademarks which it believes are widely
recognized throughout the world and have considerable value.
Item 2. Properties
The Company's cruise ships and private island, Half Moon Cay, are
described in Section B of Item 1 under the heading Cruise Ship Segment -
Cruise Ships and Itineraries. The properties associated with Holland
America Westours tour operations are described in Section C of Item 1 under
the heading "Tour Segment".
Carnival's principal shoreside operations and the Company's corporate
headquarters are located at 3655 N.W. 87th Avenue, Miami, Florida. These
Company-owned facilities include approximately 456,000 square feet of
office space. HAL headquarters are at 300 Elliott Avenue West in Seattle,
Washington in approximately 128,000 square feet of leased office space.
Cunard Line Limited headquarters are at 6100 Blue Lagoon Drive in Miami,
Florida in approximately 51,000 square feet of leased office space.
The Company's cruise ships, tour properties and shoreside operations
facilities are well maintained and in good condition.
Item 3. Legal Proceedings
Several actions (collectively, the "Passenger Complaints"), as
previously reported, have been filed against Carnival or Holland America
Westours on behalf of purported classes of persons who paid port charges to
Carnival or Holland America, alleging that statements made in advertising
and promotional materials concerning port charges were false and
misleading. The Passenger Complaints allege violations of the various state
consumer protection acts and claims of fraud, conversion, breach of
fiduciary duties and unjust enrichment. Plaintiffs seek compensatory
damages or, alternatively, refunds of portions of port charges paid,
attorneys' fees, costs, prejudgment interest, punitive damages and
injunctive and declaratory relief. The status of each pending Passenger
Complaint is as follows:
In 1996, four Passenger Complaints were filed against Carnival in the
Circuit Court for the Eleventh Judicial Circuit in Dade County, Florida, by
Michelle Hackbarth, Larry Katz, Michelle A. Sutton, Pedro Rene Mier, and
others, respectively, on behalf of purported nationwide classes. In
February 1998, Carnival's motions to dismiss the plaintiffs' second amended
complaints were granted in part and denied in part. In May 1998, the court
consolidated all four actions. The court has lifted, solely with respect to
the issue of class certification, a previously-imposed stay on discovery.
Plaintiffs' motion for class certification was argued on January 13, 1999,
and a decision on that motion has not yet been rendered.
Carnival had previously reached an agreement-in-principle to settle
the action filed against it by Michelle Hackbarth and others under terms
that would apply to a nationwide class of Carnival passengers. That
agreement-in-principle was subject to the parties' entering into a
definitive agreement. A definitive agreement was not executed, and the
action is now proceeding.
In March 1997, a Passenger Complaint was filed against Carnival in the
Chancery court in Dyer County, Tennessee, by Brent Mezzacasa and others, on
behalf of a purported nationwide class. The complaint also named, as
co-defendants, Norwegian Cruise Lines, Royal Caribbean Cruise Lines and
Princess Cruise Lines. Simultaneous with the filing of the complaint, the
court granted Plaintiffs' motion to conditionally certify the class. In
October 1997, the court granted Carnival's motion to dismiss on the grounds
of inconvenient forum. Plaintiffs' appeal from that order is under
consideration in the Tennessee Court of Appeals.
In April 1997, a Passenger Complaint was filed against Carnival in the
Court of Common Pleas, Montgomery County, Ohio, by Cathy J. Miller and
others, on behalf of a purported statewide class. Carnival's motion to
dismiss on inconvenient forum grounds is under consideration. In October
1997, a Passenger Complaint was filed against Carnival in Georgia state
court by Elizabeth Forsling on behalf of a purported statewide class, and
in February 1999, the court granted Carnival's motion to dismiss on
inconvenient forum grounds.
In March 1998, a Passenger Complaint was filed against Carnival in the
Circuit Court for the 20th Judicial Circuit in St. Clair County, Illinois,
by John R. Birdsell and others on behalf of a purported nationwide class.
The complaint also names, as co-defendants, Norwegian Cruise Lines, Royal
Caribbean Cruise Lines and Princess Cruise Lines. The court overruled
Carnival's objection to the court's exercise of personal jurisdiction and
denied its motion to dismiss on grounds of improper forum. Carnival is now
appealing the trial court's decision and plaintiffs have moved to certify a
class.
