Strategic Report and IFRS Financial Statements Year Ended November 30, 2013

The Annual Report of Carnival plc comprises the Strategic Report and Carnival plc consolidated and company IFRS Financial Statements contained herein, together with certain parts of both the Carnival Corporation & plc 2013 Annual Report ("DLC Annual Report") and the Proxy Statement (including its Annexes), dated February 20, 2014.

The Carnival plc consolidated IFRS Financial Statements, which are required to satisfy reporting requirements of the Companies Act 2006, incorporate the results of Carnival plc and its subsidiaries and, accordingly, do not include the IFRS consolidated results and financial position of Carnival Corporation and its subsidiaries. However, the Directors consider that, within the Carnival Corporation and Carnival plc dual listed company ("DLC") arrangement, the most appropriate presentation of Carnival plc's results and financial position is by reference to the U.S. GAAP consolidated financial statements of Carnival Corporation & plc ("DLC Financial Statements"). Accordingly, the DLC Financial Statements form part of the Carnival plc IFRS Financial Statements as additional disclosures.

In order to obtain a better understanding of the Carnival Corporation & plc business, financial condition and results of operations, the Carnival plc stakeholders should read the items referenced below, in addition to the Carnival plc Strategic Report and IFRS Financial Statements contained herein.

The locations where the Carnival plc Annual Report Documents and Other Information can be found are as follows:

CARNIVAL PLC ANNUAL REPORT DOCUMENTS	LOCATIONS	PAGE NO.
Strategic Report
Chairman's Letter to Shareholders	Strategic Report	2
Chief Executive Officer's Letter to Shareholders	Strategic Report	3-5
Business-Overview-Summary	Strategic Report	5
Mission and Related Strategies	Strategic Report	6-8
Cruise Programs	Strategic Report	8
Cruise Business-Overview-Summary	Strategic Report	8-9
Favorable Characteristics of the Cruise Industry	Strategic Report	9-10
Global Cruise Industry	Strategic Report	10-11
Segment Information	Strategic Report	11-12
North America Cruise Brands	Strategic Report	12-15
Europe, Australia & Asia Cruise Brands	Strategic Report	15-20
Ships Under Contract for Construction	Strategic Report	21
Cruise Ports and Destination Developments	Strategic Report	21-22
Cruise Ship Repair Facility Cruise Pricing and Payment Terms, Onboard and Other Revenues, Sales	Strategic Report	22
Relationships, Marketing Activities, Seasonality and Competition Government Regulations (including Greenhouse Gas Emissions and Human	Strategic Report	22-25
Rights)	Strategic Report	25-33
Employees (including diversity), Suppliers, Insurance, Trademarks and Other
Intellectual Property and Taxation	Strategic Report	33-37
Business Review (Management's Discussion & Analysis of Financial Condition
and Results of Operations, including Critical Accounting Estimates and Key
Performance Indicators ("MD&A"))	Strategic Report	37-58
Principal Risks and Uncertainties	Strategic Report	58-66
Repurchase Authorizations and Stock Swap Programs	Strategic Report	66-67
Carnival plc IFRS Financial Statements for the year ended November 30, 2013
Carnival plc IFRS Financial Statements	Carnival plc Financial
	Statements	68-113
PricewaterhouseCoopers LLP Independent Auditor's Report	Carnival plc Financial
	Statements	114-118
DLC Financial Statements
2013 Carnival Corporation & plc U.S. GAAP Consolidated Financial Statements
("DLC Financial Statements")	DLC Annual Report	6-40
Proxy Statement, Governance Report and Other
Certain Relationships and Related Party Transactions	Proxy Statement	90
Carnival plc Directors' Report	Proxy Statement	Annex A
Carnival plc Directors' Remuneration Report – Part I	Proxy Statement	50-70
Carnival plc Directors' Remuneration Report – Part II	Proxy Statement	Annex B
Carnival plc Corporate Governance Report	Proxy Statement	Annex C
OTHER INFORMATION
Selected Financial Data	DLC Annual Report	66-67
Market Price for Common Stock and Ordinary Shares	DLC Annual Report	68
Stock Performance Graphs	DLC Annual Report	69-70
Selected Quarterly Financial Data (Unaudited)	DLC Annual Report	71-72
Corporate and Other Information	DLC Annual Report	73
Other Risk Factors	Form 10-K	31-39
Properties, Legal Proceedings, Executive Officers and Dividends	Form 10-K	40-43

The Notice of Annual Meetings and Proxy Statement, dated February 20, 2014 ("Proxy Statement"), Carnival Corporation & plc joint Annual Report on Form 10-K ("Form 10-K") and DLC Annual Report are not set forth within this document, but are available for viewing at www.carnivalcorp.com or www.carnivalplc.com. The Carnival plc IFRS Financial Statements have been submitted to the National Storage Mechanism and are available for inspection at www.morningstar.co.uk/uk/NSM and will be included in the Annual Meeting materials available to the Carnival plc shareholders.

Strategic Report

The Directors consider that, within the DLC arrangement, the most appropriate presentation of Carnival plc's business strategy is by reference to the consolidated strategy of Carnival Corporation & plc. Accordingly, the below Strategic Report presents the strategy and business review for the combined group, which is required to satisfy reporting requirements of the Companies Act 2006.

1. Letters to Shareholders.

A. Chairman's Letter to Shareholders

Dear Shareholders,

Although fiscal 2013 was a year of challenge for Carnival Corporation & plc, it was also a year of great change for our company.

As you know, last July I decided to split the role of Chairman and CEO after serving in that dual capacity for almost 25 years. Although I remain Executive Chairman, I have transitioned out of day-to-day operations. My tenure as CEO was an extraordinarily rewarding experience. I am humbled by the many talented people I have been privileged to work with over the years.

Among those, is Howard Frank, with whom I worked side-by-side during his long tenure as Vice Chairman of the Board and Chief Operating Officer. I could not have asked for a better partner and confidant. He is truly a strategic thinker and his merger and acquisition experience was instrumental in shaping the global entity Carnival Corporation & plc is today. Together, along with contributions from many others in the Carnival family, we grew from a single brand, carrying fewer than 1 million guests in 1989 to 10 brands welcoming over 10 million guests. As our global footprint expanded, our revenues grew from \$1 billion to \$15 billion and our market capitalization flourished, growing tenfold from \$2.7 billion to \$27 billion during his tenure. While Howard has stepped down from his roles as Vice Chairman and COO, I appreciate his commitment to provide ongoing counsel, advice and industry leadership through his Chairmanships of the Costa Cruises board and the Cruise Lines International Association. I look forward to his contributions in these roles.

I am also grateful for the many contributions of long-time Costa Cruises Chief Executive Officer and Carnival Corporation & plc board member Pier Luigi Foschi, who retired after 16 years. He is a talented leader who had a tremendous impact on the Costa Cruises' brand, including a strong artistic influence on the Costa Cruises fleet that endures today.

And, of course, in July we welcomed Arnold Donald to his new role as Chief Executive Officer. During his tenure on our board, I came to value and rely on his judgment and insight. An inspiring leader with strong operating experience, his skills are ideally suited to lead the next stage of Carnival Corporation & plc. In his initial months, Arnold has brought a fresh perspective and new energy to our company. I am confident he will move this organization forward and will drive improved performance and increased shareholder returns. I am excited for the future of our company and, as Chairman, I will continue to work closely with Arnold to ensure a great future for all stakeholders.

Micky Arison Chairman of the Board of Directors February 20, 2014

B. Chief Executive Officer's Letter to Shareholders

Dear Shareholders,

Fiscal 2013 was clearly a challenging year for our company as a result of economic headwinds in Europe and media attention from voyage disruptions. However, we addressed those challenges head-on and made significant progress on a number of strategic initiatives designed to better position our company for the future.

2013 Overview

Revenue yields declined 2.6 percent (constant dollars) driven by lower yields for our North America segment, due principally to promotional pricing at Carnival Cruise Lines, as well as lower revenue yields in Europe resulting from the challenging economic environment.

Excluding fuel, unit costs increased 4.6 percent (constant dollars) primarily due to voyage disruptions and related repair and vessel enhancement costs as well as increased investment in advertising and emerging-market development.

Net income for 2013 decreased to \$1.1 billion from \$1.3 billion the prior year. However, our company continued to produce strong cash from operations approaching \$3 billion, funding our capital commitments and returning value to shareholders through regular dividend distributions of \$775 million and share repurchases of \$100 million.

During 2013, we achieved a number of major milestones within our organization. Our flagship brand, Carnival Cruise Lines, embarked on a number of strategic initiatives to accelerate its reputational recovery. The brand executed a travel agent outreach program, called Carnival Conversations, which entailed a series of roadshows reaching thousands of agents across the country to better align with our travel partners. They launched a creative new national advertising campaign, "Moments That Matter," featuring memorable vacation moments experienced by millions of guests as captured through their own images. The brand also unveiled the "Great Vacation Guarantee," an unprecedented hassle-free money-back guarantee. These efforts had a powerful impact on the marketplace, as Carnival Cruise Lines experienced a significant improvement in brand perception following the events in early 2013. The Carnival brand recovery has been faster than originally anticipated and our team is working hard to maintain that momentum.

Also during 2013, Costa Cruises continued to experience a strong brand perception recovery, aided by the dramatic parbuckling operation which righted Costa Concordia. The brand recovered more than half of the reputation it lost in 2012, achieved a 4 percent improvement in revenue yields and returned to profitability, despite the sluggish economic environment in Southern Europe.

We made significant progress on our Asia growth strategy, positioning us to capitalize on that very important emerging market. We doubled our cruise presence in China and successfully launched an inaugural homeport in Japan. We also opened five offices in China, a second office in Japan and offices in Korea, Taiwan, Hong Kong and Singapore. These additional resources will support our 2014 Asian sourcing, which is again expected to double.

Also in 2013, through our two innovative new ships, as well as new technology and ship retirements, we have advanced our fleet and improved efficiency. Royal Princess, the first of a new class of ships for Princess Cruises, captured worldwide attention with a spectacular naming ceremony in England presided over by the ship's godmother, Her Royal Highness the Duchess of Cambridge. In addition, our German brand AIDA Cruises introduced AIDAstella, its seventh ship in just seven years for the burgeoning German market. AIDAstella and Royal Princess are among the most efficient ships at sea today, both from a unit cost and fuel efficiency standpoint, enabling them to produce returns significantly higher than our fleet average. We also retired a smaller, less-profitable Costa vessel and announced construction of a new, more efficient Seabourn ship for delivery in 2016 to replace three smaller original ships.

In addition, we announced many exciting new product features to take the guest experience to new heights. Carnival Cruise Lines continued to roll out its Fun Ship 2.0 product enhancement program, transforming the onboard experience through celebrity partnerships including comedian George Lopez, who serves as the brand's director for comedy, and Food Network personality and chef Guy Fieri, who developed a complimentary burger venue called Guy's Burger Joint. Carnival Cruise Lines has also undertaken a variety of brand-building initiatives including an exclusive partnership with Dr. Seuss Enterprises to bring the beloved children's brand and favorite characters to its fleet, and the Carnival LIVE™ Concert Series, which brings the best in live music to the seas with a diverse roster of popular music artists including Jennifer Hudson, Lady Antebellum and Jewel.

More broadly, across our world–wide fleet, new entertainment concepts have been introduced including a Las Vegas–style water and light show on-deck at Princess; "Dancing with the Stars at Sea," a Holland America partnership with the hit TV show in the U.S.; and "Strictly Come Dancing," a P&O Cruises (UK) partnership with the BBC. Onboard AIDA, we brought two of Germany's biggest TV shows to sea with "Who Wants To Be a Millionaire" and "Voice of the Ocean."

P&O Cruises (Australia) introduced a new adventure park at sea, P&O Edge, allowing guests to jump, climb and race their way to parts of the ship never seen before. Costa Cruises introduced a new slow style of cruising, Costa neoCollection, with smaller ships sailing to less traveled destinations featuring longer voyages and overnight stopovers. We are looking forward to Cunard celebrating Queen Mary 2's 10th year in service in May 2014, underscoring her role as the only passenger ship in the world maintaining scheduled service across the Atlantic, and featuring two exclusive performances by Grammy Award–winning singer James Taylor.

The level of quality, variety and innovation available throughout the fleet has never been greater and our guests are reaping the benefit of truly exceptional vacation values. We are working to more broadly communicate this message through strengthened engagement with our travel agent partners as well as stepped-up consumer and trade marketing efforts. We recently introduced new advertising campaigns for P&O Cruises (UK) and Costa Cruises in continental Europe. Princess Cruises launched, "Come Back New," its first television advertising campaign for the North American market in more than a decade. Also, Carnival Cruise Lines was the national cruise line advertiser of the Sochi 2014 Olympic Winter Games.

Sustainability

We recognize our reputation and success depend on having sustainable and transparent operations. Our commitments and actions to keep our guests and crew safe, protect the environment, develop our workforce, strengthen our stakeholder relationships and enhance the port communities our ships visit as well as the communities where we work are as vital as maintaining our fiscal strength.

We continue to make significant strides toward reducing our environmental footprint. In 2013, our fuel consumption per unit decreased by more than 5 percent for a cumulative 23 percent reduction since 2005. We also furthered our environmental efforts through the successful testing of ground-breaking exhaust gas cleaning "scrubber" technology, which we plan to install throughout the fleet. In addition to exceeding stricter air emissions standards, this technology will help mitigate higher fuel costs, creating a true win-win scenario.

Vision

In my first eight months in this new role, I have affirmed what I knew at a visceral level as a board member the inherent strengths of this organization clearly lie with our people, a passionate and dedicated team worldwide; our core product, which is clearly the best vacation value there is; and, of course, our scale.

We have over 100 ships carrying more than 10 million guests each year — twice that of the next largest player in the industry. With 78 million passenger cruise days, we have a tremendous opportunity to accelerate earnings growth by utilizing our scale. Operating our brands independently has been successful and led to our industryleading position. Our brands will remain independent at the guest interface and become increasingly distinct in the psychographics of the guests they source. Going forward, we plan to change the focus of our efforts to take advantage of our scale. We will capitalize on this inherent opportunity through greater communication, collaboration and cooperation across our 10 brands.

We have already announced a realignment of our leadership team. We have begun to change our work processes and our incentive structure to facilitate those efforts. Our highly talented leadership team is energized by the

opportunity and has identified a number of areas to further use our scale. On the revenue side we are collaborating on onboard revenue initiatives and revenue management practices. On the cost side we are increasing cooperation among our brands on procurement, inventory management, information technology and port planning to achieve cost savings. We have begun to mine our opportunities by sizing and prioritizing these and many other initiatives.

We will secure our future success though a willingness to invest for the long-term. We have eight innovative new ships scheduled to enter service through 2016 and we continue to invest in existing ships to strengthen the leadership position of our brands. We will invest in gaining an even deeper understanding of what drives consumer vacation decisions and onboard enjoyment, which bodes well for attracting first-time cruisers and powerfully differentiating our brands relative to others. We are ardently focused on delivering a customer experience that surpasses even the high levels we achieve today and, most importantly, driving greater advocacy from our satisfied guests.

Carnival Corporation & plc enjoys an enviable position in today's competitive landscape. Our leadership position is firmly rooted in our portfolio of distinct iconic brands. It is fueled by the efforts of our dedicated employees around the world and countless travel agent partners. Most importantly, it is anchored in a consistent strategy of exceeding guest expectations. I have great confidence in our ability to execute and deliver on the expectations we have set for ourselves, and thereby realize our company's true earnings power, driving significant free cash flow and returning to double-digit returns on invested capital over time.

I am honored and privileged to be leading the next stage of growth for Carnival Corporation & plc. I thank Micky and our board of directors for entrusting me with this great enterprise and its rich legacy. I thank our employees for their dedication to delivering great joyful vacation experiences each day and our travel agent partners who have helped us grow to the point where almost half of all guests that cruise anywhere in the world cruise aboard one of our ships. And, of course, I especially thank our shareholders and our more than 10 million annual guests for their continued support.

Arnold Donald President and Chief Executive Officer February 20, 2014

2. Business.

A. Overview

I. Summary

Carnival Corporation was incorporated in Panama in 1972 and Carnival plc was incorporated in England and Wales in 2000. Carnival Corporation and Carnival plc operate a dual listed company ("DLC"), whereby the businesses of Carnival Corporation and Carnival plc are combined through a number of contracts and through provisions in Carnival Corporation's Articles of Incorporation and By-Laws and Carnival plc's Articles of Association. The two companies operate as if they are a single economic enterprise with a single senior executive management team and identical Boards of Directors, but each has retained its separate legal identity. Carnival Corporation and Carnival plc are both public companies with separate stock exchange listings and their own shareholders. Together with their consolidated subsidiaries, Carnival Corporation and Carnival plc are referred to collectively in this Strategic Report as "Carnival Corporation & plc," "our," "us" and "we."

We are the largest cruise company with a global market share of 46% and are among the most profitable and financially strong leisure travel companies in the world with a market capitalization of \$30 billion at February 20, 2014. We operate 101 cruise ships within a portfolio of ten leading cruise brands that sell cruise products and services in all the world's major vacation markets. We are also a leading provider of vacations to all major cruise destinations throughout the world.

II. Mission and Related Strategies

Our mission is to take the world on vacation and deliver exceptional experiences that appeal to a large variety of consumers, all at an outstanding value. We believe our multi-brand strategy is essential to achieving our mission and maintaining our leadership positions. Our ten unique brands with worldwide sourcing of guests and diverse itinerary options allow us to expand our offerings to our ever increasing past guest customer base, while continuing to grow our business through the acquisition of new guests in established and emerging markets. Our success also depends on our ability to understand our guests' needs and consistently exceed their expectations by providing them with a wide variety of exceptional vacation experiences. We strive to capture a greater share of consumers' spending on vacations by providing extraordinary cruise products and services, all at an outstanding value.

In conjunction with our mission we are committed to:

Protecting the health, safety and security of our guests, employees and all others working on our behalf, thereby promoting an organization that is free of injuries, illness and loss. Our uncompromising commitment to the safety of our guests and crew is paramount to the success of our business. We continue to focus on improving existing, and implementing new, safety measures onboard all of our ships.
Protecting the environment, including the marine environment in which our vessels sail and the communities in which we operate.
Fully complying with, or exceeding, all legal and statutory requirements related to health, environment, safety, security and sustainability throughout our business activities.
Assigning health, environment, safety, security and sustainability matters the same priority as other critical business matters.

Our primary financial goals are to profitably grow our cruise business thus increasing our return on invested capital, while maintaining a strong balance sheet. Our ability to generate significant operating cash flows allows us to internally fund all of our capital investments. Over time, we expect to have higher levels of free cash flow, which we intend to return to shareholders in the form of additional dividends and opportune share buybacks. We are also committed to maintaining our strong investment grade credit ratings, which are among the highest in the leisure travel industry.

We are building new innovative ships and continue to invest in our existing ships to strengthen the leadership position of each of our brands and to achieve our mission and primary financial goals. Our newbuilding program is the primary platform for our capacity growth. In 2013, we continued to enhance our fleet with the debut of Princess Cruises' 3,560-passenger Royal Princess and AIDA Cruises' 2,194-passenger AIDAstella. We currently have eight cruise ships scheduled to enter service between May 2014 and July 2016, some of which will replace existing capacity from the possible sales of older, smaller or less efficient ships. We strategically time the introduction of additional ships into our brands to allow ample time for those lines to further grow their guest base and absorb the new capacity. In addition, we will continue to focus on increasing our fleets' onboard revenues by adding new innovative products and services for our guests to enjoy.

Based on our current ship orders and announced ship withdrawals, our capacity growth rate is expected to be 4%, compounded annually through 2016. Our rate of growth has slowed in the more established regions of North America and Western Europe. We are committed to a measured pace of newbuilds to achieve an optimal balance of supply and demand to maximize our profitability in these established regions. In addition, we believe that we have significant opportunities to grow our presence in the emerging Asian cruise region and will continue to redeploy some of our existing ships to that region. In 2013, we more than doubled our presence in China and launched our first season of cruises originating from Japan. In 2013, we also opened ten sales offices throughout Asia to support our continued expansion plans in this important emerging cruise region.

Each of our major brands has its own operating team, which helps create an ownership culture that is an important driver of our performance. We believe this approach results in delivering products and services that are tailored to specific geographic areas and lifestyles, which allows us to penetrate each geographic area more effectively. With over 100 ships and more than 10 million guests, we have a scale advantage in the cruise

industry and we are aggressively seeking opportunities to use it to drive top-line improvements and obtain economies of scale and synergies by utilizing our purchasing power and implementing cross-brand initiatives aimed at cost containment, such as common reservation systems, shared data centers and shared port facilities.

We recently realigned our leadership team and changed our work processes and our incentive structures to enable our brands to more efficiently collaborate and coordinate among each other, which will help us to further optimize our operations. Our leadership team has identified and will continue to identify opportunities to use our scale to drive initiatives to increase our revenues and optimize our cost structure with the goal of improving our return on invested capital. In addition, we have heightened our focus on the guest experience and further exceeding guest expectations.

Some of our most important cross-brand initiatives have been aimed at further improving our safety training, continuing to enhance our fleet to further increase our guest and crew safety and comfort, further reducing our fuel consumption and limiting the financial impact of low sulfur fuel usage requirements while achieving regulatory environmental objectives. In addition, we have streamlined certain support functions to gain efficiencies and achieve cost savings. In 2013, we furthered our environmental efforts through the successful testing of a new exhaust gas cleaning "scrubber" technology and plan to install scrubbers on most of our ships. In addition to exceeding stricter air emission standards, this technology will help mitigate higher fuel costs on these ships. As 2014 progresses, we will continue to implement a number of strategic initiatives designed to fuel our earnings power, drive cash flow and improve return on invested capital over time.

In 2012 and 2013, we had voyage disruptions that drew public attention to the safety and reliability of our products and services. Although the frequency of our incidents relative to our size is below the cruise industry average, the negative publicity we received significantly impacted the reputation and, accordingly, the demand for two of our largest brands, Costa Cruises ("Costa") and Carnival Cruise Lines. We have, and continue to, take steps to help ensure that our cruise products and services are safe and reliable and that in the rare event of a ship incident, our guests and crew are comfortably returned to port. Safety of our guests and crew is our utmost concern and key to our continuing success. These incidents, in combination with the uncertain global economic conditions significantly impacted our results in 2012 and 2013. However, we are confident that our business will continue to recover over the next few years.

In order to achieve our financial goals, we are also committed to rebuilding the image and reputation of Costa and Carnival Cruise Lines by regaining the confidence of their guests and travel agents. The reputation of Costa has significantly improved during 2013 and we expect this improvement to continue in the future. In 2013, Costa did return to profitability, excluding the impact of ship impairment charges related to two of its smaller vessels, and we expect to see an increase in Costa's profitability in 2014 despite softer economies in Southern Europe.

After successfully up righting Costa Concordia in 2013, we are working with the insurers, local authorities and industry leading salvage experts to remove the ship from the coast of Italy in 2014 while minimizing any environmental impact from the 2012 ship incident. As of February 20, 2014, we have settled 95% and 76% of the crew and guest claims, respectively. Substantially all of the ship removal costs and the costs of these and future claims will be covered by insurance.

As of February 20, 2014 according to national market research data, Carnival Cruise Lines, which is our largest cruise brand, has improved significantly. Having already implemented several strategies to enhance its operations and strengthen its public perception, we believe that over time the brand will continue to recover its reputation and increase its profitability. Earlier this year, Carnival Cruise Lines announced an estimated \$300 million vessel enhancement program, which is part of a corporate-wide program that will take place over the next several years and is expected to cost as much as \$700 million, to improve emergency power capabilities, to introduce new or enhanced fire safety technology and to increase the level of operating redundancies across its entire fleet.

In addition to the operational enhancements, Carnival Cruise Lines has launched a new travel agent outreach program designed to strengthen relationships by opening the lines of communication and implementing changes based on travel agent feedback. The most important goal of this program is to let travel agents know that Carnival Cruise Lines appreciates, needs and relies on them and values their insight and support. As part of the program, Carnival Cruise Lines has implemented a number of initiatives, including a simplified pricing structure, enhanced travel agent website capabilities and new group promotions. Further, they have launched a new nationwide advertising campaign to stimulate consumer interest by sharing memorable vacation moments from past guests. Carnival Cruise Lines has also introduced a new industry-leading vacation guarantee, whereby guests will receive a 110% refund of their cruise fare plus return travel arrangements if they are not satisfied with their cruise for any reason and provide notification within the first 24 hours of the voyage. We believe that Carnival Cruise Lines will successfully implement these and other strategies and programs, along with a number of innovative product enhancement initiatives, which will lead to continuing improvement in its reputation, which in turn will drive additional guest demand and increase profitability.

III. Cruise Programs

Our 101 ships sail to all of the world's major cruise destinations and the percentage of our passenger capacity deployed in each of these regions is as follows:

Region	2014	2013	2012
Caribbean	35%	33%	35%
Europe	29	31	29
Asia/Australia	12	10	8
Alaska	5	6	6
Other	19	20	22
	100%	100%	100%

B. Cruise Business

I. Overview

a. Summary

The multi-night cruise industry has grown significantly but still remains relatively small compared to the wider global vacation industry, which includes a large variety of land-based vacation alternatives around the world. For example, there were only about 240,000 cabins in the global cruise industry at November 30, 2013, which is less than two percent of the number of worldwide hotel rooms. Within the global vacation industry, cruise companies compete for the discretionary income spent by vacationers. A 2013 Nielsen Global Consumer Confidence Survey found that after providing for savings and living expenses, the number one global spending priority is for vacations. As a result of these and other favorable cruise industry characteristics, we believe that the cruise industry has the opportunity to capture a greater share of consumers' spending.

b. Favorable Characteristics of the Cruise Industry

1. Exceptional Value Proposition

We believe that the cost of a cruise vacation represents an exceptional value in comparison to alternative landbased vacations. Cruising provides many relatively unique benefits, such as transportation to various destinations while also providing accommodations, a generous diversity of food choices and a selection of daily entertainment options for one all-inclusive, competitive price. To make cruising even more cost effective and more easily accessible to our guests, we offer a number of drive-to homeports, which enables many cruise guests to reduce their overall vacation costs by eliminating or reducing air and other transportation costs.

