C A R N I VA L

COR POR AT ION & PLC

2003 A N N UA L R E PORT
T H E P O W E R O F O U R G L O B A L B R A N D S
Carnival Cruise Lines is the most popular and most profitable cruise line in P&O Cruises is the largest cruise operator in the UK and the best-known
the world. The leader in the contemporary cruise sector, Carnival operates cruise brand. The four ship fleet consists of Aurora, Oriana, Adonia, and
20 ships, including its newest ship, the Carnival Miracle. The line currently Oceana. P&O Cruises offers cruises to the Mediterranean, the Baltic, the
has two new ships scheduled for delivery during the next two years at Norwegian Fjords, the Caribbean, the Atlantic Islands and around the
an estimated cost of $1 billion. Carnival ships cruise to destinations in the world voyages.
Bahamas, Canada, the Caribbean, the Mexican Riviera, New England, www.pocruises.com
the Panama Canal, Alaska, and Hawaii, with most cruises ranging from
3 to 7 days.
www.carnival.com

Cunard Line offers the only regular transatlantic crossing service aboard
Princess Cruises operates a fleet of eleven ships deployed around the globe the world famous ocean liner, Queen Mary 2. Her equally famous sister,
calling at more than 200 ports worldwide. Princess is the only premium Queen Elizabeth 2, sails on unique itineraries worldwide serving both U.S.
cruise line that offers a resort-like experience with flexible dining and enter- and UK guests. The 1,968-passenger Queen Victoria, currently under con-
tainment options. Princess is also known for its contemporary, luxurious struction, will round out the fleet of three Queens when she joins in the
and innovative fleet of modern ships. Princess has three ships on order to spring of 2005. Caronia will offer cruises from the UK until November 2004
be delivered in 2004 and a fourth in 2006 at an estimated cost of $2 billion. when she leaves the fleet in preparation for the arrival of Queen Victoria.
Most cruises range from 7 to 14 days in length, with some up to 30 days.
www.cunard.com
Destinations include Alaska, the Caribbean, Europe, the Panama Canal,
the Mexican Riviera, the South Pacific, South America, Hawaii, Asia, and
Canada/New England.
www.princesscruises.com
Swan Hellenic operates a program of discovery cruises, targeted particularly
to the UK. Itineraries include the Mediterranean, North America, South
Holland America Line is a leader in the premium cruise sector. Holland America, the Caribbean, the Indian Ocean and the Far East.
America operates a five-star fleet of 12 ships, including its newest ship, the www.swanhellenic.com
Oosterdam. The line currently has two new ships scheduled for delivery
during the next two years at an estimated cost of $800 million. Holland
America Line visits 280 ports in its primary destinations which include
Alaska, the Caribbean, the Panama Canal, Mexico, South America, Hawaii,
Canada, New England and Europe. Ocean Village is a new cruise brand in the UK which has been established
to provide informal, contemporary, and affordable holidays at sea for
www.hollandamerica.com
younger people. Its cruise product emphasizes informality, health, and
well-being. Ocean Village cruises in the Mediterranean in the summer and
Seabourn Cruise Line epitomizes luxury cruising aboard each of its three the Caribbean in the winter.
intimate all suite ships. The Yachts of Seabourn are lavishly appointed with www.oceanvillageholidays.co.uk
virtually one staff member for every guest, which assures superlative
award-winning service as they sail to destinations around the world.
www.seabourn.com

AIDA is the best-known cruise brand in the fast growing German cruise
Windstar Cruises is the luxury destination of choice for pure romance under industry. With its four club ships, AIDAcara, AIDAaura, AIDAblu, and
sail. The line’s three sleek sailing yachts offer its 148–308 privileged guests AIDAvita, AIDA offers cruises to the Mediterranean, the Baltic, the Norwegian
all ocean view staterooms, pampering 5-star service, an eclectic selection of Fjords, Canary Islands, and the Caribbean.
cuisine created by celebrity chef Joachim Splichal, and a water sports pro-
www.aida.de
gram. Windstar Cruises sails to exotic and intriguing worldwide destinations
including Europe, the Caribbean, Central America and the South Pacific.
www.windstarcruises.com

P&O Cruises Australia is a cruise brand that caters to Australians. Its

Costa Cruises is Europe’s leading cruise line. Headquartered in Italy, Costa
contemporary product, Pacific Sky, will be joined by Pacific Sun in late
offers guests on its ten ships a multi-ethnic, multi-cultural and multi-lingual
2004, offering 7 to 14 night cruises to New Caledonia, Vanuatu and Fiji from
ambiance. The line currently has two new ships slated to enter service
the home ports of Sydney, Brisbane and Auckland.
during the next two years at an estimated cost of $1.1 billion. Costa ships, AUSTRALIA
www.pocruises.com.au
including its newest, the popular Costa Fortuna, sail to destinations in
Europe, South America, and the Caribbean.
www.costacruises.com
Carnival Corporation & plc
Highlights
Pro Forma
(in millions, except per share
amounts and other operating data) 2003(a) 2003 2002 2001

Revenues . . . . . . . . . . . . . . . . . . . . . . . . $ 7,596 $ 6,718 $ 4,383 $ 4,549

Net Income. . . . . . . . . . . . . . . . . . . . . . . $ 1,210 $ 1,194 $ 1,016 $ 926
Earnings Per Share . . . . . . . . . . . . . . . . . $ 1.51 $ 1.66 $ 1.73 $ 1.58
Dividends Per Share . . . . . . . . . . . . . . . . $ 0.44 $ 0.44 $ 0.42 $ 0.42
Total Assets . . . . . . . . . . . . . . . . . . . . .
(b)
$24,491 $24,491 $12,335 $11,564
Other Operating Data
Passengers Carried . . . . . . . . . . . . . . . . . 5,422,456 5,037,553 3,549,019 3,385,280
Passenger Capacity (b)(c) . . . . . . . . . . . . . . . 118,040 118,040 67,282 58,346
Number of Ships . . . . . . . . . . . . . . . . . .
(b)
73 73 45 42

(a) Gives pro forma effect for the merger with P&O Princess as if the P&O Princess brands had been included in our consoli-
dated results for all of 2003 and excludes $51 million of P&O Princess’ merger related costs, or $0.06 earnings per share.
This differs from the pro forma amounts shown in Note 3 to the consolidated financial statements as GAAP requires pro
forma net income to be reduced by the amount of the merger related costs.
(b) As of the end of the year, except for the number of ships and passenger capacity in 2003, which is as of February 15, 2004.
(c) Passenger capacity is calculated based on two passengers per cabin.

A Global Cruise Company

Carnival Corporation & plc is a global cruise company and one of the largest vacation companies in
the world. Our portfolio of 12 leading cruise brands includes Carnival Cruise Lines, Princess Cruises,
Holland America Line, Windstar Cruises and Seabourn Cruise Line in North America; P&O Cruises,
Cunard Line, Ocean Village and Swan Hellenic in the United Kingdom; AIDA in Germany; Costa
Cruises in Europe; and P&O Cruises in Australia. These brands, which comprise the most-recognized
cruise brands in North and South America, the United Kingdom, Germany, Southern Europe and
Australia, offer a wide range of holiday and vacation products to a customer base that is broadly
varied in terms of cultures, languages and leisure-time preferences. We also own two leading tour
companies in Alaska and the Canadian Yukon that complement our cruise operations, Holland America
and Princess Tours. Combined, our vacation companies attract over five million guests annually.
Carnival’s product offerings provide our guests with exceptional vacation experiences at an out-
standing value, and our success in this regard has made us the most profitable company in the leisure
industry. Our company is dually listed on both the New York Stock Exchange and on the London Stock
Exchange under the symbol CCL. Carnival is the only company in the world to be included in both the
S&P 500 Index in the United States and the FTSE 100 Index in the United Kingdom.
Headquartered in Miami, Florida, U.S.A. and London, England, Carnival has more than 65,000
employees worldwide. We operate a fleet of 73 ships, and we have another 11 vessels scheduled for
delivery by mid-2006. With more than 118,000 berths and 55,000 crew members, there are approxi-
mately 175,000 people at sea with Carnival at any given time.

Carnival Corporation & plc 1

 To Our Shareholders

By almost any account, 2003 was truly an extraordinary year for Carnival Corporation & plc. Along with
many remarkable moments and achievements came more than a few significant roadblocks and challenges.

A Global Transformation
While our company achieved numerous milestones in 2003, none was more historic than our merger
with P&O Princess Cruises, now known as Carnival plc. Overcoming seemingly insurmountable odds, we
successfully concluded this $8 billion transaction in April, creating the world’s first global cruise company.
This merger truly changed the dynamics of our company. Not only did it expand upon our already
impressive portfolio of quality cruise products, it also created an excellent vehicle for future growth
in North and South America, Europe and Australia, and a unique platform for developing new markets
in the future.
Today, Carnival Corporation & plc comprises 12 of the world’s leading cruise lines
and positions us with the most recognized cruise brands in North and South America,
the United Kingdom, Germany, Italy, France, Spain, Holland and Australia. Collectively,
these countries account for nearly 90 percent of cruise passengers worldwide.
These 12 brands cater to the desires of different cultures, offering multiple lan-
guages, and meeting varying entertainment and vacation preferences. Our portfolio
of cruise brands offers consumers the widest array of choices in cruising, from
contemporary to ultra-luxury and everything in between. Together, they produced
pro forma revenues of $7.6 billion in 2003, and carried approximately 5.4 million
guests. These trusted brands are powerful vehicles for our future growth.
In completing the merger, we employed a unique dual listed company (DLC)
structure, which enabled shareholders in both the United States and the United
Kingdom, to maintain an interest in the combined organization and share in its
future growth. Today, Carnival Corporation & plc trades on both the New York
and London stock exchanges, and is the only company in the world included in
both the S&P 500 and the FTSE 100 indices.
Shareholders already have benefited greatly from this transaction. As this annual
report goes to print—less than a year after the conclusion of the merger—Carnival
Corporation & plc’s share price has increased more than 60 percent, surpassing the
performance of the S&P 500 and FTSE 100 indices by 37 percent and 49 percent,
“Today’s Carnival Corporation respectively. We also increased our quarterly dividend by 19 percent to 12.5 U.S.
cents per share in late 2003.
& plc is a larger, more powerful, To date, the benefits reaped from the integration of P&O Princess Cruises are
more global organization, exceeding our expectations, making our company stronger and creating greater
value for our shareholders.
well-positioned to take advantage We are building upon this valuable base. Across our organization, management
teams are already evaluating processes, improving operating efficiencies and devel-
of emerging cruise markets oping many best-practice solutions across the group.
wherever they may occur,
‘The Perfect Storm’
anywhere in the world.” At roughly the same time that the ongoing P&O Princess transaction was under-
way, the cruise industry was challenged by several external factors that signifi-
cantly affected our revenues—the soft U.S. economy, an unstable geopolitical
environment, the emergence of SARS, and of course, the threat and eventual outbreak of war in Iraq.
Added to this picture were rapidly escalating fuel, insurance, security and environmental costs, all of
which came together almost simultaneously, dramatically affecting our operating costs.
Yet, despite these extraordinary challenges, we added seven new ships to our combined fleet and
earned $1.2 billion in 2003, outperforming every other sector of the leisure travel industry.

Corporate Governance Initiatives

Corporate governance was another area of great change for our company in 2003. The combination of
Sarbanes-Oxley, new Securities and Exchange Commission and New York Stock Exchange rules and the
application to our companies of UK market practice and the new UK Combined Code as a result of the
DLC transaction, required a great deal of attention to our governance policies and practices. The result
of such efforts was the development of our Corporate Governance Guidelines that set forth a single

2 Carnival Corporation & plc

governance framework that effectively addresses the key areas of corporate governance in both the
United States and the United Kingdom.
The boards of Carnival Corporation & plc now include eight non-executive independent directors and
six executive directors. We created the position of presiding director to act as the senior non-executive
director serving as the principal liaison between management and the independent directors. We have
also developed procedures to facilitate communications between shareholders and our directors.
In 2003 we broadened the responsibilities of our three standing committees of the Boards—Nominating
& Governance, Audit and Compensation—all composed exclusively of independent directors. Our Audit
Committee saw its workload increase as it oversaw the melding of the financial reporting systems of our
two public companies while discharging its enhanced responsibilities to monitor our financial processes.
The Nominating & Governance Committee developed our comprehensive Corporate Governance Guidelines.
Following the DLC transaction, the Compensation Committee commenced a comprehensive review of
our compensation policies and is working to develop an executive compensation program that meets, to
the extent possible, best practices in both the United States and the United Kingdom.
I believe the foregoing changes, although time-consuming and at substantial cost, have made Carnival
Corporation & plc a better company. Our talented group of directors is more involved than ever in our
business; our already strong financial reporting and internal control systems have become even tighter; and
there is greater awareness and sensitivity to ethical issues company-wide. Rest assured that in 2004 and
beyond we will continue our substantial efforts to refine and enhance our corporate governance policies.

Charting a New Course

The peak of our multibillion-dollar newbuilding program will occur this year and will see the launch of
seven new ships over a nine-month period resulting in an average annual capacity increase of 17.5 percent.
Included in 2004’s historic order book is a new “Spirit-class” vessel for Carnival Cruise Lines, Carnival
Miracle; three new “Love Boats” for Princess Cruises, the Diamond, Caribbean, and Sapphire Princesses;
a second 2,702-passenger Costa Cruises ship, Costa Magica; a 1,848-passenger Vista-class ship, the
Westerdam, for Holland America Line; and, of course, the internationally heralded debut of the Queen
Mary 2—the largest passenger vessel ever constructed—which celebrates the bygone era of classic cruis-
ing while setting new standards in transatlantic luxury travel.
The reception for Queen Mary 2 has been nothing short of extraordinary, capturing more worldwide
acclaim than we ever imagined and creating an emotional response from consumers, the likes of which
has never before been seen. The Queen Mary 2 is already the most famous ship in the world. Her launch
truly reinforces Cunard’s unique position as the operator of the most famous ocean liners in the world.
Beyond 2004, capacity growth will moderate, and we expect that our company will produce substan-
tial free cash flow which we plan to use to reduce debt, increase dividends, and, if considered appropri-
ate, repurchase shares.

Looking Forward
We at Carnival Corporation & plc look forward to 2004 with great enthusiasm. After three extremely
difficult years, we anticipate a rebound in leisure travel sales and a return to earnings growth.
By any measure, 2003 was a year with great challenges but even greater achievements which we
believe have laid the foundation for the future success of our company.
With new ships, a strong and talented management team, dedicated employees, innovative ideas and,
most of all, exceptional cruise vacations, I have never, in my 35 years in this business, been more excited
and enthusiastic about the future of our company.
I would like to take this opportunity to thank our employees, both shipboard and shoreside, and our
management teams for their hard work and our boards of directors and shareholders throughout the
world for their unflagging confidence in our vision for the future. It is a testament to the financial
strength of our company, the vision of our management, the dedication of employees and the resiliency
of our industry that Carnival Corporation & plc was able to weather the perfect storm that was 2003.
We emerged from 2003 as a very different company than when we began the year. Today’s Carnival
Corporation & plc is a larger, more powerful, more global organization, well-positioned to take advan-
tage of emerging cruise markets wherever they may occur, anywhere in the world.

Micky Arison
Chairman and Chief Executive Officer

February 24, 2004

Shareholder Benefit

Carnival Corporation & plc is pleased to extend the following benefit to our shareholders:

North United Continental

American Kingdom European Australian
Brands Brands Brands Brand

Onboard credit per stateroom on sailings of 14 days or longer $250 £ 125 € 250 AUD 250
Onboard credit per stateroom on sailings of 7 to 13 days $100 £ 50 € 100 AUD 100
Onboard credit per stateroom on sailings of 6 days or less $ 50 £ 25 € 50 AUD 50

This benefit is applicable on sailings through July 31, 2005 aboard the brands listed below. Certain restrictions apply.
This benefit is available to shareholders holding a minimum of 100 shares of Carnival Corporation or Carnival plc.
Employees, travel agents cruising at travel agent rates, tour conductors or anyone cruising on a reduced-rate or complimentary
basis are excluded from this offer. This benefit is not transferable, not combinable with any other shipboard offer and cannot
be used for casino credits/charges and gratuities charged to your onboard account. Only one onboard credit per shareholder-
occupied stateroom. Reservations must be made by February 28, 2005.
Please provide your name, reservation number, ship and sailing date, along with proof of ownership of Carnival
Corporation or Carnival plc shares (i.e., photocopy of shareholder proxy card, shares certificate or a current brokerage or nominee
statement) and the initial deposit to your travel agent or to the cruise line you have selected.

NORTH AMERICAN BRANDS

C A R N I VA L C R U I S E L I N E S PRINCESS CRUISE LINES H O L L A N D A M E R I C A L I N E / W I N D S TA R CUNARD LINE*/SEABOURN

Research Supervisor, Reservation Administration Yield Management Reservation Administration Supervisor, Guest Services
3655 N.W. 87th Avenue 24305 Town Center Drive 300 Elliott Avenue West 6100 Blue Lagoon Drive
Miami, FL 33178 Santa Clarita, CA 91355 Seattle, WA 98119 Suite 400
Tel 800-438-6744 ext. 70041 Tel 800-872-6779 ext. 30305 Tel 800-426-0327 ext. 4042 Miami, FL 33126
Fax 305-406-5882 Fax 661-753-0180 Fax 206-298-3059 Tel 800-528-6273 ext. 1214
Fax 305-463-3038

UNITED KINGDOM BRANDS

P&O CRUISES OCEAN VILLAGE S WA N H E L L E N I C CUNARD LINE*

Reservations Manager Reservations Manager Reservations Manager Supervisor, Guest Services
Richmond House Richmond House Richmond House 6100 Blue Lagoon Drive
Terminal Terrace Terminal Terrace Terminal Terrace Suite 400
Southampton Southampton Southampton Miami, FL 33126
Hants SO14 3PN Hants SO14 3PN Hants SO14 3PN Tel 800-528-6273 ext. 1214
United Kingdom United Kingdom United Kingdom Fax 305-463-3038
Tel 44 (0) 238 052 3717 Tel 44 (0) 238 052 3717 Tel 44 (0) 238 052 3717
Fax 44 (0) 238 052 3720 Fax 44 (0) 238 052 3720 Fax 44 (0) 238 052 3720

C O N T I N E N TA L E U R O P E A N B R A N D S AUSTRALIAN BRAND

C O S TA C R U I S E S * AIDA DAS CLUBSCHIFF P&O CRUISES AUSTRALIA

Staff Vice President, Passenger Services SEETOURS Reservations Manager
200 S. Park Road, Suite 200 Manager Reservations Locked Bag 1014
Hollywood, FL 33021 Frankfurter Strasse 233 St. Leonards NSW 1590
Tel 800-462-6782 63263 Neu Isenburg, Germany Tel 61 2 8424 8800
Fax 954-266-2100 Tel 49 (0) 6102 811-100 Fax 61 2 8424 9161
Fax 49 (0) 6102 811-921

*The onboard credit for Cunard Line and Costa Cruises is determined based on the operational currency onboard the vessel.