In April 1996, a Passenger Complaint was filed against Holland America
Westours in the Superior Court in King County, Washington, by Francine
Pickett and others on behalf of a purported nationwide class. The court
denied both Holland America Westours' motion to dismiss and the plaintiffs'
motion for class certification. Thereafter Holland America Westours entered
into a settlement agreement for this action, the only Passenger Complaint
filed against it. The settlement agreement was approved by the court on
September 28, 1998. Five members of the settlement class have appealed the
court's approval of the settlement. The appeal is likely to take between
one and two years to be resolved. Unless the appeal is successful, Holland
America will issue travel vouchers with a face value of $10-$50 depending
on specified criteria, to certain of its passengers who are U.S. residents
and who sailed between April 1992 and April 1996, and will pay a portion of
the plaintiffs' legal fees. The amount and timing of the travel vouchers to
be redeemed and the effects of the travel voucher redemption on revenues is
not reasonably determinable. Accordingly, the Company will account for the
redemption of the vouchers as a reduction of future revenues. In 1998, the
Company established a liability for the estimated distribution costs of the
settlement notices and plaintiffs' legal costs.
Several complaints have been filed against Carnival and/or Holland
America Westours (collectively the "Travel Agent Complaints") on behalf of
purported classes of travel agencies who had booked a cruise with Carnival
or Holland America, claiming that advertising practices regarding port
charges resulted in an improper commission bypass. These actions allege
violations of state consumer protection laws, claims of breach of contract,
negligent misrepresentation, unjust enrichment, unlawful business practices
and common law fraud, and they seek unspecified compensatory damages (or
alternatively, the payment of usual and customary commissions on port
charges paid by passengers in excess of certain charges levied by
government authorities), an accounting, attorneys' fees and costs, punitive
damages and injunctive relief. The status of each pending Travel Agent
Complaint is as follows:
In August 1997, a Travel Agent Complaint was filed against Carnival in
the Circuit Court for the Eleventh Judicial Circuit in Dade County,
Florida, by N.G.L. Travel Associates, on behalf of a purported nationwide
class of travel agencies who booked cruises with Carnival. The court
dismissed the action with prejudice in January 1999, and plaintiff has
appealed.
In September 1997, a Travel Agent Complaint was filed against Holland
America Westours in the Superior Court of the State of Washington for King
County by N.G.L. Travel Associates on behalf of a purported nationwide
class of travel agencies who booked cruises with Holland America. Holland
America Westours filed summary judgment motions as to all of the claims.
The motions were granted as to every claim except for one alleging a breach
of contract under the Sales Agreement between Holland America Westours and
GEM, the travel agent consortium of which N.G.L. Travel Associates was a
member. Both parties have requested the court to reconsider its rulings on the
summary judgment motions; those requests are pending. The court has ruled
that a class of travel agents will be certified in this matter. The exact
composition of the class is uncertain at this time as the order signed by
the court is inconsistent with the previous decisions made by the court on
the summary judgment motions. Holland America Westours expects the
situation to be clarified in the near future and may appeal the court's
class certification order.
In August 1996, a Travel Agent Complaint was filed against Carnival
and Holland America Westours in the Superior Court in Los Angeles, County,
California, by Nelsons Travel Associates, on behalf of purported nationwide
classes of travel agencies who booked cruises with Carnival and Holland
America. Upon Carnival's and Holland America Westours' motions to dismiss
or stay the action on the grounds of inconvenient forum, the court stayed
the action, pending resolution of the Florida and Washington actions.
In February 1998, a Travel Agent Complaint was filed against Carnival
in Alabama state court by Flora Price and others on behalf of a purported
statewide class of travel agencies who booked cruises with Carnival. The
case was removed to the United States District Court for the Northern
District of Alabama which granted Carnival's motion to dismiss or transfer
on the grounds of inconvenient forum.
It is not now possible to determine the ultimate outcome of the pending
Passenger and Travel Agent Complaints if such claims should proceed to
trial. Management believes it has meritorious defenses to the claims.
Management understands that purported class actions similar to the
Passenger and Travel Agent Complaints have been filed against several other
cruise lines.