2. Relatively Low Penetration Levels

Based on industry data, the 2013 annual penetration rates when computed based on the number of annual cruise guests as a percentage of the total population are as follows:

3.4% for North America (a),
2.9% for Australia,
2.8% for the United Kingdom ("UK") and
1.4% for continental Europe (Germany, Italy, France, Spain and Portugal).
(a) For the purpose of the penetration rate calculation, North America is only comprised of the United States of America ("U.S.") and Canada.

Based on industry data or our internal estimates, approximately 20% of the U.S. population and lower percentages of European and Australian populations have ever taken a cruise. In addition, Europeans and Australians have significantly more vacation days a year than North Americans, which presents opportunities for increases in these regions' penetration levels compared to North America.

Cruising is at an earlier stage of development and has lower penetration rates in emerging markets within Asia. There are an increasing number of relatively lower penetrated markets where economic growth has raised discretionary income levels and thus fueled an increasing demand for vacations, including cruising.

3. Wide Appeal

Cruising appeals to a broad range of ages and income levels. The average age of a cruise guest varies by brand and ranges from approximately 40 years to 60 years across the contemporary, premium and luxury cruise categories. Cruising provides something for every generation, from kids' clubs to an array of onboard entertainment provided to teens and adults. Cruising also offers transportation to a variety of destinations and a diverse range of ship types and sizes, as well as price points, to attract guests with varying tastes and from most income levels. To attract more first time cruisers, the duration of some cruises has been shortened, which has lowered the purchase price and thus broadened the appeal for cruising. Our brands have multiple pricing levels that vary by cruise line, by category of cabin, by ship, by season, by duration and by itinerary.

4. Positive Demographics

The average age of populations in established cruise regions is increasing. Between 2013 and 2023, the number of people in the cruise business' primary age group of 45 years and older is expected to grow by 17 million, or 12%, in the U.S. and Canada and 15 million, or 10%, in the major Western European countries. We believe the cruise industry is well-positioned to take advantage of these favorable age demographics in its major markets.

Many emerging international markets are experiencing growing economies and a rapid growth in middle-class consumers. As their earnings power and disposable income increase, these middle-class consumers are becoming more eager to purchase entertainment, travel and discretionary products and services. This demand growth provides the cruise business the opportunity to expand its reach in these markets.

5. Ship Mobility

The mobility of cruise ships enables them to move between regions in order to maximize their profitability. Accordingly, cruise companies can redeploy their ships to other more profitable regions as guests' tastes change and if economic or other conditions warrant.

6. High Guest Satisfaction Rates

Cruise guests tend to rate their overall satisfaction with a cruise vacation higher than comparable land-based hotel and resort vacations. According to industry surveys, the cruise experience consistently exceeds expectations of repeat and first-time cruisers on a wide range of important vacation attributes. Cruising continues to receive high guest satisfaction rates because of the unique vacation experiences it offers, including visiting multiple destinations without having to pack and unpack, all-inclusive product offerings and state-of-the-art cruise ships with entertainment, relaxation and fun, all at an outstanding value.

7. Favorable Supply Versus Demand Balance

Over the last several years cruise operators have slowed their passenger capacity growth compared to historical levels. Furthermore, smaller, older or less efficient cruise ships will continue to be retired from service as they

near the end of their economic lives or no longer provide sufficient cash flows. Over time we expect demand to accelerate as we rebuild our Carnival Cruise Lines and Costa brands, global economic conditions improve and emerging markets continue to develop. We believe this favorable supply versus demand balance will have a positive impact on our ability to profitably grow our cruise business.

c. Global Cruise Industry

Cruising offers a broad range of products and services to suit vacationing guests of many ages, backgrounds and interests. Cruise brands can be broadly classified as offering contemporary, premium and luxury cruise experiences. The contemporary experience typically includes cruises that last seven days or less, have a more casual ambiance and are less expensive than premium or luxury cruises. The premium experience typically includes cruises that last from seven to 14 days and appeal to the more experienced cruise guest who is usually more affluent and older. Premium cruises emphasize quality, comfort, style, more destination-focused itineraries and the average pricing is normally higher than contemporary cruises. The luxury experience is usually characterized by smaller vessel size, very high standards of accommodation and service, higher prices and exotic itineraries to ports that are inaccessible to larger ships. We have product and service offerings in each of these three broad classifications. Notwithstanding these classifications, there generally is overlap and competition among all cruise products and services.

The passenger capacities that have been or are expected to be marketed are as follows:

	Passenger Capacity (weighted-average)
Fiscal Year	Global Cruise Industry	Carnival Corporation & plc
2007	359,000	150,000
2008	377,000	162,000
2009	397,000	174,000
2010	423,000	186,000
2011	443,000	195,000
2012	455,000	200,000
2013	470,000	205,000
2014 (a)	482,000	210,000
2015 (a)	503,000	220,000
2016 (a)	525,000	228,000

(a) Our estimates of future passenger capacity do not include any assumptions related to unannounced ship withdrawals and, accordingly, our estimates could indicate a higher growth in passenger capacity than will actually occur.
The global cruise industry and our passenger capacity have increased at compound annual growth rates of 4.9% and 5.9%, respectively, from 2007 to 2012.
The global cruise industry and our compound annual passenger capacity growth rates are currently expected to be 3.6% and 3.3%, respectively, from 2012 to 2016.

The number of cruise guests carried are as follows:

	Cruise Guests
		Global Cruise Industry		Carnival Corporation & plc
Year (a)	North America	Europe, Australia, Asia and Other	Total	Total
2007	10,450,000	5,500,000	15,950,000	7,672,000
2008	10,290,000	6,000,000	16,290,000	8,183,000
2009	10,400,000	7,190,000	17,590,000	8,519,000
2010	11,000,000	8,070,000	19,070,000	9,147,000
2011	11,440,000	9,050,000	20,490,000	9,559,000
2012	11,640,000	9,180,000	20,820,000	9,829,000
2013 (b)	11,790,000	9,750,000	21,540,000	10,061,000

(a) The estimates of the total guests carried for 2007 through 2012 were obtained from G.P. Wild (International) Limited, an independent cruise research company, and are based upon where the guests were sourced and not the cruise brands on which they sailed.
(b) The estimates of the total guests carried for 2013 are based on internally developed global guests' growth rates.
The number of cruise guests carried in the global cruise industry and by us have increased at compound annual growth rates of 5.5% and 5.1% from 2007 to 2012, respectively, and 3.5% and 2.4% from 2012 to 2013, respectively.
The North America regions' cruise guests have increased at a compound annual growth rate of 2.2% from 2007 to 2012 and 1.3% from 2012 to 2013.
The Europe, Australia, Asia and Other regions' cruise guests have increased at a compound annual growth rate of 10.8% from 2007 to 2012 and 6.2% from 2012 to 2013.

As we continue to expand our global presence, our revenues generated from guests sourced from outside the U.S. have grown to 56% in 2013, up from 46% in 2007.

II. Segment Information

Each of our ten cruise brands is an operating segment that we aggregate into either the (1) North America or (2) Europe, Australia & Asia ("EAA") reportable cruise segments based on the similarity of their economic and other characteristics.

As of February 20, 2014, our cruise brands' summary information is as follows:

Cruise Brands	Passenger Capacity (a)	Percentage of Total Capacity	Number of Cruise Ships	Primary Markets (b)
North America
Carnival Cruise Lines	62,356	30%	24	North America
Princess Cruises ("Princess")	40,502	20	17	North America
Holland America Line	23,540	11	15	North America
Seabourn	1,988	1	6	North America
North America Cruise Brands	128,386	62	62
EAA (c)
Costa	32,136	16	14	Italy, France and Germany
AIDA Cruises ("AIDA")	18,636	9	10	Germany
P&O Cruises (UK)	14,736	7	7	UK
Cunard	6,672	3	3	UK and North America
P&O Cruises (Australia)	4,804	2	3	Australia
Ibero Cruises ("Ibero")	2,932	1	2	Spain and Argentina
EAA Cruise Brands	79,916	38	39
	208,302	100%	101

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

(b) Represents the primary regions or countries from where guests are sourced.

As of February 20, 2014, we had signed agreements with two shipyards providing for the construction of eight cruise ships, with two to be delivered in 2014, two in 2015 and four in 2016. These additions are expected to increase our passenger capacity by more than 24,700 lower berths. Our North America cruise brands have four ships with almost 10,800 lower berths scheduled to enter service by July 2016 and our EAA cruise brands have four ships with more than 13,900 lower berths scheduled to enter service by March 2016. It is possible that some of our smaller, older or less efficient ships may be sold, chartered or retired during the next few years.

We also have a Cruise Support segment that includes our cruise port and related facilities located in Cozumel, Mexico (which is part of the Carnival plc Group); Grand Turk, Turks and Caicos Islands; Roatán, Honduras; and Puerto Plata, Dominican Republic (currently under development), which are or will be, operated for the benefit of our cruise brands. Cruise Support also includes other corporate-wide services that are provided for the benefit of our cruise brands.

In addition to our cruise operations, we own Holland America Princess Alaska Tours, the leading tour company in Alaska and the Canadian Yukon, which complements our Alaska cruise operations. Our tour company owns and operates 11 hotels or lodges, over 300 motorcoaches and 20 glass-domed railcars. This tour company and one cruise ship, which we own and charter-out under a long-term lease, comprise our Tour and Other segment, which is part of the Carnival plc Group.

III. North America

Almost 55% of the cruise guests in the world are sourced from the North American region, where cruising is a mainstream alternative to land-based vacations. Approximately 11.6 million North American-sourced guests took multi-night cruise vacations in 2012, and we estimate that 11.8 million guests cruised in 2013. According to an internally developed survey, nearly 75% of Americans listed travel as their top lifetime goal. As a result of this and other favorable characteristics of the cruise industry, we expect increased demand in the cruise segment of the North America vacation market.

The most popular location visited by North America-sourced cruise guests in 2013 was the Caribbean (including The Bahamas), followed by other locations, such as the Mediterranean Sea, Alaska, Northern Europe, Mexican Riviera, New England and Canada, Bermuda, Hawaii, the Panama Canal and other exotic locations, such as South and Central America, the South Pacific Islands, Australia, the Far East and India.

Carnival Cruise Lines, Princess, Holland America Line and Seabourn source their guests primarily from North America. Cunard also sources a large portion of its guests from North America.

CARNIVAL CRUISE LINES

Carnival Cruise Lines is a leader in contemporary cruising and operates 24 ships designed to provide fun and memorable vacation experiences at an outstanding value. Founded in 1972, Carnival Cruise Lines is one of the most recognizable brands in the cruise industry and carried 4.3 million guests in 2013, the most of any individual cruise brand. Carnival Cruise Lines identifies their target customers as "The Spirited" or those who like to live life to the fullest, look at the glass as half full, feel comfortable in their own skin, make their own fun and are open to considering a cruise. Their cruises have a broad appeal to families, couples, singles and seniors and have carried more than 700,000 children in 2013. Carnival Cruise Lines' 25th ship, the 3,972-passenger Carnival Vista, is scheduled to enter service in April 2016, which will grow the brand's existing passenger capacity by 6%.

Carnival Cruise Lines offers cruises generally from three to eight days in length with almost all of its ships departing from 12 convenient U.S. home ports located along the Eastern seaboard and the Gulf and West Coasts. Carnival Cruise Lines is the leading provider of year-round cruises in The Bahamas, Caribbean and Mexico and also operates seasonal cruises in New England and Canada, Alaska, Hawaii, and the Panama Canal.

The brand's focus continues to be on improving their product and services with innovations that appeal to new consumers, as well as past guests. In 2013, Carnival Cruise Lines continued the rollout of its fleet wide Fun Ship® 2.0 product enhancement initiative, which represents an initial investment of \$500 million. Fun Ship 2.0 is transforming the line's guest experience through innovative dining, bar and entertainment concepts, as well as partnerships with popular celebrities and brands. Entertainer George Lopez is the brand's creative director for comedy and is enhancing the line's fleet wide comedy clubs; Food Network star Guy Fieri has developed an

onboard burger restaurant called Guy's Burger Joint; leading video game manufacturer EA SPORTS helped create the first-ever EA SPORTS Bars at sea; and through a partnership with toy and game leader Hasbro, Inc. the line has created Hasbro, The Game Show, with larger-than-life adaptations of Hasbro's iconic games. The many groundbreaking features of Fun Ship 2.0 are best reflected in the Carnival Breeze and Carnival Sunshine. As of February 20, 2014, nine of Carnival Cruise Lines' ships have some Fun Ship 2.0 features, with additional vessels scheduled to receive upgrades over the next few years.

Fun Ship 2.0 played a central role in the refurbishment of the Carnival Destiny, which was renamed Carnival Sunshine following a groundbreaking 75 day makeover that was completed in May 2013 and was the line's largest ship transformation. The refurbishment added all of the Fun Ship 2.0 innovations, as well as one-of-akind amenities such as a three-level Serenity adults-only retreat, the brand's first full-service Asian restaurant called Ji Ji Asian Kitchen and new food and beverage concepts such as Havana Bar, ShakeSpot and JavaBlue Cafe.

Furthermore, Carnival Cruise Lines recently entered into an exclusive partnership with Dr. Seuss Enterprises to create the new Carnival Seuss at Sea program, which will bring the beloved children's brand and favorite characters to the line's entire fleet. Seuss at Sea will begin rolling out aboard Carnival Splendor in February 2014 with implementation across the full fleet by 2015, as well as the new Carnival Vista. The brand has also recently introduced American Table and American Feast, which are new dining concepts in the main dining rooms designed to evoke a more contemporary restaurant experience with an emphasis on exceptional American cuisine, with updated menus, place settings, and serving and presentation styles, as well as expanded cocktail and wine lists.

On January 22, 2014, Carnival Cruise Lines announced Carnival LIVETM—a new onboard offering that brings the best live music entertainment to the seas. The Carnival LIVETM Concert Series features a diverse roster of popular, well known music artists who will play a series of onboard concerts for its guests at select ports-of-call. The Carnival LIVETM initiative also includes enhancements to Carnival Cruise Lines' onboard lounge band experience, which is designed to provide guests with a very high caliber of music entertainment.

Carnival Cruise Lines sources a majority of its guests from North America but also sources some of its guests from Australia. See below "Cruise Business – Australia" for additional discussion of Carnival Cruise Lines' operations in Australia.

PRINCESS

Princess, whose brand name was originally made famous by the Love Boat television show, has been providing cruises since 1965. Princess is the world's largest premium cruise line based on passenger capacity and operates a fleet of 17 ships. Princess offers 125 unique itineraries to more than 310 destinations, with cruises generally from seven to 14 days and two world cruises over 100 days. In 2013, Princess introduced a new range of three and four day cruises in order to provide customers an opportunity to experience the Princess products and services on shorter voyages.

In June 2013, her Royal Highness The Duchess of Cambridge named Royal Princess, the newest addition to the fleet. In addition, Royal Princess' sister ship, Regal Princess, is scheduled to enter service in May 2014. These new ships each have a 3,560-passenger capacity, the largest in its fleet, and continue the evolution of the Princess products and services. These two newbuilds offer a variety of new features, including a unique over-the-water SeaWalk, which is a top-deck, glass-bottom walkway extending more than 28 feet beyond the ship's side. With the addition of Regal Princess in 2014, Princess' existing passenger capacity will grow by 9%.

Voted "Best Itinerary Design" in the 2013 Travel Weekly Readers Choice Award, Princess is a leading cruise line in international and exotic destinations, including Europe, Australia, Asia, the Panama Canal, Hawaii and South America. Princess will have five ships sailing in 2014 throughout Europe between the months of April and December, including the inaugural season of Regal Princess. Princess is also a leading cruise line in Alaska and in 2014 will continue to dedicate seven ships to sailing in this area between the months of May and September. Some of Princess' Caribbean cruise offerings feature a private island destination that Princess leases and operates, known as Princess Cays®, which is located on the island of Eleuthera in The Bahamas.

Princess is widely recognized as an innovative, premium cruise line committed to helping its guests Escape Completely® from their daily routine and responsibilities. Designed with a warm, welcoming "comfortable elegance," Princess' ships provide a relaxed, rejuvenating retreat at sea, with signature amenities offered consistently across most of its fleet befitting its mission to be The Consummate Host® to its guests. Its "Piazza" main atrium serves as the heart of the ship, featuring its International Café and specialty coffee bar, its Vines wine and seafood bar and a variety of entertainment throughout the day and evening. Its "Movies Under The Stars" outdoor theaters recreate the drive-in movie experience out on deck, with first-run Hollywood hits and major sporting events shown on a 330 square-foot poolside LED screen, complete with fresh-made popcorn. Its adults-only Sanctuary retreat space and unique "Ultimate Balcony Dining" course-by-course dining option were industry firsts.

In January 2014, Princess introduced a new multi-media marketing campaign designed to redefine its brand and differentiate it from other cruise line competitors. The campaign positions Princess as being uniquely qualified to provide its guests with meaningful travel and life experiences, both in destinations and onboard, so that they will "Come Back New" from their Princess vacation. In addition, we continue to enhance our travel agent support with the Princess Academy educational program, voted Best Travel Agent Educational Program by Travel Weekly. More than 50,000 travel agents around the world have learned about Princess' product and service offerings and destinations through this program, making it one of the largest and most comprehensive travel industry training programs in the world.

Princess sources primarily all of its guests from North America but also sources more than a quarter of its guests from Australia and the UK. In addition, in recent years Princess has been growing its passenger sourcing from Asia. See below "Cruise Business – Australia" and "Cruise Business – Asia" for additional discussion of Princess' operations in these regions.

HOLLAND AMERICA LINE

Holland America Line, which celebrated its 140th year anniversary in 2013, operates a fleet of 15 premium midsized ships. Holland America Line offers more than 500 cruises to over 400 ports in almost 100 countries and territories on all seven continents, including Antarctica. While the majority of cruises are from seven to 21 days, Holland America Line also offers four longer, exotic Grand Voyages up to 113 days, including a Grand World Voyage. Holland America Line is also a leading cruise line in Alaska and in 2014 will continue to dedicate seven ships to sailing in this area between the months of May and September. Europe also continues to be a key destination in 2014 with seven ships sailing there between the months of March and November, including Rotterdam, which is home ported year-round in Amsterdam, the Netherlands. In the Caribbean, most of Holland America Line's ships visit its private island in The Bahamas, Half Moon Cay. Holland America Line has one new 2,660-passenger capacity ship scheduled to enter service in February 2016, which will grow its existing passenger capacity by 11%.

Holland America Line's mission is to create once-in-a-lifetime experiences for its guests every time they cruise. The brand continues to enjoy one of the highest rates of repeat cruisers. Holland America Line's Signature of Excellence products and services emphasize its dedication to all aspects of the guest experience, including elegant accommodations, sophisticated five-star dining and award-winning service. Its mid-sized ships are designed for more intimate cruising and feature classically-designed interiors, wraparound teak decks and private verandas. In addition, Holland America Line ships have one of the most extensive collections of art and antiques at sea.

All of Holland America Line's ships have Culinary Arts Centers presented by Food & Wine magazine, where guests enjoy cooking demonstrations, private cooking lessons, wine tastings and lifestyle seminars, as well as cuisine from the recipes of an esteemed Culinary Council including David Burke, Jacques Torres, Elizabeth Falkner, Jonnie Boer and Master Chef Rudi Sodamin. In addition, the Digital Workshop in collaboration with Microsoft® offers complimentary photo and video editing classes. Guests will find specialty coffees, an extensive library, music listening stations and internet access in the Explorations Café® in partnership with The New York Times®. The Greenhouse Spa and Salon has extensive wellness and beauty treatments, fitness classes and exercise equipment. Other marquee partnerships bring guests unique onboard experiences such as B.B. King's Blues Club and Dancing with the Stars at Sea, featuring theme cruises, dance lessons and guest dance competitions.

SEABOURN

Seabourn provides ultra-luxury cruising vacations on smaller ships that focus on personalized service and guest recognition, spacious all-suite accommodations, award-winning gourmet dining and unique experiences. It was voted the "Best-Small Ship Cruise Line" by readers of Travel + Leisure for the past five years and Condé Nast Traveler for the last four years. Seabourn offers travelers a compelling value proposition that includes complimentary open bars throughout the ship, fine wines during lunch and dinner and gratuities that are neither required nor expected. Seabourn pampers its guests with value-added extras such as Massage MomentsSM on deck and Caviar in the SurfSM beach parties. Seabourn's ships cruise to destinations throughout the world, including Europe, South Africa, Asia, the South Pacific Islands, Australia, the Americas and Antarctica, with cruises generally from seven to 14 days, with some of longer length. In addition, Seabourn has introduced Extended Explorations, which is a novel way for travelers to enjoy longer cruises, with the added luxury of a wide range of choices regarding where and when they sail. The new, linked itineraries allow guests to deeply explore more extensive regions of the world on voyages ranging from 28 to 116 days.

Seabourn currently operates one 458-passenger capacity ship, two 450-passenger capacity ships and three 210 passenger capacity ships. The three larger ships offer more categories of luxury suites, more dining alternatives and 11,400 square-foot spa facilities that are among the largest on any ultra-luxury vessel. All of the Seabourn ships have a service ratio of nearly one staff member per guest and an intimate, sociable atmosphere that has been the hallmark of the Seabourn lifestyle since it began its operations in 1988. Seabourn has one new 604 passenger capacity ship scheduled to enter service in July 2016, which will replace the capacity of its three original smaller ships that were sold in 2013 and will be leaving its fleet by May 2015.

IV. Europe, Australia & Asia

a. Europe

We believe that Europe is the largest leisure travel vacation region in the world. However, cruising in Europe has achieved a much lower level of penetration than in North America and represents a relatively small percentage of the European vacation markets. Approximately 6.2 million European-sourced guests took multi-night cruise vacations in 2012 compared to 11.6 million North American-sourced guests. Additionally, we estimate that 6.5 million European-sourced guests cruised in 2013. Because of the relatively low penetration rates and other favorable characteristics of the cruise industry, we expect increased demand in the cruise segments of the European vacation markets.

The most popular location visited by European-sourced cruise guests in 2013 was the Mediterranean Sea, followed by other locations such as the Atlantic Isles (including the Canary Islands and Madeira), Northern Europe (including Scandinavia and the Baltic Sea), the Caribbean, Bermuda, the Arabian Gulf and Indian Ocean, the Far East, South America, New York, the Black Sea, New England and Canada.

1. United Kingdom

The UK provides the largest number of cruise guests sourced in Europe. Approximately 1.7 million UK-sourced guests took a multi-night cruise vacation in 2012, and we estimate that 1.8 million guests cruised in 2013. Cruising in the UK is an established alternative to land-based vacations. P&O Cruises (UK) sources substantially all its guests from the UK. Cunard sources more than half of its guests from the UK but also sources principally all of its other guests from North America, Germany and Australia.

P&O CRUISES (UK)

P&O Cruises (UK) is the leading and most recognized cruise brand in the UK and can trace its roots back 175 years to the formation of the Peninsular Steam Navigation Company. Today, P&O Cruises (UK) is dedicated to providing the vacation of a lifetime to its largely British guests and operates a fleet of seven premium ships that vary in size from 700 to 3,100 lower berths. Three of its ships offer vacations exclusively for adults, while the other ships are well-suited for families. P&O Cruises (UK) has one new 3,647-passenger capacity ship, Britannia, scheduled to enter service in March 2015, which will grow its existing passenger capacity by 25%. Britannia will be the largest cruise ship built exclusively for the British market.

P&O Cruises (UK)'s ships visit over 200 destinations worldwide, with cruises generally from seven to 15 days, with a number of longer voyages, including three world cruises of over 80 days in 2014. In the summer, cruises generally depart from Southampton, England to the Mediterranean Sea, Scandinavia and the Baltic Sea, New England and Canada, the Atlantic Isles and the Caribbean. Beginning in the summer of 2014, Ventura will offer a new cruise program for its seven or 14 day voyages departing from Venice and Savona, Italy. In the winter of 2014, P&O Cruises (UK) offers cruises in the Caribbean, cruises departing from Southampton, England primarily to the Mediterranean Sea and the Canary Islands and world cruises.

P&O Cruises (UK)'s fleet reflects the tastes and trends of contemporary Britain in dining, entertainment, service and ambiance. This is enhanced through partnerships with British celebrity chefs Marco Pierre White, Atul Kochhar and Olly Smith, together with popular television programs, such as the British Broadcasting Corporation's Strictly Come Dancing. P&O Cruises (UK) provides an authentic, quality cruise experience and has an enviable reputation for trust and reliability, highlighted by high levels of customer loyalty.

CUNARD

Cunard, which was launched in 1840, operates three premium/luxury ships, Queen Elizabeth, Queen Mary 2 and Queen Victoria and has one of the youngest fleets in the cruise business. During 2014, Cunard ships will principally sail a variety of seasonal itineraries in Northern Europe, the Mediterranean Sea and New England and Canada, as well as their iconic transatlantic voyages on Queen Mary 2. Most of Cunard's cruises are from seven to 14 days with three world cruises of over 105 days.

Cunard is an international cruise line that offers guests a unique experience that celebrates its British heritage. Cunard provides guests with the opportunity to relive the golden age of ocean travel featuring sophisticated fivestar dining, luxurious accommodations and award-winning White Star Service. In addition, Cunard ships spotlight uniquely British shipboard amenities, such as libraries, traditional British pubs and theaters. Cunard ships also feature the Queen's Grill and Princess Grill categories, which are renowned for their extensive suites and intimate dining rooms. Cunard enjoys an enviable association with the British Royal Family. Her Majesty the Queen is Godmother to both Queen Elizabeth and Queen Mary 2. Together, these features further distinguish this historic brand from all others and have made Cunard ships the Most Famous Ocean Liners In The WorldSM.