4 Carnival Corporation & plc

Consolidated Statements of Operations

Years Ended November 30,

(in millions, except per share data) 2003 2002 2001
Revenues
Cruise
Passenger tickets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,039 $3,346 $3,530
Onboard and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,420 898 841
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 259 139 178
6,718 4,383 4,549
Costs and Expenses
Operating
Cruise
Passenger tickets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,021 658 813
Onboard and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 229 116 116
Payroll and related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 744 458 459
Food . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 393 256 265
Other ship operating. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,237 734 694
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 108 135
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,818 2,330 2,482
Selling and administrative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 932 609 619
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 382 372
Impairment charge. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 140
Loss from affiliated operations, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5,335 3,341 3,657
Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,383 1,042 892
Nonoperating (Expense) Income
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 32 34
Interest expense, net of capitalized interest . . . . . . . . . . . . . . . . . . . . . . . . (195) (111) (121)
Other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 (4) 109
(160) (83) 22
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,223 959 914
Income Tax (Expense) Benefit, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (29) 57 12
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,194 $1,016 $ 926
Earnings Per Share
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.66 $ 1.73 $ 1.58
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.66 $ 1.73 $ 1.58
Dividends Per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.44 $ 0.42 $ 0.42

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

Carnival Corporation & plc 5

Consolidated Balance Sheets

November 30,
(in millions, except par/stated values) 2003 2002
Assets
Current Assets
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,070 $ 667
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 39
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403 108
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171 91
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 212 149
Fair value of derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 275
Fair value of hedged firm commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,132 1,132
Property and Equipment, Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,522 10,116
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,031 681
Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,324
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345 297
Fair Value of Derivative Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Fair Value of Hedged Firm Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 109
$24,491 $12,335
Liabilities and Shareholders’ Equity
Current Liabilities
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 94
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 392 $ 155
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 645 269
Accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 441 290
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,352 771
Dividends payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100 61
Fair value of hedged firm commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 264
Fair value of derivative contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 74
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,315 1,620
Long-Term Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,918 3,014
Deferred Income and Other Long-Term Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . 299 170
Fair Value of Hedged Firm Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Fair Value of Derivative Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 113
Commitments and Contingencies (Notes 8, 9 and 14)
Shareholders’ Equity
Common stock of Carnival Corporation; $.01 par value;
1,960 shares at 2003 and 960 at 2002 authorized; 630 shares
at 2003 and 587 shares at 2002 issued and outstanding . . . . . . . . . . . . . . . . . . . 6 6
Ordinary shares of Carnival plc; $1.66 stated value;
226 shares authorized; 210 shares issued. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 349
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,163 1,089
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,191 6,326
Unearned stock compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18) (11)
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160 8
Treasury stock; 42 shares of Carnival plc at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,058)
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,793 7,418
$24,491 $12,335

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

6 Carnival Corporation & plc

Consolidated Statements of Cash Flows

Years Ended November 30,

(in millions) 2003 2002 2001
Operating Activities
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,194 $ 1,016 $ 926
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 585 382 372
Impairment charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 140
Gain on sale of investments in affiliates, net . . . . . . . . . . . . . . . . . . . . . (117)
Loss from affiliated operations and dividends received . . . . . . . . . . . . . . 57
Accretion of original issue discount . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 19 2
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 14 19
Changes in operating assets and liabilities, excluding business acquired
(Increase) decrease in
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (91) (5) (7)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17) 2 9
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 (81) 44
Increase (decrease) in
Accounts payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 (12) (63)
Accrued and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (16) (28)
Customer deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125 142 (143)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . 1,933 1,469 1,239
Investing Activities
Additions to property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,516) (1,986) (827)
Proceeds from sale of investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . 531
Cash acquired from (expended for) the acquisition of Carnival plc, net . . . . . . 140 (30)
Proceeds from retirement of property and equipment . . . . . . . . . . . . . . . . . . 51 4 15
Sale (purchase) of short-term investments, net . . . . . . . . . . . . . . . . . . . . . . . 42 2 (33)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50) (10) (28)
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . (2,333) (2,020) (342)
Financing Activities
Proceeds from issuance of long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . 2,123 232 2,574
Principal repayments of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,137) (190) (1,971)
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (292) (246) (246)
Proceeds from short-term borrowings, net. . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Proceeds from issuance of common stock and ordinary shares . . . . . . . . . . . 53 7 5
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (15) (1) (25)
Net cash provided by (used in) financing activities . . . . . . . . . . . . . . . 826 (198) 337
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . (23) (5) (2)
Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . 403 (754) 1,232
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . 667 1,421 189
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,070 $ 667 $ 1,421

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

Carnival Corporation & plc 7

Consolidated Statements of Shareholders’ Equity

Unearned Accumulated Total

Compre- Additional stock other share-
hensive Common Ordinary paid-in Retained compen- comprehensive Treasury holders’
(in millions) income stock shares capital earnings sation income (loss) stock equity
Balances at November 30, 2000 . . . . . . . $6 $1,773 $4,884 $(12) $ (75) $ (705) $ 5,871
Comprehensive income
Net income. . . . . . . . . . . . . . . . . . . $ 926 926 926
Foreign currency
translation adjustment, net . . . . . 46 46 46
Unrealized gains on
marketable securities, net . . . . . . 6 6 6
Minimum pension liability
adjustment . . . . . . . . . . . . . . . . . (6) (6) (6)
Changes related to cash flow
derivative hedges, net. . . . . . . . . (4) (4) (4)
Transition adjustment for
cash flow derivative hedges . . . . (4) (4) (4)
Total comprehensive income . . $ 964
Cash dividends declared . . . . . . . . . . . (246) (246)
Issuance of stock under stock plans . . 32 (5) (22) 5
Amortization of unearned stock
compensation . . . . . . . . . . . . . . . . . 5 5
Other . . . . . . . . . . . . . . . . . . . . . . . . . (8) (8)
Balances at November 30, 2001 . . . . . . . 6 1,805 5,556 (12) (37) (727) 6,591
Comprehensive income
Net income. . . . . . . . . . . . . . . . . . . $1,016 1,016 1,016
Foreign currency
translation adjustment. . . . . . . . . 51 51 51
Minimum pension liability
adjustment . . . . . . . . . . . . . . . . . (9) (9) (9)
Unrealized gains on
marketable securities, net . . . . . . 3 3 3
Total comprehensive income . . $1,061
Cash dividends declared . . . . . . . . . . . (246) (246)
Issuance of stock under stock plans . . 11 (4) 7
Retirement of treasury stock . . . . . . . (727) 727
Amortization of unearned stock
compensation . . . . . . . . . . . . . . . . . 5 5
Balances at November 30, 2002 . . . . . . . 6 1,089 6,326 (11) 8 7,418
Comprehensive income
Net income. . . . . . . . . . . . . . . . . . . $1,194 1,194 1,194
Foreign currency
translation adjustment. . . . . . . . . 162 162 162
Unrealized losses on
marketable securities, net . . . . . . (1) (1) (1)
Changes related to cash flow
derivative hedges, net. . . . . . . . . (9) (9) (9)
Total comprehensive income . . $1,346
Cash dividends declared . . . . . . . . . . . (329) (329)
Acquisition of Carnival plc . . . . . . . . . . $346 6,010 (1,058) 5,298
Issuance of stock under stock plans . . 3 64 (14) 53
Amortization of unearned stock
compensation . . . . . . . . . . . . . . . . . 7 7
Balances at November 30, 2003. . . . . . $6 $349 $7,163 $7,191 $(18) $160 $(1,058) $13,793

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

8 Carnival Corporation & plc

Notes to Consolidated Financial Statements

Note 1—General on the NYSE. However, the two companies operate as

if they were a single economic enterprise (see Note 3).
Description of Business
Carnival Corporation is a Panamanian corporation
On April 17, 2003, Carnival Corporation and Carnival
and Carnival plc is incorporated in England and Wales.
plc (formerly known as P&O Princess Cruises plc)
Together with their consolidated subsidiaries they are
completed a dual listed company (“DLC”) transaction
referred to collectively in these consolidated financial
(the “DLC transaction”), which implemented Carnival
statements and elsewhere in this 2003 Annual Report
Corporation & plc’s DLC structure. The DLC transaction
as “Carnival Corporation & plc,” “our,” “us,” and “we.”
combined the businesses of Carnival Corporation and
Our consolidated financial statements include the con-
Carnival plc through a number of contracts and amend-
solidated results of operations of Carnival Corporation
ments to Carnival Corporation’s articles of incorporation
for all periods presented and Carnival plc’s consolidated
and by-laws and to Carnival plc’s memorandum of asso-
results of operations since April 17, 2003.
ciation and articles of association. The two companies
We are a global cruise company and one of the
have retained their separate legal identities, and each
largest vacation companies in the world. As of February
company’s shares continue to be publicly traded on
15, 2004, a summary of the number of cruise ships we
the New York Stock Exchange (“NYSE”) for Carnival
operate, by brand, their passenger capacity and the pri-
Corporation and the London Stock Exchange for
mary areas in which they are marketed is as follows:
Carnival plc. In addition, Carnival plc ADS’s are traded
Number of Passenger
Cruise Brands Cruise Ships Capacity(a) Primary Market
Carnival Cruise Lines (“CCL”) . . . . . . . . . . . . . ............ 20 43,446 North America
Princess Cruises (“Princess”) . . . . . . . . . . . . . ............ 11 19,880 North America
Holland America Line . . . . . . . . . . . . . . . . . . . ............ 12 16,320 North America
Costa Cruises (“Costa”) . . . . . . . . . . . . . . . . . ............ 10 15,570 Europe
P&O Cruises . . . . . . . . . . . . . . . . . . . . . . . . . . ............ 4 7,724 United Kingdom
AIDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ............ 4 5,314 Germany
Cunard Line (“Cunard”). . . . . . . . . . . . . . . . . . ............ 3 5,078 United Kingdom/North America
Ocean Village . . . . . . . . . . . . . . . . . . . . . . . . . ............ 1 1,602 United Kingdom
P&O Cruises Australia. . . . . . . . . . . . . . . . . . . ............ 1 1,200 Australia
Swan Hellenic. . . . . . . . . . . . . . . . . . . . . . . . . ............ 1 678 United Kingdom
Seabourn Cruise Line (“Seabourn”). . . . . . . . . ............ 3 624 North America
Windstar Cruises (“Windstar”) . . . . . . . . . . . . ............ 3 604 North America
73 118,040

(a) In accordance with cruise industry practice, passenger capacity is calculated based on two passengers per cabin even though
some cabins can accommodate three or more passengers.

Carnival Corporation & plc 9

Notes to Consolidated Financial Statements (continued)

Preparation of Financial Statements Property and Equipment

The preparation of our consolidated financial state- Property and equipment are stated at cost. Deprecia-
ments in accordance with accounting principles gener- tion and amortization were computed using the straight-
ally accepted in the United States of America requires line method over our estimates of average useful lives
us to make estimates and assumptions that affect the and residual values, as a percentage of original cost,
amounts reported and disclosed in our financial state- as follows:
ments. Actual results could differ from these estimates. Residual
All material intercompany accounts, transactions and Values Years
unrealized profits and losses on transactions within Ships . . . . . . . . . . . . . . . . . . ... 15% 30
our consolidated group and with affiliates are elimi- Buildings and improvements . ... 0–10% 5–40
nated in consolidation. Transportation equipment
Commencing in 2003, we changed the reporting and other . . . . . . . . . . . . . ... 0–25% 2–20
format of our consolidated statements of operations Leasehold improvements,
including port facilities . . . . ... Shorter of lease
to present our significant revenue sources and their
term or related
directly related variable costs and expenses. In addition,
asset life
we have separately identified certain ship operating
expenses, such as payroll and related expenses and
We review our long-lived assets for impairment
food costs. All prior periods were reclassified to con-
whenever events or changes in circumstances indicate
form to the current year presentation.
that the carrying amount of these assets may not be
fully recoverable. The assessment of possible impair-
Note 2—Summary of Significant Accounting Policies
ment is based on our ability to recover the carrying
Basis of Presentation value of our asset based on our estimate of its undis-
We consolidate entities over which we have control, counted future cash flows. If these estimated undis-
as typically evidenced by a direct ownership interest of counted future cash flows are less than the carrying
greater than 50%. For affiliates where significant influ- value of the asset, an impairment charge is recognized
ence over financial and operating policies exists, as typ- for the excess, if any, of the assets carrying value over
ically evidenced by a direct ownership interest from 20% its estimated fair value (see Note 5).
to 50%, the investment is accounted for using the equity Dry-dock costs are included in prepaid expenses and
method. See Note 6. are amortized to other ship operating expenses using
the straight-line method generally over one year.
Cash and Cash Equivalents and Short-Term
Ship improvement costs that we believe add value to
Investments
our ships are capitalized to the ships, and depreciated
Cash and cash equivalents include investments with
over the improvements’ estimated useful lives, while
original maturities of three months or less, which are
costs of repairs and maintenance are charged to expense
stated at cost. At November 30, 2003 and 2002, cash
as incurred. We capitalize interest on ships and other
and cash equivalents included $937 million and $616
capital projects during their construction period. Upon
million of investments, respectively, primarily comprised
the replacement or refurbishment of previously capital-
of strong investment grade asset-backed debt obliga-
ized ship components, these assets’ estimated cost
tions, commercial paper and money market funds.
and accumulated depreciation are written-off and any
Short-term investments are comprised of marketable
resulting loss is recognized in our results of operations.
debt and equity securities which are categorized as
No such material losses were recognized in fiscal 2003,
available for sale and, accordingly, are stated at their
2002 or 2001. See Note 4.
fair values. Unrealized gains and losses are included
as a component of accumulated other comprehensive Goodwill
income (“AOCI”) within shareholders’ equity until real- Statement of Financial Accounting Standards (“SFAS”)
ized. The specific identification method is used to No. 142, “Goodwill and Other Intangible Assets” requires
determine realized gains or losses. companies to stop amortizing goodwill and requires an
annual, or when events or circumstances dictate, a more
Inventories
frequent, impairment review of goodwill. Accordingly,
Inventories consist primarily of provisions, gift shop
upon adoption of SFAS No. 142 on December 1, 2001,
and art merchandise held for resale, spare parts, sup-
we ceased amortizing our goodwill, all of which had
plies and fuel carried at the lower of cost or market.
been allocated to our cruise reporting units. In April
Cost is determined using the weighted-average or first-
2003, we recorded $2.25 billion of additional goodwill
in, first-out methods.

10 Carnival Corporation & plc

as a result of our acquisition of Carnival plc, which was to manage our interest rate exposure and to achieve a
also allocated to our cruise reporting units (see Note 3). desired proportion of variable and fixed rate debt (see
There was no other change to our goodwill carrying Note 12).
amount since November 30, 2001, other than the All derivatives are recorded at fair value, and the
changes resulting from using different foreign currency changes in fair value must be immediately included in
translation rates at each balance sheet date. earnings if the derivatives do not qualify as effective
The SFAS No. 142 goodwill impairment review con- hedges. If a derivative is a fair value hedge, then changes
sists of a two-step process of first determining the fair in the fair value of the derivative are offset against the
value of the reporting unit and comparing it to the car- changes in the fair value of the underlying hedged firm
rying value of the net assets allocated to the reporting commitment. If a derivative is a cash flow hedge, then
unit. Fair values of our reporting units were determined changes in the fair value of the derivative are recog-
based on our estimates of comparable market price or nized as a component of AOCI until the underlying
discounted future cash flows. If this fair value exceeds hedged item is recognized in earnings. If a derivative or
the carrying value, which was the case for our reporting a nonderivative financial instrument is designated as a
units, no further analysis or goodwill write-down is hedge of a net investment in a foreign operation, then
required. If the fair value of the reporting unit is less changes in the fair value of the financial instrument are
than the carrying value of the net assets, the implied recognized as a component of AOCI to immediately off-
fair value of the reporting unit is allocated to all the set the change in the translated value of the net invest-
underlying assets and liabilities, including both recog- ment being hedged, until the investment is liquidated.
nized and unrecognized tangible and intangible assets, The ineffective portion of a hedge’s change in fair
based on their fair value. If necessary, goodwill is then value is immediately recognized in earnings. We for-
written-down to its implied fair value. mally document all relationships between hedging
Prior to fiscal 2002, our goodwill was reviewed for instruments and hedged items, as well as our risk man-
impairment pursuant to the same policy as our other agement objectives and strategies for undertaking our
long-lived assets as discussed above (see Note 5) and hedge transactions.
our goodwill was amortized over 40 years using the We classify the fair value of our derivative contracts
straight-line method. and the fair value of our offsetting hedged firm commit-
If goodwill amortization, including goodwill expensed ments as either current or long-term assets and liabili-
as part of our loss from affiliated operations, had not ties depending on whether the maturity date of the
been recorded for fiscal 2001 our adjusted net income derivative contract is within or beyond one year from
would have been $952 million and our adjusted basic our balance sheet dates, respectively. The cash flows
and diluted earnings per share would have been $1.63 from derivatives treated as hedges are classified in our
and $1.62, respectively. statements of cash flows in the same category as the
item being hedged.
Trademarks
During fiscal 2003, 2002 and 2001, all net changes in
The cost of developing and maintaining our trade-
the fair value of both our fair value hedges and the off-
marks have been expensed as incurred. However, pur-
setting hedged firm commitments and our cash flow
suant to SFAS No. 141, “Business Combinations,”
hedges were immaterial, as were any ineffective por-
commencing for acquisitions made after June 2001,
tions of these hedges. No fair value hedges or cash
we have allocated a portion of the purchase price to
flow hedges were derecognized or discontinued in fis-
the acquiree’s identified trademarks. The trademarks
cal 2003, 2002 or 2001, and the amount of estimated
that Carnival Corporation recorded as part of the DLC
cash flow hedges unrealized net losses which are
transaction, which are estimated to have an indefinite
expected to be reclassified to earnings in the next
useful life and, therefore, are not amortizable, are
twelve months is not material. At November 30, 2003
reviewed for impairment annually, or more frequently
and 2002, AOCI included $17 million and $8 million of
when events or circumstances indicate that the trade-
unrealized net losses, respectively, from cash flow
mark may be impaired. Our trademarks are considered
hedge derivatives, the majority of which were variable
impaired if their carrying value exceeds their fair value.
to fixed interest rate swap agreements.
See Note 3.
Finally, if any shipyard with which we have contracts
Derivative Instruments and Hedging Activities to build our ships is unable to perform, we would be
We utilize derivative and nonderivative financial required to perform under our foreign currency forward
instruments, such as forward foreign currency con- contracts related to these shipbuilding contracts.
tracts, cross currency swaps and foreign currency debt Accordingly, based upon the circumstances, we may
obligations to limit our exposure to fluctuations in for- have to discontinue the accounting for those forward
eign currency exchange rates and interest rate swaps contracts as hedges, if the shipyard cannot perform.

Carnival Corporation & plc 11

Notes to Consolidated Financial Statements (continued)

However, we believe that the risk of shipyard nonper- Stock-Based Compensation

formance is remote. Pursuant to SFAS No. 123, “Accounting for Stock-
Based Compensation,” as amended, we elected to
Revenue and Expense Recognition
use the intrinsic value method of accounting for our
Guest cruise deposits represent unearned revenues
employee and director stock-based compensation
and are initially recorded as customer deposit liabilities
awards. Accordingly, we have not recognized compen-
when received. Customer deposits are subsequently
sation expense for our noncompensatory employee and
recognized as cruise revenues, together with revenues
director stock option awards. Our adjusted net income
from onboard and other activities and all associated
and adjusted earnings per share, had we elected to
direct costs of a voyage, generally upon completion of
adopt the fair value approach of SFAS No. 123, which
voyages with durations of ten days or less and on a pro
charges earnings for the estimated fair value of stock
rata basis for voyages in excess of ten days. Future
options, would have been as follows (in millions,
travel discount vouchers issued to guests are recorded
except per share amounts):
as a reduction of revenues when such vouchers are uti-
Years Ended
lized. Revenues and expenses from our tour and travel November 30,
services are recognized at the time the services are 2003 2002 2001
performed or expenses are incurred.
Net income, as reported . . . . . . . $1,194 $1,016 $ 926
Advertising Costs Stock-based compensation
Substantially all of our advertising costs are charged expense included in
to expense as incurred, except costs which result in net income, as reported. . . . . . 7 5 5
Total stock-based compensation
tangible assets, such as brochures, which are recorded
expense determined under
as prepaid expenses and charged to expense as con-
the fair value-based
sumed. Media production costs are also recorded as method for all awards . . . . . . . (36) (30) (27)
prepaid expenses and charged to expense upon the
Adjusted net income for basic
first airing of the advertisement. Advertising expenses
earnings per share . . . . . . . . . . 1,165 991 904
totaled $334 million, $208 million and $214 million in
Interest on dilutive
fiscal 2003, 2002 and 2001, respectively. At November convertible notes . . . . . . . . . . . 5
30, 2003 and 2002, the amount of advertising costs
Adjusted net income for diluted
included in prepaid expenses was not material.
earnings per share . . . . . . . . . . $1,170 $ 991 $ 904
Foreign Currency Translations and Transactions
Earnings per share
For our foreign subsidiaries and affiliates using the
Basic
local currency as their functional currency, assets and As reported . . . . . . . . . . . . . $ 1.66 $ 1.73 $1.58
liabilities are translated at exchange rates in effect at
the balance sheet dates. Translation adjustments result- Adjusted . . . . . . . . . . . . . . . $ 1.62 $ 1.69 $1.54
ing from this process are reported as cumulative trans- Diluted
lation adjustments, which are a component of AOCI. As reported . . . . . . . . . . . . . $ 1.66 $ 1.73 $1.58
Revenues and expenses of these foreign subsidiaries
Adjusted . . . . . . . . . . . . . . . $ 1.62 $ 1.69 $1.54
and affiliates are translated at weighted-average exchange
rates for the period. Therefore, the U.S. dollar value of
these items on the income statement fluctuates from As recommended by SFAS No. 123, the fair value of
period to period, depending on the value of the dollar options were estimated using the Black-Scholes option-
against these functional currencies. Exchange gains pricing model. The Black-Scholes weighted-average
and losses arising from transactions denominated in a assumptions were as follows:
currency other than the functional currency of the entity Years Ended
involved are immediately included in our earnings. November 30,
2003 2002 2001
Earnings Per Share
Fair value of options at the
Basic earnings per share is computed by dividing net
dates of grant . . . . . . . . . $13.33 $12.16 $12.67
income by the weighted-average number of shares of
common stock and ordinary shares outstanding during Risk free interest rates . . . . 3.5% 4.3% 4.5%
each period. Diluted earnings per share is computed by Dividend yields . . . . . . . . . . 1.30% 1.23% 1.16%
dividing adjusted net income by the weighted-average
number of shares of common stock and ordinary shares, Expected volatility . . . . . . . . 48.7% 48.0% 50.0%
common stock equivalents and other potentially dilutive Expected option life
securities outstanding during each period. See Note 15. (in years) . . . . . . . . . . . . . 6 6 6