Item 4. Submission of Matters to a Vote of 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 Annual Report on Form 10-K.
The following table sets forth the name, age and title of each
executive officer. Titles listed relate to positions within the Company
unless otherwise noted.
NAME AGE POSITION
Micky Arison 49 Chairman of the Board of Directors
and Chief Executive Officer
Gerald R. Cahill 47 Senior Vice President-Finance and Chief
Financial Officer
Robert H. Dickinson 56 President and Chief Operating Officer
of Carnival and Director
Howard S. Frank 57 Vice Chairman of the Board of Directors
and Chief Operating Officer
A. Kirk Lanterman 67 Chairman of the Board of Directors
and Chief Executive Officer of
Holland America Line-Westours Inc.
and Director
Peter T. McHugh 51 President and Chief Operating Officer
of Holland America Line-Westours Inc.
Lowell Zemnick 55 Vice President and Treasurer
Meshulam Zonis 65 Senior Vice President-Operations of
Carnival and Director
Business Experience of Officers
Micky Arison, has been Chief Executive Officer since 1979 and Chairman
of the Board of Directors 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, is a Certified Public Accountant and has been Senior
Vice President-Finance, Chief Financial Officer and Chief Accounting
Officer since January 1998. From September 1994 to January 1998 he was Vice
President-Finance. He 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.
Robert H. Dickinson, 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, has been Vice Chairman of the Board of Directors
since October 1993, Chief Operating Officer since January 1998 and a
director since 1992. From July 1989 to January 1998 he was Chief Financial
Officer and Chief Accounting Officer and 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, is a Certified Public Accountant and has been a
director since April 1992. He has been Chairman of the Board of Directors
of Holland America Line-Westours Inc. since March 1997 and has been Chief
Executive Officer of Holland America Line-Westours Inc. since January 1989.
From January 1983 to March 1997, he was President of Holland America
Line-Westours Inc. and from January 1983 to January 1989 he was Chief
Operating Officer of Holland America Line-Westours Inc.
Peter T. McHugh, has been President and Chief Operating Officer of
Holland America Line-Westours Inc. since March 1997. From January 1996 to
March 1997 he was Executive Vice President of Holland America Line-Westours
Inc. From January 1992 to December 1995 he was Chief Executive Officer and
Responsible Officer of Pan American World Airways.
Lowell Zemnick, is a Certified Public Accountant and has been a Vice
President since 1980 and Treasurer since September 1990. He was the Chief
Financial Officer of Carnival from 1980 to September 1990 and was the Chief
Financial Officer of Carnival Corporation from May 1987 through June 1989.
Meshulam Zonis, has been Senior Vice President-Operations of Carnival
since 1979. He has also been a director since June 1987. From 1974 through
1979, he 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 Annual Report on Form 10-K and certain oral
statements by authorized officers of the Company constitute "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. 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; consumer demand for cruises;
pricing policies followed by competitors of the Company; increases in
cruise industry capacity; changes in tax laws and regulations; 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; unscheduled ship repairs and drydocking; incidents involving
cruise vessels at sea; computer program Year 2000 compliance; and changes
in laws and regulations applicable to the Company.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
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
The Company declared cash dividends on all of its Common Stock in the
amount of $.055 per share in each of the first three quarters of fiscal
1997, $.075 in the fourth quarter of fiscal 1997, $.075 in each of the
first three quarters of fiscal 1998, and $.09 in the fourth quarter of
fiscal 1998 and first quarter of fiscal 1999. Payment of future dividends
on the Common Stock will depend upon, among other factors, the Company's
earnings, financial condition and capital requirements. The Company may
also declare special dividends to all stockholders in the event that
members of the Arison family and certain related entities (the "Arison
Group") are required to pay additional income taxes by reason of their
ownership of the Common Stock because of an income tax audit of the
Company. On April 13, 1998, the Board of Directors of the Company approved
a two-for-one split of its Common Stock. The additional shares were
distributed on June 12, 1998 to shareholders of record on May 29, 1998. All
share and per share data presented herein has been retroactively restated
to give effect to this stock split.
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.