2. Continental Europe

The main countries in continental Europe for sourcing cruise guests are Germany, Italy, France and Spain. Together, almost 3.5 million cruise guests were sourced from these countries for multi-night cruise vacations in 2012 and we estimate that approximately 3.6 million guests cruised in 2013. The German cruise industry reached more than 1.6 million guests in 2013 and is the second largest source market in Europe, after the UK. The Italian cruise industry is the third largest in Europe with 870,000 guests in 2013. The Spanish and French cruise industries are the fourth and fifth largest in Europe with 600,000 guests and 500,000 guests in 2013, respectively.

The primary sources for Costa's guests are from Italy, France and Germany, although it also sources a significant number of guests from China, Brazil and Argentina. AIDA sources substantially all of its guests from Germany and Ibero currently sources principally all of its guests from Spain and Argentina.

COSTA

Costa is Europe's largest cruise line based on guests carried and passenger capacity. It is also the number one cruise line in Italy and France and a leading cruise line in Germany. Costa has been providing cruises for 66 years and operates a fleet of 14 contemporary ships. Costa has one new 3,708-passenger capacity ship, Costa Diadema, scheduled to enter service in November 2014, which will grow its existing passenger capacity by 12%. In Germany, where we also own and operate AIDA, Costa offers a more traditional cruise product and services catering to an older age demographic, which differentiates its product offerings from AIDA.

Costa's 1.6 million guests in 2013 were sourced from over 200 countries. Costa calls on 250 ports around the world, with 150 different itineraries, with cruises generally from seven to 11 days. In the summer, Costa deploys its ships in the Mediterranean and Northern Europe areas. In the winter, Costa deploys its ships in Brazil and Argentina, the Mediterranean Sea, the Caribbean and the Arabian Gulf. See below "Cruise Business – Asia" for additional discussion of Costa's operations in Asia.

During 2013, Costa expanded its international advertising campaign to support its sales activities. The campaign expresses Costa's brand position by perfectly combining "Sea, Ship, and Shore" in a new kind of holiday. Travelling on a Costa ship is seen as a personal journey, full of scents, taste sensations, scenery, places, cultures and the excitement of new destinations. The itinerary sets the cruise vacation apart not merely as a line connecting multiple destinations, but rather as a common theme linking the many new experiences awaiting discovery. Costa's website has also been enhanced to facilitate access to Costa's social media channels, such as "Costa Cruise Tips" where past guests can share their experiences and give recommendations and tips on its ships and destinations.

Costa's ships represent the best of Italy by offering beautiful Italian art, unique interior decorations with superb Italian mosaics, precious Murano chandeliers, fine Italian wines, excellent Mediterranean food selections and unique shops that carry well-known Italian fashion brands. Costa attracts international guests due to its multilingual service and is considered in Europe to be a top vacation provider. Costa is also known for offering innovative itineraries that combine the excitement of new destinations with pampering onboard service and ambiance. The spectacular Samsara spa wellness center includes a dedicated restaurant and cabins with direct access to the spa.

In November 2013, Costa announced the beginning of a new style of cruising onboard two of its smaller ships with the advent of Costa's neoCollection. The neoCollection cruises are an invitation to make the most of every minute and enjoy the holiday in a more leisurely way. This is a new type of Costa cruise experience that is tailored to suit individual tastes and allows each guest to go at their own pace, both onboard and ashore, making it an ideal vacation for couples and groups of friends. The cruise itineraries are exclusive with longer port calls and sailings to destinations inaccessible to larger cruise ships. The neoCollection cruises will offer a range of options, such as specially designed shore excursions for small groups and fine food and wine options based on the authentic cuisine of the regions visited. The neoCollection cruises will debut in February 2014 and offer 12 day itineraries to the most attractive destinations in the Mediterranean Sea during spring and summer, as well as 13 and 15 day cruises in Northern Europe during summer.

AIDA

AIDA, which began operating in 1996, is the leader and most recognized cruise brand in the German cruise industry. Germany is our fastest growing European market and AIDA is our fastest growing cruise brand. AIDA has taken delivery of seven ships in the past seven years including the 2013 delivery of AIDAstella and now operates ten contemporary ships. AIDA has one new ship scheduled to enter service in March 2015 and another one in March 2016, which together will grow its existing passenger capacity by 35%.

AIDA's two newbuilds are a new design, larger than AIDA's current generation of vessels and combine an advanced technological platform with innovative guest features. These 3,286-passenger capacity ships will also further develop AIDA's hallmark "Theatrium" and "Brauhaus" micro-brewery features. In 2013, AIDA refreshed its brand image to underline its leadership in the German speaking vacation market and highlighted its product's individuality, which is "Unique. Every time."

AIDA offers its guests cruises generally from five to 14 days, while calling on approximately 185 ports. In the summer, AIDA ships sail in the North Sea, the Baltic Sea, the Mediterranean Sea, the Black Sea and New England and Canada. In the winter, AIDA ships sail in the Caribbean, Central America, South America, Southeast Asia, the Atlantic Isles, the Western Mediterranean Sea and the Arabian Gulf.

AIDA's product is especially tailored for German-speaking guests and includes a German-speaking crew as well as German-style food and entertainment. AIDA offers an exceptionally relaxed, yet active, cruising experience with an emphasis on a healthy and youthful lifestyle, choice, informality, family friendliness and activity. In addition, AIDA's ships include a variety of informal and formal dining options, including buffets, grills and exclusive restaurants.

IBERO

Ibero began operations in Spain in 2003. Ibero's two contemporary ships are especially tailored for Spanishspeaking guests, which includes a Spanish-speaking crew as well as Mediterranean and Spanish-style food and entertainment. One of Ibero's ships offers year-round Mediterranean Sea sailings ranging from seven to 11 days. Its other ship sails in the Mediterranean Sea from spring until fall while in the winter season its areas of operations are Argentina and Brazil.

b. Australia

Approximately 700,000 Australian and New Zealand guests took multi-night cruise vacations in 2012, and we estimate that 760,000 guests cruised in 2013. Of these 2013 guests, 72% sailed on Carnival Corporation & plc branded vessels. Cruising in Australia is an established alternative to land-based vacations. However, due to the favorable characteristics of the cruise industry, we expect increased demand in the cruise segment of the Australian vacation market. In 2014, we have dedicated six ships year round and three ships on a seasonal basis to serve this market through our P&O Cruises (Australia), Princess and Carnival Cruise Lines brands. Some of our other brands also source guests from Australia and New Zealand but to a lesser extent. Carnival Cruise Lines and Princess are primarily marketed in North America, so we consider them North America cruise brands for our cruise segment reporting, even though some of their ships are marketed principally to Australians and New Zealanders during certain deployments.

P&O CRUISES (AUSTRALIA)

P&O Cruises (Australia) is the leading Australian cruise line, recognized by nine out of ten Australians as the brand synonymous with cruising. With close to 260,000 guests annually, P&O Cruises (Australia) carried almost 35% of all Australia and New Zealand cruise guests on its three contemporary ships in 2013. Its ships offer cruises generally from three day themed seabreaks to ten day explorer trips for guests of all ages and have broad appeal to families, friends and couples.

P&O Cruises (Australia) sails to more South Pacific Island destinations than any other cruise line, which enables guests to discover the islands of the South Pacific from New Caledonia to Fiji. In 2013, remote idyllic parts of Papua New Guinea were also added to their itineraries. P&O Cruises (Australia) also offers year round itineraries to Australia's magnificent coast line and New Zealand.

With almost 80 years of cruising experience, P&O Cruises (Australia) provides a quintessential holiday experience for Australians and New Zealanders. The onboard atmosphere is laid back with a focus on great food, friendly service and exciting entertainment. In 2013, P&O Cruises (Australia) launched P&OEdgeTM, one of the most comprehensive adventure programs on the high seas. The P&OEdgeTM program gives its guests the opportunity to climb, swing, race and jump their way to parts of the ship never seen before by guests. The activities, which include repelling, ziplining, tight-rope balancing, Segway obstacle courses, rock wall climbing and many more, have been specifically designed to make use of the ship's existing architecture to create one of the largest adventure parks at sea.

PRINCESS

In 2014, Princess will deploy two premium ships on a year-round basis and another two on a seasonal basis from Australia. During 2014, Princess will have the largest Australian and New Zealand passenger capacity deployment of any cruise brand. Princess' ships visit the South Pacific Islands, Australia, New Zealand and Asia and the cruises generally are from 11 to 17 days, with one world cruise of over 100 days.

CARNIVAL CRUISE LINES

In 2014, Carnival Cruise Lines will deploy one year-round ship and one seasonally-based ship from Australia. These ships offer cruises from eight to 12 days to the South Pacific Islands and New Zealand.

c. Asia

Although in the early stages of development, we believe the cruise segment of the Asian vacation markets has significant long-term potential for growth. Accordingly, we view Asia as an important part of our global strategy and remain committed to capacity growth focused on the emerging vacation markets in this region. Over the past two years, we have increased our presence in the region by opening 12 sales and marketing offices in six Asian countries and establishing a corporate office in Singapore.

1. China

We began sourcing guests from China in 2006. We source most of our Chinese guests from major cities, such as Shanghai, Beijing and Guangdong, which have a combined population of approximately 150 million people. Over the past decade China has been, by far, the world's fastest growing tourism source market. China's consumer expenditures on travel abroad reached over \$100 billion in 2012, making it the number one tourism source market in the world based on spending, according to the United Nations World Tourism Organization. Tourism is one of the most rapidly growing sectors in the Chinese economy as Chinese discretionary income has increased at a compound average annual growth rate of over 10% over the past five years. More than 94 million Chinese tourists are expected to have travelled abroad in 2013. We believe the cruise segment of the Chinese vacation market has significant long-term growth potential given its early stage of development, the large and growing middle-class population, the easing of travel restrictions and expansion of international tourist travel. We serve this market substantially through our Costa and Princess brands although some of our other brands also source guests from China.

COSTA

Costa began its China operations in 2006 and was the first international cruise line to home port a ship there. Costa operates two contemporary ships from China that are primarily marketed to the Chinese and surrounding vacation markets. The second ship was deployed to China in May 2013 and more than doubled Costa's capacity. These ships offer a unique product by providing a blend of both Italian-style hospitality, design, shopping experience and cuisine, as well as catering to Chinese-speaking guests' desires for local cuisine and entertainment, gaming options and well-known luxury brands in their retail shops.

Costa offers its guests cruises generally from four to seven days. One of its ships will offer cruises to South Korea year round. Costa's other ship will also sail from China to South Korea from the spring through the fall months. During the winter months, it will sail from Singapore calling on ports in Malaysia and Thailand and from Hong Kong calling on ports in mainland China, Vietnam and the Philippines.

PRINCESS

In 2014, Princess will enter the cruise segment of the Chinese vacation market with its four-month deployment of the 2,678-passenger capacity Sapphire Princess on cruises departing from Shanghai. Sapphire Princess will bring a new international premium cruise experience to the Chinese vacation market with an onboard product that is customized to meet the needs of its Chinese guests. The 2014 China season will feature itineraries ranging from three to seven days and includes calls at several South Korean ports.

From fall 2014 to spring 2015, Princess will bring Sapphire Princess to Singapore in the largest deployment ever by a premium cruise line in the Southeast Asia region. Sapphire Princess will feature 15 cruises from three to 11 days, visiting seven countries and 16 ports including some of this region's major cities such as Bangkok, Ho Chi Minh City and Kuala Lumpur, along with smaller, off-the-beaten path resort destinations including Penang, Ko Samui and Langkawai. Guests will be sourced from Singapore and throughout Asia, in addition to other international markets including Australia, North America and the UK.

2. Japan

Japan has the world's eleventh largest population with 127 million people and fifth largest economy at \$4.6 trillion. In addition, Japan has numerous highly developed ports-of-call with sight-seeing attractions, shopping, shoreside transportation and infrastructure making them one of the more attractive destinations in the Asia region. We believe the cruise segment of the Japanese vacation market has significant long-term growth potential given its early stage of development, relatively large market, with 25% of its population over 65 years old, developed economy and a relatively large number of interesting ports-of-call. We serve this market substantially all through Princess although some of our other brands also source guests from Japan.

PRINCESS

In April 2013, Princess entered the cruise segment of the Japanese vacation market with its three-month deployment of the 2,022-passenger capacity Sun Princess on cruises that departed from home ports in Yokohama and Kobe, Japan. This ship offers Princess' international products and services with Japanese touches to appeal to the tastes of its Japanese guests. In 2014, Princess will expand its Japanese deployments to two ships. One ship will offer cruises departing from Kobe and Otaru, Japan from April to August and the other ship will offer cruises departing from Yokohama, Japan from April to October. These 2014 cruises will range from seven to nine days. The two ships will visit Japan, South Korea, Taiwan and Russia.

V. Ships Under Contract for Construction

As of February 20, 2014, summary information of our ships under contract for construction is as follows (a):

Cruise Brands and Ships	Expected Service Date (b)	Passenger Capacity
North America
Carnival Cruise Lines
Carnival Vista	4/16	3,972
Holland America Line
Newbuild	2/16	2,660
Princess
Regal Princess	5/14	3,560
Seabourn
Newbuild	7/16	604
North America Cruise Brands		10,796
EAA
AIDA
AIDAprima	3/15	3,286
Newbuild	3/16	3,286
Costa
Costa Diadema	11/14	3,708
P&O Cruises (UK)
Britannia	3/15	3,647
EAA Cruise Brands		13,927
		24,723

(a) Our ship construction agreements cannot be cancelled by either party without cause, and such cancellation will subject the defaulting party to contractual liquidated damages.

(b) The expected service date is the month that the ship is currently expected to begin its first revenue generating cruise. All of our ship construction contracts except AIDA's are with Fincantieri in Italy. Our AIDA ship construction contracts are with Mitsubishi Heavy Industries in Japan.

VI. Cruise Ports and Destination Developments

Our cruise brands provide guests with unique vacation experiences and additional home and transit ports through the development and management of new or enhanced cruise port facilities. Our involvement is usually in cooperation with governmental entities and typically includes providing development and management expertise and financial commitments that are connected to long-term port usage and preferential berthing agreements. However, sometimes we provide direct financial support or develop the port infrastructure ourselves, including the development and operation of mixed-use commercial properties.

During 2013, we were in various stages of involvement with the development, enhancement and/or financing of government-owned and operated cruise port facilities in Galveston, Texas; Miami, Florida; New York City, New York; Port Everglades, Florida; San Juan, Puerto Rico and St. Maarten, Kingdom of the Netherlands. We also operate leased or owned port facilities or have interests in joint ventures that operate leased or owned port facilities in Barcelona, Spain; Civitavecchia, Naples, Savona and Trieste, Italy; Hamburg, Germany; Juneau, Alaska; Long Beach, California and Marseilles, France for the benefit of our cruise brands.

We also operate leased or owned port facilities that we have developed as destinations in Cozumel, Mexico; Grand Turk, Turks and Caicos Islands and Roatán, Honduras, as well as private island destinations in The

Bahamas primarily for the benefit of our North America cruise brands. We are also developing a port facility destination in Puerto Plata, Dominican Republic, known as Amber Cove, that is expected to be operational in 2015. These destinations offer a variety of features, including shore excursions, cultural and historic exhibits, water sports, beaches, duty-free shopping and a variety of themed-dining options. These features come together to make each of these ports-of-call an all-encompassing unique vacation experience.

VII. Cruise Ship Repair Facility

We own a 40% interest in Grand Bahamas Shipyard Ltd. ("GBSL"), which is the largest cruise ship dry-dock repair facility in the world, to support our ship repair and maintenance programs. We utilize this facility, as well as other ship repair facilities, for our dry-dockings. This repair facility, located in Freeport, Grand Bahamas, has three dry-docks and can accommodate almost all of our ships. As a result, our North America brand ships based in the Caribbean primarily use this facility given its proximity to their home ports. During 2013, we had 13 ships serviced at this facility. In addition, unaffiliated cruise ships and other types of ships, such as cargo and oil and gas tankers, were serviced at this facility. GBSL generated total revenues of \$121 million in 2013, with a large portion being derived from work on our cruise ships.

Royal Caribbean Cruises Ltd. ("RCCL"), our largest cruise competitor, also owns a 40% interest in GBSL and an unaffiliated entity owned by Grand Bahamas Port Authority owns the remaining 20%. We account for our investment in GBSL using the equity method, with our share of income or loss recorded in other nonoperating income or expense. Our total net investment in, including notes receivable from GBSL was \$71 million at November 30, 2013. GBSL had an aggregate of \$102 million of outstanding debt to RCCL and us at November 30, 2013.

VIII. Cruise Pricing and Payment Terms

Each of our cruise brands publishes prices for the upcoming seasons primarily through the internet, although published materials such as brochures and direct mailings are also used. Our brands have multiple pricing levels that vary by cruise line, by category of cabin, by ship, by season, by duration and by itinerary. Cruise prices frequently change in a dynamic pricing environment. Some cruise prices are reduced through special promotions and early booking, past guest recognition and other programs. Conversely, some cruise prices are increased due to higher demand.

Our bookings are generally taken several months in advance of the cruise departure date. Typically, the longer the cruise itinerary the further in advance the bookings are made. This lead time allows us to manage our prices in relation to demand for available cabins through the use of advanced revenue management capabilities and other initiatives, with the strategy of filling our ships while achieving the highest possible overall net revenue yields. In addition, we have the ability to change ship itineraries and cruise durations over time to maximize our net revenue yields. See "Key Performance Non-GAAP Financial Indicators" for a discussion of net revenue yields in our MD&A within this Strategic Report.

The cruise ticket price typically includes accommodations, most meals, some non-alcoholic beverages and most onboard entertainment such as the use of, or admission to, a wide variety of activities and facilities including nightclubs, lounges, bars, theatrical shows, movies, comedy and music acts, parties, supervised youth programs, swimming pools, water slides, water parks, whirlpools, saunas, a health club, a jogging track, basketball, table tennis, sun decks, libraries, cooking demonstrations and a planetarium. Our brands' payment terms generally require that a guest pay a deposit to confirm their reservation and pay the balance due before the departure date. In addition, some of our European brands extend certain of their travel agents and tour operators with credit that allow them to pay us a certain period of time after they collect cruise ticket payments from our guests but typically prior to sailing.

Our guests are subject to a cancellation fee if they cancel their cruise within a pre-defined period before sailing, unless they purchase a vacation protection premium for the ability to obtain a refund. We include this cancellation fee income in cruise passenger ticket revenues upon cancellation. Guests who pay a vacation protection premium will receive all or a portion of their deposit value back in cash or in the form of a future cruise credit, in accordance with the terms of the programs. We include this vacation protection premium in other cruise revenues.

As a convenience to our guests, we offer to arrange air transportation to and from airports near the ship's home port. When a guest elects to purchase air transportation from us, both our revenues and expenses generally increase by approximately the same amount. Air transportation prices typically vary by gateway, ticket class, destination and other ticket restrictions. In 2013, approximately 10% of our guests purchased air transportation from us. In order to increase the level of our air transportation services, certain of our brands offer an air program that includes competitive air prices (for both restricted/non-refundable and flexible fares) and provides our guests with next port protection, which enables them to get to the next appropriate cruise port at no additional air cost if they miss their original port embarkation due to airline delays or other airline service disruptions. In addition, for some of our European brands' cruise itineraries we charter aircraft to facilitate our guests' travel to distant locations. We also offer ground transfers from and to the airport near the ship's home port as part of our transfer programs. When a guest elects to purchase these transfer services these revenues are included in cruise passenger ticket revenues.

IX. Onboard and Other Revenues

Onboard and other activities are provided either directly by us or by independent concessionaires, from which we receive either a percentage of their revenues or a fee. In 2013, we earned 23% of our revenues from onboard and other revenue activities and services not included in the cruise ticket price including substantially all liquor and some non-alcoholic beverage sales, casino gaming, shore excursions, gift shop sales, photo sales, full service spas, communication services, a wide variety of dining options, art sales and laundry services. Our brands are always working on innovative ways to enhance our guests' onboard experience and increasing our onboard revenues, such as offering all-inclusive beverage packages and prepaid gift cards. We use various marketing and promotional tools and are supported by point-of-sale systems permitting "cashless" transactions for the sale of these onboard and other products and services. As a convenience to our guests, all our brands allow their guests to pre-book, and in some cases pre-pay, certain of their onboard and other revenue-producing activities in advance of the cruise.

We offer a variety of shore excursions at each ship's ports-of-call that include general sightseeing, cultural tours, adventure outings and local boat rides and beach experiences. We typically utilize local operators who provide shore excursions with guides who speak the same languages as most of our shore excursion guests. For our sailings to destinations in Alaska, shore excursions are operated by Holland America Princess Alaska Tours or provided by local operators. We also offer revenue-producing activities on the private islands and port destinations that we operate that include beach bars and restaurants, water sports, sky lifts, cabana rentals and a surf rider attraction.

Our casinos are all owned and operated directly by us and are equipped according to the needs of the individual brands, ships and itineraries. We offer a wide variety of slot and gaming machines and a diverse mix of both traditional and specialty table games designed to meet the needs of our guests. The casinos are only open when our ships are at sea in international waters or when otherwise permitted by law.

In conjunction with our cruise vacations, many of our cruise brands sell pre-and post-cruise land packages of one to four days that include guided tours, hotel accommodations and related transportation services. In Alaska and the Canadian Yukon, we utilize, to a large extent, our own hotel and transportation assets. The land portion of these Alaska and Yukon vacations vary in length from three to 13 days.

X. Sales Relationships

We sell our cruises mainly through travel agents, including retail, online, and home-based agents, as well as wholesalers, general sales agents and tour operators that serve our guests in their local markets. Travel agents are an integral part of our long-term cruise distribution network and are critical to our success. Our individual cruise brands' relationships with their travel agents are generally independent of each of our other brands. Our travel agent relationships are generally not exclusive and travel agents generally receive a base commission, plus the potential of additional commissions based on the achievement of pre-defined sales volumes. Most travel agents also sell cruises and other vacations provided by our competitors. We utilize local sales teams to motivate travel agents to support our products and services with competitive sales and pricing policies and joint marketing and advertising programs. We also employ a wide variety of trade marketing techniques, including websites, training

seminars and videos, to familiarize agents with our cruise brands and their products and services. Substantially all of our cruise brands offer interactive online and other education courses for travel professionals who want to continue learning about the cruise industry and how to effectively sell our cruise products and services. During fiscal 2013, no controlled group of travel agencies accounted for 10% or more of our revenues.

We are a customer service driven company and continue to invest in our service organization to assist travel agents and guests. We believe that our support systems and infrastructure are among the strongest in the vacation industry. Our investment in customer service includes the development of employees, processes and systems. We continually improve our systems within the reservations and customer relationship management functions, emphasizing the continuing support and training of the travel agency community, while simultaneously developing greater contact and interaction with our guest base.

All of our brands have developed internet booking engines to allow travel agents to book our cruises. We also support travel agent booking capabilities through global distribution systems. We estimate that almost 75% of our bookings from travel agents are made electronically.

All of our cruise brands have their own consumer websites that provide access to information about their products and services to users and enable their guests to quickly and easily book cruises and other products and services online. These sites interface with their social networks, blogs and other social media sites. We also employ vacation planners who support our direct sales initiatives by offering our guests cruise planning expertise and other services.

XI. Marketing Activities

Guest feedback and research is a critically important element in the development of our overall marketing and business strategies. We measure and evaluate key drivers of guest loyalty and satisfaction that provide valuable insights about the cruise experience. We regularly initiate customer research studies among guests, travel agents, tour operators and others to assess the impact of various programs and to solicit feedback to help make business decisions.

Each of our brands has comprehensive marketing and advertising programs to promote their products and services to vacationers and travel agents in their source markets. Each brand's marketing activities are designed to reach a local market in the local language. The principal mediums used for marketing and advertising are television, magazine, online, social media, direct mail, e-mail, brand websites, radio and outdoor billboards.

We continue to expand our marketing efforts to attract new guests online by leveraging the reach and impact of digital marketing and social media, such as Facebook, Twitter, YouTube, Blog, Google+, Flickr, Instagram and Pinterest. This helps us cultivate guests as fans of our brands, ships, itineraries and onboard products and services. In 2013, we had almost 7.5 million "Likes" on Facebook for all our brands. We also have blogs hosted by ship captains, cruise and entertainment directors, executive pursers and special guests. We use Twitter to enhance our customer service and as part of our public relations strategies to inform the press, popular bloggers, fans and brand advocates of new developments and breaking news stories.

All of our cruise brands offer past guest recognition programs that reward repeat guests with special incentives such as reduced fares, gifts, onboard activity discounts, expedited ship embarkation and disembarkation and special onboard activities. In addition, some of our brands offer private-label credit cards to their guests, which accumulate award points for them to redeem for our products and services, and also provide other loyalty benefits. We earn revenue from the credit card providers based principally on new card issuances and the volume of purchases through these credit cards that is included in our other revenues. Our cruise brands continue to offer new enhancements and benefits to their past guest recognition programs.

XII. Seasonality

Our revenues from the sale of passenger tickets are seasonal. Historically, demand for cruises has been greatest during our third fiscal quarter, which includes the Northern Hemisphere summer months. This higher demand during the third quarter results in higher ticket prices and occupancy levels and, accordingly, the largest share of our operating income is earned during this period. The seasonality of our results also increases due to ships being taken out-of-service for maintenance, which we schedule during non-peak demand periods. In addition, substantially all of Holland America Princess Alaska Tours' revenue and net income is generated from May through September in conjunction with the Alaska cruise season.