12 Carnival Corporation & plc

 The Black-Scholes option-pricing model was developed actions primarily designed to amend or unwind the DLC
for use in estimating the fair value of traded options structure. Generally, no class rights action will be imple-
that have no vesting or trading restrictions and are fully mented unless approved by both shareholder bodies.
transferable. In addition, option-pricing models require Upon the closing of the DLC transaction, Carnival
the input of subjective assumptions, including expected Corporation and Carnival plc also executed the Equal-
stock price volatility. Because our options have charac- ization and Governance Agreement, which provides for
teristics different from those of traded options, the the equalization of dividends and liquidation distribu-
existing models do not necessarily provide a reliable tions based on an equalization ratio and contains provi-
single measure of the fair value of our options. sions relating to the governance of the DLC structure.
Because the current equalization ratio is 1 to 1, one
Concentrations of Credit Risk
Carnival plc ordinary share is entitled to the same distri-
As part of our ongoing control procedures, we moni-
butions, subject to the terms of the Equalization and
tor concentrations of credit risk associated with financial
Governance Agreement, as one share of Carnival
and other institutions with which we conduct signifi-
Corporation common stock. In a liquidation of either
cant business. Credit risk, including counterparty non-
company or both companies, if the hypothetical poten-
performance under derivative instruments, contingent
tial per share liquidation distributions to each com-
obligations and new ship progress payment guaran-
pany’s shareholders are not equivalent, taking into
tees, is considered minimal, as we primarily conduct
account the relative value of the two companies’
business with large, well-established financial institu-
assets and the indebtedness of each company, to
tions who have long-term credit ratings of A or above
the extent that one company has greater net assets
and we seek to diversify our counterparties. In addition,
so that any liquidation distribution to its shareholders
we have established guidelines regarding credit ratings
would not be equivalent on a per share basis, the com-
and investment maturities that we follow to maintain
pany with the ability to make a higher net distribution
safety and liquidity. We do not anticipate nonperfor-
is required to make a payment to the other company
mance by any of our significant counterparties.
to equalize the possible net distribution to sharehold-
We also monitor the creditworthiness of our cus-
ers, subject to certain exceptions.
tomers to which we grant credit terms in the normal
At the closing of the DLC transaction, Carnival
course of our business. Concentrations of credit risk
Corporation and Carnival plc also executed deeds of
associated with these receivables are considered mini-
guarantee. Under the terms of Carnival Corporation’s
mal primarily due to their short maturities and large
deed of guarantee, Carnival Corporation has agreed to
number of accounts within our customer base. We
guarantee all indebtedness and certain other monetary
have experienced only minimal credit losses on our
obligations of Carnival plc that are incurred under agree-
trade receivables. We do not normally require collateral
ments entered into on or after the closing date of the
or other security to support normal credit sales.
DLC transaction. The terms of Carnival plc’s deed of
However, we do normally require collateral and/or guar-
guarantee are identical to those of Carnival Corporation’s.
antees to support notes receivable on significant asset
In addition, Carnival Corporation and Carnival plc have
sales and new ship progress payments to shipyards.
each extended their respective deeds of guarantee
Reclassifications to the other’s pre-DLC indebtedness and other mone-
Reclassifications have been made to prior year tary obligations, thus effectively cross guaranteeing all
amounts to conform to the current year presentation. Carnival Corporation and Carnival plc indebtedness and
other monetary obligations. Each deed of guarantee
Note 3—DLC Transaction provides that the creditors to whom the obligations are
owed are intended third party beneficiaries of such
The contracts governing the DLC structure provide
deed of guarantee.
that Carnival Corporation and Carnival plc each continue
The deeds of guarantee are governed and construed
to have separate boards of directors, but the boards
in accordance with the laws of the Isle of Man. Subject
and senior executive management of both companies
to the terms of the guarantees, the holders of indebt-
are identical. The amendments to the constituent docu-
edness and other obligations that are subject to the
ments of each of the companies also provide that, on
guarantees will have recourse to both Carnival plc
most matters, the holders of the common equity of both
and Carnival Corporation though a Carnival plc creditor
companies effectively vote as a single body. On specified
must first make written demand on Carnival plc and a
matters where the interests of Carnival Corporation’s
Carnival Corporation creditor on Carnival Corporation.
shareholders may differ from the interests of Carnival
Once the written demand is made by letter or other
plc’s shareholders (a “class rights action”), each share-
form of notice, the holders of indebtedness or other
holder body will vote separately as a class, such as trans-
obligations may immediately commence an action

Carnival Corporation & plc 13

Notes to Consolidated Financial Statements (continued)

against the relevant guarantor. There is no requirement Carnival plc was the third largest cruise company in
under the deeds of guarantee to obtain a judgment, take the world and operated many well-known global brands
other enforcement actions or wait any period of time with leading positions in the U.S., UK, Germany and
prior to taking steps against the relevant guarantor. All Australia. The combination of Carnival Corporation with
actions or proceedings arising out of or in connection Carnival plc under the DLC structure has been accounted
with the deeds of guarantee must be exclusively brought for under U.S. generally accepted accounting principles
in courts in England. (“GAAP”) as an acquisition of Carnival plc by Carnival
Under the terms of the DLC transaction documents, Corporation pursuant to SFAS No. 141. The purchase
Carnival Corporation and Carnival plc are permitted to price of $25.31 per share was based upon the average of
transfer assets between the companies, make loans or the quoted closing market price of Carnival Corporation’s
investments in each other and otherwise enter into inter- shares beginning two days before and ending two days
company transactions. The companies have entered into after January 8, 2003, the date the Carnival plc board
some of these types of transactions and expect to enter agreed to enter into the DLC transaction. The number
into additional transactions in the future to take advan- of additional shares effectively issued in the combined
tage of the flexibility provided by the DLC structure and entity for purchase accounting purposes was 209.6 mil-
to operate both companies as a single unified economic lion. In addition, Carnival Corporation incurred approxi-
enterprise in the most effective manner. In addition, mately $60 million of direct acquisition costs, which
under the terms of the Equalization and Governance have been included in the purchase price. The aggre-
Agreement and the deeds of guarantee, the cash flow gate purchase price of $5.36 billion, computed as
and assets of one company are required to be used to described above, has been allocated to the assets and
pay the obligations of the other company, if necessary. liabilities of Carnival plc as follows (in millions):
Given the DLC structure as described above, we
Ships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 4,669
believe that providing separate financial statements Ships under construction . . . . . . . . . . . . . . . . . . . . 233
for each of Carnival Corporation and Carnival plc would Other tangible assets . . . . . . . . . . . . . . . . . . . . . . . 868
not present a true and fair view of the economic reali- Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,248
ties of their operations. Accordingly, separate financial Trademarks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,291
statements for both Carnival Corporation and Carnival Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,879)
plc have not been presented. Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,072)
Simultaneously with the completion of the DLC $ 5,358
transaction, a partial share offer (“PSO”) for 20% of
Carnival plc’s shares was made and accepted, which
enabled 20% of Carnival plc shares to be exchanged for During the fourth quarter of fiscal 2003 an appraisal
41.7 million Carnival Corporation shares. The 41.7 mil- firm who we engaged completed its valuation work in
lion shares of Carnival plc held by Carnival Corporation connection with establishing the estimated fair values
as a result of the PSO, which cost $1.05 billion, are of Carnival plc’s cruise ships and non-amortizable and
being accounted for as treasury stock in the accompany- amortizable intangible assets as of the April 17, 2003
ing balance sheet. The holders of Carnival Corporation acquisition date. Accordingly, we reduced the carrying
shares, including the new shareholders who exchanged values of 15 Carnival plc ships, including three ships
their Carnival plc shares for Carnival Corporation shares which were under construction at the acquisition date,
under the PSO, now own an economic interest equal to by $689 million. Trademarks are non-amortizable and
approximately 79%, and holders of Carnival plc shares represent the Princess, P&O Cruises, P&O Cruises
now own an economic interest equal to approximately Australia, AIDA, and A’ROSA trademarks’ estimated fair
21%, of Carnival Corporation & plc. values. There were no significant amortizable intangible
The management of Carnival Corporation and assets identified in this appraisal firm’s valuation study.
Carnival plc ultimately agreed to enter into the DLC The information presented below gives pro forma
transaction because, among other things, the creation effect to the DLC transaction between Carnival
of Carnival Corporation & plc would result in a company Corporation and Carnival plc. Management has pre-
with complementary well-known brands operating glob- pared the pro forma information based upon the com-
ally with enhanced growth opportunities, benefits of panies’ reported financial information and, accordingly,
sharing best practices and generating cost savings, the pro forma information should be read in conjunction
increased financial flexibility and access to capital mar- with the companies’ financial statements.
kets and a DLC structure, which allows for continued As noted above, the DLC transaction has been
participation in an investment in the global cruise indus- accounted for as an acquisition of Carnival plc by Carnival
try by Carnival plc’s shareholders who wish to continue Corporation, using the purchase method of accounting.
to hold shares in a UK-listed company. Carnival plc’s accounting policies have been conformed

14 Carnival Corporation & plc

to Carnival Corporation’s policies. Carnival plc’s reporting Note 4—Property and Equipment
period has been changed to Carnival Corporation’s
Property and equipment consisted of the following
reporting period and the information presented below
(in millions):
covers the same periods of time for both companies.
November 30,
This pro forma information has been prepared as if 2003 2002
the DLC transaction had occurred on December 1,
Ships . . . . . . . . . . . . . . . . . . . . . . . . . . $18,134 $10,666
2002 and 2001, respectively, rather than April 17, 2003,
Ships under construction. . . . . . . . . . . . 886 713
and has not been adjusted to reflect any net transaction
benefits. In addition, this pro forma information does 19,020 11,379
not purport to represent what the results of operations Land, buildings and improvements,
and port facilities. . . . . . . . . . . . . . . . 504 315
actually could have been if the DLC transaction had
Transportation equipment and other . . . 549 409
occurred on December 1, 2002 and 2001 or what those
results will be for any future periods. Total property and equipment . . . . . . . . 20,073 12,103
Years Ended Less accumulated depreciation
November 30, and amortization . . . . . . . . . . . . . . . . (2,551) (1,987)
(in millions, except earnings per share) 2003 2002 $17,522 $10,116
Pro forma revenues . . . . . . . . . . . . . . . . . . $7,596 $6,768

Pro forma net income(a)-(d) . . . . . . . . . . . . . $1,159 $1,271 Capitalized interest, primarily on our ships under con-
struction, amounted to $49 million, $39 million and $29
Pro forma earnings per share
million in fiscal 2003, 2002 and 2001, respectively. Ships
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.46 $ 1.60
under construction include progress payments for the
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.45 $ 1.59 construction of the ship, as well as design and engi-
Pro forma weighted-average neering fees, capitalized interest, construction oversight
shares outstanding costs and various owner supplied items. At November
Basic . . . . . . . . . . . . . . . . . . . . . . . . . 797 795 30, 2003, seven ships with an aggregate net book value
of $1.94 billion were pledged as collateral pursuant to
Diluted . . . . . . . . . . . . . . . . . . . . . . . . 805 800
mortgages related to $1.04 billion of debt and a $469
(a) In accordance with SFAS No. 141, pro forma net income million contingent obligation (see Notes 7 and 9). During
was reduced by $51 million in 2003 and $104 million in fiscal 2003, $1.05 billion of ship collateral, which was
2002 for Carnival plc’s nonrecurring costs related to its pledged against $697 million of Carnival plc debt was
terminated Royal Caribbean transaction and the completion released as collateral in exchange for revising the matu-
of the DLC transaction with Carnival Corporation, which rity dates of this debt and providing Carnival Corporation
were expensed by Carnival plc prior to April 17, 2003.
guarantees (see Note 7).
(b) As a result of the reduction in depreciation expenses due
to the revaluation of Carnival plc’s ships carrying values, Maintenance and repair expenses and dry-dock
pro forma net income has been increased by $16 million amortization were $251 million, $175 million and $160
in 2003 and $14 million in 2002. million in fiscal 2003, 2002 and 2001, respectively.
(c) The 2002 pro forma net income included a $51 million non-
recurring income tax benefit related to an Italian incentive Note 5—Impairment Charge
tax law, which allowed Costa to receive an income tax ben-
efit for contractual expenditures during 2002 incurred on In fiscal 2002 we reduced the carrying value of one
the construction of a new ship. of our ships by recording an impairment charge of $20
(d) The 2003 pro forma net income included a $13 million non- million. In fiscal 2001, we recorded an impairment
recurring expense related to a DLC litigation matter and
charge of $140 million, which consisted principally of
$19 million of income related to the receipt of nonrecurring
net insurance proceeds.
a $71 million reduction in the carrying value of ships, a
$36 million write-off of Seabourn goodwill, a $15 million
write-down of a Holland America Line note receivable,
and a $11 million loss on the sale of the Seabourn
Goddess I and II. The impaired ships’ and note receivable
fair values were based on third party appraisals, negoti-
ations with unrelated third parties or other available
evidence, and the fair value of the impaired goodwill
was based on our estimates of discounted future
cash flows.

Carnival Corporation & plc 15

Notes to Consolidated Financial Statements (continued)

Note 6—Investments In and Advances To Affiliates Note 7—Debt

On June 1, 2001, we sold our equity investment in Short-Term Borrowings
Airtours plc, which resulted in a nonoperating net gain Short-term borrowings consisted of unsecured notes,
of $101 million and net cash proceeds of $492 million. bearing interest at libor plus 0.18% (1.3% weighted-
Cumulative foreign currency translation losses of $59 average interest rate at November 30, 2003), repaid to
million were reclassified from AOCI and included in a bank in December 2003.
determining the 2001 net gain.

Long-Term Debt
Long-term debt consisted of the following (in millions):
November 30,
2003(a) 2002(a)
Secured
Floating rate notes, collateralized by two ships, bearing interest at libor plus 1.25% and libor
plus 1.29% (2.24% and 2.33% at November 30, 2003), due through 2015(b) . . . . . . . . . . . . . . . . . . ........ $ 631
Euro floating rate note, collateralized by one ship, bearing interest at euribor plus 0.5% (2.75% and
4.0% at November 30, 2003 and 2002, respectively), due through 2008 . . . . . . . . . . . . . . . . . . . . . . . . . .... 115 $ 119
Euro fixed rate note, collateralized by one ship, bearing interest at 4.74%, due through 2012(b) . . . . . . . . . . .... 182
Capitalized lease obligations, collateralized by two ships, implicit interest at 3.66%, due through 2005 . . . . .... 115
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... 3 3
1,046 122
Unsecured
Fixed rate notes, bearing interest at 3.75% to 8.2%, due through 2028(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2,123 857
Euro floating rate notes, bearing interest at euribor plus 0.35% to euribor plus 1.29%
(2.4% to 3.9% and 3.8% to 4.0% at November 30, 2003 and 2002, respectively), due through 2008(b) . . . . .. 1,129 570
Euro revolving credit facilities, bearing interest at euribor plus 0.50% and euro libor plus 0.98%
(2.6% to 3.2% and 3.6% at November 30, 2003 and 2002, respectively), due through 2006(b) . . . . . . . . . . . . . 300 110
Sterling fixed rate notes, bearing interest at 6.4%, due in 2012(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
Euro fixed rate notes, bearing interest at 5.57%, due in 2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353 297
Floating rate note, bearing interest at libor plus 1.33% (2.45% at November 30, 2003), due through 2008(b) . . . . 244
Revolving credit facility, bearing interest at libor plus 0.17% (1.6% at November 30, 2002), due through 2006 . . 50
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 42
Convertible notes, bearing interest at 2%, due in 2021, with first put option in 2005(b) . . . . . . . . . . . . . . . . . . . . 600 600
Zero-coupon convertible notes, net of discount, with a face value of $1.05 billion, due in 2021,
with first put option in 2006(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 541 521
Convertible notes, bearing interest at 1.75%, net of discount, with a face value of $889 million,
due in 2033, with first put option in 2008(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 575
6,264 3,047
7,310 3,169
Less portion due within one year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (392) (155)
$6,918 $3,014

(a) All borrowings are in U.S. dollars unless otherwise noted. Euro and sterling denominated notes have been translated to U.S.
dollars at the period-end exchange rates. At November 30, 2003, 67%, 28% and 5% of our debt was U.S. dollar, euro and
sterling denominated, respectively, and at November 30, 2002, 65% was U.S. dollar and 35% was euro denominated.
(b) At November 30, 2003, all of Carnival plc’s $1.20 billion of debt was unconditionally guaranteed by P&O Princess Cruises
International Limited (“POPCIL”), a 100% direct wholly-owned subsidiary of Carnival plc. On June 19, 2003, POPCIL, Carnival
Corporation and Carnival plc executed a deed of guarantee under which POPCIL agreed to guarantee all indebtedness and
related obligations of both Carnival Corporation and Carnival plc incurred under agreements entered into after April 17, 2003,
the date the DLC transaction was completed. Under this deed of guarantee, POPCIL also agreed to guarantee all other Carnival
Corporation and Carnival plc indebtedness and related obligations that Carnival Corporation and Carnival plc agreed to guarantee
under their deeds of guarantee. We anticipate that, in connection with corporate reorganization transactions that we expect to
complete shortly, the POPCIL guarantee will terminate in accordance with its terms.
In addition, in exchange for certain amendments to Carnival plc’s consolidated indebtedness, which was outstanding prior to
April 17, 2003, Carnival Corporation has guaranteed substantially all of the Carnival plc consolidated pre-acquisition debt out-
standing at November 30, 2003. Finally, Carnival plc has guaranteed all of the Carnival Corporation pre-acquisition debt outstand-
ing at November 30, 2003.

16 Carnival Corporation & plc

 Carnival Corporation’s 2% convertible notes (“2% be $63.73 per share. Thereafter, this conversion trigger
Notes”), its zero-coupon convertible notes (“Zero- price increases each quarter based on an annual rate of
Coupon Notes”) and its 1.75% convertible notes 1.75%, until maturity. In addition, holders may also sur-
(“1.75% Notes”) are convertible into 15.3 million render the 1.75% Notes for conversion if they have been
shares, 17.4 million shares and a maximum of 20.9 called for redemption or, for other specified occurrences,
million shares, respectively, of Carnival Corporation including the credit rating assigned to the 1.75% Notes
common stock. being Baa3 or lower by Moody’s Investors Service and
The 2% Notes are convertible at a conversion price BBB- or lower by Standard & Poor’s Rating Services, as
of $39.14 per share, subject to adjustment, during any well as certain corporate transactions. The conditions for
fiscal quarter for which the closing price of the Carnival conversion of the 1.75% Notes were not met during fis-
Corporation common stock is greater than $43.05 per cal 2003. The 1.75% Notes interest is payable in cash
share for a defined duration of time in the preceding semi-annually in arrears, commencing October 29, 2003
fiscal quarter. The conditions for conversion of the 2% through April 29, 2008. Effective April 30, 2008, the
Notes have not been met since their issuance in 2001 1.75% Notes no longer require a cash interest payment,
through November 30, 2003. but interest will accrete at a 1.75% yield to maturity.
The Zero-Coupon Notes have a 3.75% yield to maturity Subsequent to April 29, 2008 and October 23, 2008,
and are convertible during any fiscal quarter for which the we may redeem all or a portion of the 1.75% Notes
closing price of the Carnival Corporation common stock and Zero-Coupon Notes, respectively, at their accreted
is greater than a specified trigger price for a defined values and subsequent to April 14, 2008, we may
duration of time in the preceding fiscal quarter. The trig- redeem all or a portion of our 2% Notes at their face
ger price commenced at a low of $31.94 per share for value plus any unpaid accrued interest.
the first quarter of fiscal 2002 and increases at an annual In addition, on April 29, 2008, 2013, 2018, 2023 and
rate of 3.75% thereafter, until maturity. As of the end 2028 the 1.75% Noteholders, on April 15 of 2005, 2008
of the 2003 third and fourth quarters, the Zero-Coupon and 2011 the 2% Noteholders and on October 24 of
Notes became convertible into Carnival Corporation 2006, 2008, 2011 and 2016 the Zero-Coupon Noteholders
common stock for the 2003 fourth quarter and the may require us to repurchase all or a portion of the out-
2004 first quarter as a result of Carnival Corporation’s standing 1.75% Notes and Zero-Coupon Notes at their
common stock achieving its target conversion trigger accreted values and the 2% Notes at their face value
price per share of $33.77 and $34.09, respectively, for plus any unpaid accrued interest.
the requisite periods of time (see Note 15). No Zero- Upon conversion, redemption or repurchase of the
Coupon Notes were converted in fiscal 2003. 1.75% Notes, the 2% Notes and the Zero-Coupon
The 1.75% Notes, which were issued in April 2003, Notes we may choose to deliver Carnival Corporation
are convertible at a conversion price of $53.11 per common stock, cash or a combination of cash and
share, subject to adjustment, during any fiscal quarter common stock with a total value equal to the value of
for which the closing price of the Carnival Corporation the consideration otherwise deliverable. If the 1.75%
common stock is greater than a specified trigger price Notes, 2% Notes and Zero-Coupon Notes were to be
for a defined duration of time in the preceding fiscal put back to us, we would expect to settle them for
quarter. During the fiscal quarters ending from August cash and, accordingly, they are not included in our
31, 2003 through April 29, 2008, the trigger price will diluted earnings per share common stock calculations,