Item 6. Selected Financial Data
The information required by Item 6, Selected Financial Data for each
of the five years in the period ended November 30, 1998, 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 Operations, is shown in
Exhibit 13 and is incorporated by reference into this Annual Report on Form
10-K.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The information required by Item 7A, Quantitative and Qualitative
Disclosures About Market Risk, 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
PricewaterhouseCoopers LLP dated January 25, 1999, is shown in Exhibit 13
and is 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, 1998.
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 24th day of February, 1999.
CARNIVAL CORPORATION
By /s/ Micky Arison
Micky Arison
Chairman of the Board of
Directors 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 of February 24, 1999
Micky Arison Directors and Chief Executive
Officer
/s/ Howard S. Frank Vice Chairman of the Board of February 24, 1999
Howard S. Frank Directors and Chief Operating
Officer
/s/ Gerald R. Cahill Senior Vice President-Finance February 24, 1999
Gerald R. Cahill and Chief Financial and
Accounting Officer
/s/ Shari Arison Director February 24, 1999
Shari Arison
/s/ Maks L. Birnbach Director February 24, 1999
Maks L. Birnbach
/s/ Richard G. Capen, Jr.Director February 24, 1999
Richard G. Capen, Jr.
/s/ David Crossland Director February 24, 1999
David Crossland
/s/ Robert H. Dickinson Director February 24, 1999
Robert H. Dickinson
/s/ James M. Dubin Director February 24, 1999
James M. Dubin
/s/ A. Kirk Lanterman Director February 24, 1999
A. Kirk Lanterman
/s/ Modesto A. Maidique Director February 24, 1999
Modesto A. Maidique
/s/ William S. Ruben Director February 24, 1999
William S. Ruben
/s/ Stuart S. Subotnick Director February 24, 1999
Stuart S. Subotnick
/s/ Sherwood M. Weiser Director February 24, 1999
Sherwood M. Weiser
/s/ Meshulam Zonis Director February 24, 1999
Meshulam Zonis
/s/ Uzi Zucker Director February 24, 1999
Uzi Zucker
INDEX TO EXHIBITS
Page No. in
Sequential
Numbering
System
Exhibits
3.1-Second Amended and Restated Articles of Incorporation of the
Company. (1)
3.2-Form of By-laws of the Company.(2)
4.1-Agreement of the Company dated February 25, 1999 to furnish
certain debt instruments to the Securities and Exchange
Commission.
4.2-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.(3)
4.3-Form of Indenture, dated 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.(4)
10.1-Retirement and Consulting Agreement dated
November 18, 1998 between Alton Kirk Lanterman, Carnival
Corporation and Holland America Line-Westours Inc.
10.2-Executive Long-term Compensation Agreement dated January 16,
1998 between Robert H. Dickinson and Carnival Corporation. (5)
10.3-1994 Carnival Cruise Line Key Management Incentive Plan as
amended on January 5, 1998. (6)
10.4-Amended and Restated Carnival Corporation 1992 Stock Option
Plan. (7)
10.5-Carnival Cruise Lines, Inc. 1993 Restricted Stock Plan
adopted on January 15, 1993 and as amended January 5, 1998 and
December 21, 1998.
10.6-Carnival Corporation "Fun Ship" Nonqualified Savings Plan.
(8)
10.7 -Amendments to The Carnival Corporation Nonqualified
Retirement Plan for Highly Compensated. (9)
10.8-Letter Agreement dated July 11, 1989, between the Company
and the Ted Arison Irrevocable Trust. (10)
10.9-Amendment to Consulting Agreement Dated August 5, 1996
between the Company and Arison Investments Ltd. (11)
10.10-Carnival Cruise Lines, Inc. 1987 Stock Option Plan.(12)
10.11-Carnival Cruise Lines, Inc. 1987 Restricted Stock Plan.(13)
10.12-Carnival Cruise Lines, Inc. Retirement Plan.(14)
10.13-Carnival Cruise Lines, Inc. Non-Qualified Retirement
Plan.(15)
10.14-1993 Outside Directors' Stock Option Plan.(16)
10.15-HAL Antillen N.V. and subsidiaries Key Management Incentive
Plan.