XIII. Competition

We compete with land-based vacation alternatives throughout the world, such as hotels, resorts (including allinclusive resorts), theme parks, organized tours, casinos and vacation ownership properties. Our principal cruise competitors are RCCL, Norwegian Cruise Line and MSC Cruises. RCCL owns Royal Caribbean International, Celebrity Cruises, Azamara Club Cruises, CDF Croisieres de France and Pullmantur. RCCL and TUI AG, the leading German tour operator, jointly own TUI Cruises, a German cruise competitor. Over 80% of all 2013 global cruise guests sailed with these competitors and us.

XIV. Governmental Regulations

a. Maritime Regulations

1. General

Our ships are regulated by various international, national, state and local laws, regulations, treaties and other legal requirements that govern health, environmental, safety and security matters in relation to our guests, crew and ships. These requirements change regularly, sometimes on a daily basis, depending on the itineraries of our ships and the ports and countries visited. If we violate or fail to comply with any of these laws, regulations, treaties and other requirements, we could be fined or otherwise sanctioned by regulators. We are committed to complying with, or exceeding, all relevant maritime requirements.

Our ships are registered, or flagged, in The Bahamas, Bermuda, Italy, Malta, the Netherlands, Panama, Portugal and the UK, which are also referred to as Flag States. They are regulated by these Flag States through international conventions that govern health, environmental, safety and security matters in relation to our guests, crew and ships. Representatives of each Flag State conduct periodic inspections, surveys and audits to verify compliance with these requirements. In addition, we are subject to the decrees, directives, regulations and requirements of the European Union ("EU"), the U.S. and more than 500 other international ports that our ships visit every year.

Our ships are also subject to periodic class surveys, including dry-docking inspections, by ship classification societies to verify that our ships have been maintained in accordance with the rules of the classification societies and that recommended repairs have been satisfactorily completed. Class certification is one of the necessary documents required for our cruise ships to be flagged in a specific country, obtain liability insurance and legally operate as passenger cruise ships. Dry-dock frequency is a statutory requirement mandated by the International Convention for the Safety of Life at Sea ("SOLAS"). Our ships dry-dock once or twice every five years, depending on the age of the ship. Dry-docking, which requires that the ship be temporarily taken out-of-service, typically lasts for one or more weeks depending on the amount of work performed. Significant dry-dock work includes hull inspection and related activities, such as scraping, pressure cleaning and bottom painting and maintenance of steering equipment, propulsion engines, stabilizers, thruster equipment and ballast tanks. While the ship is out of the water in dry-dock, we also perform other repairs and maintenance and ship improvement work. To the extent practical, each ship's crew including the hotel staff remain with the ship during the dry-dock period and assist in performing repair and maintenance work or participate in occupation, safety or other training.

As noted above, our ships are subject to inspection by the port regulatory authorities, which are also referred to as Port State Control, in the various countries that they visit. Such inspections include verification of compliance with the maritime safety, security, environmental, customs, immigration, health and labor requirements applicable to each port, as well as with international requirements. Many countries have joined together to form regional port regulatory authorities. Agreements have been signed covering Europe and the North Atlantic, Asia and the Pacific, Caribbean, West and Central Africa, the Black Sea region, the Mediterranean Sea, the Indian Ocean and other areas. In U.S. ports, these authorities include the U.S. Coast Guard and U.S. Customs and

Border Protection and in Canada, the Canadian Coast Guard. In Italian ports these authorities include the Italian Coast Guard, Maritime Health and the State Police. In UK ports, these authorities include the UK Maritime & Coastguard Agency, the Department for Transport's Transport Security team, otherwise known as TRANSEC, and the Port Health Authority.

Although not required by regulations, we voluntarily publish Sustainability Reports that address governance, commitments, stakeholder engagement, environmental, labor, human rights, society, product responsibility, economic and other sustainability-related issues and performance indicators. These reports, which can be viewed at www.carnivalcorp.com and www.carnivalplc.com, were developed in accordance with the Sustainability Reporting Guidelines established by the Global Reporting Initiative, the global standard for reporting on environmental, social and governance policies, practices and performance.

In 2006, our Boards of Directors established board-level Health, Environment, Safety & Security Committees ("HESS Committees"), which are currently each comprised of three independent directors. The principal function of the HESS Committees is to assist the boards in fulfilling their responsibility to supervise and monitor our health, safety, security and sustainability-related policies, programs and initiatives at sea and ashore and compliance with related legal and regulatory requirements. The HESS Committees and our management team reviews all significant risks or exposures and associated mitigating actions. We continue to be committed to implementing practical measures to manage identified risks effectively. To ensure that we are compliant with these requirements and that these areas of our business operate in an efficient manner we continue to, among other things:

Provide regular health, environmental, safety and security support, training, guidance and information to guests, employees and others working on our behalf,
Develop and implement effective and verifiable management systems to realize our health, environmental, safety and security commitments,
Perform regular shoreside and shipboard audits and take prompt action when deficiencies are identified,
Report and investigate all health, environmental, safety and security incidents and take appropriate action to prevent recurrence,
Identify those employees responsible for managing health, safety, environment, security and sustainability programs and ensure that there are clear lines of accountability and
Identify the aspects of our business that impact the environment and continue to take appropriate action to minimize that impact.

We believe maritime safety, security, environmental, sustainability, health and labor issues will continue to be areas of focus by relevant government authorities where our cruise ships operate and, accordingly, we will likely be subject to increasing compliance costs in the future.

2. Maritime Safety Regulations

The International Maritime Organization ("IMO"), a specialized agency of the United Nations, has adopted safety standards as part of SOLAS, which apply to all of our ships. Among other things, SOLAS establishes requirements for vessel design, structural features, construction and materials, refurbishment standards, lifesaving and other equipment, fire protection and detection, safe management and operation and security in order to help ensure guest and crew safety and security. All of our crew undergo regular safety training that meets or exceeds all international maritime regulations. SOLAS requirements are periodically revised and apply to ships under construction as well as to existing ships.

SOLAS requires implementation of the International Safety Management Code ("ISM Code"), which provides an international standard for the safe management and operation of ships and for pollution prevention. The ISM Code is mandatory for passenger vessel operators. Under the ISM Code, vessel operators are required to develop a Safety Management System ("SMS") that includes, among other things, the adoption of a safety and environmental protection policies setting forth instructions and procedures for operating vessels safely and describing procedures for responding to emergencies and protecting the environment. The ISM Code also requires that vessel operators obtain a Document of Compliance ("DOC") as well as a Safety Management

Certificate ("SMC") for each vessel they operate. These documents are issued by the vessel's Flag State and evidence our compliance with the SMS. Such DOCs and SMCs must be verified or renewed periodically in accordance with the ISM Code. All of our shoreside and shipboard operations and ships are regularly audited by the national authorities and maintain the required certificates of compliance in accordance with the ISM Code.

In December 2012, we completed a comprehensive audit and review of our safety and emergency response policies and procedures in consultation with third-party safety experts. This wide-ranging review reinforced our commitment to the safety of our guests and crew and recommended the:

Expansion and acceleration of training of our bridge and engine room officers in maritime related best practices at our training facilities in Almere, the Netherlands and Rostock, Germany, which opened in 2009 and 2011, respectively,
Expansion of our existing oversight function to monitor bridge operations, modified policies across all the health, environment, safety and security disciplines and created a process for continuous improvement in the safety of our operations,
Restructuring of our existing health, environment, safety and security audit function and
Further standardization of our detailed bridge and engine resource management procedures on all of our ships.

As members of the Cruise Lines International Association ("CLIA"), the global cruise business trade association, we have agreed to and are implementing policies that were identified as part of CLIA's Cruise Industry Operational Safety Review. These policies include passenger muster, passage planning, personnel access to the bridge, excess life jackets, recording the nationality of passengers, common elements of musters and emergency instructions, lifeboat loading for training purposes, harmonization of bridge procedures, location of lifejacket storage and securing heavy objects. Further details on the above policies can be found on the CLIA website at www.cruising.org/regulatory/cruise-industry-policies/cruise-industry-operational-safety-review.

3. Maritime Security Regulations

Our ships are subject to various security requirements. These requirements include the International Ship and Port Facility Security Code, which is part of SOLAS, the U.S. Maritime Transportation Security Act of 2002, which addresses port and waterway security and the U.S. Cruise Vessel Security and Safety Act, which applies to all of our ships that embark or disembark passengers in the U.S. These regulations require that, among other things, we implement specific security measures, including onboard installation of a ship security alert system, conduct vessel security assessments, identify and deter security threats, conduct training, drills and exercises and develop security plans that may include guest, vehicle and baggage screening procedures, security patrols, establishment of restricted areas, personnel identification procedures, access control measures and installation of surveillance equipment. We are in compliance with these maritime security regulations.

4. Maritime Environmental Regulations

We are subject to numerous international, national, state and local environmental laws, regulations and treaties that govern, among other things, air emissions, waste discharges, water management and disposal, and the storage, handling, use and disposal of hazardous substances such as chemicals, solvents and paints. In addition to the existing legal requirements, we are committed to helping to preserve the environment and, in particular, the health of the world's oceans as the success of our business is dependent on them. We have made, and will continue to make, capital and other expenditures to comply with environmental laws, regulations and treaties.

Our environmental efforts are focused on, among other things, reducing emissions such as greenhouse gases ("GHGs") (for example, carbon dioxide ("CO2") or carbon dioxide equivalents ("CO2e")), sulfur oxide ("SOx") and nitrogen oxide ("NOx"). These emissions result from the combustion of the marine fuels consumed by our ships, which accounts for substantially all of our total GHG and other emissions. Further, reducing fuel consumption continues to be one of our most important cross-brand initiatives, which has and will continue to help reduce emissions and mitigate the impact of high fuel prices. We have and will continue to implement our energy-saving strategy through our environmental management systems. This strategy includes installing some of the best available energy reduction technologies on our ships, such as propulsion and cooling systems, and

evaluating alternative fuels and emission reduction technologies. In addition, we are designing more energy efficient ships that will enter our fleet in the future, while continuing to reduce the fuel consumption of our existing fleet.

We measure our ability to use direct energy efficiently by calculating the amount of primary source energy we consume. We have achieved a 21% cumulative reduction in unit fuel consumption since 2007 and look to further manage and reduce our fuel consumption costs in the future. We control our GHG and other emissions by managing our energy consumption. Our ship fuel consumption and emission rates and our total ship fuel GHG emissions are as follows:

						Percentage Change Since
Measure	Units	2013	2012	2008	2012	2008
Ship Fuel Consumption Rate Grams Fuel/ALB-KM (a)		89	92	104	(3.3%)	(14.4%)
Ship Fuel GHG Emission Rate Grams CO2e/ALB-KM (b)		280	289	327	(3.1%)	(14.4%)
SOx Emission Rate Kg SOx/NM (c)		(e)	13.6	16.1	(e)	(15.5%)(e)
NOx Emission Rate Kg NOx/NM (c)		(e)	22.8	24.8	(e)	(8.1%)(e)
Total Ship Fuel GHG Emissions
(in millions) Tonnes CO2e (d)		10.3	10.6	10.0	(2.6%)	2.8%

(a) We measure and report the fuel consumption rate in terms of grams of fuel per available lower berth kilometer ("ALB-KM"). This indicator enables us to make meaningful fuel consumption comparisons that take into account changes in fleet size, itineraries and passenger capacity.

(b) We measure and report the fuel GHG emission rate in terms of grams of CO2e per ALB-KM. This indicator enables us to make meaningful GHG emission reduction comparisons that take into account changes in fleet size, itineraries and passenger capacity.

(c) We measure emission rates in terms of total kilograms ("Kg") of emissions per nautical mile ("NM"). Using an emission rate normalized by distance travelled allows us to compare our pollutant reduction efforts over the reporting periods.
(d) GHG emission data collection and calculations were performed in accordance with our GHG Inventory Management Plan, the Greenhouse Gas Protocol and ISO 14064-3:2006.
(e) Information for 2013 is not available as of February 20, 2014. Percentage reduction presented is from 2008 to 2012.

i. International Regulations

The principal international convention governing marine pollution prevention and response is the IMO's International Convention for the Prevention of Pollution from Ships ("MARPOL"). MARPOL includes requirements designed to prevent and minimize both accidental and operational pollution by oil, sewage, garbage and air emissions. To further these objectives, MARPOL sets forth specific requirements related to vessel operations, equipment, recordkeeping and reporting that are designed to prevent and minimize pollution. All of our ships must carry an International Oil Pollution Prevention Certificate, an International Sewage Pollution Prevention Certificate, an International Air Pollution Prevention Certificate and a Garbage Management Plan. The ship's Flag State issues these certificates, which evidence their compliance with the MARPOL regulations regarding prevention of pollution by oil, sewage, garbage and air emissions. Certain jurisdictions have not adopted MARPOL but have established various national, regional or local laws and regulations to address these issues.

As noted above, MARPOL governs the prevention of pollution by oil from operational measures, as well as from accidental discharges. MARPOL requires that discharges of machinery space bilge water pass through pollution prevention equipment that separates oil from the water and monitors the discharge to ensure that the effluent does not exceed 15 parts per million of oil. Our ships must have oily water separators with oil content monitors installed and must maintain a record of certain engine room operations in an Oil Record Book. MARPOL also requires that our ships have Shipboard Oil Pollution Emergency Plans.

MARPOL also governs the discharge of sewage from ships and contains regulations regarding the ships' equipment and systems for the control of sewage discharge, the provision of facilities at ports and terminals for the reception of sewage and requirements for survey and certification. The MARPOL amendment making the Baltic Sea a "Special Area" where sewage discharges from passenger ships are restricted entered into force on January 1, 2013. However, this amendment will only take effect upon notification of the existence of adequate reception facilities from countries whose coastlines border the Baltic Sea Special Area. The date these amendments will take effect is uncertain as the underlying requirements have not yet been finalized. These new requirements may affect our operations unless suitable port waste facilities are available or new technologies for onboard waste treatment are developed. The cost of complying with these new requirements is not determinable at this time.

MARPOL also governs the discharge of garbage from ships and requires a Garbage Management Plan and a Garbage Record Book. New regulations addressing garbage management went into effect on January 1, 2013. The most significant change in the new regulations is the prohibition on the discharge of all garbage unless the discharge is expressly provided for under the regulations. The cost of offloading garbage increased in 2013 as a result of these new requirements.

Furthermore, MARPOL addresses air emissions from vessels, establishes requirements for the prevention of air pollution from ships to reduce emissions of SOx, NOx and particulate matter. It also contains restrictions on the use of ozone depleting substances ("ODS") and requires the recording of ODS use, equipment containing ODS, the emission of ODS and the disposal of equipment containing ODS from ships. Finally, additional MARPOL requirements are discussed below in Section iv. "Low Sulfur Fuel Regulations."

As a means of managing our environmental compliance, we adhere to standards set by the International Organization for Standardization ("ISO"), an international standard-setting body, which produces worldwide industrial and commercial standards. Our environmental management systems and ships are certified in accordance with ISO 14001, the environmental management standard that was developed to help organizations manage the environmental impacts of their processes, products and services. By presenting a structured approach to setting environmental objectives and targets, ISO 14001 provides a framework for any organization to apply these broad conceptual tools to their own processes.

ii. U.S. Federal and State Regulations

The Act to Prevent Pollution from Ships, authorizes the implementation of MARPOL in the U.S. and imposes numerous requirements on our ships, as discussed above. Administrative, civil and criminal penalties may be assessed for violations.

The Oil Pollution Act of 1990 ("OPA 90") established a comprehensive federal liability regime, as well as prevention and response requirements, relating to discharges of oil in U.S. waters. The major requirements include demonstrating financial responsibility up to the liability limits and having oil spill response plans in place. We have Certificates of Financial Responsibility that demonstrate our ability to meet the maximum amount of OPA 90 related liability that our ships could be subject to for removal costs and damages, such as from an oil spill or a release of a hazardous substance. Under OPA 90, owners or operators of vessels operating in U.S. waters must file vessel response plans with the U.S. Coast Guard and must operate in compliance with these plans. Our vessel response plans have been submitted to the U.S. Coast Guard and we operate in accordance with our plans. As OPA 90 expressly allows coastal states to impose liabilities and requirements beyond those imposed under federal law, many U.S. states have enacted laws more stringent than OPA 90. Some of these state laws impose unlimited liability for oil spills and contain more stringent financial responsibility and contingency planning requirements, of which we are in compliance.

The Clean Water Act ("CWA") and other laws and regulations provide the U.S. Environmental Protection Agency ("EPA") with the authority to regulate commercial vessels' incidental discharges of ballast water, bilge water, gray water, anti-fouling paints and other substances during normal operations within the U.S. three mile territorial sea and inland waters.

Pursuant to the CWA authority, the U.S. National Pollutant Discharge Elimination System was designed to minimize pollution within U.S. territorial waters. For our affected ships, all of the requirements are laid out in the Vessel General Permit ("VGP"), which is an EPA requirement. The VGP establishes effluent limits for 26

specific discharges incidental to the normal operation of a vessel. In addition to these discharge and vessel specific requirements, the VGP includes requirements for inspections, monitoring, reporting and record-keeping.

Our operations generate and require the transportation and disposal of both hazardous and non-hazardous solid wastes that are subject to the requirements of the U.S. Resource Conservation and Recovery Act. In general, vessel owners are required to determine if their wastes are hazardous, comply with certain standards for the proper management of hazardous wastes and use hazardous waste manifests for shipments to disposal facilities.

In 1996, the U.S. National Invasive Species Act ("NISA") was enacted in response to growing reports of harmful organisms being released into U.S. waters through ballast water taken on by vessels in foreign waters. The U.S. Coast Guard adopted regulations under NISA in July 2004 that impose mandatory ballast water management practices for all vessels equipped with ballast water tanks entering U.S. waters. These requirements can be met by performing mid-ocean ballast exchange, by retaining ballast water onboard the vessel or by using environmentally sound ballast water treatment methods approved by the U.S. Coast Guard.

The U.S. Coast Guard issued a final rule, which went into effect in June 2012, establishing standards for the allowable concentration of living organisms in ballast water discharged in U.S. waters and requiring the phase-in of U.S. Coast Guard approved ballast water management systems. The standards are equivalent to those in the IMO convention. In most cases, affected vessels will be required to install and operate a ballast water management system that has been approved by the U.S. Coast Guard. A vessel's compliance date varies based upon the date of construction and ballast water capacity. New ships constructed on or after December 1, 2013 must comply with these standards on delivery. Existing ships must comply by their first dry-dock after January 1, 2014 or 2016, depending on the ships' ballast water capacity. However, as of February 20, 2014, no ballast water management systems have been approved by the U.S. Coast Guard and, accordingly, they are granting exemptions from this rule.

Most U.S. states that border navigable waterways or sea coasts have also enacted environmental regulations that impose strict liability for removal costs and damages resulting from a discharge of oil or a release of a hazardous substance. These laws may be more stringent than U.S. federal law and in some cases have no statutory limits of liability.

The state of Alaska enacted legislation that prohibits certain discharges in designated Alaskan waters and sets effluent limits on others. Further, the state requires that certain discharges be reported and monitored to verify compliance with the standards established by the legislation. Both the state and federal environmental regimes in Alaska are more stringent than the U.S. federal requirements with regard to discharge from vessels. The legislation also provides that repeat violators of the regulations could be prohibited from operating in Alaskan waters.

iii. EU Regulations

Over the past 30 years, the EU has adopted a broad range of substantial environmental measures aimed at improving the quality of the environment for European citizens and providing them with a high quality of life. To support the implementation and enforcement of European environmental legislation, the EU has adopted directives on environmental liability and enforcement and a recommendation providing for minimum criteria for environmental inspections.

The European Commission's ("EC") strategy is to reduce atmospheric emissions from seagoing ships. The EC strategy seeks to implement SOx Emission Control Areas set out in MARPOL, as discussed below. In addition, the EC goes beyond the IMO by requiring the use of low sulfur (less than 0.1%) marine gas oil while in EU ports.

iv. Low Sulfur Fuel Regulations

MARPOL Annex VI, which addresses air emissions from vessels, requires the use of low sulfur fuel worldwide in both auxiliary and main propulsion diesel engines on ships. Annex VI also specifies requirements for Emission Control Areas ("ECAs") with stricter limitations on sulfur emissions in these areas. Ships operating in the Baltic

Sea ECA, the North Sea/English Channel ECA and the North American ECA are required to use fuel with a sulfur content of no more than 1% or use alternative emission reduction methods rather than the current 3.5% global limit. Beginning in January 2014, the area that extends approximately 50 miles off the coasts of Puerto Rico and the U.S. Virgin Islands has also become an ECA ("U.S. Caribbean ECA"), but we do not believe this will result in a significant impact on our fuel costs. From January 2015 and thereafter, the fuel sulfur content limit in ECAs will be further reduced to 0.1% ("2015 ECA").

The MARPOL global limit on fuel sulfur content outside of ECAs will be reduced to 0.5% on and after January 2020. The 0.5% global standard will be subject to an IMO review by 2018 to determine the availability of fuel oil to comply with this standard, taking into account the global fuel oil market supply and demand, an analysis of trends in fuel oil markets and any other relevant issues. If the IMO determines that there is insufficient fuel to comply with the 0.5% standard in January 2020, then this requirement will be delayed to January 2025, at the latest. However, the European Union Parliament and Council have set 2020 as the final date for the 0.5% fuel sulfur limit to enter force, regardless of the 2018 IMO review results. This European Union Sulfur Directive will cover European Union Member State territorial waters that are within 12 nautical miles of their coastline.

In conjunction with an affiliate we have and will continue to develop and test scrubber designs that we believe will reduce the sulfur emission levels of our higher sulfur bunker fuel to or below the levels required under the current and 2015 ECAs. Furthermore, we have received an exemption for 32 ships that regularly sail within the North American and U.S. Caribbean ECA that will delay the requirements to comply with the 2015 ECA limits through agreed upon dates ending in 2016. We expect to install scrubbers on most of our ships between 2014 and 2016. As a result of installing these scrubbers, we believe the cost of complying with the 2015 ECA sulfur emission requirement will not be significant to our results of operations.

In regards to the 2020 MARPOL global requirements outside of ECAs, we currently plan on installing additional scrubbers on our ships between 2017 and 2019 in order to comply with these requirements. We expect that as a result of installing these scrubbers, the cost of complying with the 2020 MARPOL global requirements will also not be significant to our results of operations.

Beyond scrubber technology, as part of our emission abatement program, we have continued our work with local port authorities and/or the EPA to help promote the development of shore power connections in Juneau, Alaska; Long Beach, Los Angeles, San Francisco and San Diego, California; Seattle, Washington and Vancouver, British Columbia and have equipped 21 ships with shore power technology. We expect to work with other port authorities in the future to implement additional shore power connections. This technology enables our ships to use power from the local electricity provider rather than running their engines while in port to power their onboard services, and thus reducing our air emissions. Similarly, in an effort to continue our commitment to sustainability and to playing a leading role in matters of environmental protection in the cruise ship industry, AIDA launched a pilot project using a liquefied natural gas ("LNG") hybrid barge for ecologically friendly and flexible power supply as an alternative to shore power, while its ships are moored in the port of Hamburg, Germany.

In the long-term, the cost impacts of achieving progressively lower sulfur emission requirements may be further mitigated by the favorable impact of future changes in the supply and demand balance for marine and other fuels, future developments of and investments in improved sulfur emission abatement technologies, the use of alternative lower cost and lower emission fuels, such as LNG at sea and in port, and our continued efforts to improve the overall fuel efficiency across our fleet. Since 2007, we have achieved a 21% cumulative reduction in unit fuel consumption by focusing on the following:

efficiency improvements in the areas of hull coatings
improved engine performance
more efficient air conditioning
more efficient LED lighting
more advanced engine designs
more efficient propeller designs
more efficient pumps and ventilation
new itineraries
reduction in ship speeds
increased energy use awareness and training

v. Greenhouse Gas Emissions

We have voluntarily set a reduction target of 20% from our 2005 baseline of CO2 emission rate from shipboard operations by 2015. We have already reached a reduction of almost 19%. We have established objectives, targets and plans within their respective ISO 14001 environmental management systems to reduce fuel consumption rates and resulting CO2 emission rates.

We voluntarily participated in the Carbon Disclosure Project ("CDP"), which provides visibility of companies' carbon footprints and activities regarding carbon emissions. The CDP rates companies on the depth and scope of their disclosures and the quality of their reporting. Our submission included details of our most recently compiled emissions data and reduction efforts, along with our completion of an independent, third-party verification of our GHG emissions inventory.

In January 2013, the IMO approved measures to reduce emissions of GHGs from international shipping by adopting technical and operational measures for all ships. The technical measures apply to the design of new vessels, and the operational reduction measures apply to all vessels. We are in compliance with these measures.

5. Maritime Health Regulations

We are committed to providing a healthy environment for all of our guests and crew. We collaborate with public health inspection programs throughout the world, such as the Centers for Disease Control and Prevention in the U.S., the SHIPSAN Project in the EU and the National Health Surveillance Agency in Brazil to ensure that development of these programs leads to enhanced health and hygiene onboard our ships.

Through our collaborative efforts, we work with the authorities to develop and revise guidelines, review plans and conduct on-site inspections for all newbuilds and significant existing ship renovations. In addition, we continue to maintain our ships by meeting, and often exceeding, applicable public health guidelines and requirements, complying with inspections, reporting communicable illnesses and conducting regular crew training and guest education programs.

6. Maritime Labor Regulations

In 2006, the International Labor Organization, an agency of the United Nations that develops and oversees international labor standards, adopted a Consolidated Maritime Labor Convention ("MLC 2006"). MLC 2006 contains a comprehensive set of global standards and includes a broad range of requirements, such as the definition of a seafarer, minimum age of seafarers, medical certificates, recruitment practices, training, repatriation, food, recreational facilities, health and welfare, hours of work and rest, accommodations, wages and entitlements. In August 2013, MLC 2006 became effective in certain countries in which we operate and we are in compliance.