Carnival Corporation & plc 17

Notes to Consolidated Financial Statements (continued)

unless they become convertible and are dilutive to our default acceleration clauses, substantially all of our out-
earnings per share computation. However, no assur- standing debt and derivative contracts payable could
ance can be given that we will have sufficient liquidity become due and the underlying facilities could be termi-
to make such cash payments. See Note 15. nated. At November 30, 2003, we were in compliance
Costa has a 257.5 million euro ($303 million U.S. with all of our debt covenants.
dollars at the November 30, 2003 exchange rate) In November 2003, we issued $550 million of unse-
unsecured euro revolving credit facility, which expires cured 3.75% Notes due in November 2007, the pro-
in May 2006, of which $219 million was available at ceeds of which we used to repay some of the amounts
November 30, 2003. In addition, POPCIL has $710 mil- outstanding under the POPCIL $710 million credit facili-
lion of unsecured revolving multi-currency credit facili- ties and for working capital purposes.
ties, which expire in September 2005, of which $494 At November 30, 2003, the scheduled annual maturi-
million was available at November 30, 2003. ties of our long-term debt was as follows (in millions):
Carnival Corporation’s $1.4 billion unsecured multi-
Fiscal
currency revolving credit facility matures in June 2006.
This facility currently bears interest at libor/eurolibor plus 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 392
2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,263(a)
20 basis points (“BPS”), which interest rate spread over
2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,587(a)
the base rate will vary based on changes to Carnival
2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 999
Corporation’s senior unsecured debt ratings, and pro- 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,492(a)
vides for an undrawn facility fee of ten BPS. Carnival Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,577
Corporation’s commercial paper program is supported
$7,310
by this revolving credit facility and, accordingly, any
amounts outstanding under its commercial paper pro- (a) Includes $600 million of Carnival Corporation’s 2% Notes in
gram, none at November 30, 2003 and 2002, reduce 2005, $541 million of its Zero-Coupon Notes in 2006, and
the aggregate amount available under this facility. At $575 million of its 1.75% Notes in 2008, based in each
November 30, 2003, the entire facility was available. case on the date of the noteholders’ first put option.
This $1.4 billion facility and other of our loan and
derivative agreements contain covenants that require Debt issuance costs are generally amortized to interest
us, among other things, to maintain a minimum debt expense using the straight-line method, which approxi-
service coverage and limits our debt to capital ratios mates the effective interest method, over the term
and debt to equity ratio, and the amounts of our secured of the notes or the noteholders first put option date,
assets and secured indebtedness, and shareholders’ whichever is earlier. In addition, all loan issue discounts
equity. In addition, if our business suffers a material are amortized to interest expense using the effective
adverse change or if other events of default under our interest rate method over the term of the notes.
loan agreements are triggered, then pursuant to cross

18 Carnival Corporation & plc

Note 8—Commitments
Ship Commitments
A description of our ships under contract for construction at November 30, 2003 was as follows (in millions, except
passenger capacity):
Expected Estimated
Service Passenger Total
Brand and Ship Date(a) Shipyard Capacity Cost(b)
Princess
Diamond Princess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3/04 Mitsubishi 2,674 $ 475
Caribbean Princess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4/04 Fincantieri(c) 3,114 500
Sapphire Princess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6/04 Mitsubishi 2,674 475
Newbuild . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6/06 Fincantieri 3,114 500
Total Princess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,576 1,950
CCL
Carnival Miracle. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2/04 Masa-Yards(c)(d) 2,124 375
Carnival Valor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12/04 Fincantieri(c) 2,974 510
Carnival Liberty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8/05 Fincantieri 2,974 460
Total CCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,072 1,345
Holland America Line
Westerdam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4/04 Fincantieri(c) 1,848 410
Noordam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2/06 Fincantieri(c) 1,848 410
Total Holland America Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,696 820
Cunard
Queen Mary 2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1/04 Chantiers de
L’Atlantique(c)(d) 2,620 800
Queen Victoria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4/05 Fincantieri(c) 1,968 410
Total Cunard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,588 1,210
Costa
Costa Magica . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11/04 Fincantieri(e) 2,702 545
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,634 $5,870

(a) The expected service date is the month in which the ship is currently expected to begin its first revenue generating cruise.
(b) Estimated total cost of the completed ship includes the contract price with the shipyard, design and engineering fees, capitalized
interest, construction oversight costs and various owner supplied items.
(c) These construction contracts are denominated in euros and have been fixed into U.S. dollars through the utilization of forward
foreign currency contracts.
(d) The Carnival Miracle and the Queen Mary 2 were delivered in February 2004 and December 2003, respectively.
(e) This construction contract is denominated in euros, which is Costa’s functional currency and, therefore, we have not entered into
a forward foreign currency contract to hedge this commitment. The estimated total cost has been translated into U.S. dollars
using the November 30, 2003 exchange rate.

Carnival Corporation & plc 19

Notes to Consolidated Financial Statements (continued)

In addition to these ship construction contracts, in In February 2001, Holland America Line-USA, Inc.
January 2004, Costa entered into a letter of intent for (“HAL-USA”), a wholly-owned subsidiary, received a
a 3,004-passenger ship with Fincantieri for a Summer grand jury subpoena requesting that it produce docu-
2006 delivery date at an estimated total cost of 450 ments and records relating to the air emissions from
million euros. Holland America Line ships in Alaska. HAL-USA
In connection with our cruise ships under contract responded to the subpoena. The ultimate outcome of
for construction, we have paid $876 million through this matter cannot be determined at this time.
November 30, 2003 and anticipate paying the remain- On August 17, 2002, an incident occurred in Juneau,
ing estimated total costs as follows: $2.98 billion in Alaska onboard Holland America Line’s Ryndam involv-
2004, $1.24 billion in 2005 and $775 million in 2006. ing a wastewater discharge from the ship. As a result
of this incident, various Ryndam ship officers and crew
Operating Leases
have received grand jury subpoenas from the Office of
Rent expense under our operating leases, primarily
the U.S. Attorney in Anchorage, Alaska requesting that
for office and warehouse space, was $48 million, $15
they appear before a grand jury. One subpoena also
million and $13 million in fiscal 2003, 2002 and 2001,
requested the production of Holland America Line doc-
respectively. At November 30, 2003, minimum annual
uments, which Holland America Line has produced.
rentals for our operating leases, with initial or remaining
Holland America Line is also complying with a sub-
terms in excess of one year, were as follows (in mil-
poena for additional documents. If the investigation
lions): $57, $49, $36, $26, $23 and $85 in fiscal 2004
results in charges being filed, a judgment could include,
through 2008 and thereafter, respectively.
among other forms of relief, fines and debarment from
Port Facilities and Other federal contracting, which would prohibit operations in
At November 30, 2003, we had commitments through Glacier Bay National Park and Preserve during the period
2052, with initial or remaining terms in excess of one of debarment. The State of Alaska is separately investi-
year, to pay minimum amounts for our annual usage of gating this incident. The ultimate outcomes of these
port facilities and other contractual commitments as fol- matters cannot be determined at this time. However, if
lows (in millions): $57, $32, $33, $35, $35 and $200 in Holland America Line were to lose its Glacier Bay per-
fiscal 2004 through 2008 and thereafter, respectively. mits we would not expect the impact on our financial
statements to be material to us since we believe there
Note 9—Contingencies are additional attractive alternative destinations in
Alaska that can be substituted for Glacier Bay.
Litigation
Costa has instituted arbitration proceedings in Italy
In 2002, two actions (collectively, the “Facsimile
to confirm the validity of its decision not to deliver its
Complaints”) were filed against Carnival Corporation
ship, the Costa Classica, to the shipyard of Cammell
on behalf of purported classes of persons who received
Laird Holdings PLC (“Cammell Laird”) under a 79 mil-
unsolicited advertisements via facsimile, alleging that
lion euro denominated contract for the conversion and
Carnival Corporation and other defendants distributed
lengthening of the ship. Costa has also given notice of
unsolicited advertisements via facsimile in contraven-
termination of the contract. It is now expected that the
tion of the U.S. Telephone Consumer Protection Act.
arbitration tribunal’s decision will be made in late-2004
The plaintiffs seek to enjoin the sending of unsolicited
at the earliest. In the event that an award is given in
facsimile advertisements and statutory damages. The
favor of Cammell Laird, the amount of damages, which
advertisements referred to in the Facsimile Complaints
Costa would have to pay, if any, is not currently deter-
were not sent by Carnival Corporation, but rather were
minable. The ultimate outcome of this matter cannot
distributed by a professional faxing company at the
be determined at this time.
behest of travel agencies that referenced a CCL prod-
On April 23, 2003, Festival Crociere S.p.A. com-
uct. We do not advertise directly to the traveling public
menced an action against the European Commission
through the use of facsimile transmission. The ultimate
(the “Commission”) in the Court of First Instance of
outcomes of the Facsimile Complaints cannot be deter-
the European Communities in Luxembourg seeking
mined at this time. We believe that we have meritori-
to annul the Commission’s antitrust approval of the
ous defenses to these claims and, accordingly, we
DLC transaction (the “Festival Action”). We have been
intend to vigorously defend against these actions.

20 Carnival Corporation & plc

granted leave to intervene in the Festival Action and In the unlikely event that we were to terminate the
intend to contest such action vigorously. A successful three lease agreements early or default on our obliga-
third party challenge of an unconditional Commission tions, we would, as of November 30, 2003 have to
clearance decision would be unprecedented, and based pay a total of $168 million in stipulated damages. As of
on a review of the law and the factual circumstances November 30, 2003, $177 million of standby letters of
of the DLC transaction, as well as the Commission’s credit have been issued by a major financial institution
approval decision in relation to the DLC transaction, in order to provide further security for the payment of
we believe that the Festival Action will not have a these contingent stipulated damages. In the event we
material adverse effect on the companies or the DLC were to default under our $1.4 billion revolving credit
transaction. However, the ultimate outcome of this facility, we would be required to post cash collateral
matter cannot be determined at this time. to support the stipulated damages standby letters of
In the normal course of our business, various other credit. Between 2017 and 2022, we have the right to
claims and lawsuits have been filed or are pending exercise options that would terminate these transac-
against us. Most of these claims and lawsuits are cov- tions at no cost to us. As a result of these three trans-
ered by insurance and, accordingly, the maximum amount actions, we have $40 million and $43 million of deferred
of our liability is typically limited to our self-insurance income recorded on our balance sheets as of November
retention levels. However, the ultimate outcome of these 30, 2003 and 2002, respectively, which is being amor-
claims and lawsuits which are not covered by insurance tized to nonoperating income through 2022.
cannot be determined at this time.
Other Contingent Obligations
Contingent Obligations Some of the debt agreements that we enter into
At November 30, 2003, we had contingent obliga- include indemnification provisions that obligate us to
tions totaling $1.08 billion to participants in lease out make payments to the counterparty if certain events
and lease back type transactions for three of our ships. occur. These contingencies generally relate to changes
At the inception of the leases, the entire amount of the in taxes, changes in laws that increase lender capital
contingent obligations was paid by us to major financial costs and other similar costs. The indemnification clauses
institutions to enable them to directly pay these obliga- are often standard contractual terms and were entered
tions. Accordingly, these obligations were considered into in the normal course of business. There are no
extinguished, and neither funds nor the contingent obli- stated or notional amounts included in the indemnifica-
gations have been included on our balance sheets. We tion clauses and we are not able to estimate the maxi-
would only be required to make any payments under mum potential amount of future payments, if any, under
these contingent obligations in the remote event of these indemnification clauses. We have not been required
nonperformance by these financial institutions, all of to make any payments under such indemnification clauses
which have long-term credit ratings of AAA or AA. In in the past and, under current circumstances, we do
addition, we obtained a direct guarantee from another not believe a request for indemnification is probable.
AAA rated financial institution for $298 million of the
above noted contingent obligations, thereby further Note 10—Income and Other Taxes
reducing the already remote exposure to this portion
We believe that substantially all of our income, with
of the contingent obligations. If the major financial insti-
the exception of our U.S. source income from the
tutions’ credit ratings fall below AA-, we would be
transportation, hotel and tour businesses of Holland
required to move a majority of the funds from these
America Tours and Princess Tours and the items listed
financial institutions to other highly-rated financial insti-
in the regulations under Section 883 that the Internal
tutions. If Carnival Corporation’s credit rating falls below
Revenue Service does not consider to be incidental to
BBB, we would be required to provide a standby letter
ship operations discussed in the following paragraph,
of credit for $90 million, or alternatively provide mort-
is exempt from U.S. federal income taxes. If we were
gages in the aggregate amount of $90 million on two
found not to qualify for exemption pursuant to applica-
of Carnival Corporation’s ships.
ble income tax treaties or under the Internal Revenue

Carnival Corporation & plc 21

Notes to Consolidated Financial Statements (continued)

Code or if the income tax treaties or Internal Revenue In addition to or in place of income taxes, virtually
Code were to be changed in a manner adverse to us, a all jurisdictions where our ships call, impose taxes
portion of our income would become subject to taxation based on passenger counts, ship tonnage or some
by the U.S. at higher than normal corporate tax rates. other measure. These taxes, other than those directly
On August 26, 2003, final regulations under Section charged to and/or collected from passengers by us, are
883 of the Internal Revenue Code were published in recorded as operating expenses in the accompanying
the Federal Register. Section 883 is the primary provi- statements of operations.
sion upon which we rely to exempt certain of our inter-
national ship operation earnings from U.S. income taxes. Note 11—Shareholders’ Equity
The final regulations list elements of income that are
Carnival Corporation’s articles of incorporation author-
not considered to be incidental to ship operations and,
ize its Board of Directors, at its discretion, to issue up to
to the extent earned within the U.S., are subject to U.S.
40 million shares of its preferred stock and Carnival plc
income tax. Among the items identified in the final reg-
has 100,000 authorized preference shares. At November
ulations are income from the sale of air and other trans-
30, 2003 and 2002, no Carnival Corporation preferred
portation, shore excursions and pre-and post cruise
stock had been issued and only a nominal amount of
land packages. These rules will first be effective for
Carnival plc preferred shares had been issued.
us in fiscal 2004.
At November 30, 2003, there were 91.7 million
AIDA, A’ROSA, Ocean Village, P&O Cruises, P&O
shares of Carnival Corporation common stock reserved
Cruises Australia and Swan Hellenic are all strategically
for issuance pursuant to its convertible notes and its
and commercially managed in the UK and have elected
employee benefit and dividend reinvestment plans. In
to enter the UK tonnage tax regime. Accordingly, these
addition, Carnival plc shareholders have authorized 4.8
operations pay UK corporation tax on shipping profits
million ordinary shares for future issuance under its
calculated by reference to the net tonnage of qualifying
employee benefit plans.
vessels. Income not considered to be shipping profits
At November 30, 2003 and 2002, AOCI included
is taxable under the normal UK tax rules. We believe
cumulative foreign currency translation adjustments
that substantially all of the income attributable to these
which increased shareholders’ equity by $191 million
brands constitutes shipping profits and, accordingly,
and $29 million, respectively.
income tax expense from these operations has been
and is expected to be minimal.
Note 12—Financial Instruments
Some of our subsidiaries, including Costa, Holland
America Tours, Princess Tours and other of our non- We estimated the fair value of our financial instru-
shipping activities, are subject to foreign and/or U.S. ments through the use of public market prices, quotes
federal and state income taxes. In fiscal 2003, we rec- from financial institutions and other available informa-
ognized a net $29 million income tax expense, primarily tion. Considerable judgment is required in interpreting
related to these operations. In 2002, we recognized a data to develop estimates of fair value and, accordingly,
net $57 million income tax benefit primarily due to an amounts are not necessarily indicative of the amounts
Italian investment incentive law, which allowed Costa that we could realize in a current market exchange. Our
to receive a $51 million income tax benefit based on financial instruments are not held for trading or other
contractual expenditures during 2002 on the construc- speculative purposes.
tion of a new ship. At November 30, 2003, Costa had a
Cash and Cash Equivalents
remaining net deferred tax asset of approximately $61
The carrying amounts of our cash and cash equivalents
million relating primarily to the tax benefit of the net
approximate their fair values due to their short maturities.
operating loss carryforwards arising from this incentive
law, which expire in 2007. In fiscal 2001, we recog- Other Assets
nized a $9 million income tax benefit from Costa prima- At November 30, 2003 and 2002, long-term other
rily due to changes in Italian tax law. assets included marketable securities held in rabbi
We do not expect to incur income taxes on future trusts for certain of our nonqualified benefit plans and
distributions of undistributed earnings of foreign sub- notes and other receivables. These assets had carrying
sidiaries and, accordingly, no deferred income taxes have and fair values of $225 million at November 30, 2003
been provided for the distribution of these earnings. and $173 million at November 30, 2002. Fair values were
based on public market prices, estimated discounted
future cash flows or estimated fair value of collateral.

22 Carnival Corporation & plc

Debt of cross currency swaps, which effectively converts
The fair values of our non-convertible debt and con- euro denominated debt into sterling debt, which is the
vertible notes were $5.8 billion and $1.92 billion, respec- functional currency of our subsidiary which was the
tively, at November 30, 2003 and $2.04 billion and borrower. At November 30, 2003, the fair value of
$1.28 billion at November 30, 2002. These fair values these cross euro/sterling currency swaps was a loss
were greater than the related carrying values by $140 of $21 million. These currency swaps mature through
million and $205 million, respectively, at November 30, 2012. The fair value of our cross currency swaps were
2003 and $4 million and $162 million at November 30, estimated based on prices quoted by financial institu-
2002. The net difference between the fair value of our tions for these instruments. Finally, we have desig-
debt and its carrying value was due primarily to our nated $355 million of outstanding sterling debt, which
issuance of debt obligations at fixed interest rates that is a nonderivative and matures in 2012, as a hedge of
are above market interest rates in existence at the our net investments in foreign operations and, accord-
measurement dates, as well as the impact of changes ingly, have included $24 million of foreign currency
in the Carnival Corporation common stock value on our transaction losses in the cumulative translation adjust-
convertible notes on those dates. The fair values of our ment component of AOCI at November 30, 2003.
unsecured fixed rate public notes, convertible notes,
Interest Rate Swaps
sterling bonds and unsecured 5.57% euro notes were
We have interest rate swap agreements designated
based on their public market prices. The fair values of
as fair value hedges whereby we receive fixed interest
our other debt were estimated based on appropriate
rate payments in exchange for making variable interest
market interest rates being applied to this debt.
rate payments. At November 30, 2003 and 2002, these
Foreign Currency Contracts interest rate swap agreements effectively changed $1.19
We have forward foreign currency contracts, desig- billion and $225 million of fixed rate debt to Libor-based
nated as foreign currency fair value hedges, for seven floating rate debt.
of our euro denominated shipbuilding contracts (see In addition, we also have interest rate swap agree-
Note 8). At November 30, 2003 and 2002, the fair value ments designated as cash flow hedges whereby we
of these forward contracts was an unrealized gain of receive variable interest rate payments in exchange for
$363 million and an unrealized loss of $178 million, making fixed interest rate payments. At November 30,
respectively. These forward contracts mature through 2003 and 2002, these interest rate swap agreements
2006. The fair values of our forward contracts were effectively changed $760 million and $468 million, respec-
estimated based on prices quoted by financial institu- tively, of euribor floating rate debt to fixed rate debt.
tions for these instruments. These interest rate swap agreements mature through
We have cross currency swaps totaling $644 million 2012. At November 30, 2003 and 2002, the fair value
that are designated as hedges of our net investments of our interest rate swaps was a loss of $6 million and
in foreign subsidiaries, which have euro and sterling $0.1 million, respectively. The fair values of our interest
denominated functional currencies. These cross cur- rate swap agreements were estimated based on prices
rency swaps were entered into to effectively convert quoted by financial institutions for these instruments.
U.S. dollar denominated debt into euro or sterling debt,
which acts as a hedge of our net investments in cruise Note 13—Segment Information
lines whose functional currencies are the euro and ster-
Our cruise segment included thirteen cruise brands
ling. At November 30, 2003, the fair value of these cross
since April 17, 2003, and six Carnival Corporation cruise
currency swaps was an unrealized loss of $49 million,
brands from December 1, 2001 to April 16, 2003,
of which $39 million is included in the cumulative trans-
which have been aggregated as a single reportable
lation adjustment component of AOCI. These currency
segment based on the similarity of their economic and
swaps mature through 2007. We also have $171 million
other characteristics.