10.16-Form of Deferred Compensation Agreement between the Company
and each of Meshulam Zonis and Robert H. Dickinson.(17)
10.17-Consulting Agreement/Registration Rights Agreement dated
June 14, 1991, between the Company and Ted Arison.(18)
10.18-Indemnity Agreement between the Company and Ted Arison.(19)
10.19-First Amendment to Consulting Agreement/Registration Rights
Agreement.(20)
10.20-Consulting Agreement dated July 31, 1992, between the
Company and Arison Investments Ltd.(21)
10.21-Organization agreement dated February 25, 1994 between the
Company and the principals of The Continental Companies.(22)
10.22-Stock Purchase Agreement between Carnival Corporation and
CHC International.(23)
10.23-Stock Purchase Agreement between Carnival Corporation,
Sherwood Weiser and others.(24)
10.24-Shareholders' Agreement dated February 21, 1996 between
Carnival Corporation and David Crossland.(25)
10.25-Maks L. Birnbach Director's Agreement.(26)
10.26-William S. Ruben Director's Agreement.(27)
10.27-Stuart Subotnick Director's Agreement.(28)
10.28-Sherwood M. Weiser Director's Agreement.(29)
10.29-Uzi Zucker Director's Agreement. (30)
10.30-David Crossland Director's Agreement.(31)
10.31-James M. Dubin Director's Agreement.(32)
10.32-Modesto M. Maidique Director's Agreement.(33)
10.33-Richard G. Capen Director's Agreement.(34)
10.34-Shari Arison Dorsman Director's Agreement.(35)
10.35-Amendment of Stock Purchase Agreement and Security and
Pledge Agreement, dated June 15, 1998, between Carnival
Corporation, Sherwood Weiser and others.
10.36-Executive Long-term Compensation Agreement dated January
11, 1999, between the Company and Micky Arison.
10.37-Executive Long-term Compensation Agreement dated January
11, 1999, between the Company and Howard S. Frank.
10.38-Note Extension and Satisfaction Agreement, dated February
17, 1999, between Carnival Corporation, Sherwood Weiser and others.
12.0-Ratio of Earnings to Fixed Charges.
13.0-Portions of 1998 Annual Report incorporated by reference
into 1998 Annual Report on Form 10-K.
21-Subsidiaries of the Company.
23.0-Consent of PricewaterhouseCoopers LLP.
27.0-Financial Data Schedule (for SEC use only).
Sequential
Numbering
System
Exhibits
(1)Incorporated by reference to Exhibit No. 3 to the registrant's
registration statement on Form S-3 (File No. 333-68999), 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. 4.1 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.
(4)Incorporated by reference to Exhibit No. 4 to the registrant's
registration statement on Form S-3 (File No. 33-53136), filed
with the Securities and Exchange Commission.
(5)Incorporated by reference to Exhibit No. 10.2 to the
registrant's Annual Report on Form 10-K for the fiscal year ended
November 30, 1997 (Commission File No. 1-9610), filed with the
Securities and Exchange Commission.
(6)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, 1997 (Commission File No. 1-9610), filed with the
Securities and Exchange Commission.
(7)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, 1997 (Commission File No. 1-9610), filed with the
Securities and Exchange Commission.
(8)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, 1997 (Commission File No. 1-9610), filed with the
Securities and Exchange Commission.
(9)Incorporated by reference to Exhibit No. 10.7 to the
registrant's Annual Report on Form 10-K for the fiscal year ended
November 30, 1997 (Commission File No. 1-9610), filed with the
Securities and Exchange Commission.
(10)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.
(11)Incorporated by reference to Exhibit No. 10.2 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.
(12)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.
(13)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.
(14)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.
(15)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.
(16)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.
(17)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.
(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 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.
(23)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.
(24)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.
(25)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.
(26)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.
(27)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.
(28)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.
(29)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.
(30)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.
(31)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, 1996 (Commission File No. 1-9610), filed with the
Securities and Exchange Commission.
(32)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, 1996 (Commission File No. 1-9610), filed with the
Securities and Exchange Commission.
(33)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, 1996 (Commission File No. 1-9610), filed with the
Securities and Exchange Commission.
(34)Incorporated by reference to Exhibit No. 10.7 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.
(35)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.