The International Convention on Standards of Training, Certification and Watchkeeping for Seafarers ("STCW"), as amended, establishes minimum standards relating to training, including security training, certification and watchkeeping for our seafarers. We are compliant with the requirements of STCW.

b. Consumer Regulations

Our ships that call on U.S. ports are regulated by the Federal Maritime Commission ("FMC"). Public Law 89- 777, which is administered by the FMC, requires all our cruise brands that call on U.S. ports and embark or disembark guests in U.S. ports to establish financial responsibility for their liability to passengers for nonperformance of transportation, for personal injury and for loss of life. The FMC's regulations require that a cruise line demonstrate its financial responsibility for nonperformance of transportation through a guarantee, escrow arrangement, surety bond or insurance. Currently, the amount required must equal 110% of the cruise line's highest amount of customer deposits over a two-year period, up to a maximum coverage level of \$15 million and will be increasing to \$30 million by April 2015. In order to comply with this requirement, we have an aggregate of \$75 million of guarantees provided by some of our insurers. Based on the increase mentioned above, our guarantee will increase to \$150 million by April 2015. Our Protection and Indemnity coverages are used to establish our financial responsibility for personal injury and loss of life.

In some cases in the UK, Europe and Australia, we are required to obtain licenses from and post bonds with various organizations in connection with the conduct of our business and/or our ability to meet our liabilities in the event of nonperformance of obligations to consumers. The most significant requirement relates to ABTA, formally known as the Association of British Travel Agents, which requires us to maintain approximately \$140 million of sterling-denominated bonds to cover certain of our brands' UK customer deposits. We are also required to pay to the UK Civil Aviation Authority a non-refundable £2.50 fee per guest when we arrange a flight as part of a cruise vacation.

In the other major countries where we source our guests, we are also required to establish financial responsibility, such as obtaining a guarantee from a reputable insurance company to ensure that, in case of insolvency, our guests will be refunded their deposits and repatriated without additional cost if insolvency occurs after a cruise starts.

c. Regulations for Guests with Disabilities

Regulations regarding ship accessibility standards are expected to be issued in the U.S. in the future. While we believe our vessels have been designed and outfitted to accommodate our disabled guests, we cannot at this time accurately predict whether we will be required to make material modifications or incur significant additional expenses in response to these expected regulations.

C. Employees

Our shoreside operations have an average of 9,700 full-time and 4,500 part-time/seasonal employees. We also employ an average of 78,500 crew members, including officers, onboard the 101 ships we currently operate. Of our total employees, 22% are female and 78% are male. Two of the 10 members of our Boards of Directors are female and eight are male. All of our executive officers are male. Holland America Princess Alaska Tours increases its work force during the late spring and summer months in connection with the Alaskan cruise season, which seasonal employees are included above. We have entered into agreements with unions covering certain employees on our ships and in our hotel and transportation operations. We consider our employee and union relations to be strong. The percentages of our shipboard and shoreside employees that are represented by collective bargaining agreements are 30% and 12%, respectively.

We source our shipboard officers primarily from Italy, the UK, Holland, Germany and Norway. The remaining crew positions are sourced from around the world, with the largest contingent from the Philippines, Indonesia and India. We utilize a limited number of manning agencies to help locate and hire most of our shipboard employees. The sourcing diversity of our crew, the majority of which are employed on a gratuity-based wage structure, is also a significant contributing factor to the attractiveness of our cruise business model.

Our cruise brands are committed to providing appropriate hotel and marine-related training to ensure that our shipboard crew, including officers, have the knowledge and skills to properly perform their jobs. We have a maritime training program for shipboard officers that includes two maritime training facilities with one located in Almere, the Netherlands, known as the Center for Simulator Maritime Training ("CSMART"), and the other in Rostock, Germany, known as CSMART Rostock. Our mission is to be a leader in delivering high quality professional maritime training. Participants receive a superior maritime training experience that fosters critical thinking, problem solving, ethical decision making and confidence. CSMART offers two full mission bridge simulators, six part-task bridge simulators and the ability to simulate fixed propeller and azipod simulation. CSMART Rostock offers one full mission bridge simulator and one part-task bridge simulator. On the engineering side, CSMART offers two full mission engine control rooms with four machinery outstations and 16 part-task engine room simulators. CSMART Rostock offers one part-task engine room simulator. The CSMART facility also features large instructional classrooms, meeting rooms and a catering facility. We have enhanced our Health, Environment, Safety and Security Management System risk assessment and management capabilities by implementing shipboard quality assurance initiatives that will further strengthen bridge and engine control room resource management training and operational performance. We have also established the European Cruise Academy in Rostock, Germany, which offers advanced training certificates in the maritime sciences primarily related to the cruise business.

D. Suppliers

Our largest non-payroll operating expenditures are for fuel, food and beverages, travel agency services, port facility utilization, repairs and maintenance including dry-docking, air transportation services, advertising and marketing, hotel and restaurant products and supplies and communication services. Our largest capital investments are for the construction of new ships and improvements to existing ships, including our vessel enhancement program and scrubber installations.

Although we utilize a select number of suppliers for most of our food and beverages, communication services, air transportation services and hotel and restaurant products and supplies, most of these products and services are available from multiple sources at competitive prices. The use of a select number of suppliers enables us to, among other things, obtain volume discounts. We purchase fuel and port facility services at some of our ports-ofcall from a limited number of maritime suppliers. Almost 50% of our fuel purchases are provided by five suppliers.

We perform our major dry-dock and ship improvement work at dry-dock facilities in The Bahamas, Europe, the U.S., Canada, Singapore and Australia. At February 20, 2014, we have agreements in place for the construction of eight cruise ships with two shipyards. We also purchase repair, maintenance and refurbishment items from a limited number of maritime suppliers. We believe there are sufficient dry-dock and shipbuilding facilities and related suppliers to meet our anticipated repair, maintenance, ship improvement and newbuild requirements.

E. Insurance

I. General

We maintain insurance to cover a number of risks associated with owning and operating our vessels and other non-ship related risks. All such insurance policies are subject to coverage limits, exclusions and deductible levels. Insurance premiums are dependent on our own loss experience and the general premium requirements of our insurers. We maintain certain levels of deductibles for substantially all the below-mentioned coverages, some of which have increased in recent years, and we may increase our deductibles further to mitigate future premium increases. We do not carry coverage related to loss of earnings or revenues from our ships or other operations.

II. Protection and Indemnity ("P&I") Coverages

Liabilities, costs and expenses for illness and injury to crew, guest injury, pollution and other third party claims in connection with our cruise activities are covered by our P&I clubs, which are mutual indemnity associations owned by ship owners.

We are members of the Standard Steamship Owners' Protection and Indemnity Association (Europe) Limited and The Steamship Mutual Underwriting Association (Bermuda) Limited P&I clubs. The P&I clubs that we participate in are part of a worldwide group of P&I clubs, known as the International Group of P&I Clubs (the "IG"). The IG insures directly, and through broad and established reinsurance markets, a large portion of the world's shipping fleets. Coverage is subject to the P&I clubs' rules and the limits of coverage are determined by the IG.

III. Hull and Machinery Insurance

We maintain insurance on the hull and machinery of each of our ships for reasonable amounts as determined by management. The coverage for hull and machinery is provided by large and well-established international marine insurers. Most insurers make it a condition for insurance coverage that a ship be certified as "in class" by a classification society that is a member of the International Association of Classification Societies ("IACS"). All of our ships have been certified within the last twelve months to be in class by an IACS member.

IV. War Risk Insurance

We maintain war risk insurance for legal liability to crew, guests and other third parties as well as loss or damage to our vessels arising from war or war-like actions, including terrorist incidents. Items excluded from this

coverage are claims arising from chemical, nuclear and biological attacks. Our primary war risk insurance coverage is provided by international marine insurers and our excess war risk insurance is provided by our two P&I clubs. Under the terms of our war risk insurance coverage, which are typical for war risk policies in the marine industry, insurers can give us seven days' notice that the insurance policies will be cancelled. However, the policies can be reinstated at different premium rates. This gives insurers the ability to increase our premiums following events that they determine have increased their risk.

V. Other Insurance

We maintain property insurance covering our shoreside assets and casualty insurance covering liabilities to third parties arising from our hotel and transportation businesses, shore excursion operations and shoreside operations, including our port and related commercial facilities. We also maintain workers compensation, directors and officer's liability and other insurance coverages.

F. Trademarks and Other Intellectual Property

We own and have registered or licensed numerous trademarks and domain names, which we believe are widely recognized and have considerable value. These intangible assets enable us to distinguish our cruise products and services, ships and programs from those of our competitors. Our trademarks include the trade names of our cruise brands, each of which we believe is a widely-recognized brand in the cruise industry, as well as our ship names and a wide variety of cruise products and services. We have entered into licenses, including a license to use the P&O name, the P&O flag and other relevant trademarks and domain names in relation to cruising and related activities. We also have a license to use the "Love Boat" name and related marks.

G. Taxation

A summary of our principal taxes and exemptions in the jurisdictions where our primary businesses are located is as follows:

I. U.S. Income Tax

We are primarily foreign corporations engaged in the business of operating cruise ships in international transportation. We also own and operate, among other businesses, the U.S. hotel and transportation business of Holland America Princess Alaska Tours through U.S. corporations.

Our North American cruise ship businesses and certain ship-owning subsidiaries are engaged in a trade or business within the U.S. Depending on its itinerary, any particular ship may generate income from sources within the U.S. We believe that our U.S. source income and the income of our ship-owning subsidiaries, to the extent derived from, or incidental to, the international operation of a ship or ships, is currently exempt from U.S. federal income and branch profit taxes.

Our domestic U.S. operations, principally the hotel and transportation business of Holland America Princess Alaska Tours, are subject to federal and state income taxation in the U.S.

a. Application of Section 883 of the Internal Revenue Code

In general, under Section 883 of the Internal Revenue Code, certain non-U.S. corporations (such as our North American cruise ship businesses) are not subject to U.S. federal income tax or branch profits tax on U.S. source income derived from, or incidental to, the international operation of a ship or ships. Applicable U.S. Treasury regulations provide in general that a foreign corporation will qualify for the benefits of Section 883 if, in relevant part, (i) the foreign country in which the foreign corporation is organized grants an equivalent exemption to corporations organized in the U.S. (an "equivalent exemption jurisdiction") and (ii) the foreign corporation meets a defined publicly-traded test. Subsidiaries of foreign corporations that are organized in an equivalent exemption jurisdiction and meet the publicly-traded test also benefit from Section 883. We believe that Panama is an equivalent exemption jurisdiction and Carnival Corporation currently qualifies as a publicly-traded corporation under the regulations. Accordingly, substantially all of Carnival Corporation's income is exempt from U.S. federal income and branch profit taxes.

Regulations under Section 883 list items that the Internal Revenue Service ("IRS") does not consider to be incidental to ship operations. Among the items identified as not incidental is income from the sale of air transportation, transfers, shore excursions and pre- and post-cruise land packages to the extent earned from sources within the U.S.

b. Exemption Under Applicable Income Tax Treaties

We believe that the U.S. source transportation income earned by Carnival plc and its Italian resident subsidiary currently qualifies for exemption from U.S. federal income tax under applicable bilateral U.S. income tax treaties.

c. U.S. State Income Tax

Carnival Corporation and Carnival plc and certain of their subsidiaries are subject to various U.S. state income taxes generally imposed on each state's portion of the U.S. source income subject to U.S. federal income taxes. However, the state of Alaska imposes an income tax on its allocated portion of the total income of our companies doing business in Alaska and certain of their subsidiaries.

II. UK and Australian Income Tax

Cunard, P&O Cruises (UK) and P&O Cruises (Australia) are divisions of Carnival plc and have elected to enter the UK tonnage tax regime through 2023. Companies to which the tonnage tax regime applies pay corporation taxes on profits calculated by reference to the net tonnage of qualifying ships. UK corporation tax is not chargeable under the normal UK tax rules on these brands' relevant shipping income. Relevant shipping income includes income from the operation of qualifying ships and from shipping related activities.

For a company to be eligible for the regime, it must be subject to UK corporation tax and, among other matters, operate qualifying ships that are strategically and commercially managed in the UK. Companies within UK tonnage tax are also subject to a seafarer training requirement.

Our UK non-shipping activities that do not qualify under the UK tonnage tax regime remain subject to normal UK corporation tax. Dividends received from subsidiaries of Carnival plc doing business outside the UK are generally exempt from UK corporation tax.

P&O Cruises (Australia) and all of the other cruise ships operated internationally by Carnival plc for the Australian market are exempt from Australian corporation tax by virtue of the UK/Australian income tax treaty.

III. Italian Income Tax

Costa, AIDA and Ibero have elected to enter the Italian tonnage tax regime through 2014 and can reapply for an additional ten-year period beginning 2015. Companies to which the tonnage tax regime applies pay corporation taxes on shipping profits calculated by reference to the net tonnage of qualifying ships.

Most of Costa's and AIDA's earnings not considered to be shipping profits for Italian tonnage tax purposes will be taxed at an effective tax rate of approximately 6% under the Italian International shipping tax regime since all of their ships are Italian registered.

IV. Portuguese, Spanish and German Income Tax

Both of Ibero's ships are registered in Portugal. Provided certain local employment requirements are satisfied, most of Ibero's income that is not considered to be shipping profits for Italian tonnage tax purposes is subject to Portuguese income tax at effective rates of 5% through 2020. After 2020, such income will be subject to the normal Portuguese tax rate.

Ibero's Spanish operations are minimal and, therefore, its Spanish income taxes are minimal.

Substantially all of AIDA's earnings are exempt from German corporation tax by virtue of the Italy/Germany income tax treaty.

V. Brazilian, Chinese and Japanese Income and Other Taxes

From November through March, Costa and Ibero operate directly and charter certain of their ships for operation in Brazil to Brazilian subsidiaries. The subsidiaries' earnings are subject to Brazilian resident income tax, and we believe that payments passengers and these subsidiaries make to Costa and Ibero are exempt from Brazilian income tax under Brazilian domestic law and the Italy/Brazil income tax treaty.

Substantially all of Costa's income from its international operations in China is exempt from Chinese corporation tax by virtue of the Italy/China Maritime tax treaty.

The Princess cruise ships operated internationally by Carnival plc for the Asian markets are exempt from Chinese and Japanese income taxes by virtue of tax treaties between these countries and the United Kingdom.

VI. Other

In addition to or in place of income taxes, virtually all jurisdictions where our ships call impose taxes and/or fees based on guest counts, ship tonnage, passenger capacity or some other measure.

3. BUSINESS REVIEW (MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, INCLUDING CRITICAL ACCOUNTING ESTIMATES AND KEY PERFORMANCE INDICATORS).

2013 Executive Overview

The past two years have been challenging as we have had voyage disruptions that drew public attention to the safety and reliability of our products and services. Although the frequency of our incidents relative to our size is below the cruise industry average, the negative publicity we received significantly impacted the reputation and, accordingly, the demand for two of our largest brands, Costa and Carnival Cruise Lines. We have, and continue to, take steps to help ensure that our cruise products and services are safe and reliable and that in the rare event of a ship incident, our guests and crew are comfortably returned to port. Safety of our guests and crew is our utmost concern and key to our continuing success. These incidents, in combination with the uncertain global economic conditions, significantly impacted our results in 2012 and 2013. However, Costa did return to profitability in 2013, excluding the impact of ship impairment charges related to two of its smaller vessels. We are confident that our business will continue to recover over the next few years.

As a result of the 2013 voyage disruptions, we commenced a corporate-wide vessel enhancement program to improve emergency power capabilities, to introduce new or enhanced fire safety technology and to increase the level of operating redundancies. The corporate-wide program of enhancements is expected to cost as much as \$700 million and will take place over the next several years. In addition to these operational enhancements, we are committed to rebuilding the image and reputation of Carnival Cruise Lines, which in turn will drive additional guest demand and increase profitability. To help rebuild its image and reputation, we have introduced a number of innovative product initiatives, launched a nationwide advertising campaign and travel agent outreach program, as well as an industry-leading vacation guarantee.

With over 100 ships and more than 10 million guests, we have a scale advantage in the cruise industry and are aggressively seeking opportunities to use it to drive top line improvements and obtain economies of scale and synergies by utilizing our purchasing power and implementing cross-brand initiatives aimed at cost-containment.

We recently realigned our leadership team and changed our work processes and our incentive structures to enable our brands to more efficiently collaborate and coordinate among each other, which will help us to further optimize our operations. Our leadership team has identified and will continue to identify opportunities to use our scale to drive initiatives to increase our revenues, while optimizing our cost structure, with the goal of improving our return on invested capital. In addition, we have heightened our focus on the guest experience and further exceeding guest expectations.

We also realized major milestones in the emerging Asian cruise region in 2013 by more than doubling our presence in China, as well as launching our first season of cruises originating from Japan. In addition, in 2013 we opened ten sales offices throughout Asia to support our continued expansion plans in this important emerging cruise region.

Net income for 2013 was \$1.1 billion, compared to \$1.3 billion for the prior year. This decrease was caused by a 2.6% decrease in constant dollar net revenue yields and a 4.6% increase in constant dollar net cruise costs excluding fuel per available lower berth days ("ALBD"), partially offset by lower fuel prices and fuel consumption per ALBD.

The 2.6% decrease in constant dollar net revenue yields was driven by our North America brands, which was primarily due to promotional pricing at Carnival Cruise Lines. In addition, our EAA brands' constant dollar net revenue yields decreased, which was affected by the ongoing challenging economic environment in Europe. Although Costa's constant dollar net revenue yields increased, they were more than offset by decreases at our other European brands.

In 2013, the constant dollar net cruise costs excluding fuel per ALBD increase of 4.6% compared to the prior year was primarily due to voyage disruptions and related repair costs, higher advertising spend, new market development initiative costs in Japan, China and Australia and vessel enhancement expenses.

Our 5.3% lower fuel consumption per ALBD compared to the prior year continues our multiple-year fuel consumption savings trend, which has reached 23% since 2005. In 2013, we furthered our environmental efforts through the successful testing of a new exhaust gas cleaning "scrubber" technology and plan to install scrubbers on most of our ships between 2014 and 2016. In addition to exceeding stricter air emission standards, this technology will help mitigate higher fuel costs on these ships.

During 2013, we generated \$2.8 billion of cash from operations and used \$2.1 billion to fund net capital expenditures, leaving us with almost \$0.7 billion of free cash flow (defined as cash from operations less net capital expenditures). All of this free cash flow was returned to shareholders through our regular quarterly dividend. In addition, during 2013 we repurchased \$103 million of Carnival Corporation common stock. Over time, we expect to have higher levels of free cash flow, which we intend to return to shareholders in the form of additional dividends and opportune share buybacks.

We are building new innovative ships and continue to invest in our existing ships in order to strengthen the leadership position of each of our brands and to achieve our mission and primary financial goals. Our newbuilding program is the primary platform for our capacity growth. In 2013, we continued the enhancement of our fleet with the debut of Princess' 3,560-passenger Royal Princess and AIDA's 2,194-passenger AIDAstella. In addition, we announced an order for a Seabourn ship, which is expected to enter service in 2016. This ship will replace the capacity of the three original Seabourn ships, which were sold in 2013 and will be leaving the fleet by May 2015. Finally, we announced the retirement of a small Costa ship.

As of February 20, 2014, we currently have eight cruise ships scheduled to enter service between May 2014 and July 2016, some of which will replace existing capacity from the possible sales of older, smaller or less efficient ships. We strategically time the introduction of additional ships into our brands to allow ample time for those lines to further grow their guest base and absorb the new capacity. Our rate of growth has slowed in the more established regions of North America and Western Europe. We are committed to a measured pace of newbuilds to achieve an optimal balance of supply and demand to maximize our profitability in these established regions. In addition, we believe that we have significant opportunities to grow our presence in the emerging Asian cruise region and will continue to redeploy some of our existing ships to that region.

Outlook for the 2014 First Quarter and Full Year

On December 19, 2013, we said that we expected our non-GAAP diluted (loss) earnings per share for the 2014 first quarter and full year would be in the ranges of \$(0.07) to \$(0.11) and \$1.40 to \$1.80, respectively (see "Key Performance Non-GAAP Financial Indicators"). Our guidance was based on fuel prices of \$643 per metric ton and \$650 per metric ton for the 2014 first quarter and full year, respectively. In addition, our guidance was based on 2014 first quarter and full year currency rates of \$1.37 to the euro, \$1.64 to sterling and \$0.91 to the Australian dollar. The fuel and currency assumptions used in our guidance change daily and, accordingly, our forecasts change daily based on the changes in these assumptions.

We believe it is more meaningful to evaluate our earnings performance by excluding, among other things, the impact of unrealized gains and losses on fuel derivatives from non-GAAP diluted earnings per share. Therefore, we do not include any future estimates of unrealized gains and losses on fuel derivatives in our non-GAAP earnings per share guidance. However, we do forecast realized gains and losses on fuel derivatives by applying current Brent crude oil ("Brent") prices to the derivatives that settle in the forecast period.

The above forward-looking statements involve risks, uncertainties and assumptions with respect to us. There are many factors that could cause our actual results to differ materially from those expressed above including, but not limited to, general economic and business conditions, increases in fuel prices, incidents, spread of contagious diseases, adverse weather conditions, geo-political events, negative publicity and other factors that could adversely impact our revenues, costs and expenses. You should read the above forward-looking statement together with the discussion of these and other risks under Principal Risks and Uncertainties within this Strategic Report.

Critical Accounting Estimates

Our critical accounting estimates are those that we believe require our most significant judgments about the effect of matters that are inherently uncertain. A discussion of our critical accounting estimates, the underlying judgments and uncertainties used to make them and the likelihood that materially different estimates would be reported under different conditions or using different assumptions is as follows:

Ship Accounting

Our most significant assets are our ships, including ship improvements and ships under construction, which represent 79% of our total assets at November 30, 2013. We make several critical accounting estimates with respect to our ship accounting. First, in order to compute our ships' depreciation expense, which represented 10% of our cruise costs and expenses in 2013, we have to estimate the average useful life of each of our ships as well as their residual values. Secondly, we account for ship improvement costs by capitalizing those costs that we believe add value to our ships and have a useful life greater than one year, and depreciate those improvements over their or the ships' estimated remaining useful life, whichever is shorter, while the costs of repairs and maintenance, including minor improvement costs and dry-dock expenses, are charged to expense as incurred. Finally, when we record the retirement of a ship component that is included within the ship's cost basis, we may have to estimate the net book value of the asset being retired in order to remove it from the ship's cost basis.

We determine the average useful life of our ships and their residual values based primarily on our estimates of the weighted-average useful lives and residual values of the ships' major component systems, such as cabins, superstructure, main electric, engines and hull. In addition, we consider, among other things, long-term vacation market conditions, competition and historical useful lives of similarly-built ships. We have estimated our new ships' weighted-average useful lives at 30 years and their average residual values at 15% of our original ship cost. Further, we determine the useful life of ship improvements based on estimates of the period over which the assets will be of economic benefit to us. In determining such lives, we also consider factors, including but not limited to, physical deterioration, obsolescence, regulatory constraints and maintenance requirements.

Given the large size and complexity of our ships, ship accounting estimates require considerable judgment and are inherently uncertain. We do not have cost segregation studies performed to specifically componentize our ships. In addition, since we do not separately componentize our ships, we do not identify and track depreciation of specific original ship components. Therefore, we typically have to estimate the net book value of components that are retired, based primarily upon their replacement cost, their age and their original estimated useful lives.

If materially different conditions existed, or if we materially changed our assumptions of ship lives and residual values, our depreciation expense, loss on retirement of ship components and net book value of our ships would be materially different. In addition, if we change our assumptions in making our determinations as to whether

improvements to a ship add value, the amounts we expense each year as repair and maintenance expense could increase, which would be partially offset by a decrease in depreciation expense, resulting from a reduction in capitalized costs. Our 2013 ship depreciation expense would increase by approximately \$40 million for every year we reduce our estimated average 30 year ship useful life. In addition, if our ships were estimated to have no residual value, our 2013 depreciation expense would increase by approximately \$190 million.

We believe that the estimates we made for ship accounting purposes are reasonable and our methods are consistently applied in all material respects and, accordingly, result in depreciation expense that is based on a rational and systematic method to equitably allocate the costs of our ships to the periods during which they are used. In addition, we believe that the estimates we made are reasonable and our methods consistently applied in all material respects in determining (1) the average useful life and average residual values of our ships, including ship improvements; (2) which ship improvement costs add value to our ships and (3) the net book value of ship component assets being retired. Finally, we believe our critical ship accounting estimates are generally comparable with those of other major cruise companies.

Asset Impairments

Impairment reviews of our cruise ships, goodwill and trademarks require us to make significant estimates to determine the fair values of these assets and cruise brands.

For our cruise ships, we perform our impairment reviews, if required, at the individual cruise ship level, which is the lowest level for which we maintain identifiable cash flows that are independent of the cash flows of other assets and liabilities.

We believe it is more-likely-than-not ("MLTN") that each of our cruise brands' estimated fair values that carry goodwill at November 30, 2013 exceeded their carrying values. We also believe that it is MLTN that the estimated fair values of each of our cruise brands' trademarks recorded at November 30, 2013 exceeded their carrying values.

In performing qualitative assessments of our cruise brands that carry goodwill, qualitative factors that we consider to determine their effect on each of the cruise brands' estimated fair values include industry and market conditions, macroeconomic conditions, changes to weighted-average cost of capital ("WACC"), overall financial performance, changes in fuel prices and capital expenditures. In determining the estimated fair values of cruise brands utilizing discounted future cash flow analysis for our quantitative goodwill impairment tests, if any, significant judgments are made related to forecasting future operating results, including net revenue yields, net cruise costs including fuel prices, capacity changes, including the expected deployment of vessels into, or out of, the cruise brand, capital expenditures, WACC of market participants, adjusted for the risk attributable to the geographic region in which the cruise brand operates and terminal values. In addition, third party appraisers are sometimes used to help determine fair values of cruise brands and trademarks, and their valuation methodologies are also typically subject to uncertainties similar to those discussed above.