Carnival Corporation & plc 23

Notes to Consolidated Financial Statements (continued)

Our other segment represents the transportation, hotel and tour operations of Holland America Tours and Princess
Tours and the business to business travel agency operations of P&O Travel Ltd., the latter two since completion of
the DLC transaction on April 17, 2003. The significant accounting policies of our segments are the same as those
described in Note 2—“Summary of Significant Accounting Policies.” Information for our cruise and other segments
as of and for the year ended November 30, was as follows (in millions):
Selling
and Depreciation Operating Capital
Operating adminis- and income expend- Total
Revenues(a)(b) expenses trative amortization (loss) itures assets
2003
Cruise . . . . . . . . . . . . . . . . . . . . $6,459 $3,624 $896 $568 $1,371 $ 2,454 $24,090
Other . . . . . . . . . . . . . . . . . . . . 345 280 36 17 12 62 401(c)
Intersegment elimination . . . . . (86) (86)
$6,718 $3,818 $932 $585 $1,383 $ 2,516 $24,491

2002
Cruise(d) . . . . . . . . . . . . . . . . . . $4,244 $2,222 $577 $371 $1,055(c) $ 1,949 $12,120
Other . . . . . . . . . . . . . . . . . . . . 176 145 32 11 (13) 37 215(c)
Intersegment elimination . . . . . (37) (37)
$4,383 $2,330 $609 $382 $1,042 $ 1,986 $12,335

2001
Cruise(d) . . . . . . . . . . . . . . . . . . $4,371 $2,347 $584 $361 $ 946(e) $ 802 $11,375
Other . . . . . . . . . . . . . . . . . . . . 229 186 35 11 (10)(e) 25 189(c)
Affiliated operations(f) . . . . . . . . (44)
Intersegment elimination . . . . . (51) (51)
$4,549 $2,482 $619 $372 $ 892 $ 827 $11,564

(a) Other revenues included revenues for the cruise portion of a tour, when a cruise is sold along with a land tour package by
Holland America Tours and Princess Tours, and shore excursion and port hospitality services provided to cruise passengers by
these tour companies. These intersegment revenues are eliminated from other revenues in the line “Intersegment elimination.”
(b) Revenue amounts in 2002 and 2001 have been reclassified to conform to the 2003 presentation.
(c) Other assets primarily included hotels and lodges in Alaska and the Canadian Yukon, luxury dayboats offering tours to the glaciers
of Alaska and the Yukon River, motor coaches used for sightseeing and charters in the States of Washington and Alaska, British
Columbia, Canada and the Canadian Yukon and private, domed rail cars, which run on the Alaska Railroad between Anchorage
and Fairbanks.
(d) In 2003, we commenced allocating all corporate expenses to our cruise segment. Accordingly, the 2002 and 2001 presentations
have been restated to allocate the previously unallocated 2002 and 2001 corporate expenses and assets to our cruise segment.
(e) Cruise operating income included impairment charges of $20 million in 2002 and $134 million in 2001 and other operating loss
included an impairment charge of $6 million in 2001.
(f) On June 1, 2001, we sold our investment in Airtours. Accordingly, we did not record any equity in the earnings or losses of
Airtours after May 31, 2001.

Foreign revenues for our cruise brands represent sales Note 14—Benefit Plans
generated from outside the U.S. primarily by foreign tour
Stock Option Plans
operators and foreign travel agencies. Substantially all of
We have stock option plans primarily for supervisory
these foreign revenues are from the UK, Italy, Germany,
and management level employees and members of
Canada, France, Australia, Spain, Switzerland and Brazil.
our Board of Directors. The Carnival Corporation and
Substantially all of our long-lived assets are located out-
Carnival plc plans are administered by a committee of
side of the U.S. and consist principally of our goodwill,
three of our directors (the “Committee”) which deter-
trademarks, ships and ships under construction.
mines who is eligible to participate, the number of
Revenue information by geographic area for fiscal
shares for which options are to be granted and the
2003, 2002 and 2001 was as follows (in millions):
amounts that may be exercised within a specified term.
2003 2002 2001 The Carnival Corporation and Carnival plc option exer-
U.S. . . . . . . . . . . . . . . . . . . . . $4,513 $3,304 $3,500 cise price is generally set by the Committee at 100%
Foreign . . . . . . . . . . . . . . . . . 2,205 1,079 1,049 of the fair market value of the common stock/ordinary
$6,718 $4,383 $4,549
shares on the date the option is granted. Substantially
all Carnival Corporation options granted during fiscal

24 Carnival Corporation & plc

2003, 2002 and 2001 and Carnival plc options granted in ally vest at the end of three years and have a ten year
2003 were granted at an exercise price per share equal term. Carnival Corporation director options granted
to the fair market value of the Carnival Corporation com- subsequent to fiscal 2000 vest evenly over five years
mon stock and Carnival plc ordinary shares, respectively, and have a ten year term. At November 30, 2003,
on the date of grant. Carnival Corporation employee Carnival Corporation had 34.9 million shares and
options generally vest evenly over five years and have Carnival plc had 4.8 million shares, which were avail-
a ten year term. Carnival plc employee options gener- able for future grants under the option plans.

A combined summary of the activity and status of the Carnival Corporation and Carnival plc stock option plans was
as follows:
Weighted-
Average Exercise Price Number of Options
Per Share Years Ended November 30,
2003 2002 2001 2003 2002 2001
Outstanding options—beginning of year . . . . . . . . . . . $29.26 $28.95 $26.80 11,828,958 12,774,293 8,840,793
Carnival plc outstanding options at April 17, 2003(a) . . . $19.64 5,523,013
Options granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30.88 $26.54 $26.44 5,464,109 33,000 6,580,250
Options exercised(b) . . . . . . . . . . . . . . . . . . . . . . . . . . $17.35 $14.35 $11.70 (2,919,554) (404,615) (2,218,075)
Options canceled . . . . . . . . . . . . . . . . . . . . . . . . . . . . $28.64 $32.80 $35.15 (598,547) (573,720) (428,675)
Outstanding options—end of year(e) . . . . . . . . . . . . . . $28.79 $29.26 $28.95 19,297,979(c) 11,828,958 12,774,293

Options exercisable—end of year . . . . . . . . . . . . . . . . $27.68 $28.71 $25.96 7,848,335(d) 4,775,894 2,972,498

(a) All Carnival plc unvested options outstanding on the date the DLC transaction was completed vested fully on such date, except
for 1.3 million options, which were granted on April 15, 2003.
(b) Included 1.8 million Carnival plc options in 2003, of which 1.0 million had a sterling denominated exercise price.
(c) Included 3.6 million of Carnival plc options at a weighted-average exercise price of $20.89 per share, based on the November 30,
2003 U.S. dollar to sterling exchange rate.
(d) Included 2.2 million of Carnival plc options at a weighted-average exercise price of $18.06 per share.
(e) On December 1, 2003, as a result of the Princess cruise operations being transferred to the Carnival Corporation side of the DLC
structure, options to purchase 567,000 shares of Carnival plc vested immediately, and the termination date of 1.5 million Carnival
plc exercisable options were shortened to the earlier of 12 months after the December 1, 2003 reorganization date or 42 months
after the date of grant. All such changes have been made pursuant to the original terms of the Carnival plc plan.

Combined information with respect to outstanding and exercisable Carnival Corporation and Carnival plc stock
options at November 30, 2003 was as follows:
Options Outstanding Options Exercisable
Weighted- Weighted- Weighted-
Average Average Average
Exercise Remaining Exercise Exercise
Price Range Shares Life (Years) Price Shares Price
$ 1.94–$ 2.25. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,980 (a) $ 2.07 30,980 $ 2.07
$10.59–$15.00. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 735,102 5.4 $13.54 735,102 $13.54
$16.28–$22.57. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,477,849 7.1 $20.71 2,617,539 $19.70
$23.04–$27.88. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,714,089 8.4 $26.44 1,319,694 $25.00
$28.21–$34.91. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,518,009 8.4 $32.12 1,172,570 $30.27
$36.72–$41.34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102,000 4.8 $38.09 97,600 $38.06
$43.56–$48.56. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,719,950 5.7 $44.36 1,874,850 $44.50
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,297,979 7.6 $28.79 7,848,335 $27.68

(a) These stock options do not have an expiration date.

Carnival Corporation & plc 25

Notes to Consolidated Financial Statements (continued)

Carnival Corporation Restricted Stock P&O Cruises, Princess and Cunard Line Limited also
Carnival Corporation has issued restricted stock to participate in an industry-wide British merchant navy
a few officers. These shares have the same rights as officers pension fund (“MNOPF”), which also is a defined
Carnival Corporation common stock, except for transfer benefit multiemployer pension plan that is available to
restrictions and forfeiture provisions. During fiscal 2003, certain of their shipboard British officers. The MNOPF
2002 and 2001, 455,000 shares, 150,000 shares and is divided into two sections, the “New Section” and
150,000 shares, respectively, of Carnival Corporation the “Old Section,” each of which covers a different
common stock were issued, which were valued at $14 group of participants, with the Old Section closed to
million, $4 million and $5 million, respectively. Unearned further benefit accrual and the New Section only closed
stock compensation was recorded within shareholders’ to new membership. Holland America Line also partici-
equity at the date of award based on the quoted mar- pates in a Dutch shipboard officers defined benefit
ket price of the Carnival Corporation common stock on multiemployer pension plan. Our multiemployer yearly
the date of grant and is amortized to expense using the pension fund plan expenses are based on the amount
straight-line method from the grant date through the ear- of contributions we are required to make annually into
lier of the vesting date or the officers estimated retire- the plans.
ment date. These shares either have three or five-year Total expense for all of our defined benefit pension
cliff vesting or vest evenly over five years after the grant plans, including our multiemployer plans, was $17 mil-
date. As of November 30, 2003 and 2002 there were lion, $11 million and $8 million in fiscal 2003, 2002 and
1,055,000 shares and 750,000 shares, respectively, 2001, respectively.
issued under the plan which remained to be vested. As of March 31, 2003, the date of the most recent
formal actuarial valuation prepared by the MNOPF’s
Defined Benefit Pension Plans
actuary, the New Section of the MNOPF was estimated
We have several defined benefit pension plans,
to have a fund deficit of approximately 200 million ster-
which cover some of our shipboard and shoreside
ling, or $340 million, assuming a 7.7% discount rate.
employees. The U.S. and UK shoreside employee plans
At November 30, 2003, our external actuary informally
are closed to new membership. The plans are funded,
updated the March 31, 2003 valuation and estimated
at a minimum, in accordance with U.S. or UK regulatory
that the New Section deficit was approximately 640
requirements, with the remaining plans being primarily
million sterling, or $1.1 billion, assuming a 5.3% discount
unfunded. In determining our plans’ benefit obligations
rate. This 5.3% is the assumed discount rate we have
at November 30, 2003, we used assumed weighted-
used for determining our other foreign pension plans
average discount rates of 6.0% and 5.3% for our U.S.
obligations. Based solely upon our share of current
and foreign plans, respectively. The net liabilities related
contributions to the MNOPF, our share of these deficit
to the obligations under these single employer defined
amounts would be between $27 million and $85 million,
benefit pension plans are not material.
depending on whether the deficit was $340 million or
A minimum pension liability adjustment is required
$1.1 billion, respectively. However, the extent of our
when the actuarial present value of accumulated bene-
portion of any liability with respect to the fund’s deficit
fits exceeds plan assets and accrued pension liabilities.
is uncertain, and is the subject of ongoing litigation, the
At November 30, 2003 and 2002, our single employer
outcome of which cannot be determined at this time.
plans had aggregated additional minimum pension liabil-
In addition, the amount of the fund deficit is subject to
ity adjustments, less allowable intangible assets, of $14
estimates and assumptions, which could cause the
million and $15 million, respectively, which are included
deficit amount to vary considerably.
in AOCI.
A substantial portion of any MNOPF fund deficit lia-
In addition, P&O Cruises participated in a Merchant
bility which we may have relates to P&O Cruises and
Navy Ratings Pension Fund (“MNRPF”), which is a
Princess liabilities which existed prior to the DLC trans-
defined benefit multiemployer pension plan. This plan
action. However, since the MNOPF is a multiemployer
has a significant funding deficit and has been closed to
plan and it is not probable that we will withdraw from
further benefit accrual since prior to the completion of
the plan nor is our share of the liability certain, we are
the DLC transaction. P&O Cruises, along with other
required to record our MNOPF plan expenses, including
unrelated employers, are making payments into this plan
any contributions to fund the deficit, as they are con-
under a non-binding Memorandum of Understanding to
tributed, instead of as a Carnival plc acquisition liability
reduce the deficit. Accordingly, at November 30, 2003,
that existed at the DLC transaction date. It is currently
we had recorded a long-term pension liability of $19
expected that deficit funding contributions, if any, will
million, which represented our estimate of the present
be required to be paid over at least ten years.
value of the entire liability due by us under this plan.

26 Carnival Corporation & plc

Defined Contribution Plans included the weighted-average of the 17.4 million
We have several defined contribution plans available shares that could be converted at the noteholders’
to substantially all employees. We contribute to these options. The conversion of these notes was only dilu-
plans based on employee contributions, salary levels tive in the 2003 third quarter.
and length of service. Total expense relating to these Our diluted earnings per share computation for fiscal
plans was $12 million, $8 million and $8 million in fiscal 2003 did not include a maximum of 36.2 million (32.7
2003, 2002 and 2001, respectively. million in 2002 and 2001) shares of Carnival Corporation
common stock issuable upon conversion of its convert-
Note 15—Earnings Per Share ible debt, as this common stock was not issuable under
the contingent conversion provisions of these debt
Our basic and diluted earnings per share were com-
instruments (see Note 7).
puted as follows (in millions, except per share data):
Options to purchase 8.4 million, 6.0 million and 5.4
Years Ended million shares for fiscal 2003, 2002 and 2001, respec-
November 30, tively, were excluded from our diluted earnings per
2003 2002 2001 share computation since the effect of including them
Net income . . . . . . . . . . . . . . . . . $1,194 $1,016 $ 926 was anti-dilutive.
Interest on dilutive
convertible notes . . . . . . . . . . . 5 Note 16—Supplemental Cash Flow Information
Net income for diluted Years Ended
earnings per share . . . . . . . . . . $1,199 $1,016 $ 926 November 30,
Weighted-average common and (in millions) 2003 2002 2001
ordinary shares outstanding . . . 718 587 585 Cash paid for
Dilutive effect of Interest, net of
convertible notes . . . . . . . . . . . 4 amount capitalized . . . . . . . . ... $156 $110 $109
Dilutive effect of stock plans . . . . 2 1 2 Income taxes, net . . . . . . . . . . . ... $ 21 $ 4
Diluted weighted-average Other noncash investing and
shares outstanding . . . . . . . . . . 724 588 587 financing activities
Common stock received as
Basic earnings per share . . . . . . . $ 1.66 $ 1.73 $1.58 payment of stock option
Diluted earnings per share . . . . . . $ 1.66 $ 1.73 $1.58 exercise price . . . . . . . . . . ... $ 23
Notes received upon the sale
of the Nieuw Amsterdam . ... $ 60
The weighted-average shares outstanding for the
year ended November 30, 2003 includes the pro rata Note 17—Recent Accounting Pronouncement
Carnival plc shares since April 17, 2003.
In January 2003, as amended, the Financial
If Carnival Corporation’s common stock price reaches
Accounting Standards Board (“FASB”) issued Financial
specified trigger prices for a defined duration of time
Accounting Standards Board Interpretation (“FIN”) No.
within a completed quarter, then, under the terms of
46, “Consolidation of Variable Interest Entities.” FIN
various classes of Carnival Corporation’s convertible
No. 46 requires consolidation of variable interest enti-
debt securities (each having its own trigger prices),
ties (“VIE’s”) by the “primary beneficiary,” as defined,
such classes of debt securities will become convertible
if certain criteria are met. FIN No. 46 is effective imme-
for the next succeeding quarter, and the shares of
diately for VIE’s created or acquired after January 31,
Carnival Corporation common stock into which those
2003. For pre-existing VIE’s, disclosure requirements
debt securities become convertible will be considered
are effective immediately and consolidation provisions
outstanding for the most recently completed quarter’s
are effective for our 2004 second quarter. In accord-
diluted earnings per share computation, if dilutive.
ance with FIN No. 46, we have determined that we are
Carnival Corporation’s Zero-Coupon Notes’ contin-
carrying a loan, initially made in April 2001, to a ship
gent conversion trigger price was reached in the sec-
repair facility that is a VIE. Although we use this facility
ond half of fiscal 2003. Accordingly, the diluted earnings
for some of our ship repair work, we are not a “primary
per share computation included an adjustment to
beneficiary” and, accordingly, this entity will not be
increase net income for the imputed interest expense
consolidated in our financial statements. At November
recorded on these Zero-Coupon Notes and the diluted
30, 2003, our loan to this VIE, which is also our maxi-
weighted-average shares outstanding for fiscal 2003
mum exposure to loss, was $41 million.

Carnival Corporation & plc 27

Report of Independent Certified Public Accountants

To the Boards of Directors and Shareholders of

Carnival Corporation and Carnival plc

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of opera-
tions, cash flows and shareholders’ equity present fairly, in all material respects, the financial position of Carnival
Corporation & plc (comprising Carnival Corporation and Carnival plc and their respective subsidiaries) at November 30,
2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended
November 30, 2003 in conformity with accounting principles generally accepted in the United States of America. These
financial statements are the responsibility of the Company’s management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
As described in Note 2 to the financial statements, the Company adopted SFAS No.142 “Goodwill and Other
Intangible Assets” which changed the method of accounting for goodwill and other intangible assets effective
December 1, 2001.

Miami, Florida
January 29, 2004

28 Carnival Corporation & plc

Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Cautionary Note Concerning Factors That May Affect • our ability to attract and retain qualified ship-
Future Results board crew and maintain good relations with
employee unions;
Some of the statements contained in this 2003 Annual
Report are “forward-looking statements” that involve • our ability to obtain financing on terms that are
risks, uncertainties and assumptions with respect to us, favorable or consistent with our expectations;
including some statements concerning future results, • the impact of changes in operating and financing
plans, outlook, goals and other events which have not costs, including changes in foreign currency and
yet occurred. These statements are intended to qualify interest rates and fuel, food, payroll, insurance and
for the safe harbors from liability provided by Section security costs;
27A of the Securities Act of 1933, as amended, and • changes in the tax, environmental, health, safety,
Section 21E of the Securities Exchange Act of 1934. security and other regulatory regimes under which
You can find many, but not all, of these statements we operate;
by looking for words like “will,” “may,” “believes,”
• continued availability of attractive port destinations;
“expects,” “anticipates,” “forecast,” “future,” “intends,”
“plans,” and “estimates” and for similar expressions. • our ability to successfully implement cost improve-
Because forward-looking statements involve risks ment plans and to integrate business acquisitions;
and uncertainties, there are many factors that could • continuing financial viability of our travel agent dis-
cause our actual results, performance or achievements tribution system;
to differ materially from those expressed or implied in • weather patterns or natural disasters; and
this 2003 Annual Report. Forward-looking statements
• the ability of a small group of shareholders to effec-
include those statements which may impact the fore-
tively control the outcome of shareholder voting.
casting of our earnings per share, net revenue yields,
booking levels, pricing, occupancy, operating, financing Forward-looking statements should not be relied
and tax costs, costs per available lower berth day, esti- upon as a prediction of actual results. Subject to any
mates of ship depreciable lives and residual values, out- continuing obligations under applicable law or any rele-
look or business prospects. These factors include, but vant listing rules, we expressly disclaim any obligation
are not limited to, the following: to disseminate, after the date of this 2003 Annual
Report, any updates or revisions to any such forward-
• achievement of expected benefits from the
looking statements to reflect any change in expecta-
DLC transaction;
tions or events, conditions or circumstances on which
• risks associated with the DLC structure; any such statements are based.
• risks associated with the uncertainty of the tax
status of the DLC structure; Executive Overview
• general economic and business conditions, which Over the past three years our net revenue yields
may impact levels of disposable income of con- have declined (see “Key Performance Indicators”
sumers and net revenue yields for our cruise brands; below). We believe this decline has been a result of
• conditions in the cruise and land-based vacation a number of factors affecting consumers’ vacation
industries, including competition from other cruise demand including, among other things, armed conflicts
ship operators and providers of other vacation in the Middle East and elsewhere, terrorist attacks in
alternatives and increases in capacity offered by the U.S. and elsewhere, minor passenger and crew ill-
cruise ship and land-based vacation alternatives; nesses, the uncertain worldwide economy and adverse
• the impact of operating internationally; publicity surrounding these and other events. In addi-
tion to these concerns, the recent large increase in new
• the international political and economic climate,
ship capacity in the cruise industry over this period has
armed conflicts, terrorist attacks, availability of air
intensified competition to attract customers from land-
service and other world events and adverse public-
based vacation alternatives, which has also contributed
ity, and their impact on the demand for cruises;
to lower cruise ticket prices.
• accidents and other incidents affecting the In addition to the lower pricing trends over this period,
health, safety, security and vacation satisfaction the cruise industry has also experienced historically high
of passengers; fuel costs; significant increases in insurance and security
• our ability to implement our shipbuilding programs costs, precipitated by the events of September 11, 2001;
and brand strategies and to continue to expand and higher environmental costs, resulting primarily from
our business worldwide; upgrading environmental compliance programs. It is