In addition, in performing our qualitative assessments of our cruise brands' significant trademarks, qualitative factors that we consider to determine their effect on each of the cruise brands recorded trademarks' estimated fair values include industry and market conditions, macroeconomic conditions, changes to the WACC, changes to the royalty rates and overall financial performance. In determining our trademark estimated fair values for our quantitative impairment tests, if any, we also use discounted future cash flow analysis, which requires some of the same significant judgments discussed above. Specifically, determining the estimated amount of royalties avoided by our ownership of the trademark is based upon forecasted cruise revenues and royalty rates that a market participant would use. The royalty rates are estimated primarily using comparable royalty agreements for similar industries.

We believe that we have made reasonable estimates and judgments in determining whether our cruise ships, goodwill and trademarks have been impaired. However, if there is a change in assumptions used or if there is a change in the conditions or circumstances influencing fair values, then we may need to recognize an impairment charge.

Contingencies

We periodically assess the potential liabilities related to any lawsuits or claims brought against us, as well as for other known unasserted claims, including environmental, legal, regulatory, guest and crew and tax matters. In addition, we periodically assess the recoverability of our trade and other receivables and other counterparty credit exposures, such as contractual nonperformance by financial and other institutions with which we conduct significant business. Our credit exposure includes contingent obligations related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales in most of Europe where we are obligated to extend credit in a like amount to these guests even if we do not receive payment from the travel agents and tour operators. While it is typically very difficult to determine the timing and ultimate outcome of these matters, we use our best judgment to determine if it is probable, or MLTN for income tax matters, that we will incur an expense related to the settlement or final adjudication of such matters and whether a reasonable estimation of such probable or MLTN loss, if any, can be made. In assessing probable losses, we make estimates of the amount of probable insurance recoveries, if any, which are recorded as assets. We accrue a liability and establish a reserve when we believe a loss is probable or MLTN for income tax matters, and the amount of the loss can be reasonably estimated in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Such accruals and reserves are typically based on developments to date, management's estimates of the outcomes of these matters, our experience in contesting, litigating and settling other similar non-income tax matters, historical claims experience, actuarially determined estimates of liabilities and any related insurance coverages.

Given the inherent uncertainty related to the eventual outcome of these matters and potential insurance recoveries, it is possible that all or some of these matters may be resolved for amounts materially different from any provisions or disclosures that we may have made with respect to their resolution. In addition, as new information becomes available, we may need to reassess the amount of asset or liability that needs to be accrued related to our contingencies. All such revisions in our estimates could materially impact our results of operations and financial position.

Results of Operations

We earn substantially all of our cruise revenues from the following:

sales of passenger cruise tickets and, in some cases, the sale of air and other transportation to and from airports near our ships' home ports and cancellation fees. The cruise ticket price typically includes accommodations, most meals, some non-alcoholic beverages and most onboard entertainment. We also collect governmental fees and taxes from our guests, and
sales of goods and services primarily onboard our ships not included in the cruise ticket price including substantially all liquor and some non-alcoholic beverage sales, shore excursions, casino gaming, gift shop sales, photo sales, full service spas, communication services, cruise vacation protection programs and pre- and post-cruise land packages. These goods and services are provided either directly by us or by independent concessionaires, from which we receive either a percentage of their revenues or a fee.

We incur cruise operating costs and expenses for the following:

the costs of passenger cruise bookings, which represent costs that are directly associated with passenger cruise ticket revenues, and include travel agent commissions, air and other transportation related costs, governmental fees and taxes that vary with guest head counts and related credit card fees,
onboard and other cruise costs, which represent costs that are directly associated with onboard and other revenues, and include the costs of liquor and some non-alcoholic beverages, costs of tangible goods sold by us in our gift shops and from our photo sales, communication costs, costs of cruise vacation protection programs, costs of pre- and post-cruise land packages and related credit card fees. Concession revenues do not have significant associated expenses because the costs and services incurred for concession revenues are borne by our concessionaires,
fuel costs, which include fuel delivery costs,
payroll and related costs, which represent all costs related to our shipboard personnel, including deck and engine crew, including officers, and hotel and administrative employees, while costs associated with our shoreside personnel are included in selling and administrative expenses,
food costs, which include both our guest and crew food costs and
other ship operating costs, which include port costs that do not vary with guest head counts, repairs and maintenance, including minor improvements and dry-dock expenses, hotel costs, entertainment, gains and losses on ship sales, including ship impairments, freight and logistics, insurance premiums and all other ship operating costs and expenses.

Statistical Information

	Years Ended November 30,
	2013		2012		2011
ALBDs (in thousands) (a) (b)	74,033		71,976		69,971
Occupancy percentage (c)	105.1%		105.5%		106.2%
Passengers carried (in thousands)	10,061		9,829		9,559
Fuel consumption in metric tons (in thousands)	3,266		3,354		3,395
Fuel consumption in metric tons per ALBD	0.044		0.047		0.049
Fuel cost per metric ton consumed	\$ 676	\$	710	\$	646
Currencies
U.S. dollar to €1	\$ 1.32	\$	1.28	\$	1.40
U.S. dollar to £1	\$ 1.56	\$	1.58	\$	1.60
U.S. dollar to Australian dollar	\$ 0.98	\$	1.03	\$	1.03

(a) ALBD is a standard measure of passenger capacity for the period, which we use to perform rate and capacity variance analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

(b) In 2013, we had a 2.9% capacity increase in ALBDs compared to 2012 comprised of a 3.4% and 2.5% capacity increase in our EAA brands and North America brands, respectively.

Our EAA brands' capacity increase was caused by:

the full year impact from one AIDA 2,194-passenger capacity ship and one Costa 2,984-passenger capacity ship both delivered in 2012;
the partial year impact from one AIDA 2,194-passenger capacity ship delivered in 2013 and
less ship dry-dock days in 2013 compared to 2012.

These increases were partially offset by the full year impact from the removal of two Costa ships and the sale of one P&O Cruises (Australia) 1,462-passenger capacity ship all in 2012.

Our North America brands' capacity increase was caused by:

the full year impact from one Carnival Cruise Lines 3,690-passenger capacity ship delivered in 2012 and
the partial year impact from one Princess 3,560-passenger capacity ship delivered in 2013.

These increases were partially offset by more ship dry-dock days in 2013 compared to 2012.

In 2012, we had a 2.9% capacity increase in ALBDs compared to 2011 comprised of a 3.4% and 2.0% capacity increase in our North America and EAA brands, respectively.

Our North America brands' capacity increase was caused by:

the full year impact from one Carnival Cruise Lines 3,690-passenger capacity ship delivered in 2011 and
the partial year impact from one Carnival Cruise Lines 3,690-passenger capacity ship delivered in 2012.

Our EAA brands' capacity increase was caused by:

the full year impact from one AIDA 2,194-passenger capacity ship and one Costa 2,984-passenger capacity ship both delivered in 2011 and
the partial year impact from one AIDA 2,194-passenger capacity ship and one Costa 2,984-passenger capacity ship both delivered in 2012.

These increases were partially offset by:

the full year impact from the sale of one P&O Cruises (UK) 1,200-passenger capacity ship removed from service in 2011;
the partial year impact from the removal of two Costa ships and the sale of one P&O Cruises (Australia) 1,462-passenger capacity ship all in 2012 and
more ship dry-dock days in 2012 compared to 2011.
(c) In accordance with cruise industry practice, occupancy is calculated using a denominator of ALBDs, which assumes two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.

2013 Compared to 2012

Revenues

Consolidated

Cruise passenger ticket revenues made up 75% of our 2013 total revenues. Cruise passenger ticket revenues decreased slightly by \$10 million to \$11.6 billion in 2013 from \$11.7 billion in 2012.

This decrease was caused by:

\$358 million decrease in cruise ticket pricing and
\$42 million decrease in occupancy.

These decreases were offset by:

\$333 million 2.9% capacity increase in ALBDs and
\$67 million weaker U.S. dollar against the euro, net of a stronger U.S. dollar against the sterling and Australian dollar ("2013 net currency impact").

The remaining 25% of 2013 total revenues were substantially all comprised of onboard and other cruise revenues, which increased by \$85 million, or 2.4%, to \$3.6 billion in 2013 from \$3.5 billion in 2012. This increase was caused by our 2.9% capacity increase in ALBDs, which accounted for \$100 million, partially offset by lower other revenues, which accounted for \$23 million. Onboard and other revenues included concession revenues of \$1.1 billion in 2013, which were flat compared to 2012.

North America Brands

Cruise passenger ticket revenues made up 74% of our 2013 total revenues. Cruise passenger ticket revenues decreased slightly by \$40 million to \$6.8 billion in 2013 from \$6.9 billion in 2012.

This decrease was caused by:

\$168 million decrease in cruise ticket pricing and
\$79 million slight decrease in occupancy.

These decreases were partially offset by:

\$173 million 2.5% capacity increase in ALBDs and
\$37 million increase in air transportation revenues from guests who purchased their tickets from us.

Our cruise ticket pricing decline was driven by promotional pricing at Carnival Cruise Lines.

The remaining 26% of 2013 total revenues were comprised of onboard and other cruise revenues, which increased slightly by \$27 million and remained at \$2.4 billion in both 2013 and 2012. This increase was caused by our 2.5% capacity increase in ALBDs, which accounted for \$60 million, partially offset by a slight decrease in occupancy, which accounted for \$27 million. Onboard and other revenues included concession revenues of \$727 million in both 2013 and 2012.

EAA Brands

Cruise passenger ticket revenues made up 81% of our 2013 total revenues. Cruise passenger ticket revenues increased slightly by \$33 million and remained at \$4.8 billion in both 2013 and 2012.

This increase was caused by:

\$163 million 3.4% capacity increase in ALBDs;
\$67 million 2013 net currency impact and
\$47 million slight increase in occupancy.

These increases were partially offset by:

\$191 million decrease in cruise ticket pricing and
\$44 million decrease in air transportation revenues from guests who purchased their tickets from us.

Our cruise ticket pricing decline, which was affected by the ongoing challenging economic environment in Europe, was caused by our European brands.

The remaining 19% of 2013 total revenues were comprised of onboard and other cruise revenues, which increased \$45 million, or 4.3% to \$1.1 billion in 2013 from \$1.0 billion in 2012. This increase was principally due to our 3.4% capacity increase in ALBDs, which accounted for \$36 million. Onboard and other revenues included concession revenues of \$370 million in 2013 and \$356 million in 2012.

Costs and Expenses

Consolidated

Operating costs and expenses increased \$304 million, or 2.9%, to \$10.6 billion in 2013 from \$10.3 billion in 2012.

This increase was caused by:

\$291 million 2.9% capacity increase in ALBDs;
\$176 million impairment charges related to two smaller Costa ships;
\$56 million additional costs and expenses related to the 2013 Carnival Triumph voyage disruptions, net of third-party insurance recoverables of \$20 million;
\$46 million 2013 net currency impact;
\$46 million additional ship repair and maintenance expenses;
\$34 million nonrecurrence in 2013 of Costa's hull and machinery insurance proceeds for the total loss of a ship in excess of its net book value and a gain from a Cunard litigation settlement ("Costa's excess insurance proceeds and Cunard's litigation settlement");
\$20 million higher insurance premiums;
\$15 million special expense assessment from the Merchant Navy Officers Pension Fund ("MNOPF") and
\$14 million new market development initiative costs.

These increases were partially offset by:

\$131 million lower fuel consumption per ALBD;
\$111 million lower fuel prices;
\$65 million decreases in commissions, transportation and other related expenses driven by lower cruise ticket pricing, partially offset by increases in air transportation costs related to guests who purchased their tickets from us;
\$34 million nonrecurrence in 2013 of the 2012 Costa Allegra ship impairment charge;
\$29 million nonrecurrence in 2013 of the 2012 Costa Concordia Ship Incident ("2012 Ship Incident") related expenses and
\$24 million various other operating expenses, net.

Selling and administrative expenses increased \$159 million, or 9.2%, to \$1.9 billion in 2013 from \$1.7 billion in 2012.

Depreciation and amortization expenses increased \$61 million, or 4.0%, to \$1.6 billion in 2013 from \$1.5 billion in 2012.

In 2013, a \$13 million impairment charge was recorded for Ibero's trademarks. In 2012, \$173 million of impairment charges were recorded for Ibero's goodwill and trademarks.

Our total costs and expenses as a percentage of revenues increased to 91% in 2013 from 89% in 2012.

North America Brands

Operating costs and expenses increased \$179 million, or 2.9%, to \$6.3 billion in 2013 from \$6.1 billion in 2012.

This increase was caused by:

\$154 million 2.5% capacity increase in ALBDs;
\$63 million additional ship repair and maintenance expenses;
\$56 million additional costs and expenses related to the 2013 Carnival Triumph voyage disruptions, net of third-party insurance recoverables of \$20 million;
\$23 million increases in commissions, transportation and other related expenses driven by increases in air transportation costs related to guests who purchased their tickets from us, partially offset by the impact of lower cruise ticket pricing;
\$14 million new market development initiative costs and
\$45 million various other operating expenses, net.

These increases were partially offset by:

\$58 million lower fuel consumption per ALBD;
\$53 million lower fuel prices;
\$39 million intersegment transaction, which was fully offset in our Cruise Support segment and
\$26 million slight decrease in occupancy.

Selling and administrative expenses increased \$99 million, or 10%, to \$1.0 billion in 2013 from \$949 million in 2012. The increase was caused by higher advertising spend, which accounted for \$57 million, new market development initiative costs, which accounted for \$26 million, and our 2.5% capacity increase in ALBDs, which accounted for \$24 million.

Our total costs and expenses as a percentage of revenues increased to 90% in 2013 from 86% in 2012.

EAA Brands

Operating costs and expenses increased \$127 million, or 3.2%, \$4.1 billion in 2013 from \$4.0 billion in 2012.

This increase was caused by:

\$176 million impairment charges related to two smaller Costa ships;
\$136 million 3.4% capacity increase in ALBDs;
\$46 million 2013 net currency impact;
\$34 million nonrecurrence in 2013 of Costa's excess insurance proceeds and Cunard's litigation settlement and
\$9 million MNOPF special expense assessment.

These increases were partially offset by:

\$100 million decreases in commissions, transportation and other related expenses driven by lower cruise ticket pricing and a decrease in air transportation costs related to guests who purchased their tickets from us;
\$72 million lower fuel consumption per ALBD;
\$58 million lower fuel prices;
\$34 million nonrecurrence in 2013 of the 2012 Costa Allegra impairment charge and
\$29 million nonrecurrence in 2013 of the 2012 Ship Incident related expenses.

In 2013, a \$13 million impairment charge was recorded for Ibero's trademarks. In 2012, \$173 million of impairment charges were recorded for Ibero's goodwill and trademarks.

Our total costs and expenses as a percentage of revenues decreased to 92% in 2013 from 93% in 2012.

Operating Income

Our consolidated operating income decreased \$290 million, or 18%, to \$1.4 billion in 2013 from \$1.6 billion in 2012. Our North America brands' operating income decreased \$321 million, or 25%, to \$956 million in 2013 from \$1.3 billion in 2012, and our EAA brands' operating income increased \$38 million, or 8.8%, to \$471 million in 2013 from \$433 million in 2012. These changes were primarily due to the reasons discussed above.

Key Performance Non-GAAP Financial Indicators

We use net cruise revenues per ALBD ("net revenue yields"), net cruise costs per ALBD and net cruise costs excluding fuel per ALBD as significant non-GAAP financial measures of our cruise segment financial performance. These measures enable us to separate the impact of predictable capacity changes from the more unpredictable rate changes that affect our business and gains and losses on ship sales including impairments, net that are not part of our core operating business. We believe these non-GAAP measures provide useful information to investors and expanded insight to measure our revenue and cost performance as a supplement to our U.S. GAAP consolidated financial statements.

Net revenue yields are commonly used in the cruise business to measure a company's cruise segment revenue performance and for revenue management purposes. We use "net cruise revenues" rather than "gross cruise revenues" to calculate net revenue yields. We believe that net cruise revenues is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues earned net of our most significant variable costs, which are travel agent commissions, cost of air and other transportation, certain other costs that are directly associated with onboard and other revenues and credit card fees. Substantially all of our remaining cruise costs are largely fixed, except for the impact of changing prices and food expenses, once our ship capacity levels have been determined.

Net passenger ticket revenues reflect gross cruise revenues, net of (1) onboard and other revenues, (2) commissions, transportation and other costs and (3) onboard and other cruise costs. Net onboard and other revenues reflect gross cruise revenues, net of (1) passenger ticket revenues, (2) commissions, transportation and other costs and (3) onboard and other cruise costs. Net passenger ticket revenue yields and net onboard and other revenue yields are computed by dividing net passenger ticket revenues and net onboard and other revenues by ALBDs.

Net cruise costs per ALBD and net cruise costs excluding fuel per ALBD are the most significant measures we use to monitor our ability to control our cruise segment costs rather than gross cruise costs per ALBD. We exclude the same variable costs that are included in the calculation of net cruise revenues to calculate net cruise costs with and without fuel to avoid duplicating these variable costs in our non-GAAP financial measures. In addition, during 2013, we changed our definition of net cruise costs with and without fuel to exclude gains and losses on ship sales including impairments, net as they are not considered part of our core operating business and are not included in our non-GAAP net income and non-GAAP earnings per share. Accordingly, we have changed our previously reported net cruise costs per ALBD and net cruise costs excluding fuel per ALBD for 2012 and 2011 from \$125.44 to \$124.77 in 2012 (\$126.11 to \$125.72 in 2011) and \$92.36 to \$91.69 in 2012 (\$94.76 to \$94.37 in 2011), respectively, to exclude losses on ship sales including impairments, net to be consistent with our treatment of these types of charges in our 2013 net cruise costs per ALBD.

In addition, because our EAA cruise brands utilize the euro, sterling and Australian dollar to measure their results and financial condition, the translation of those operations to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies. Accordingly, we also monitor and report these non-GAAP financial measures assuming the 2013 and 2012 periods currency exchange rates have remained constant with the 2012 and 2011 periods rates, respectively, or on a "constant dollar basis," in order to remove the impact of changes in exchange rates on the translation of our EAA brands. We believe that this is a useful measure since it facilitates a comparative view of the changes in our business in a fluctuating currency exchange rate environment.

We believe that the losses on ship sales including impairments, net recognized in 2013, 2012 and 2011 are not part of our core operating business and, therefore, are not an indication of our future earnings performance. As such, we believe it is more meaningful for gains and losses on ship sales including impairments, net to be excluded from our net income and earnings per share and, accordingly, we present non-GAAP net income and non-GAAP earnings per share excluding these items. In addition, we changed our previously reported non-GAAP earnings per share for 2012 and 2011 from \$1.88 to \$1.94 and \$2.42 to \$2.46, respectively, to exclude losses on ship sales including impairments, net to be consistent with our treatment of these type of charges in our 2013 non-GAAP earnings per share.

We believe that the goodwill, trademark and other impairment charges recognized in 2013 and 2012 are special charges and, therefore, are also not an indication of our future earnings performance. As such, we also believe it is more meaningful for these impairment charges to be excluded from our net income and earnings per share and, accordingly, we present non-GAAP net income and non-GAAP earnings per share excluding these impairment charges.

Under U.S. GAAP, the realized and unrealized gains and losses on fuel derivatives not qualifying as fuel hedges are recognized currently in earnings. We believe that unrealized gains and losses on fuel derivatives are not an indication of our earnings performance since they relate to future periods and may not ultimately be realized in our future earnings. Therefore, we believe it is more meaningful for the unrealized gains and losses on fuel derivatives to be excluded from our net income and earnings per share and, accordingly, we present non-GAAP net income and non-GAAP earnings per share excluding these unrealized gains and losses.

We have not included in our earnings guidance the impact of unrealized gains and losses on fuel derivatives because these unrealized amounts involve a significant amount of uncertainty, and we do not believe they are an indication of our future earnings performance. Accordingly, our earnings guidance is presented on a non-GAAP basis only. As a result, we did not present a reconciliation between forecasted non-GAAP diluted earnings per share guidance and forecasted U.S. GAAP diluted earnings per share guidance, since we do not believe that the reconciliation information would be meaningful.

Our consolidated financial statements are prepared in accordance with U.S. GAAP. The presentation of our non-GAAP financial information is not intended to be considered in isolation or as substitute for, or superior to, the financial information prepared in accordance with U.S. GAAP. There are no specific rules for determining our non-GAAP current and constant dollar financial measures and, accordingly, they are susceptible to varying calculations, and it is possible that they may not be exactly comparable to the like-kind information presented by other companies, which is a potential risk associated with using these measures to compare us to other companies.

Consolidated gross and net revenue yields were computed by dividing the gross and net cruise revenues, without rounding, by ALBDs as follows (dollars in millions, except yields):

	Years Ended November 30,
		2013		2013 Constant Dollar		2012		2012 Constant Dollar		2011
Passenger ticket revenues Onboard and other revenues	\$	11,648 3,598	\$	11,581 3,588	\$	11,658 3,513	\$	11,941 3,570	\$	12,158 3,357
Gross cruise revenues		15,246		15,169		15,171		15,511		15,515
Less cruise costs Commissions, transportation and other Onboard and other		(2,303) (539) (2,842)		(2,285) (538) (2,823)		(2,292) (558) (2,850)		(2,358) (566) (2,924)		(2,461) (506) (2,967)
Net passenger ticket revenues Net onboard and other revenues		9,345 3,059		9,296 3,050		9,366 2,955		9,583 3,004		9,697 2,851
Net cruise revenues	\$	12,404	\$	12,346	\$	12,321	\$	12,587	\$	12,548
ALBDs		74,032,939		74,032,939		71,975,652		71,975,652		69,970,910
Gross revenue yields	\$	205.94	\$	204.89	\$	210.78	\$	215.50	\$	221.74
% decrease vs. prior year		(2.3)%		(2.8)%		(4.9)%		(2.8)%
Net revenue yields	\$	167.56	\$	166.76	\$	171.18	\$	174.88	\$	179.35
% decrease vs. prior year		(2.1)%		(2.6)%		(4.6)%		(2.5)%
Net passenger ticket revenue yields	\$	126.23	\$	125.57	\$	130.13	\$	133.14	\$	138.60
% decrease vs. prior year		(3.0)%		(3.5)%		(6.1)%		(3.9)%
Net onboard and other revenue yields	\$	41.33	\$	41.19	\$	41.05	\$	41.74	\$	40.75
% increase vs. prior year		0.7%		0.4%		0.7%		2.4%

Consolidated gross and net cruise costs and net cruise costs excluding fuel per ALBD were computed by dividing the gross and net cruise costs and net cruise costs excluding fuel, without rounding, by ALBDs as follows (dollars in millions, except costs per ALBD):

	Years Ended November 30,
		2013		2013 Constant Dollar		2012		2012 Constant Dollar		2011
Cruise operating expenses	\$	10,481	\$	10,434	\$	10,166	\$	10,338	\$	10,095
Cruise selling and administrative expenses		1,871		1,864		1,713		1,749		1,696
Gross cruise costs		12,352		12,298		11,879		12,087		11,791
Less cruise costs included above
Commissions, transportation and other		(2,303)		(2,285)		(2,292)		(2,358)		(2,461)
Onboard and other		(539)		(538)		(558)		(566)		(506)
Losses on ship sales including impairments,
net		(178)		(167)		(49)		(49)		(28)
Net cruise costs		9,332		9,308		8,980		9,114		8,796
Less fuel		(2,208)		(2,208)		(2,381)		(2,381)		(2,193)
Net cruise costs excluding fuel	\$	7,124	\$	7,100	\$	6,599	\$	6,733	\$	6,603
ALBDs		74,032,939		74,032,939		71,975,652		71,975,652		69,970,910
Gross cruise costs per ALBD	\$	166.83	\$	166.12	\$	165.04	\$	167.94	\$	168.51
% increase (decrease) vs. prior year		1.1%		0.6%		(2.1)%		(0.3)%
Net cruise costs per ALBD	\$	126.05	\$	125.74	\$	124.77	\$	126.62	\$	125.72
% increase (decrease) vs. prior year		1.0%		0.8%		(0.8)%		0.7%
Net cruise costs excluding fuel per ALBD	\$	96.23	\$	95.91	\$	91.69	\$	93.55	\$	94.37
% increase (decrease) vs. prior year		4.9%		4.6%		(2.8)%		(0.9)%

Non-GAAP diluted earnings per share was computed as follows (in millions, except per share data):

	Years Ended November 30,
	2013	2012	2011
Net income – diluted
U.S. GAAP net income	\$1,078	\$1,298	\$1,912
Losses on ship sales including impairments, net	163 (a)	49 (b)	28 (c)
Goodwill, trademark and other impairment charges	27 (d)	173 (e)	-
Unrealized gains on fuel derivatives, net	(36)	(6)	(1)
Non-GAAP net income	\$1,232	\$1,514	\$1,939
Weighted-average shares outstanding – diluted	777	779	789
Earnings per share – diluted
U.S. GAAP earnings per share	\$ 1.39	\$ 1.67	\$ 2.42
Losses on ship sales including impairments, net	0.21 (a)	0.06 (b)	0.04 (c)
Goodwill, trademark and other impairment charges	0.03 (d)	0.22 (e)	-
Unrealized gains on fuel derivatives, net	(0.05)	(0.01)	-
Non-GAAP earnings per share	\$ 1.58	\$ 1.94	\$ 2.46

(a) Substantially due to impairment charges of \$176 million related to two smaller Costa ships, partially offset by a \$15 million gain in our Tour and Other segment from the sale of a former Holland America Line ship, which was on charter to an unaffiliated entity.

(b) Represents impairment charges of \$34 million related to Costa Allegra and \$23 million related to two Seabourn ships, partially offset by an \$8 million gain on the sale of Pacific Sun.
(c) Represents impairment charges related to the sale of Costa Marina and Pacific Sun.
(d) Represents impairment charges of \$14 million related to an investment and \$13 million for Ibero's remaining trademarks' carrying value.
(e) Represents impairment charges related to Ibero's goodwill and trademarks.

Net cruise revenues increased slightly by \$83 million to \$12.4 billion in 2013 from \$12.3 billion in 2012. This was caused by our 2.9% capacity increase in ALBDs, which accounted for \$352 million, and the 2013 net currency impact, which accounted for \$58 million, partially offset by a 2.6% decrease in constant dollar net revenue yields, which accounted for \$327 million. The 2.6% decrease in net revenue yields on a constant dollar basis was caused by a 3.5% decrease in net passenger ticket revenue yields, partially offset by a slight increase in net onboard and other revenue yields. The 3.5% decrease in net passenger ticket revenue yields was driven by our North America brands' 3.8% net yield decrease, which was driven by promotional pricing at Carnival Cruise Lines. In addition, our EAA brands' net passenger ticket revenue yields decreased 2.8%, which was affected by the ongoing challenging economic environment in Europe. Although Costa's net passenger ticket revenue yields increased, they were more than offset by decreases at our other European brands. Gross cruise revenues increased slightly by \$75 million and remained at \$15.2 billion in both 2013 and 2012 for largely the same reasons as discussed above.

Net cruise costs excluding fuel increased \$525 million, or 8.0%, to \$7.1 billion in 2013 from \$6.6 billion in 2012. The increase was caused by a 4.6% increase in constant dollar net cruise costs excluding fuel per ALBD, which accounted for \$313 million, our 2.9% capacity increase in ALBDs, which accounted for \$189 million, and the 2013 net currency impact, which accounted for \$23 million.

The 4.6% increase in constant dollar net cruise costs excluding fuel per ALBD was caused by:

\$56 million additional costs and expenses related to the 2013 Carnival Triumph voyage disruptions, net of third-party insurance recoverables of \$20 million;
\$46 million additional ship repair and maintenance expenses;
\$44 million higher advertising spend;
\$40 million new market development initiative costs;
\$34 million nonrecurrence in 2013 of Costa's excess insurance proceeds and Cunard's litigation settlement ;
\$20 million higher insurance premiums;
\$15 million MNOPF special expense assessment and
\$87 million various other operating expenses, net.

These increases were partially offset by:

• \$29 million – nonrecurrence in 2013 of the 2012 Ship Incident related expenses.

Fuel costs decreased \$173 million, or 7.3%, to \$2.2 billion in 2013 from \$2.4 billion in 2012. This was caused by a 5.3% decrease in fuel consumption per ALBD, which accounted for \$131 million, and lower fuel prices, which accounted for \$111 million, partially offset by our 2.9% capacity increase in ALBDs, which accounted for \$68 million.

Gross cruise costs increased \$473 million, or 4.0% to \$12.4 billion in 2013 from \$11.9 billion in 2012 for principally the same reasons as discussed above.

2012 Compared to 2011

Revenues

Consolidated

Cruise passenger ticket revenues made up 76% of our 2012 total revenues. Cruise passenger ticket revenues decreased by \$500 million, or 4.1%, to \$11.7 billion in 2012 from \$12.2 billion in 2011.

This decrease was caused by:

\$434 million decrease in cruise ticket pricing;
\$282 million a stronger U.S. dollar against the euro and sterling, net of a weaker U.S. dollar against the Australian dollar ("2012 net currency impact") and
\$82 million slight decrease in occupancy.

These decreases were partially offset by:

• \$348 million – 2.9% capacity increase in ALBDs.

Our cruise ticket pricing and occupancy were affected by the direct and indirect consequences of the 2012 Ship Incident and the challenging economic environment in Europe.

The remaining 24% of 2012 total revenues were substantially all comprised of onboard and other cruise revenues, which increased by \$156 million, or 4.6%, to \$3.5 billion in 2012 from \$3.4 billion in 2011.

This increase was caused by:

\$96 million 2.9% capacity increase in ALBDs;
\$51 million higher onboard spending by our guests and
the change in the accounting for our North America cruise brands and Tour and Other segments.

These increases were partially offset by:

\$58 million 2012 net currency impact and
\$23 million slight decrease in occupancy.

Onboard and other revenues included concession revenues of \$1.1 billion in 2012, which were flat compared to 2011.

North America Brands

Cruise passenger ticket revenues made up 74% of our 2012 total revenues. Cruise passenger ticket revenues increased by \$123 million, or 1.8%, to \$6.9 billion in 2012 from \$6.8 billion in 2011. This increase was caused by our 3.4% capacity increase in ALBDs, which accounted for \$229 million, partially offset by a decrease in cruise ticket pricing, which accounted for \$59 million, and a decrease in air transportation revenues from guests who purchased their tickets from us, which accounted for \$39 million. Our cruise ticket pricing was affected by the indirect consequences of the 2012 Ship Incident.

The remaining 26% of 2012 total revenues were comprised of onboard and other cruise revenues, which increased \$214 million, or 9.9%, to \$2.4 billion in 2012 from \$2.2 billion in 2011. This increase was substantially due to our 3.4% capacity increase in ALBDs, which accounted for \$73 million, higher onboard spending by our guests, which accounted for \$42 million, and the change in the accounting for our North America cruise brands and Tour and Other segments. Onboard and other revenues included concession revenues of \$727 million in 2012 and \$681 million in 2011.

EAA Brands

Cruise passenger ticket revenues made up 82% of our 2012 total revenues. Cruise passenger ticket revenues decreased by \$621 million, or 11%, to \$4.8 billion in 2012 from \$5.4 billion in 2011.

This decrease was caused by:

\$354 million decrease in cruise ticket pricing;
\$282 million 2012 net currency impact and
\$110 million 2.1 percentage point decrease in occupancy.

These decreases were partially offset by:

• \$110 million – 2.0% capacity increase in ALBDs.

Our cruise ticket pricing and occupancy were affected by the direct and indirect consequences of the 2012 Ship Incident and the challenging economic environment in Europe.

The remaining 18% of 2012 total revenues were comprised of onboard and other cruise revenues, which decreased \$56 million, or 5.1%, to \$1.0 billion in 2012 from \$1.1 billion in 2011. This decrease was caused by the 2012 net currency impact, which accounted for \$58 million, and a 2.1 percentage point decrease in occupancy, which accounted for \$23 million, partially offset by our 2.0% capacity increase in ALBDs, which also accounted for \$23 million. Onboard and other revenues included concession revenues of \$356 million in 2012 and \$397 million in 2011.

Costs and Expenses

Consolidated

Operating costs and expenses increased slightly by \$21 million and remained at \$10.3 billion in both 2012 and 2011.

This increase was caused by:

\$289 million 2.9% capacity increase in ALBDs;
\$214 million higher fuel prices;
\$51 million Costa Allegra ship impairment charge and incident-related expenses and
\$29 million 2012 Ship Incident related expenses.

These increases were partially offset by:

\$172 million 2012 net currency impact;
\$158 million decrease in commissions, transportation and other costs primarily as a result of our lower cruise ticket pricing, the change in our UK brands' commission structure and a decrease in air transportation costs related to guests who purchased their tickets from us;
\$89 million lower fuel consumption per ALBD;
\$34 million Costa's excess insurance proceeds and Cunard's litigation settlement;
\$28 million nonrecurrence in 2012 of ship impairment charges recognized in 2011 related to the sale of Costa Marina and Pacific Sun;
\$27 million slight decrease in occupancy and
\$54 million various other operating expenses, net.

Selling and administrative expenses of \$1.7 billion in 2012 were flat compared to 2011.

Depreciation and amortization expenses of \$1.5 billion in 2012 were flat compared to 2011.

Ibero goodwill and trademark impairment charges of \$173 million were recorded in 2012.

Our total costs and expenses as a percentage of revenues increased to 89% in 2012 from 86% in 2011.

North America Brands

Operating costs and expenses increased \$286 million, or 4.9%, to \$6.1 billion in 2012 from \$5.8 billion in 2011.

This increase was caused by:

\$198 million 3.4% capacity increase in ALBDs;
\$147 million higher fuel prices and
the change in the accounting for our North America cruise brands and Tour and Other segments.

These increases were partially offset by:

\$46 million decrease in commissions, transportation and other costs primarily as a result of our lower cruise ticket pricing and a decrease in air transportation costs related to guests who purchased their tickets from us and
\$44 million lower fuel consumption per ALBD.

Our total costs and expenses as a percentage of total revenues of 86% in 2012 was flat compared to 2011.

EAA Brands

Operating costs and expenses decreased \$234 million, or 5.5%, to \$4.0 billion in 2012 from \$4.2 billion in 2011.

This decrease was caused by:

\$172 million 2012 net currency impact;
\$103 million decrease in commissions, transportation and other costs primarily as a result of our lower cruise ticket pricing, the change in our UK brands' commission structure and a decrease in air transportation costs related to guests who purchased their tickets from us;
\$45 million lower fuel consumption per ALBD;
\$36 million 2.1 percentage point decrease in occupancy;
\$34 million Costa's excess insurance proceeds and Cunard's litigation settlement and
\$28 million nonrecurrence in 2012 of ship impairment charges recognized in 2011 related to the sale of Costa Marina and Pacific Sun.

These decreases were partially offset by:

\$87 million 2.0% capacity increase in ALBDs;
\$67 million higher fuel prices;
\$51 million Costa Allegra ship impairment charge and incident-related expenses and
\$29 million 2012 Ship Incident related expenses.

Ibero goodwill and trademark impairment charges of \$173 million were recorded in 2012.

Our total costs and expenses as a percentage of total revenues increased to 93% in 2012 from 84% in 2011.

Operating Income

Our consolidated operating income decreased \$613 million, or 27%, to \$1.6 billion in 2012 from \$2.3 billion in 2011. Our North America brands' operating income increased slightly by \$11 million and remained at \$1.3 billion in both 2012 and 2011, and our EAA brands' operating income decreased \$593 million, or 58%, to \$433 million in 2012 from \$1.0 billion in 2011. These changes were primarily due to the reasons discussed above.

Key Performance Non-GAAP Financial Indicators

Net cruise revenues decreased \$227 million, or 1.8%, to \$12.3 billion in 2012 from \$12.5 billion in 2011. This was caused by a 2.5% decrease in constant dollar net revenue yields, which accounted for \$321 million, and the 2012 net currency impact, which accounted for \$267 million, partially offset by our 2.9% capacity increase in ALBDs, which accounted for \$361 million. The 2.5% decrease in net revenue yields on a constant dollar basis was comprised of a 3.9% decrease in net passenger ticket revenue yields, partially offset by a 2.4% increase in net onboard and other revenue yields. The 3.9% decrease in net passenger ticket revenue yields was principally due to our EAA brands with a 7.6% yield decrease, which was affected by the direct and indirect consequences of the 2012 Ship Incident and the challenging economic environment in Europe. The 2.4% increase in net onboard and other revenue yields was primarily due to higher onboard spending by guests from our North America brands, partially offset by lower yields from certain of our EAA brands, driven by lower occupancy, principally at Costa. Gross cruise revenues decreased \$344 million, or 2.2%, to \$15.2 billion in 2012 from \$15.5 billion in 2011 for largely the same reasons as discussed above.

Net cruise costs excluding fuel decreased slightly by \$4 million and remained at \$6.6 billion in both 2012 and 2011. Our 2.9% capacity increase in ALBDs, which accounted for \$190 million, was offset by the 2012 net currency impact, which accounted for \$135 million, and a slight decrease in constant dollar net cruise costs excluding fuel per ALBD, which accounted for \$38 million.

Fuel costs increased \$188 million, or 8.6%, to \$2.4 billion in 2012 from \$2.2 billion in 2011. This was caused by higher fuel prices, which accounted for \$214 million, and a 2.9% capacity increase in ALBDs, which accounted for \$63 million, partially offset by a 3.9% decrease in fuel consumption per ALBD, which accounted for \$89 million.

Gross cruise costs increased \$88 million, or 0.7% to \$11.9 billion in 2012 from \$11.8 billion in 2011 for principally the same reasons as discussed above.

Liquidity, Financial Condition and Capital Resources

Our primary financial goals are to profitably grow our cruise business thus increasing our return on invested capital, while maintaining a strong balance sheet. Our ability to generate significant operating cash flows allows us to internally fund all of our capital investments. Over time, we expect to have higher levels of free cash flow, which we intend to return to shareholders in the form of additional dividends and opportune share buybacks. We are also committed to maintaining our strong investment grade credit ratings. Other objectives of our capital structure policy are to maintain a sufficient level of liquidity with our available cash and cash equivalents and committed financings for immediate and future liquidity needs, and a reasonable debt maturity profile that is spread out over a number of years.

Based on our historical results, projections and financial condition, we believe that our future operating cash flows and liquidity will be sufficient to fund all of our expected capital projects including shipbuilding commitments, ship improvements, debt service requirements, working capital needs and other firm commitments over the next several years. We believe that our ability to generate significant operating cash flows and our strong balance sheet as evidenced by our investment grade credit ratings provide us with the ability in most financial credit market environments to obtain debt financing, as needed. Our future operating cash flows and our ability to issue debt can be adversely impacted by numerous factors outside our control including, but not limited to, those noted under Principal Risks and Uncertainties within this Strategic Report. In June 2013, Moody's downgraded our senior unsecured credit ratings to Baa1. This downgrade did not have a significant impact on our operating results. However, if our long-term senior unsecured credit ratings were to be further downgraded, our access to, and cost of, debt financing may be negatively impacted.

At November 30, 2013, we had a working capital deficit of \$4.8 billion. This deficit included \$3.0 billion of current customer deposits, which represent the passenger revenues we collect within a year in advance of sailing dates and, accordingly, are substantially more like deferred revenue balances rather than actual current cash liabilities. Our November 30, 2013 working capital deficit also included \$1.5 billion of current debt obligations, which are substantially related to our export credit facilities, bank loans and other debt. We continue to generate significant cash from operations and have a strong balance sheet. This strong balance sheet provides us with the ability to refinance our current debt obligations before, or as they become due, in most financial credit market environments. We also have our revolving credit facilities available to provide long-term rollover financing should the need arise, or if we choose to do so. After excluding current customer deposits and current debt obligations from our November 30, 2013 working capital deficit balance, our non-GAAP adjusted working capital deficit was \$284 million. Our business model, along with our unsecured revolving credit facilities, allows us to operate with a working capital deficit and still meet our operating, investing and financing needs. We believe we will continue to have working capital deficits for the foreseeable future.

At November 30, 2012, the U.S. dollar was \$1.60 to sterling, \$1.30 to the euro and \$1.05 to the Australian dollar. Had these November 30, 2012 currency exchange rates been used to translate our November 30, 2013 non-U.S. dollar functional currency operations' assets and liabilities instead of the November 30, 2013 U.S. dollar exchange rates of \$1.63 to sterling, \$1.36 to the euro and \$0.91 to the Australian dollar, our total assets and liabilities would have been lower by \$580 million and \$225 million, respectively.

Sources and Uses of Cash

Our business provided \$2.8 billion of net cash from operations during 2013, a decrease of \$165 million, or 5.5%, compared to \$3.0 billion in 2012. This decrease was caused by less cash being provided from our operating results, partially offset by less cash being used for our working capital needs.

During 2013, our expenditures for capital projects were \$2.1 billion, of which \$1.3 billion was spent on our ongoing new shipbuilding program, including \$836 million for the final delivery payments for AIDAstella and Royal Princess. In addition to our new shipbuilding program, we had capital expenditures of \$633 million for ship improvements and replacements and \$227 million for information technology and other assets. Furthermore, in 2013 we sold three of our Seabourn ships that are leaving the fleet by May 2015, and received \$70 million in cash proceeds, which represented substantially all of the sales price.

During 2013, we borrowed a net \$4 million of short-term borrowings in connection with our availability of, and needs for, cash at various times throughout the year. In addition, during 2013 we issued \$1.7 billion of unsecured publicly-traded notes, of which \$500 million was used to repay a like amount of unsecured floating rate export credit facilities, and the remaining \$1.2 billion was and will be used for general corporate purposes, including repayments of portions of debt facilities maturing through May 2014. We also borrowed \$1.0 billion of new long-term debt under two unsecured floating rate export credit facilities and one floating rate bank loan. Furthermore, during 2013 we repaid \$2.2 billion of long-term debt. Finally, during 2013 we paid cash dividends of \$1.2 billion and purchased \$103 million of shares of Carnival Corporation common stock in open market transactions, net of \$35 million of treasury stock sales under our Stock Swap program.

Future Commitments and Funding Sources

At November 30, 2013, our contractual cash obligations were as follows (in millions):

		Payments Due by
	2014	2015	2016	2017	2018	There after	Total
Recorded Contractual Cash Obligations
Short-term borrowings	\$ 60						\$ 60
Long-term debt (a)	1,408	\$1,403	\$1,537	\$ 627	\$1,301	\$3,224	9,500
Other long-term liabilities reflected on the
balance sheet (b)	86	108	74	107	111	158	644
Unrecorded Contractual Cash Obligations
Shipbuilding (c)	1,604	1,305	1,814	-	-	-	4,723
Operating leases (c)	51	46	40	28	23	163	351
Port facilities and other (c)	172	157	129	115	101	613	1,287
Purchase obligations (d)	851	104	82	40	36	6	1,119
Fixed rate interest payments (e)	234	213	163	131	107	432	1,280
Floating rate interest payments (e)	42	42	57	65	68	192	466
Total Contractual Cash Obligations (f)	\$4,508	\$3,378	\$3,896	\$1,113	\$1,747	\$4,788	\$19,430

(a) Our long-term debt has a weighted-average maturity of 4.4 years.

(b) Represents cash outflows for certain of our long-term liabilities, including their current portion, that could be reasonably estimated. The primary outflows are for estimates of our compensation plans' obligations, crew and guest claims, uncertain income tax position liabilities and certain deferred income taxes. Other deferred income taxes have been excluded from the table because they do not require a cash settlement in the future.
(c) Our shipbuilding contractual obligations are legal commitments and, accordingly, cannot be cancelled without cause by the shipyards or us, and such cancellation will subject the defaulting party to significant contractual liquidating damage payments.
(d) Represents legally-binding commitments to purchase inventory and other goods and services made in the normal course of business to meet operational requirements. Many of our contracts contain clauses that allow us to terminate the contract with notice, either with or without a termination penalty. Termination penalties are generally an amount less than the original obligation. Historically, we have not had any significant defaults of our contractual obligations or incurred significant penalties for their termination.
(e) Fixed rate interest payments represent cash outflows for fixed interest payments, including interest swapped from a floating rate to a fixed rate. Floating rate interest payments represent forecasted cash outflows for interest payments on floating rate debt, including interest swapped from a fixed rate to a floating rate, using the November 30, 2013 forward interest rates for the remaining terms of the loans.
(f) Amounts payable in foreign currencies, which are principally the euro, sterling and Australian dollars, are based on the November 30, 2013 exchange rates.

As of November 30, 2013, our total annual capital expenditures consist of ships under contract for construction, estimated improvements to existing ships and shoreside assets and for 2014, 2015 and 2016 are expected to be \$3.0 billion, \$2.7 billion and \$2.8 billion, respectively.

As a result of the 2013 voyage disruptions, we commenced a corporate-wide vessel enhancement program to improve emergency power capabilities, to introduce new or enhanced fire safety technology and to increase the level of operating redundancies. The enhancement program is expected to cost as much as \$700 million over the next several years. In addition, we expect to install scrubbers on most of our ships between 2014 and 2016. The expected costs of both the enhancement program and installation of scrubbers through 2016 are included in our total annual capital expenditures discussed in the above paragraph.

The year-over-year percentage increase in our annual capacity is currently expected to be 2.8% for 2014 and 3.9% for both 2015 and 2016. These percentage increases result primarily from contracted new ships entering service and include Seabourn Pride, Seabourn Spirit and Seabourn Legend leaving the fleet by May 2015.

In 2013, the Board of Directors increased the authorization to repurchase Carnival Corporation common stock and/or Carnival plc ordinary shares under the Repurchase Program back to \$1 billion. Since March 2013, the remaining availability under the Repurchase Program was \$975 million.

In addition to the Repurchase Program, the Boards of Directors authorized, in October 2008, the repurchase of up to 19.2 million Carnival plc ordinary shares and, in January 2013, the repurchase of up to 32.8 million shares of Carnival Corporation common stock under the Stock Swap programs. Depending on market conditions and other factors, we may repurchase shares of Carnival Corporation common stock and/or Carnival plc ordinary shares under the Repurchase Program and the Stock Swap programs concurrently. We use the Stock Swap programs in situations where we can obtain an economic benefit because either Carnival Corporation common stock or Carnival plc ordinary shares are trading at a price that is at a premium or discount to the price of Carnival plc ordinary shares or Carnival Corporation common stock, as the case may be. Any realized economic benefit under the Stock Swap programs is used for general corporate purposes, which could include repurchasing additional stock under the Repurchase Program. Carnival plc ordinary share repurchases under both the Repurchase Program and the Stock Swap programs require annual shareholder approval. The existing shareholder approval is limited to a maximum of 21.5 million ordinary shares and is valid until the earlier of the conclusion of the Carnival plc 2014 annual general meeting or October 16, 2014. Finally, under the Stock Swap programs, any sales of the Carnival Corporation common stock and Carnival plc ordinary shares have been or will be registered under the Securities Act.

At January 22, 2014, the remaining availability under the Stock Swap programs was 18.1 million Carnival plc ordinary shares and 32.0 million shares of Carnival Corporation common stock.

At November 30, 2013, we had liquidity of \$6.5 billion. Our liquidity consisted of \$187 million of cash and cash equivalents, which excludes \$275 million of cash used for current operations, \$2.8 billion available for borrowing under our revolving credit facilities and \$3.5 billion under our committed export credit ship financings. Of this \$3.5 billion, \$1.1 billion, \$1.0 billion and \$1.4 billion are scheduled to be funded in 2014, 2015 and 2016, respectively. Substantially all of our revolving credit facilities are scheduled to mature in 2016, except for \$300 million that matures in 2020. These commitments are from numerous large and well-established banks and export credit agencies, which we believe will honor their contractual agreements with us.

Substantially all of our debt agreements contain financial covenants and at November 30, 2013, we believe we were in compliance with our debt covenants. In addition, based on, among other things, our forecasted operating results, financial condition and cash flows, we expect to be in compliance with our debt covenants for the

foreseeable future. Generally, if an event of default under any debt agreement occurs, then pursuant to cross default acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated.

Off-Balance Sheet Arrangements

We are not a party to any off-balance sheet arrangements, including guarantee contracts, retained or contingent interests, certain derivative instruments and variable interest entities that either have, or are reasonably likely to have, a current or future material effect on our consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rate Risks

Operational and Investment Currency Risks

We have \$578 million of foreign currency forwards that are designated as hedges of our net investments in foreign operations, which have a euro-denominated functional currency, thus partially offsetting this foreign currency exchange rate risk. Based on a 10% hypothetical change in the U.S. dollar to euro exchange rate as of November 30, 2013, we estimate that these foreign currency forwards' fair values would change by \$51 million, which would be offset by a corresponding change of \$51 million in the U.S. dollar value of our net investments. In addition, based on a 10% hypothetical change in the U.S. dollar to euro, sterling and Australian dollar exchange rates as of November 30, 2013, which are the functional currencies that we translate into our U.S. dollar reporting currency, we estimate that our 2014 full year December 19, 2013 non-GAAP guidance would change by \$0.19 per share.

Newbuild Currency Risks

In 2012, we entered into foreign currency zero cost collars that are designated as cash flow hedges for a portion of P&O Cruises (UK) Britannia's euro-denominated shipyard payments. These collars mature in February 2015 at a weighted-average ceiling rate of £0.83 to the euro, or \$300 million, and a weighted-average floor rate of £0.77 to the euro, or \$278 million. If the spot rate is between these two rates on the date of maturity, then we would not owe or receive any payments under these collars. At November 30, 2013, the estimated fair value of these outstanding foreign currency zero cost collars was an asset of \$8 million. Based on a 10% hypothetical increase or decrease in the November 30, 2013 sterling rates to euro exchange rates, we estimate the fair value of these collars would increase \$15 million or decrease \$12 million, respectively.

At November 30, 2013, substantially all our remaining newbuild currency exchange rate risk relates to eurodenominated newbuild construction payments for Regal Princess, the Seabourn newbuild and a portion of Britannia, which represent a total commitment of \$1.3 billion. The functional currency cost of each of these ships will increase or decrease based on changes in the exchange rates until the payments are made under the shipbuilding contract, or we enter into a foreign currency hedge. Based on a 10% hypothetical change in the U.S. dollar and sterling to euro exchange rates as of November 30, 2013, the unpaid cost of these ships would have a corresponding change of \$134 million.

Interest Rate Risks

At November 30, 2013, we have interest rate swaps that have or will effectively changed \$500 million of fixed rate debt to U.S. dollar LIBOR-based floating rate debt and \$909 million of EURIBOR-based floating rate euro debt to fixed rate euro debt. Based on a 10% hypothetical change in the November 30, 2013 market interest rates, the fair value of all our debt and related interest rate swaps would change by \$116 million. In addition, based on a 10% hypothetical change in the November 30, 2013 market interest rates, our annual interest expense on floating rate debt, including the effect of our interest rate swaps, would change by an insignificant amount. Substantially all of our fixed rate debt can only be called or prepaid by incurring additional costs.

Fuel Price Risks

Our exposure to market risk for changes in fuel prices substantially all relates to the consumption of fuel on our ships. We expect to consume approximately 3.2 million metric tons of fuel in 2014. Based on a 10% hypothetical change in our December 19, 2013 guidances' forecasted average fuel price, we estimate that our 2014 fuel expense, excluding the effect of zero cost collar fuel derivatives, would change by \$210 million.