Carnival Corporation & plc 29

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
possible that some of these increasing cost trends will The year over year percentage increases in Carnival
continue in the future. However, as we have done in Corporation & plc’s available lower berth day (“ALBD”)
the past, we expect to be able to partially offset these capacity for fiscal 2004 (versus fiscal 2003 pro forma
increases through the continuing benefits of scale, as ALBD, assuming that the DLC transaction was com-
well as cost containment measures. pleted and Carnival plc was consolidated for the full
The factors mentioned above have put pressure on our period in 2003), 2005 and 2006, resulting primarily from
earnings over this period, especially since most of our new ships entering service, is currently expected to be
costs are largely fixed once we put a ship into service. 17.5%, 9.2% and 5.3%, respectively.
Although it is impossible to quantify the financial impact We believe that given a more stable geopolitical envi-
on us of each of the foregoing factors, these events ronment, our net revenue yields will increase in 2004,
adversely impacted the entire leisure and travel industry despite the expected significant increase in our 2004
in general, and the cruise industry and us in particular. passenger capacity.
During 2003, we were able to complete the largest
acquisition in our history, the DLC transaction with P&O Outlook For Fiscal 2004 (“2004”)
Princess. We have made significant progress in inte-
As of December 18, 2003, we said that we expected
grating our two organizations, including announcing the
our first quarter 2004 earnings per share to be in the
expected redeployment in late 2004 of CCL’s Jubilee
range of $0.17 to $0.20 versus 2003 pro forma first
to the P&O Cruises Australia fleet, the transfer of a
quarter earnings per share of $0.16 ($0.18 less a $0.02
Holland America newbuild shipyard slot to Princess for
per share non-recurring gain from insurance settle-
a new ship deployment in 2006, the consolidation of
ments). We also said that we were comfortable with
our German and London office operations and the sale
consensus earnings estimates for the 2004 year, which
of our German river boat business, global procurement
at that time was $1.98 per share, assuming no signifi-
savings and the implementation of many best practices
cant geopolitical or economic shocks.
among our brands. As a result, we are well on our way
Since early January, the cruise industry has entered
to realizing the $100 million of annual DLC transaction
the “wave season” (a period of higher booking levels
synergies we initially targeted.
than during the rest of the year). As we had expected,
In addition, during the second half of 2003, we saw
bookings during this year’s wave season have been
a strong rebound in our booking volumes, which com-
significantly higher than during the comparable period
menced shortly after the conclusion of the Iraqi war,
last year, which was adversely impacted by the build
although our cruise ticket prices were still somewhat
up to the war in Iraq. Since the beginning of January,
lower than last year.
company wide booking levels have been running 59%
As mentioned above, the entire cruise industry had a
higher than during the same period last year, which is
large increase in capacity during this three year period,
significantly above the company’s 17.5% pro forma
including our introduction of seven new ships into serv-
capacity increase for 2004.
ice during 2003. Even with our 17.5% pro forma capac-
We now expect that first quarter 2004 net revenue
ity increase in fiscal 2003, we were able to maintain our
yields will increase 3% to 4% (versus an increase of
occupancy level at over 103%. As a large part of our
1% to 2% in our previous guidance) and net cruise
operating costs are fixed in nature, we strategically
costs per ALBD, will be at the low end of our previous
manage our prices to enable us to fill our ships at the
guidance of an increase of 1% to 3%. The increase in
highest possible prices, since incremental passengers
expected net revenue yields is largely due to the weak-
contribute to our fixed costs. Our ability to maintain
ening of the U.S. dollar, and to a lesser extent, higher
these high occupancy levels helped us to achieve an
than expected pricing on close to sailing bookings. The
increasing level of onboard and other revenues, which
weak dollar also had the effect of increasing net cruise
partially offset the impact of lower cruise ticket prices.
costs per ALBD, however that is expected to be more
Throughout this period, despite the adverse external
than offset by lower than anticipated advertising costs,
travel and leisure environment and the significant
which is partially timing and is expected to be expended
increase in cruise industry capacity, we generated sig-
later in the year, and lower than forecasted fuel costs.
nificant cash flows. These results provide an indication
We now expect first quarter 2004 earnings per share to
of the strength of our business. However, our opera-
be in the range of $0.21 to $0.22.
tions are subject to many risks, as briefly noted above
Net revenue yields for the year 2004 are now fore-
and under the caption “Cautionary Note Concerning
cast to increase 5% to 7%, versus our previous forecast
Factors That May Affect Future Results,” which could
of an increase of 2% to 4%. The increase in expected
significantly impact our future results.
net revenue yields is largely due to weakness in the

30 Carnival Corporation & plc

U.S. dollar (our current guidance is based on an exchange Critical Accounting Estimates
rate of $1.27 to the euro and $1.84 to the sterling), and
Our critical accounting estimates are those which we
to a lesser extent, strengthening booking levels noted
believe require our most significant judgments about
during wave season. Net cruise costs per ALBD is fore-
the effect of matters that are inherently uncertain. A
cast to increase 2% to 3% versus to our earlier guid-
discussion of our critical accounting estimates, the
ance of flat compared to 2003 pro forma costs. The
underlying judgments and uncertainties used to make
increase in expected net cruise costs per ALBD is due
them and the likelihood that materially different esti-
to the weaker U.S. dollar.
mates would be reported under different conditions or
Carnival Corporation’s 2% Notes become convertible
using different assumptions, is set forth below.
if the share price of its common stock closes above
$43.05 for 20 days out of the last 30 trading days of Ship Accounting
the quarter. If the 2% Notes become convertible, earn- Our most significant assets are our ships and ships
ings per share for the full year 2004 will be reduced by under construction, which represent 78% of our total
$0.02 per share. Assuming this dilution occurs, we are assets. We make several critical accounting estimates
comfortable with the current consensus 2004 earnings dealing with our ship accounting. First, we compute our
estimates of $2.02 per share, assuming no geopolitical ships’ depreciation expense, which represents 11.9%
or economic shocks. of our cruise operating expenses in fiscal 2003, which
requires us to estimate the average useful life of each
Income Taxes
of our ships, as well as their residual values. Secondly,
The new U.S. income tax regulations under Section
we account for ship improvement costs by capitalizing
883 of the Internal Revenue Code have become effec-
those costs, which we believe will add value to our ships
tive for us in 2004. Although we are still in the process
and depreciate those improvements over their estimated
of analyzing the impact of these new rules on our oper-
useful lives. Finally, we account for the replacement or
ations, based upon our preliminary analysis, we currently
refurbishment of our ship components and recognize
estimate that their application will reduce our 2004
the resulting loss in our results of operations.
earnings per share by approximately $0.02 to $0.03.
We determine the average useful lives of our ships
based primarily on our estimates of the average useful
Key Performance Indicators
lives of the ships’ major component systems, such as
We use net cruise revenues per ALBD (“net revenue cabins, main diesels, main electric, superstructure and
yields”) and net cruise costs per ALBD as significant hull. In addition, we consider, among other things, the
non-GAAP financial measures of our cruise segment impact of anticipated technological changes, long-term
financial performance. We believe that net revenue vacation market conditions and competition and histori-
yields are commonly used in the cruise industry to cal useful lives of similarly-built ships. We have esti-
measure a company’s revenue performance and pricing mated our new ships’ average useful lives at 30 years
power. This measure is also used for revenue manage- and their residual values at 15% of our original ship cost.
ment purposes. In calculating net revenue yields, we Given the very large and complex nature of our
use net cruise revenues rather than gross cruise rev- ships, ship accounting estimates require considerable
enues. We believe that “net cruise revenues” is a more judgment and are inherently uncertain. We do not
meaningful measure in determining revenue yield than have cost segregation studies performed to specifically
gross cruise revenues because it reflects the cruise componetize our ship systems; therefore, our overall
revenues earned by us net of its most significant variable estimates of the relative costs of these component
costs (travel agent commissions, cost of air transporta- systems are based principally on general and technical
tion and certain other variable direct costs associated information known about major ship component sys-
with onboard revenues). Substantially all of our remain- tem lives and our knowledge of the cruise industry. In
ing cruise costs are largely fixed once our ship capacity addition, we do not identify and track the depreciation
levels have been determined. of specific component systems, but instead utilize
Net cruise costs per ALBD is the most significant estimates when determining the net cost basis of
measure we use to monitor our ability to control costs. assets being replaced or refurbished. If materially
In calculating this measure, we exclude the same vari- different conditions existed, or if we materially changed
able costs as described above, which are included in our assumptions of ship lives and residual values, our
the calculation of net cruise revenues. This is done to depreciation expense or loss on replacement or refur-
avoid duplicating these variable costs in the two non- bishment of ship assets and net book value of our
GAAP financial measures described above. ships would be materially different. In addition, if we

Carnival Corporation & plc 31

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
change our assumptions in making our determinations methodologies are also subject to similar types of
as to whether improvements to a ship add value, the uncertainties. Also, the determination of fair values of
amounts we expense each year as repair and mainte- reporting units using a price earnings multiple approach
nance costs could increase, partially offset by a decrease also requires significant judgments, such as determining
in depreciation expense, as less costs would have been reasonably comparable multiples. Finally, determining
initially capitalized to our ships. Our fiscal 2003 ship trademark fair values also requires significant judgments
depreciation expense would have increased by approxi- in determining both the estimated trademark cash
mately $18 million for every year we reduced our esti- flows, and the appropriate royalty rates to be applied
mated average 30 year ship useful life. In addition, if to those cash flows to determine their fair value. We
our ships were estimated to have no residual value, our believe that we have made reasonable estimates and
fiscal 2003 depreciation expense would have increased judgments in determining whether our ships, goodwill
by approximately $78 million. Some ships in our fleet and trademarks have been impaired. However, if there
are over 30 years old. is a material change in the assumptions used in our
We believe that the estimates we made for ship determination of fair value or if there is a material
accounting purposes are reasonable and our methods change in the conditions or circumstances influencing
are consistently applied and, accordingly, result in fair value, we could be required to recognize a material
depreciation expense that is based on a rational and impairment charge.
systematic method to equitably allocate the costs of
Contingencies
our ships to the periods during which services are
We periodically assess the potential liabilities related
obtained from their use. In addition, we believe that the
to any lawsuits or claims brought against us, as well as
estimates we made are reasonable and our methods
for other known unasserted claims, including environ-
consistently applied (1) in determining the average use-
mental, legal and tax matters. While it is typically very
ful life and residual values of our ships; (2) in determin-
difficult to determine the timing and ultimate outcome
ing which ship improvement costs add value to our
of these matters, we use our best judgment to deter-
ships; and (3) in determining the net cost basis of ship
mine if it is probable that we will incur an expense
component assets being replaced or refurbished.
related to the settlement or final adjudication of such
Finally, we believe our critical ship accounting esti-
matters and whether a reasonable estimation of such
mates are generally comparable with those of other
probable loss, if any, can be made. In assessing proba-
major cruise companies.
ble losses, we make estimates of the amount of insur-
Asset Impairment ance recoveries, if any. We accrue a liability when we
The impairment reviews of our ship and trademark believe a loss is probable and the amount of the loss can
assets and of our goodwill, which has been allocated be reasonably estimated, in accordance with the provi-
to our reporting units, such as our cruise lines, require sions of SFAS No. 5, “Accounting for Contingencies,” as
us to make significant estimates to determine the fair amended. Such accruals are typically based on develop-
values, including the cash flows, of these assets or ments to date, management’s estimates of the out-
reporting units. comes of these matters, our experience in contesting,
The determination of fair value includes numerous litigating and settling other similar matters and any
uncertainties, unless a viable actively traded market related insurance coverage. See Notes 9 and 14 in the
exists for the asset or for a comparable reporting unit, accompanying financial statements for additional infor-
which is usually not the case for cruise ships, cruise mation concerning our contingencies.
lines and trademarks. For example, in determining fair Given the inherent uncertainty related to the even-
values of ships and cruise lines utilizing discounted tual outcome of these matters and potential insurance
forecasted cash flows, significant judgments are made recoveries, it is possible that all or some of these mat-
concerning, among other things, future net revenue ters may be resolved for amounts materially different
yields, net cruise costs per ALBD, interest and discount from any provisions or disclosures that we may have
rates, cruise itineraries, ship additions and retirements, made with respect to their resolution. In addition, as
technological changes, consumer demand, governmen- new information becomes available, we may need to
tal regulations and the effects of competition. In addi- reassess the amount of probable liability that needs to
tion, third party appraisers are sometimes used to be accrued related to our contingencies. All such revi-
determine fair values and some of their valuation sions in our estimates could materially impact our
results of operations and financial position.

32 Carnival Corporation & plc

Property, Plant and Equipment Draft Results of Operations
Statement of Position
We earn our cruise revenues primarily from
In late 2003, the Accounting Standards Executive
the following:
Committee issued a new Statement of Position draft,
entitled “Accounting for Certain Costs and Activities • sales of passenger cruise tickets and, in some
Related to Property, Plant and Equipment” (“PP&E cases, the sale of air and other transportation to
SOP”), the adoption of which is subject to the final and from our ships. The cruise ticket price
clearance of the FASB. If issued in its new form, the includes accommodations, meals, entertainment
PP&E SOP would allow us the choice of selecting the and many onboard activities, and
level at which we componetize our ships, as long as • the sale of goods and/or services primarily on
the identified components are at or below the “func- board our ships, which include bar and beverage
tional unit level,” which is the ship itself. If we elect sales, casino gaming, shore excursions, gift shop
to identify and track ship components below the ship and spa sales, photo and art sales and pre-and
level, the PP&E SOP will require us, among other things, post cruise land packages. These activities are
to maintain very detailed historical cost records for either performed directly by us or by independent
these ship parts and determine separate depreciable concessionaires, from which we receive a percent-
lives for each component, which may result in changes age of their revenues.
in the amount and timing of depreciation and repair and
maintenance expenses and the amount of loss recog- We incur cruise operating costs and expenses for
nized on the replacement or refurbishment of ship parts. the following:
Alternatively, the PP&E SOP allows us to identify our • the costs of passenger cruise tickets which repre-
entire ship as one component; however, electing each sent costs that vary directly with passenger cruise
ship as one component will require us to expense as ticket revenues, and include travel agent commis-
incurred all otherwise capitalizable expenditures incurred sions, air and other travel related costs and credit
after the ship is placed into service, rather than capi- card fees,
talize and depreciate these expenditures over their
• onboard and other cruise costs which represent
estimated useful lives. In addition, the PP&E SOP will
costs that vary directly with onboard and other rev-
require us to expense our dry-dock costs as incurred,
enues, and include the costs of liquor and bever-
instead of amortizing our dry-dock costs to expense
ages, costs of tangible goods sold from our gift,
generally over one year.
photo and art auction activities, pre-and post cruise
We have not decided what level of componentization
land packages and credit card fees. Concession
we will choose nor have we completed an analysis of
revenues do not have any significant amount of
the impact this PP&E SOP would have on our financial
costs associated with them, as the costs and serv-
statements, although it may be material, dependent
ices incurred for these activities are provided by
upon the alternatives we choose in relation to identifying
our concessionaires,
components. The PP&E SOP is expected to be effective
for fiscal years beginning after December 15, 2004 (fiscal • payroll and related costs which represent costs for
2006 for us), with earlier application encouraged. all our shipboard personnel, including deck and
engine officers and crew and hotel and administra-
tive employees,
• food costs which include both our passenger and
crew food costs, and
• other ship operating costs which include fuel,
repairs and maintenance, port charges, insurance,
entertainment and all other shipboard operating
costs and expenses.
We do not allocate payroll and related costs, food
costs or other ship operating costs to the passenger
cruise ticket costs or to onboard and other cruise costs
since they are incurred to support the total cruise experi-
ence and do not vary significantly with passenger levels.

Carnival Corporation & plc 33

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
For segment information related to our revenues, Fiscal 2003 (“2003”) Compared to Fiscal 2002 (“2002”)
expenses, operating income and other financial informa-
Given that our reported results for 2003 include the
tion see Note 13 in the accompanying financial state-
results of Carnival plc for only the last seven and one-
ments. Operations data expressed as a percentage of
half months of 2003 and the preceding year does not
total revenues and selected statistical information were
include any of Carnival plc’s results, we believe that the
as follows(a):
most meaningful presentation of our operating perform-
Years Ended November 30,
2003 2002 2001 ance measures for 2003 is on a pro forma basis, which
reflects the results of both Carnival Corporation and
Revenues
Carnival plc for the entirety of both years. Accordingly,
Cruise
we have disclosed pro forma information, as well as
Passenger tickets . . . . . . 75.0% 76.3% 77.6%
Onboard and other . . . . . 21.1 20.5 18.5 the required reported information, in the discussion of
Other . . . . . . . . . . . . . . . . . 3.9 3.2 3.9 our results of operations.
100.0 100.0 100.0 Revenues
Costs and Expenses Cruise revenues increased $2.22 billion, or 52.2%,
Operating to $6.46 billion in 2003 from $4.24 billion in 2002.
Cruise Approximately $1.75 billion of our cruise revenue
Passenger tickets . . . . 15.2 15.0 17.9 increase was due to the consolidation of Carnival plc
Onboard and other . . . 3.4 2.7 2.6 and $462 million (a 10.9% increase over 2002) was
Payroll and related. . . . 11.1 10.5 10.1 due to increased revenues from Carnival Corporation’s
Food . . . . . . . . . . . . . . 5.8 5.8 5.8 cruise brands. Carnival Corporation’s increase in cruise
Other ship operating . . 18.4 16.7 15.2 revenues resulted primarily from a 17.3% increase in
Other . . . . . . . . . . . . . . . 2.9 2.5 3.0
its standalone ALBD capacity in 2003 compared to
Total . . . . . . . . . . . . . . . . 56.8 53.2 54.6 2002, partially offset by lower cruise ticket prices and,
Selling and administrative . . 13.9 13.9 13.6 to a lesser extent, a reduced number of passengers
Depreciation and purchasing air transportation from Carnival Corporation.
amortization . . . . . . . . . . 8.7 8.7 8.2
Included in onboard and other revenues were con-
Impairment charge . . . . . . . 0.4 3.0
cession revenues of $198 million in 2003 and $154
Loss from affiliated
operations, net . . . . . . . . 1.0 million in 2002.
Our pro forma ALBD capacity increase was 17.5% in
Operating Income . . . . . . . . . 20.6 23.8 19.6
2003 compared to 2002. Pro forma gross revenue yields
Nonoperating (Expense)
(gross revenue per ALBD) declined 3.8% (reported
Income, Net. . . . . . . . . . . . (2.4) (1.9) 0.5
declined 2.1%) in 2003 compared to 2002 primarily for
Income Before the same reasons as the decline in net revenue yields
Income Taxes . . . . . . . . . . 18.2 21.9 20.1
discussed below. Pro forma net revenue yields declined
Income Tax (Expense)
3.2% (reported declined 3.4%) in 2003 compared to
Benefit, Net . . . . . . . . . . . . (0.4) 1.3 0.3
2002 largely because of lower cruise ticket prices and,
Net Income . . . . . . . . . . . . . . 17.8% 23.2% 20.4% to a lesser extent, lower occupancy levels. Our revenue
Selected Statistical Information yields were adversely affected by consumer concerns
Passengers carried about travel during the period leading up to the war
(in thousands) . . . . . . . . . 5,038 3,549 3,385 with Iraq and its eventual outbreak, the uncertain world
Occupancy percentage(b). . . 103.4% 105.2% 104.7% economy and the increase in cruise industry capacity.
(a) The information presented above includes the results of Finally, our pro forma net revenue yields in 2003 were
Carnival plc since April 17, 2003. See below for discussion favorably impacted by the strengthening of the euro
of pro forma results. and sterling against the dollar.
(b) In accordance with cruise industry practice, occupancy per- Other non-cruise revenues increased $169 million,
centage is calculated using a denominator of two passen- or 96.0%, to $345 million in 2003 from $176 million in
gers per cabin even though some cabins can accommodate
2002 due to the consolidation of Princess Tours and
three or more passengers. The percentages in excess of
100% indicate that more than two passengers occupied P&O Travel Ltd.
some cabins.

34 Carnival Corporation & plc

Costs and Expenses and amortization expense increased by $120 million,
Total cruise operating expenses increased $1.40 bil- or 22.5%, to $654 million from $534 million largely due
lion, or 63.1%, to $3.62 billion in 2003 from $2.22 bil- to the expansion of the combined fleet and ship
lion in 2002. Approximately $1.02 billion of our increase improvement expenditures.
was due to the consolidation of Carnival plc, and the
Nonoperating (Expense) Income
remaining $380 million (a 17.1% increase over 2002)
Interest expense, net of interest income and exclud-
of the increase was from Carnival Corporation. Carnival
ing capitalized interest, increased to $217 million in
Corporation’s increase was primarily a result of the
2003 from $118 million in 2002, or $99 million, which
impact of the 17.3% increase in its standalone ALBD
increase was comprised primarily of a $125 million
capacity in 2003 compared to 2002. In addition, higher
increase in interest expense from our increased level
fuel prices added approximately $44 million to the Carnival
of average borrowings, partially offset by a $31 million
Corporation standalone expenses in 2003 compared to
decrease in interest expense due to lower average bor-
2002. Finally, the increase in each of the individual cruise
rowing rates. The higher average debt balances were
operating expense line items was primarily a result of
primarily a result of our consolidation of Carnival plc’s
the same factors as discussed above. Pro forma cruise
debt (see Note 7 in the accompanying financial state-
operating expenses increased $655 million, or 18.4%,
ments) and new ship deliveries. Capitalized interest
to $4.2 billion in 2003 from $3.57 billion in 2002 prima-
increased $10 million during 2003 compared to 2002
rily as a result of the 17.5% increase in pro forma
due primarily to higher average levels of investments
ALBD capacity and higher fuel costs.
in ship construction projects.
Other non-cruise operating expenses increased $135
Other income was $8 million in 2003, which included
million, or 93.1%, to $280 million in 2003 from $145 mil-
$19 million from net insurance proceeds, $10 million as
lion in 2002 due to the consolidation of Princess Tours
a result of Windstar’s Wind Song casualty loss and $9
and P&O Travel Ltd.
million as a reimbursement of expenses incurred in
Cruise selling and administrative expenses increased
prior years, partially offset by $13 million related to a
$319 million, or 55.3%, to $896 million in 2003 from
DLC-related litigation matter.
$577 million in 2002. Approximately $247 million of our
increase was due to the consolidation of Carnival plc Income Taxes
and the remaining $72 million (a 12.5% increase over The income tax provision of $29 million in 2003 was
2002) of the increase was from Carnival Corporation, primarily due to the consolidation of Carnival plc’s U.S.
which was primarily due to the 17.3% increase in based Princess Tours and Costa’s Italian taxable income.
standalone ALBD capacity. Pro forma cruise selling and
administrative expenses, excluding Carnival plc nonre- Fiscal 2002 (“2002”) Compared to Fiscal 2001 (“2001”)
curring DLC transaction expenses, increased $142 mil-
Revenues
lion, or 15.6%, to $1.05 billion from $912 million in
Cruise revenues decreased $127 million, or 2.9%,
2002, primarily as a result of the 17.5% increase in pro
to $4.24 billion in 2002 from $4.37 billion in 2001. Our
forma ALBD capacity, partially offset by the benefits of
cruise revenue change resulted from a 7.0% decrease
scale and synergy savings from the DLC transaction.
in our gross revenue per passenger cruise day, partially
Pro forma gross cruise costs per ALBD increased by
offset by a 3.6% increase in passenger capacity and a
0.2% (reported increased 3.9%) in 2003 compared to
0.5% increase in our occupancy rate. This decrease in
2002. Pro forma net cruise costs per ALBD increased
our gross revenue per passenger cruise day was prima-
2.9% (reported increased 4.0%) in 2003 compared to
rily caused by a significant decline in the number of
2002. Pro forma gross and net cruise costs per ALBD
guests purchasing air transportation from us in 2002
in 2003 compared to 2002 were higher largely because
compared to 2001. When a guest elects to provide his
of higher fuel costs. Finally, our pro forma net cruise
or her own transportation, rather than purchasing air
costs were unfavorably affected by the weakening of
transportation from us, both our cruise revenues and
the dollar against the euro and sterling.
operating expenses decrease by approximately the
Depreciation and amortization increased by $203 mil-
same amount. Also adding to the reduction in gross
lion, or 53.1%, to $585 million in 2003 from $382 million
revenue per passenger cruise day was the adverse
in 2002. A large portion of this increase was from the
impact of the September 11, 2001 events, which
consolidation of Carnival plc, which accounted for
resulted in lower cruise ticket prices. Net revenue
approximately $126 million of the increase. The
yield was down 2.7% (gross revenue yield was
majority of the remaining increase was a result of the
down 6.3%) in 2002 compared to 2001.
expansion of the Carnival Corporation fleet and ship
improvement expenditures. Pro forma depreciation

Carnival Corporation & plc 35

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Included in onboard and other revenues were con- adoption of SFAS No. 142 on December 1, 2001 (see
cession revenues of $154 million in 2002 and $136 mil- Note 2 in the accompanying financial statements).
lion in 2001. See Notes 5 and 6 in the accompanying financial
Other revenues, which consisted of Holland America statements for a discussion of the 2002 and 2001
Tours decreased $53 million, or 23.1%, to $176 million in impairment charge and 2001 affiliated operations.
2002 from $229 million in 2001 principally due to a lower
Nonoperating (Expense) Income
number of Alaska and Canadian Yukon cruise/tours sold.
Interest income decreased by $2 million in 2002
This revenue decrease was primarily as a result of one
compared to 2001, which was comprised of a $25 mil-
less ship offering land tours to its guests in 2002 com-
lion reduction in interest income due to lower average
pared to 2001 and increased competition. In addition,
interest rates, partially offset by a $23 million increase
three isolated cancellations of Holland America Alaska
in interest income from our higher average invested
cruises in 2002 resulting primarily from mechanical mal-
cash balances. Interest expense was the same in 2002
functions also contributed to this decrease in revenues.
and in 2001, which was comprised of a $22 million
Costs and Expenses increase in interest expense due to our increased level
Total cruise operating costs decreased by $125 mil- of average borrowings, offset by a $22 million reduc-
lion, or 5.3%, to $2.22 billion in 2002 from $2.35 billion tion in interest expense due to lower average borrow-
in 2001. Approximately $116 million of this decrease ing rates. The higher level of average borrowings in
was due to reduced air travel and related costs prima- 2002 were due primarily from the issuance of our con-
rily due to fewer guests purchasing air transportation vertible notes in April and October 2001. Capitalized
through us, and $41 million was primarily due to lower interest increased $10 million during 2002 compared to
commissions because of lower cruise revenues. This 2001 due primarily to higher average levels of invest-
decrease was partially offset by an increase in fuel and ments in ship construction projects.
other cruise operating expenses, which was largely due Other expense in 2002 of $4 million consisted prima-
to costs associated with our 3.6% increase in passen- rily of a $8 million loss, including related expenses,
ger capacity. Net cruise operating costs per ALBD resulting from the sale of Holland America Line’s for-
decreased 2.4% (gross cruise operating costs per mer Nieuw Amsterdam, partially offset by $4 million of
ALBD decreased 7.8%), partially as a result of the cost income related to the termination of an over funded
reduction initiatives we undertook after the events of pension plan.
September 11, 2001.
Income Taxes
Other operating expenses, which consisted of Holland
The income tax benefit of $57 million recognized in
America Tours, decreased $41 million, or 22.0%, to $145
2002 was substantially all due to an Italian investment
million in 2002 from $186 million in 2001 principally due
incentive law, which allowed Costa to receive an income
to the reduction in the number of cruise/tours sold.
tax benefit of $51 million based on contractual expendi-
Selling and administrative expenses decreased $10
tures during 2002 on the construction of a new ship.
million, or 1.6%, to $609 million in 2002 from $619 mil-
lion in 2001. Selling and administrative expenses
Liquidity and Capital Resources
decreased in 2002 primarily because of our 4.7%
decrease in cruise selling and administrative costs per Sources and Uses of Cash
ALBD, partially offset by additional expenses associated Our business provided $1.93 billion of net cash from
with our 3.6% increase in passenger capacity. Our costs operations during fiscal 2003, an increase of $464 mil-
per ALBD decreased partially because of the cost con- lion, or 31.6%, compared to fiscal 2002, due primarily
tainment actions taken after September 11, 2001. to the consolidation of Carnival plc. We continue to
Depreciation and amortization increased by $10 mil- generate substantial cash from operations and remain
lion, or 2.7%, to $382 million in 2002 from $372 million in a strong financial position.
in 2001. Depreciation and amortization in 2002 com- During fiscal 2003, our net expenditures for capital
pared to 2001 increased by $30 million primarily as a projects were $2.52 billion, of which $2.25 billion was
result of the expansion of our fleet and ship improve- spent for our ongoing new shipbuilding program. The
ment expenditures, partially offset by the elimination of remaining capital expenditures consisted primarily of
$20 million of annual goodwill amortization upon our $133 million for ship improvements and refurbishments,
and $130 million for Alaska tour assets, cruise port facil-
ity developments and information technology assets.
During fiscal 2003, we borrowed net proceeds of
$1.08 billion primarily to finance a portion of our ship

36 Carnival Corporation & plc

building programs and other capital expenditures, and Future Commitments and Funding Sources
for working capital purposes. Specifically, we issued At November 30, 2003, our contractual cash obliga-
1.75% Notes and 3.75% unsecured notes for gross tions, with initial or remaining terms in excess of one
proceeds of $1.12 billion, and we borrowed $335 mil- year, and the effects such obligations are expected to
lion for the acquisition of the Island Princess. We also have on our liquidity and cash flow in future periods
paid cash dividends of $292 million in fiscal 2003. were as follows (in millions):

Payments Due by Fiscal Year

Contractual Cash Obligations(a) Total 2004 2005 2006 2007 2008 Thereafter
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,310 $ 392 $1,263 $1,587 $ 999 $1,492 $1,577
Shipbuilding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,994 2,982 1,237 775
Port and other commitments . . . . . . . . . . . . . . . . . . . 392 57 32 33 35 35 200
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276 57 49 36 26 23 85
Total contractual cash obligations . . . . . . . . . . . . . . . . $12,972 $3,488 $2,581 $2,431 $1,060 $1,550 $1,862

(a) See Notes 7, 8, 9 and 14 in the accompanying financial statements for additional information regarding our debt, shipbuilding and
other contractual cash obligations and commitments and our contingent obligations.

At November 30, 2003, we had liquidity of $3.92 bil- Other Matters

lion, which consisted of $1.07 billion of cash and cash
Market Risks
equivalents, $2.11 billion available for borrowing under
We are principally exposed to market risks from fluc-
our $2.41 billion revolving credit facilities, and $736 mil-
tuations in foreign currency exchange rates, bunker fuel
lion under committed ship financing arrangements. Our
prices and interest rates. We seek to minimize foreign
revolving credit facilities mature in September 2005
currency and interest rate risks through our normal
with respect to $710 million, and in May and June 2006
operating and financing activities, including netting cer-
with respect to $1.70 billion. A key to our access to liq-
tain exposures to take advantage of any natural offsets,
uidity is the maintenance of our strong credit ratings.
through our long-term investment and debt portfolio
We believe that our liquidity, including cash and com-
strategies and, when considered appropriate, through
mitted financings, and cash flow from future operations
the use of derivative financial instruments. The financial
will be sufficient to fund most of our expected capital
impacts of these hedging instruments are generally off-
projects, debt service requirements, dividend payments,
set by corresponding changes in the underlying expo-
working capital and other firm commitments. However,
sures being hedged. Our policy is to not use financial
our forecasted cash flow from future operations, as well
instruments for trading or other speculative purposes.
as our credit ratings, may be adversely affected by vari-
ous factors, including, but not limited to, those factors Exposure to Foreign Currency Exchange Rates
noted under “Cautionary Note Concerning Factors That One of our primary foreign currency exchange risks
May Affect Future Results.” To the extent that we are is related to our outstanding commitments under ship
required, or choose, to fund future cash requirements, construction contracts denominated in a currency other
including our future shipbuilding commitments, from than the functional currency of the cruise brand that
sources other than as discussed above, we believe that is expected to be operating the ship. These currency
we will be able to secure such financing from banks or commitments are affected by fluctuations in the value
through the offering of debt and/or equity securities in of the functional currency as compared to the currency
the public or private markets. No assurance can be in which the shipbuilding contract is denominated.
given that our future operating cash flow will be suffi- Foreign currency forward contracts are generally used
cient to fund future obligations or that we will be able to manage this risk (see Notes 2, 8 and 12 in the
to obtain additional financing, if necessary. accompanying financial statements). Accordingly,
increases and decreases in the fair value of these for-
Off-Balance Sheet Arrangements
eign currency forward contracts offset changes in the
We are not a party to any off-balance sheet arrange-
fair value of the foreign currency denominated ship
ments, including guarantee contracts, retained or
construction commitments, thus resulting in the elimi-
contingent interests, certain derivative instruments
nation of such risk.
and variable interest entities, that either have, or are
reasonably likely to have, a current or future material
effect on our financial statements.

Carnival Corporation & plc 37

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
We have forward foreign currency contracts for We consider our investments in foreign subsidiaries
seven of our euro denominated shipbuilding contracts. to be denominated in relatively stable currencies and/or
At November 30, 2003, the fair value of these forward of a long-term nature. However, we partially hedge
contracts was an unrealized gain of $363 million which these exposures by denominating our debt in our sub-
is recorded, along with an offsetting $363 million fair sidiary’s functional currency (generally euros or sterling).
value liability related to our shipbuilding firm commit- Specifically, we have $815 million of cross currency
ments, on our accompanying 2003 balance sheet. swaps, whereby we have converted U.S. dollar debt to
Based upon a 10% strengthening or weakening of the euro and sterling debt and euro debt to sterling debt,
U.S. dollar compared to the euro as of November 30, thus partially offsetting this foreign currency exchange
2003, assuming no changes in comparative interest risk. At November 30, 2003, the fair value of these
rates, the estimated fair value of these contracts would cross currency swaps was a loss of $70 million, $39
decrease or increase by $247 million, which would be million of which is recorded in AOCI and offsets a por-
offset by a decrease or increase of $247 million in the tion of the gains recorded in AOCI upon translating
U.S. dollar value of the related foreign currency ship these foreign subsidiaries net assets into U.S. dollars.
construction commitments resulting in no net dollar Based upon a 10% hypothetical increase or decrease
impact to us. in the November 30, 2003 foreign currency exchange
The cost of shipbuilding orders that we may place in rate, we estimate that these contracts fair values would
the future for our cruise lines who generate their cash increase or decrease by $82 million, which would be
flows in a currency that is different than the shipyard’s offset by a decrease or increase of $82 million in the
operating currency, generally the euro, is expected to U.S. dollar value of our net investments.
be affected by foreign currency exchange rate fluctua-
Exposure to Bunker Fuel Prices
tions. Given the recent decline in the U.S. dollar relative
Other cruise ship operating expenses are impacted by
to the euro, the U.S. dollar cost to order new cruise
changes in bunker fuel prices. Fuel consumed over the
ships at current exchange rates has increased signifi-
past three fiscal years ranged from approximately 5.5%
cantly. We currently have on order new cruise ships
in fiscal 2003 to 4.5% in fiscal 2002 and 4.2% in fiscal
for delivery through 2006. Should the U.S. dollar remain
2001 of our cruise revenues. We have typically not used
at current levels or decline further, this may affect our
financial instruments to hedge our exposure to the
ability to order new cruise ships for 2007 or later years.
bunker fuel price market risk.
In addition to the foreign currency denominated oper-
Based upon a 10% hypothetical increase or decrease
ations of our Costa subsidiary, we have broadened our
in the November 30, 2003 bunker fuel price, we estimate
global presence as a result of Carnival plc’s foreign
that our fiscal 2004 bunker fuel cost would increase or
operations. Specifically, our expanded international busi-
decrease by approximately $45 million.
ness operations through P&O Cruises, Ocean Village and
Swan Hellenic in the UK and Aida in Germany subject us Exposure to Interest Rates
to an increasing level of foreign currency exchange risk In order to limit our exposure to interest rate fluctua-
related to the sterling and euro. These are the primary tions, we have entered into a substantial number of
currencies for which we have U.S. dollar exchange rate fixed rate debt instruments. We continuously evaluate
exposures. Accordingly, these foreign currency exchange our debt portfolio, including interest rate swap agree-
fluctuations against the dollar will affect our reported ments, and make periodic adjustments to the mix of
financial results since the reporting currency for our floating rate and fixed rate debt based on our view of
consolidated financial statements is the U.S. dollar and interest rate movements. Accordingly in 2003 and
the functional currency for our international operations 2001, we entered into fixed to variable interest rate
is generally the local currency. Any weakening of the swap agreements, which lowered our fiscal 2003, 2002
U.S. dollar against these local functional currencies has and 2001 interest costs and are also expected to lower
the financial statement effect of increasing the U.S. our fiscal 2004 interest costs. At November 30, 2003,
dollar values reported for cruise revenues and cruise 61% of the interest cost on our debt was effectively
expenses in our consolidated financial statements. fixed and 39% was variable, including the effect of our
Strengthening of the U.S. dollar has the opposite effect. interest rate swaps.
We will continue to monitor the effect of such expo- At November 30, 2003, our long-term debt had a car-
sures to determine if any additional actions, such as the rying value of $7.31 billion. At November 30, 2003, our
issuance of additional foreign currency denominated debt interest rate swap agreements effectively changed
or use of other financial instruments would be war- $1.19 billion of fixed rate debt to Libor-based floating
ranted to reduce such risk. rate debt. In addition, interest rate swaps at November
30, 2003 effectively changed $760 million of euribor
floating rate debt to fixed rate debt. The fair value of our

38 Carnival Corporation & plc

long-term debt and interest rate swaps at November 30, Gross and net cruise costs per ALBD were com-
2003 was $7.69 billion. Based upon a hypothetical 10% puted as follows:
decrease or increase in the November 30, 2003 market
(in millions, except Years Ended November 30,
interest rates, the fair value of our long-term debt and ALBDs and costs per ALBD) 2003 2002 2001
swaps would increase or decrease by $128 million. In
Cruise operating
addition, based upon a hypothetical 10% decrease or
expenses . . . . . . . $ 3,624 $ 2,222 $ 2,347
increase in our November 30, 2003 common stock price,
Cruise selling and
the fair value of our convertible notes would increase administrative
or decrease by approximately $97 million. expenses . . . . . . . 896 577 584
These hypothetical amounts are determined by con-
Gross cruise costs . . 4,520 2,799 2,931
sidering the impact of the hypothetical interest rates
Less cruise costs
and common stock price on our existing long-term debt Passenger
and interest rate swaps. This analysis does not con- tickets . . . . . . . . (1,021) (658) (813)
sider the effects of the changes in the level of overall Onboard
economic activity that could exist in such environments and other. . . . . . (229) (116) (116)
or any relationships which may exist between interest Net cruise costs . . . . $ 3,270 $ 2,025 $ 2,002
rate and stock price movements. Furthermore, since
substantially all of our fixed rate long-term debt cannot ALBDs(a) . . . . . . . . . . 33,309,785 21,435,828 20,685,123
currently be called or prepaid and some of our variable Gross cruise costs
rate long-term debt is subject to interest rate swaps per ALBD(d) . . . . . . $135.69 $130.54 $141.66
which effectively fix the interest rate, it is unlikely we
Net cruise costs
would be able to take any significant steps in the short-
per ALBD(e) . . . . . . $ 98.16 $ 94.43 $ 96.76
term to mitigate our exposure in the unlikely event of a
significant decrease in market interest rates.
Pro Forma GAAP Reconciling Information
Reported GAAP Reconciling Information
Pro forma gross and net revenue yields, assuming
Gross and net revenue yields were computed as follows: that the DLC transaction was completed and Carnival
plc was consolidated for the full years noted below,
(in millions, Years Ended November 30,
except ALBDs and yields) 2003 2002 2001 would have been computed as follows(f):

Cruise revenues Years Ended

Passenger (in millions, except November 30,
tickets . . . . . . . . $ 5,039 $ 3,346 $ 3,530 ALBDs and yields) 2003 2002
Onboard Cruise revenues
and other. . . . . . 1,420 898 841 Passenger tickets . . . . . . . . . . . $ 5,732 $ 5,128
Gross cruise Onboard and other . . . . . . . . . . 1,600 1,356
revenues . . . . . . . . 6,459 4,244 4,371 Gross cruise revenues . . . . . . . . . 7,332 6,484
Less cruise costs Less cruise costs
Passenger Passenger tickets . . . . . . . . . . . (1,227) (1,121)
tickets . . . . . . . . (1,021) (658) (813) Onboard and other . . . . . . . . . . (279) (240)
Onboard
Net cruise revenues . . . . . . . . . . . $ 5,826 $ 5,123
and other. . . . . . (229) (116) (116)
Net cruise ALBDs(a) . . . . . . . . . . . . . . . . . . . . 37,554,709 31,962,000
revenues . . . . . . . . $ 5,209 $ 3,470 $ 3,442 Gross revenue yields(b) . . . . . . . . . $195.23 $202.85
ALBDs(a) .......... 33,309,785 21,435,828 20,685,123 Net revenue yields(c). .......... $155.11 $160.25
Gross revenue
yields(b) . . . . . . . . . $193.91 $198.01 $211.33

Net revenue
yields(c) . . . . . . . . . $156.38 $161.91 $166.44

Carnival Corporation & plc 39

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
Pro forma gross and net cruise costs per ALBD The above pro forma information has not been adjusted
would have been computed as follows(f): to reflect any net transaction benefits from the DLC trans-
action. In addition, it excludes the costs related to the ter-
Years Ended minated Royal Caribbean transaction and the completion of
(in millions, except November 30, the DLC transaction with Carnival Corporation, which were
ALBDs and costs per ALBD) 2003 2002 expensed by Carnival plc prior to April 17, 2003. The exclu-
Cruise operating expenses . . . . . . $ 4,222 $ 3,567 sion of these nonrecurring costs is consistent with the
requirements of Article 11 of Regulation S-X. Finally, the
Cruise selling and
pro forma information does not purport to represent what
administrative expenses . . . . . . 1,054 912
the results of operations actually could have been if the
Gross cruise costs . . . . . . . . . . . . 5,276 4,479 DLC transaction had occurred on December 1, 2001 or
Less cruise costs what those results will be for any future periods.
Passenger tickets . . . . . . . . . . . (1,227) (1,121) The 2003 pro forma information is computed by adding
Onboard and other . . . . . . . . . . (279) (240) four and one-half months of Carnival plc’s results of opera-
tions, adjusted for SFAS No. 141 acquisition accounting
Net cruise costs . . . . . . . . . . . . . . $ 3,770 $ 3,118
adjustments, to the reported Carnival Corporation & plc
ALBDs(a) . . . . . . . . . . . . . . . . . . . . 37,554,709 31,962,000 results since the April 17, 2003 DLC transaction date. The
2002 pro forma information is computed by adding Carnival
Gross cruise costs per ALBD(d) . . . $140.50 $140.15 plc’s 2002 results, adjusted for acquisition adjustments, to
the 2002 Carnival Corporation reported results. For additional
Net cruise costs per ALBD(e) .... $100.38 $ 97.55
information related to the pro forma statements of opera-
(a) Total passenger capacity for the period, assuming two pas- tions see Note 3 in the accompanying financial statements.
sengers per cabin, that we offer for sale, which is computed (g) We have not provided estimates of future gross revenue
by multiplying passenger capacity by revenue-producing yields or gross cruise costs per ALBD because we are unable
ship operating days in the period. to provide reconciliations of forecasted net cruise revenues
(b) Gross cruise revenues divided by ALBDs. to forecasted gross cruise revenues or forecasted net cruise
(c) Net cruise revenues divided by ALBDs. costs to forecasted cruise operating expenses without
(d) Gross cruise costs divided by ALBDs. unreasonable effort. The reconciliations would require us
(e) Net cruise costs divided by ALBDs. to forecast, with reasonable accuracy, the amount of air
(f) The pro forma information gives pro forma effect for the DLC and other transportation costs that our forecasted cruise
transaction between Carnival Corporation and Carnival plc, passengers would elect to purchase from us (the “air/sea
which was completed on April 17, 2003, as if the DLC trans- mix”). Since the forecasting of future air/sea mix involves
action had occurred on December 1, 2001. Management several significant variables and the revenues from the sale
has prepared the pro forma information based upon the of air and other transportation approximate the costs of
companies’ reported financial information and, accordingly, providing that transportation, management focuses prima-
the above information should be read in conjunction with rily on forecasts of net cruise revenues and costs rather
the companies’ financial statements. than gross cruise revenues and costs. This does not impact,
The DLC transaction has been accounted for as an in any material respect, our ability to forecast our future
acquisition of Carnival plc by Carnival Corporation, using results, as any variation in the air/sea mix has no material
the purchase method of accounting. The Carnival plc impact on our forecasted net cruise revenues or forecasted
accounting policies have been conformed to Carnival net cruise costs.
Corporation’s policies. Carnival plc’s reporting period has
been changed to the Carnival Corporation reporting period
and the information presented above covers the same peri-
ods of time for both companies.

40 Carnival Corporation & plc

Selected Financial Data
The selected consolidated financial data presented below for fiscal 1999 through 2003 and as of the end of each
such year, are derived from our audited financial statements and should be read in conjunction with those financial
statements and the related notes.
Years Ended November 30,
(in millions, except per share and other operating data) 2003 2002 2001 2000 1999
Statement of Operations and Cash Flow Data(a)(b)
Revenues(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,718 $ 4,383 $ 4,549 $3,791 $3,509
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,383 $ 1,042 $ 892 $ 983 $1,020
Net income(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,194 $ 1,016(e) $ 926(e) $ 965 $1,027
Earnings per share(d)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.66 $ 1.73 $ 1.58 $ 1.61 $ 1.68
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.66 $ 1.73 $ 1.58 $ 1.60 $ 1.66
Dividends declared per share. . . . . . . . . . . . . . . . . . $ 0.440 $ 0.420 $ 0.420 $0.420 $0.375
Cash from operations . . . . . . . . . . . . . . . . . . . . . . . $ 1,933 $ 1,469 $ 1,239 $1,280 $1,330
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . $ 2,516 $ 1,986 $ 827 $1,003 $ 873
Other Operating Data(a)(b)
Available lower berth days(f)
North America . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,388,144 17,037,860 16,536,756 15,033,370 13,505,014
Europe and Australia . . . . . . . . . . . . . . . . . . . . . . 8,921,641 4,397,968 4,148,367 855,034 831,466
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,309,785 21,435,828 20,685,123 15,888,404 14,336,480

Passengers carried . . . . . . . . . . . . . . . . . . . . . . . . . 5,037,553 3,549,019 3,385,280 2,669,153 2,365,720

Occupancy percentages(g) . . . . . . . . . . . . . . . . . . . . 103.4% 105.2% 104.7% 105.4% 104.3%

As of November 30,
(in millions, except percentages) 2003 2002 2001 2000 1999
Balance Sheet and Other Data(a)(b)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $24,491(h) $12,335(h) $11,564(h) $9,831 $8,286
Long-term debt, excluding current portion . . . . . . . . $ 6,918 $ 3,014 $ 2,955 $2,099 $ 868
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . $13,793 $ 7,418 $ 6,591 $5,871 $5,931
Debt to capital(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34.9% 29.9% 31.1% 28.6% 15.3%
(a) Includes the results of Carnival plc since April 17, 2003. Accordingly, the information for 2003 is not comparable to the prior periods.
(b) From June 1997 through September 28, 2000, we owned 50% of Costa. On September 29, 2000, we completed the acquisition
of the remaining 50% interest in Costa. We accounted for this transaction using the purchase accounting method. Prior to the
fiscal 2000 acquisition, we accounted for our 50% interest in Costa using the equity method. Commencing in fiscal 2001,
Costa’s results of operations have been consolidated in the same manner as our other wholly-owned subsidiaries. Our
November 30, 2000 and subsequent consolidated balance sheets include Costa’s balance sheet. All statistical information prior
to 2001 does not include Costa.
(c) Reclassifications have been made to prior period amounts to conform to the current period presentation.
(d) Effective December 1, 2001, we adopted SFAS No. 142, which required us to stop amortizing goodwill as of December 1, 2001,
and requires an annual, or when events or circumstances dictate a more frequent, impairment review of goodwill. If goodwill
had not been recorded for periods prior to December 1, 2001, our adjusted net income and adjusted basic and diluted earnings
per share would have been as follows (in millions, except per share data):
Years Ended
November 30,
2001 2000 1999
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 926 $ 965 $1,027
Goodwill amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 23 21
Adjusted net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 952 $ 988 $1,048

Adjusted earnings per share

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.63 $1.65 $ 1.71

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1.62 $1.64 $ 1.70

(e) Our net income for fiscal 2002 and 2001 includes an impairment charge of $20 million and $140 million, respectively, and fiscal
2001 includes a nonoperating net gain of $101 million from the sale of our investment in Airtours plc. In addition, fiscal 2002
includes a $51 million income tax benefit as a result of an Italian investment incentive.

Carnival Corporation & plc 41

Management’s Discussion and Analysis of Financial Condition and
Results of Operations (continued)
(f) Total annual passenger capacity for the period, assuming two passengers per cabin, that we offered for sale, which is computed
by multiplying passenger capacity by revenue-producing ship operating days in the period. North America brands in 2003 include
CCL, Holland America Line, Princess, Seabourn and Windstar. Europe brands in 2003 include AIDA, A’ROSA, Costa, Cunard,
Ocean Village, P&O Cruises and Swan Hellenic.
(g) In accordance with cruise industry practice, occupancy percentage is calculated using a denominator of two passengers per
cabin even though some cabins can accommodate three or more passengers. The percentages in excess of 100% indicate that
more than two passengers occupied some cabins.
(h) Effective December 1, 2000, we adopted SFAS No. 133, which requires that all derivative instruments be recorded on our bal-
ance sheet. At November 30, 2003, total assets included $410 million of derivative contract fair values. Total assets at November
30, 2002 and 2001 included $187 million and $578 million, respectively, of fair value of hedged firm commitments. See Note 2 in
the accompanying financial statements.
(i) Percentage of total debt to the sum of total debt and shareholders’ equity.

Market Price for Common Stock and Ordinary Shares

Carnival Corporation’s common stock, together with Carnival plc(a)

paired trust shares of beneficial interest in the P&O Price per Ordinary Price per
Princess Special Voting Trust (which holds a Special Share (GBP) ADS ($)
Voting Share of Carnival plc), is traded on the NYSE High Low High Low
under the symbol “CCL.” Effective April 22, 2003, Fiscal 2003
Carnival plc’s ordinary shares trade on the London Fourth Quarter . . . . . . 21.80 18.72 $35.71 $31.21
Stock Exchange (“LSE”) under the symbol “CCL” Third Quarter . . . . . . . 21.80 16.50 $33.98 $27.92
(formerly traded under “POC”). Effective April 21, Second Quarter . . . . . 17.41 11.24 $28.50 $18.54
First Quarter . . . . . . . 16.82 11.97 $26.22 $19.97
2003, Carnival plc’s American Depositary Shares or
ADSs, each one of which represents one Carnival plc Fiscal 2002
ordinary share, are traded on the NYSE under the sym- Fourth Quarter . . . . . . 17.88 12.32 $27.92 $20.72
bol “CUK” (formerly traded under “POC”). The deposi- Third Quarter . . . . . . . 15.06 11.15 $23.13 $18.14
tory for the ADSs is JPMorgan Chase Bank. The high Second Quarter . . . . . 16.64 12.98 $23.54 $19.35
and low stock sales price for the periods indicated First Quarter . . . . . . . 13.85 11.75 $20.89 $17.06
were as follows: (a) Per share price has been adjusted for the effect of the con-
solidation of each 3.3289 existing shares into one share
Carnival Corporation effected in connection with the DLC transaction.
High Low
Fiscal 2003 As of January 29, 2004, there were approximately
Fourth Quarter . . . . . . . . . . . . . . . . . . . . $35.99 $32.76 4,897 holders of record of Carnival Corporation common
Third Quarter . . . . . . . . . . . . . . . . . . . . . $36.04 $30.50 stock and 63,801 holders of record of Carnival plc ordi-
Second Quarter . . . . . . . . . . . . . . . . . . . $30.74 $20.34
nary shares and 64 holders of record of Carnival plc ADSs.
First Quarter . . . . . . . . . . . . . . . . . . . . . $28.15 $21.86
Since the completion of the DLC transaction, Carnival
Fiscal 2002 plc dividends per share are the same as Carnival
Fourth Quarter . . . . . . . . . . . . . . . . . . . . $29.78 $22.07 Corporation’s per share dividends and are declared in U.S.
Third Quarter . . . . . . . . . . . . . . . . . . . . . $30.90 $22.81 dollars. Carnival plc UK ordinary shareholders can elect to
Second Quarter . . . . . . . . . . . . . . . . . . . $34.64 $27.40 receive these dividends either in U.S. dollars or sterling,
First Quarter . . . . . . . . . . . . . . . . . . . . . $28.62 $25.05
based upon a current U.S. dollar to sterling exchange
rate announced prior to the dividend payment date.

42 Carnival Corporation & plc

Selected Quarterly Financial Data (Unaudited)

Our revenue from the sale of passenger tickets is seasonal, with our third quarter being the strongest. Historically,
demand for cruises has been greatest during our third fiscal quarter, which includes the North American summer
months. The consolidation of Carnival plc has caused our quarterly results to be slightly more seasonal than we had
previously experienced, as their business is more seasonal. This higher demand during the third quarter results in
higher net revenue yields and, accordingly, the largest share of our net income is earned during this period. Revenues
from our Holland America Tours and Princess Tours units are highly seasonal, with a vast majority of those revenues
generated during the late spring and summer months in conjunction with the Alaska cruise season.
Quarterly financial results for fiscal 2003 were as follows:
Quarters Ended
(in millions, except per share data) February 28 May 31 August 31 November 30
Revenues . . . . . . . . . . . . . . . .................................. $1,035 $1,342 $2,523 $1,818
Operating income . . . . . . . . . .................................. $ 132 $ 168 $ 809 $ 274
Net income . . . . . . . . . . . . . . .................................. $ 127(a) $ 128(b) $ 734 $ 205
Earnings per share
Basic. . . . . . . . . . . . . . . . . .................................. $ 0.22 $ 0.19 $ 0.92 $ 0.26
Diluted . . . . . . . . . . . . . . . .................................. $ 0.22 $ 0.19 $ 0.90 $ 0.26
Dividends declared per share .................................. $0.105 $0.105 $0.105 $0.125
(a) Included $19 million of income from net insurance proceeds.
(b) Included $16 million of expenses related to litigation and other charges associated with the DLC transaction.

Quarterly financial results for fiscal 2002 were as follows:

Quarters Ended
(in millions, except per share data) February 28 May 31 August 31 November 30
Revenues(a) . . . . . . . . . . . . . . .................................. $ 910 $ 993 $1,440 $1,040
Operating income . . . . . . . . . .................................. $ 146 $ 220 $ 488 $ 188
Net income . . . . . . . . . . . . . . .................................. $ 130 $ 194 $ 501(b) $ 191(b)
Earnings per share
Basic. . . . . . . . . . . . . . . . . .................................. $ 0.22 $ 0.33 $ 0.85 $ 0.33
Diluted . . . . . . . . . . . . . . . .................................. $ 0.22 $ 0.33 $ 0.85 $ 0.33
Dividends declared per share .................................. $0.105 $0.105 $0.105 $0.105
(a) Reclassifications have been made to these amounts to conform to the 2003 presentation.
(b) Included a $17 million and a $34 million income tax benefit in the August 31 and November 30 quarters, respectively, from Costa,
resulting from an Italian investment incentive law. In addition, the August 31 quarter included a $20 million impairment charge.

Carnival Corporation & plc 43

Glossary of Terms

The attached financial statements include certain U.S. accounting terminology, which may not be familiar to a UK
reader. The following glossary is provided to assist in interpreting these financial statements:
UK Term U.S. Term
Acquisition accounting . . . . . . . . . . . . . . . . ......... Purchase method of accounting
Associate/Joint venture . . . . . . . . . . . . . . . ......... Equity investment
Called up share capital . . . . . . . . . . . . . . . . ......... Common stock at par value
Creditors . . . . . . . . . . . . . . . . . . . . . . . . . . ......... Payables
Debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... Receivables
Finance lease . . . . . . . . . . . . . . . . . . . . . . . ......... Capital lease
Financial year . . . . . . . . . . . . . . . . . . . . . . . ......... Fiscal year
Gearing . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... Debt/Capital (debt plus equity)
Interest payable . . . . . . . . . . . . . . . . . . . . . ......... Interest expense
Interest receivable . . . . . . . . . . . . . . . . . . . ......... Interest income
Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... Income
Profit and loss account . . . . . . . . . . . . . . . . ......... Statement of operations
Profit and loss account reserves . . . . . . . . . ......... Retained earnings
Profit for the financial year . . . . . . . . . . . . . ......... Net income
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . ......... Liabilities or reserves
Share premium . . . . . . . . . . . . . . . . . . . . . . ......... Additional paid-in capital
Shareholders’ funds . . . . . . . . . . . . . . . . . . ......... Shareholders’ equity
Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... Inventories
Tangible fixed assets . . . . . . . . . . . . . . . . . ......... Property, plant and equipment
Turnover . . . . . . . . . . . . . . . . . . . . . . . . . . . ......... Revenue

44 Carnival Corporation & plc

Carnival Corporation & plc

Corporate Information

P R I N C I PA L O F F I C E R S BOARD OF DIRECTORS O T H E R I N F O R M AT I O N

C A R N I VA L C O R P O R AT I O N & PLC
Micky Arison Corporate Headquarters
Micky Arison Chairman of the Board and Carnival Corporation
Chairman of the Board and Chief Executive Officer 3655 N.W. 87th Avenue
Chief Executive Officer Carnival Corporation & plc Miami, Florida 33178-2428 U.S.A.
Richard G. Capen, Jr. 305-599-2600
Howard S. Frank
Vice Chairman of the Board and Former United States Ambassador to Spain
Registered Office
Chief Operating Officer Corporate Director, Author and
Carnival plc
Business Consultant
Gerald R. Cahill Carnival House
Executive Vice President and Robert H. Dickinson 5 Gainsford Street
Chief Financial and Accounting Officer President and Chief Executive Officer London SE1 2NE, UK
Carnival Cruise Lines 44 (0) 20 7940 5381
Richard D. Ames
Senior Vice President Arnold W. Donald
Chairman and Chief Executive Officer Independent Certified Public Accountants
Management Advisory Services
Merisant Company PricewaterhouseCoopers LLP
Ian J. Gaunt 200 South Biscayne Boulevard
Senior Vice President International Pier Luigi Foschi Suite 1900
Chairman of the Board and Miami, Florida 33131-2330 U.S.A.
Arnaldo Perez
Chief Executive Officer
Senior Vice President,
Costa Crociere, S.p.A. Registrars, Stocks Transfer Agents and
General Counsel and Secretary
Howard S. Frank Dividend Reinvestment Plan
Kenneth D. Dubbin Administrators
Vice Chairman of the Board and
Vice President Carnival Corporation
Chief Operating Officer
Corporate Development Sun Trust Bank
Carnival Corporation & plc
C A R N I VA L C R U I S E L I N E S
CC 258
Baroness Hogg P.O. Box 4625
Robert H. Dickinson Chairman Atlanta, Georgia 30302-4625 U.S.A.
President and Chief Executive Officer 3i Group plc and Frontier Economics Ltd. 800-568-3476
C O S TA C R O C I E R E , S . p . A . A. Kirk Lanterman
Chairman of the Board and Carnival plc
Pier Luigi Foschi Chief Executive Officer Lloyds TSB Registrars
Chairman of the Board and Holland America Line Inc. The Causeway, Worthing
Chief Executive Officer West Sussex BN 99 6DA UK
Modesto A. Maidique
0870 609 4532 (UK)
CUNARD LINE LIMITED President
44 121 415 7107 (Outside UK)
Florida International University
Pamela C. Conover
President and Chief Operating Officer John P. McNulty Legal Counsel
Former Managing Director Paul, Weiss, Rifkind, Wharton and
HOLLAND AMERICA LINE INC. Goldman Sachs & Co. Garrison LLP
A. Kirk Lanterman Sir John Parker 1285 Avenue of the Americas
Chairman of the Board and Chairman New York, New York 10019-6064 U.S.A.
Chief Executive Officer National Grid Transco plc and
RMC Group plc
Other Shareholder Information
Stein Kruse
Copies of our joint Annual Report on
President and Peter Ratcliffe Form 10-K, joint Quarterly Reports on
Chief Operating Officer Chief Executive Officer Form 10-Q, joint Current Reports on
P&O CRUISES AUSTRALIA P&O Princess Cruises International Ltd. Form 8-K, Carnival plc Annual Accounts
Stuart Subotnick and all amendments to those reports,
Gavin Smith
General Partner and press releases and other documents,
Managing Director
Executive Vice President as well as information on our cruise
P&O CRUISES UK Metromedia Company brands are available through our home
pages at www.carnivalcorp.com and
David Dingle Uzi Zucker www.carnivalplc.com.
Managing Director Private Investor
You may also obtain copies of this information
P & O P R I N C E S S C R U I S E S I N T E R N AT I O N A L L T D . by contacting our investor relations department
DIRECTORS EMERITUS at our corporate headquarters or registered office.
Peter Ratcliffe
Our chief executive, chief operating and chief
Chief Executive Officer
Ted Arison (1924–1999) financial and accounting officers have furnished
PRINCESS CRUISES Chairman Emeritus, Carnival Corporation the Sections 302 and 906 certifications required
by the Securities and Exchange Commission in
Alan Buckelew Maks Birnbach our joint Annual Report on Form 10-K. In addition,
President Director Emeritus, Carnival Corporation our Chief Executive Officer has certified to the
NYSE that he is not aware of any violation by us
SEETOURS Meshulam Zonis of NYSE corporate governance listing standards.
Director Emeritus, Carnival Corporation
Lars Clasen
President The Lord Sterling of Plaistow GCVO, CBE
Life President of P&O Cruises
Horst Rahe
Life President of Seetours
 C A R N I VA L
COR POR ATION & PLC

Carnival Place
3655 N.W. 87th Avenue
Miami, Florida 33178-2428
U.S.A.
www.carnivalcorp.com

Carnival House
5 Gainsford Street
London SE1 2NE
UK
www.carnivalplc.com

AUSTRALIA