We use our fuel derivatives program to mitigate a portion of our economic risk attributable to potential fuel price increases. At November 30, 2013, we had fuel derivatives consisting of zero cost collars on Brent to cover a portion of our estimated fuel consumption through 2017. Based on a 10% hypothetical increase in the Brent spot price used in our December 19, 2013 guidance, there would be a realized gain of \$56 million on our fuel derivatives as the resulting Brent price would be above the ceiling Brent prices established by certain of these collars. However, based on a 10% hypothetical decrease in the Brent spot price used in our December 19, 2013 guidance, there would be no realized losses on our fuel derivatives as the resulting Brent price would remain above the floor Brent prices established by these collars. At November 30, 2013, the estimated fair value of our outstanding fuel derivative contracts was a net asset of \$43 million. Based on a 10% hypothetical increase or decrease in the November 30, 2013 Brent forward price curve, we estimate the fair value of our fuel derivatives would increase \$165 million or decrease \$115 million, respectively.

4. Principal Risks and Uncertainties.

You should carefully consider the specific risks and uncertainties set forth below and the other information contained in this Strategic Report, as these are important factors that could cause our actual results, performance or achievements to differ materially from our expected or historical results. Some of the statements in this Strategic Report, DLC Annual Report and in the Carnival plc IFRS Financial Statements are "forward-looking statements." For a discussion of those statements and of other factors to consider see the "Cautionary Note Concerning Factors That May Affect Future Results" section below.

• General economic and business conditions may adversely impact consumer demand for vacations and, consequently, reduce our cruise brands' net revenue yields and profitability.

Demand for cruises is in part dependent on the underlying perceived or actual economic condition of the countries from which cruise companies source their guests. Adverse changes in the perceived or actual economic climate, such as higher unemployment and underemployment rates; declines in income levels; securities, real estate and other market declines and volatility; increasing taxation; higher fuel prices and healthcare costs; more restrictive credit markets; higher interest rates and changes in governmental regulations, could reduce our potential vacationers' discretionary incomes, net worth or their consumer confidence. Consequently, this may negatively affect demand for vacations, including cruise vacations, which are a discretionary purchase. Decreases in demand could lead to price reductions which, in turn, could reduce the profitability of our business. These ticket price reductions may result in a less affluent guest base, which along with decreases in discretionary income or consumer confidence could also result in lower onboard revenues that could also have a negative effect on our net revenue yields and profitability. Given the mobility of our ships, we can mitigate some of this risk by redeploying our ships to more profitable regions as guests' tastes change and if economic or other conditions warrant.

• Increases in fuel prices may adversely affect our operations, financial condition and liquidity.

Economic, market and political conditions around the world, such as fuel demand, regulatory requirements, supply disruptions and related infrastructure needs, make it difficult to predict the future price and availability of fuel. Fuel costs accounted for 21%, 23% and 21% of our cruise operating expenses in 2013, 2012 and 2011, respectively. Future increases in the global price of fuel would increase the cost of our cruise ship operations as well as some of our other expenses, such as crew travel, freight and commodity prices. We may be unable to implement additional fuel conservation initiatives and other best practices or increase ticket prices and collect fuel supplements, which would help to fully or partially offset these fuel price increases. See risks relating to environmental laws and regulations and continuing financial viability of air service providers for additional information regarding our fuel risks.

To mitigate a portion of our economic risk attributable to potential fuel price increases, we have established a fuel derivatives program. To date under this program, we have bought Brent crude oil ("Brent") call options and sold Brent put options, collectively referred to as zero cost collars, that established ceiling and floor prices. These derivatives are based on Brent prices whereas the actual fuel used on our ships is marine fuel. Changes in the Brent prices may not show a high degree of correlation with changes in our underlying marine fuel prices. In addition, there can be no assurance that our fuel derivatives program will provide a sufficient level of protection against increases in fuel prices or that our counterparties will be able to perform, such as in the case of a counterparty bankruptcy. The zero cost collars will reduce our benefit if Brent prices drop below the floor. Also, the fuel derivative contracts may create significant volatility in our U.S. GAAP earnings due to volatility in fuel prices over the contracts' terms. Furthermore, volatility in fuel prices could have a material adverse effect on our operations, financial condition and liquidity. We may be able to mitigate some of the risk of fuel price increases by continuing to reduce our fuel consumption. Furthermore, we expect to install scrubbers on most of our ships between 2014 and 2019. As a result of installing these scrubbers, we believe the cost of complying with more stringent emission regulations will not be significant to our results of operations.

Finally, we believe that our land-based vacation competitors' operating costs are less affected by fuel price increases than cruise companies. Accordingly, fuel price increases may adversely impact cruise companies more than their land-based competitors.

• Incidents, the spread of contagious diseases and threats thereof, adverse weather conditions or other natural disasters and other incidents affecting the health, safety, security and satisfaction of guests and crew could have an adverse effect on our sales and profitability.

The operation of cruise ships, hotels, land tours, port and related commercial facilities and shore excursions involve the risk of incidents, including those caused by the improper operation of our ships, motorcoaches and trains; guest and crew illnesses, such as from the spread of contagious diseases; mechanical failures; fires and collisions; repair delays; groundings; navigational errors; oil spills and other maritime and environmental mishaps; missing passengers and other incidents at sea or while in port or on land, which may cause injury and death, guest and crew discomfort and the alteration of itineraries or cancellation of a cruise or series of cruises or tours. Although we place guest and crew safety as the highest priority in all our operations, our ships have been involved in accidents and other incidents in the past. We may experience similar or other incidents in the future, even though we have and will implement policies, procedures and best practices to limit their future occurrence. These types of incidents may bring into question guest and crew health, safety, security and satisfaction and may adversely affect our brand reputation and demand for the brand, and cruising in general, and may affect our sales and profitability, may result in additional costs to our business, litigation against us and increasing government or other regulatory oversight. It is possible that the initiatives we implement to increase our net revenue yields as a result of our 2012 and 2013 ship incidents may not be effective, and our pricing and profitability may not return to pre-incident or higher levels.

In particular, our ability to effectively and efficiently operate shipboard and shoreside activities may be impacted by widespread public health issues/illnesses or health warnings resulting in, among other things, reduced demand for cruises and cruise cancellations and employee absenteeism that could have an adverse effect on our sales and profitability. We have implemented crew training and ship cleaning protocols to limit the spread of contagious diseases, but such actions may not be sufficient to fully mitigate this risk. For example, a severe outbreak of the influenza virus or some other pandemic could, among other things, disrupt our ability to embark/disembark passengers and crew, disrupt air travel to and from ports, increase costs for prevention and treatment and adversely affect our supply chain. This could also adversely impact cruise demand in areas unaffected by such an outbreak.

In addition, as mentioned above, our ships are subject to the risks of mechanical failures and accidents, for which we have had to incur repair and equipment replacement expenditures. If these occur in the future, we may be unable to procure spare parts or new equipment when needed or make repairs without incurring significant expenditures or suspension of service. However, we do maintain an inventory of certain strategic spare parts to help mitigate this risk. A significant performance deficiency or problem on any one or more of our ships could have an adverse effect on our financial condition and results of operations.

Our cruise ships, hotels, land tours, port and related commercial facilities, shore excursions and other service providers may be impacted by adverse weather patterns or other natural disasters, such as hurricanes, earthquakes, floods, fires, tornados, tsunamis, typhoons and volcanic eruptions. These events could result in, among other things, increased port related and other costs. It is possible that we could be forced to alter itineraries or cancel a cruise or a series of cruises or tours due to these or other factors, which would have an adverse effect on our sales and profitability.

The frequency of extreme weather events such as hurricanes and floods, which may be caused by climate change, may not only cause disruption, alteration, or cancellation of cruises but may also adversely impact commercial airline flights, other transport and shore excursion activities or prevent our guests from electing to cruise altogether. Such extreme weather events may also disrupt the supply of provisions, fuel and shore power, and may limit our ability to safely embark and disembark our guests. In addition, these extreme weather conditions could result in increased wave and wind activity, which would make it more challenging to sail and dock our ships and could cause sea/motion sickness among guests and crew. These events could have an adverse impact on the safety and satisfaction of cruising and could have an adverse impact on our sales and profitability. Finally, these extreme weather conditions could cause property damage to our ships, port and related commercial facilities and other assets and impact our ability to obtain insurance coverage for operations in such areas at reasonable rates.

Furthermore, some of the same factors that impact our guests' decisions to cruise with us may also impact our ability to employ qualified crew.

• The international political climate, armed conflicts, terrorist and pirate attacks, vessel seizures, and threats thereof, and other world events affecting the safety and security of travel could adversely affect the demand for cruises and could harm our future sales and profitability.

Demand for cruises and other vacation options has been and is expected to continue to be affected by the public's attitude towards the safety and security of travel. Factors including, but not limited to, past acts of terrorism, threats of additional terrorist attacks, drug-related violence in Mexico, pirate attacks and vessel seizures off the east and west coasts of Africa, national government travel advisories, political instability in North Africa, the Middle East and elsewhere and general concerns over the safety and security aspects of traveling have had a significant adverse impact on demand and pricing in the travel and vacation industry in the past and may have an adverse impact in the future. Decreases in demand may lead to price reductions, which in turn would reduce our profitability. These types of events could also impact our ability to source qualified crew from throughout the world at competitive costs and, therefore, increase our shipboard crew costs. We have implemented various safety and security policies, procedures and best practices to help mitigate this risk, but it is still possible that they could occur.

• Negative publicity concerning the cruise business in general or us in particular, including any adverse environmental impacts of cruising, could impact the demand for cruises, affect our reputation and harm our future sales and profitability.

Incidents involving cruise ships, in particular our cruise ships, and media coverage thereof, as well as adverse media publicity concerning the cruise vacation industry in general, or unusual weather patterns or other natural disasters or disruptions, such as hurricanes and earthquakes, could impact demand for our cruises. In addition, any events which impact the travel industry more generally may negatively impact guests' ability or desire to travel to or from our ships or interrupt our ability to obtain services and goods from key vendors in our supply chain. Any of the foregoing could have an adverse impact on our result of operations and on the cruise business performance.

Maintaining a good reputation is critical to our business. Reports and media coverage of ship incidents at sea or while in port, including missing guests, improper conduct by our employees, guests or agents, crimes, dissatisfied guests, crew and guest illnesses, such as incidents of stomach flu, parasitic outbreaks or other contagious diseases, security breaches, terrorist threats and attacks and other adverse events can result in negative publicity, which could lead to a negative perception regarding the safety of our ships and the satisfaction of our guests. In addition, negative publicity regarding adverse environmental impacts of cruising, such as climate change and oil

spills, could diminish our reputation. The considerable expansion in the use of social media over recent years has increased the ways in which our reputation can be impacted, and the speed with which it can occur. Anything that damages our reputation, whether or not justified, could have an adverse impact on demand, which could lead to price reductions and a reduction in our sales and profitability. We leverage the reach and impact of digital marketing and social media, such as Facebook, Twitter, YouTube, Blog, Google+, Flickr, Instagram and Pinterest to provide accurate information to the media, popular bloggers, fans and brand advocates to mitigate some of the risk of negative publicity.

• Litigation, enforcement actions, fines or penalties could adversely impact our financial condition or results of operations and damage our reputation.

Our business is subject to various international laws and regulations that could lead to enforcement actions, fines, civil or criminal penalties or the assertion of litigation claims and damages. In addition, improper conduct by our employees or agents could damage our reputation and lead to litigation or legal proceedings that could result in significant awards or settlements to plaintiffs and civil or criminal penalties, including substantial monetary fines. Such events could lead to an adverse impact on our financial condition or results of operations, if not mitigated by our insurance coverage.

As a result of any ship or other incidents, litigation claims, enforcement actions and regulatory actions and investigations, including, but not limited to, those arising from personal injury, loss of life, loss of or damage to personal property, business interruption losses or environmental damage to any affected coastal waters and the surrounding area, may be asserted or brought against various parties including us and/or our cruise brands. The time and attention of our management may also be diverted in defending such claims, actions and investigations. We may also incur costs both in defending against any claims, actions and investigations and for any judgments, fines, civil or criminal penalties if such claims, actions or investigations are adversely determined and not covered by our insurance policies.

• Changes in and compliance with environmental laws and regulations could adversely affect our operations and thus impact our profitability.

Some environmental groups have lobbied for more stringent regulation of cruise ships. Some groups have also generated negative publicity about the cruise business and its environmental impact. Various agencies and regulatory organizations have enacted or are considering new regulations or policies, such as stricter emission limits to reduce GHG effects, which could adversely impact the cruise industry.

The IMO has amended the MARPOL regulations to reduce emissions from ships. As described in "Maritime Environmental Regulations" as referenced below, these changes will result in reductions in ship SOx emissions by requiring progressive reductions in the sulfur content in fuel or the use of abatement technologies. These limits will be further reduced in designated ECAs, including ECAs that have been or could be proposed in other prime cruising areas, such as around Australia, Hong Kong, Japan, the Mediterranean Sea and Mexico. As a result of these amendments, we have elected to install scrubbers on most of our ships, which we believe will enable our SOx emissions to meet the MARPOL current and probable future requirements without the use of low sulfur fuel, in all material respects. However, if this type of technology is not widely used within the shipping industry it is possible that there could be limited availability of high sulfur fuels because of low demand and the cost of such fuel may increase. The increase in fuel prices caused by these regulations may impact our other expenses including, but not limited to, freight and commodity prices and may have an adverse impact on our profitability.

In 2012, initiatives to limit GHG emissions were introduced in Australia and are being considered in several European countries. Similarly, numerous bills related to climate change have been introduced in the U.S. Congress, which could adversely impact our business. For example, while not all are likely to become law, there are indications that additional climate change related mandates could be forthcoming, and they may significantly impact our costs, including, among other things, increasing fuel prices, including new taxes on bunker fuel, establishment of costly emissions trading schemes and increasing newbuild and operational costs.

Environmental laws and regulations or liabilities arising from past or future releases of, or exposure to, hazardous substances or vessel discharges, including ballast water and waste disposal, could materially increase our cost of

compliance or otherwise adversely affect our business, results of operations and financial condition. See above "Cruise Business-Governmental Regulations – Maritime Regulations" for additional information regarding these risks.

• Changes in and compliance with laws and regulations relating to the protection of persons with disabilities, employment, health, safety, security and other regulations under which we operate could increase our costs.

We are subject to various international, national, state and local laws, regulations, treaties and employee union agreements related to, among other things, persons with disabilities, employment, health, safety and security. Failure to comply with these laws and regulations could lead to enforcement actions, fines, civil or criminal penalties or the assertion of litigation claims and damages. These issues are, and we believe will continue to be, an area of focus by the relevant authorities throughout the world. Accordingly, new legislation, regulations or treaties, or changes thereto, could impact our operations and would likely subject us to increased compliance costs in the future. In addition, training of crew may become more time consuming and may increase our operating costs due to increasing regulatory and other requirements.

• Changes in and compliance with income tax laws and regulations and income tax treaties may adversely affect the taxation of our shipping income and our profitability.

We believe that substantially all of the income earned by Carnival Corporation, Carnival plc and their ship owning or operating subsidiaries qualifies for taxation based on ship tonnage and are exempt from taxation or are otherwise subject to minimal taxes in the jurisdictions where the entities are incorporated or do business.

We believe that Panama and the jurisdictions where the ship owning and operating subsidiaries of Carnival Corporation are formed are equivalent exemption jurisdictions for purposes of Section 883 of the Internal Revenue Code. The laws of Panama and the other jurisdictions where our ships are owned or operated are subject to change and, in the future, may no longer qualify as equivalent exemption jurisdictions.

The IRS interpretation of Section 883 could differ materially from ours. In addition, provisions of the Internal Revenue Code, including Section 883, are subject to legislative change at any time. Moreover, changes could occur in the future with respect to the trading volume or trading frequency of Carnival Corporation shares. Accordingly, it is possible that Carnival Corporation and its ship-owning or operating subsidiaries whose tax exemption is based on Section 883 could lose this exemption.

There is no authority that directly addresses the effect, if any, of a DLC arrangement on the availability of benefits under treaties and, accordingly, their application to our operations is not free from doubt. The applicable treaties may be revoked by either applicable country, replaced or modified with new agreements that treat income from international operation of ships differently than the agreements currently in force or may be interpreted by one of its countries differently from us.

If we did not qualify for tonnage tax, exemption, treaties or minimal taxes, or if the laws that provide for these tax systems were changed, we would have significantly higher income tax expense. In many jurisdictions, the benefit of tonnage tax or preferential tax regimes would be replaced with taxation at normal statutory rates. In the absence of Section 883 or an applicable income tax treaty in the U.S., we would be subject to the net income and branch profits tax regimes of Section 882 and Section 884 of the Internal Revenue Code. In combination, these provisions would result in the taxation of our U.S. source shipping income, net of applicable deductions, at a current federal corporate income tax rate of up to 35%, state income tax rates would vary and our net after-tax income would be potentially subject to a further branch profits tax of 30%.

We are subject to the continual examination of our income tax returns by tax authorities in the jurisdictions where we operate. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcome from these examinations will not adversely affect our net income.

As budgetary constraints continue to adversely impact the jurisdictions in which we operate, or for other reasons, increases in income tax regulations affecting our operations may be imposed. We continue to monitor global

administrative, legislative and judicial tax related developments and evaluate a variety of possible courses of action based upon such developments. However, there is no assurance that such actions, if taken, will successfully mitigate adverse income tax consequences.

• Lack of continuing availability of attractive, convenient and safe port destinations on terms that are favorable or consistent with our expectations could adversely affect our net revenue yields and net income.

We believe that attractive, convenient and safe port destinations, including ports that are not overly congested with tourists, are major reasons why our guests choose a cruise versus an alternative vacation option. The continuing availability of these types of ports on terms that are favorable or consistent with our expectations, including the port facilities where our guests embark and disembark, is affected by a number of factors including, but not limited to, existing capacity constraints (particularly during the Caribbean winter months and Mediterranean summer months), security, safety and environmental concerns, adverse weather conditions and other natural disasters, financial limitations on port development, political instability, exclusivity arrangements that ports may have with our competitors, port operator consolidation, local governmental regulations, such as those recently enacted that will limit cruise ship operations in the highly popular port of Venice, Italy and fees and local community concerns about both port development and other adverse impacts on their communities from additional tourists. In order to mitigate this risk, among other things, we work with port authorities and others to educate them on the benefits derived from cruising as well as taking actions to address their concerns, if appropriate. The inability to continue to utilize, maintain, rebuild, if necessary, and increase the number of ports that our ships call on could adversely affect our net revenue yields and net income.

• Continuing financial viability of our travel agent distribution system, air service providers and other key vendors in our supply chain is essential to allowing us to profitably operate our business. In addition, reductions in the availability of, and increases in the prices for, the services and products provided by these vendors can adversely impact our net income.

Primarily all of our guests book their cruises through independent travel agents, including wholesalers, general sales agents and tour operators. These parties generally sell and market our cruises on a nonexclusive basis. Our competitors may offer higher commissions and incentives and thus adversely impact our business. Significant disruptions, contractions or consolidations to our travel agent distribution system, such as those caused by a reduction in travel and related commission income as a result of an economic slowdown could have an adverse effect on our sales and profitability. In addition, we currently extend credit to certain of our larger European travel agents and tour operators and, accordingly, if such agents and operators cannot repay their debts to us, it will adversely impact our cash flows and operations. However, we have entered into agreements with certain of our larger European travel agents and tour operators to mitigate this risk.

Many of our guests and substantially all our crew depend on scheduled or chartered commercial airline services to transport them to or from the airports near the ports where our cruises embark and disembark. Changes or disruptions in commercial or chartered airline services as a result of strikes, labor unrest, financial instability or viability, adverse weather conditions, airport delays, consolidation of carriers, or other events or the lack of availability due to schedule changes or a high level of airline bookings could adversely affect our ability to deliver guests and crew to or from our cruise ships and increase our costs which would, in turn, have an adverse effect on our results of operations. In addition, increases in the prices of airfares due to, among other things, rising fuel prices and airline consolidations would increase the overall vacation price to our guests and may adversely affect demand for our cruises, as well as increase our airfare for our crew.

Travel agents may face increased pressure from our competitors, particularly in the North America market, to sell and market these competitor cruises exclusively. If such exclusive arrangements were introduced, there can be no assurance that we will be able to find alternative distribution channels to ensure our customer base would not be affected.

Economic downturns may impact the financial viability of other key vendors in our supply chain and the interruption in the services or goods we purchase from them could adversely impact our operations and profitability.

• We may lose business to competitors throughout the wider vacation industry, which could adversely affect our operations and financial condition.

We face significant competition from other cruise brands on the basis of cruise pricing, travel agent preference and the types and sizes of ships and cabins, services and destinations being offered by them to cruise guests. We try to differentiate ourselves from our cruise competitors by offering a wide variety of brands, itineraries, products and services to our guests, but the acceptance of each offering is not certain and consumers' preferences are always subject to change. It is possible that our programs to motivate previous guests to cruise with us again may not be successful and they may elect not to cruise with us again. In addition, we may choose to enhance our older ships with innovative amenities and improvements in order for those ships to be more competitive with other cruise ships. Alternatively, without these investments these older ships may become less competitive, which could result in lower profitability and ship impairment charges. The used cruise ship market is small. Accordingly, if we need to dispose of a ship, we cannot be assured of finding a viable buyer to purchase it at a price that meets our expectations, which could result in ship impairment charges and losses on ship disposals.

In addition, we operate in the wider vacation industry and cruising is only one of many alternatives for people choosing a vacation. We therefore risk losing business not only to other cruise lines, but also to vacation operators that provide other travel and leisure options, including, but not limited to, hotels, resorts, theme parks, packaged holidays and tours, casino operators and vacation ownership properties.

In the event that we do not compete effectively with other cruise companies and other vacation alternatives, our results of operations and financial condition could be adversely affected.

• Overcapacity in the cruise ship and land-based vacation industry could have a negative impact on our net revenue yields and increase operating costs. As a result, we may experience ship, goodwill and trademark asset impairments, which could adversely affect profitability.

Although cruising capacity has grown at a slower pace in recent years, we expect it to continue to increase over the next few years. The wider vacation industry may also face increases in land-based vacation capacity, which may impact us as well. We typically aim to fill our new capacity at favorable revenue yields despite the new competing cruise and land-based capacity growth. Also, to the extent that we or our competitors deploy ships to a particular itinerary and the resulting capacity in that region exceeds the demand, we may lower pricing and profitability may be lower than anticipated. Should net revenue yields be negatively impacted, our results of operations and financial condition could be adversely affected, including the impairment of the value of our ships, goodwill and trademark assets. In addition, increased cruise capacity could impact our ability to retain and attract qualified crew, including officers, at competitive rates and, therefore, increase our shipboard employee costs. To partially mitigate this risk, we strategically time the introduction of new ships into our brands to allow ample time to further grow their guest base and absorb our new capacity.

• The loss of key personnel or our ability to recruit or retain qualified personnel could adversely affect our results of operations.

We rely upon the ability, expertise, judgment, discretion, integrity and good faith of our senior management team. Our success is also dependent upon our personnel and our ability to recruit and train high quality employees. We must continue to recruit, retain and motivate management and other employees to enable us to maintain our current business and support our projected growth. The loss of services of any of our key management could have a material adverse effect on our business. We are not protected by life insurance covering any of our personnel. We do not have employment agreements with our officers, except for our President and Chief Executive Officer and the Chief Executive Officer of Costa.

• Our success depends upon the continued strength of our cruise brands and our ability to implement our brand strategies.

We believe that our cruise branding has contributed significantly to the success of our business and that restoring, maintaining and enhancing our branding is critical to expanding our brands' customer bases. Our inability to restore consumers' confidence in our Carnival Cruise Lines or Costa brands would have an adverse impact on our long-term profitability. In addition, the ability of our brands to successfully target different segments of the vacation markets in which they operate enables them to strengthen their business. Failure to protect our brands from infringers could have a material adverse effect on our business and results of operations.

• Our decisions to self-insure against various risks or the inability to obtain insurance for certain risks at reasonable rates could result in higher expenses or lower revenues.

We seek to maintain comprehensive insurance coverage at commercially reasonable rates. We believe that our current coverage is adequate to protect us against most of the significant risks involved in the conduct of our business, although we do elect to self-insure or use higher deductibles for substantially all the insurable risks we face in order to minimize the cost of our insurance policies. Accordingly, we are not protected against all risks, such as loss of use of a ship, which could result in an unexpected decrease in our revenue in the event of an incident. We attempt to mitigate our risks that are not covered by insurance, although we cannot be certain such processes and procedures will be successful. Further, significant incidents could result in higher insurance premiums commencing on the policy renewal dates or the inability to obtain coverage.

We may also be subject to additional premium costs based not only on our own claims record but also on the claims records of all other members of the P&I associations through which we receive indemnity coverage for tort liability. We are also subject to additional P&I premium assessments for various reasons including, but not limited to, investment or underwriting shortfalls experienced by our P&I clubs. In addition, if we or other shipowners sustain significant losses, our ability to obtain future insurance coverage at commercially reasonable rates could be materially adversely affected.

Finally, we cannot be certain that affordable and viable direct insurance and reinsurance markets will be available to us in the future.

• Fluctuations in foreign currency exchange rates could adversely affect our financial results.

We earn revenues, pay expenses, purchase and own assets and incur liabilities in currencies other than the U.S. dollar; most significantly, the euro, sterling and Australian and Canadian dollars. We derived 56%, 54% and 56% of our revenues from passengers sourced from countries outside of the U.S. in 2013, 2012 and 2011, respectively. Because our consolidated financial statements are presented in U.S. dollars, we must translate revenues and expenses, as well as assets and liabilities, into U.S. dollars at exchange rates in effect during or at the end of each reporting period. We report currency transactions in the functional currencies of our reporting units, excluding fuel which is always transacted and reported in U.S. dollars regardless of the functional currency of the reporting unit. Furthermore, we convert a significant amount of these currencies into U.S. dollars. Therefore, the strengthening of the U.S. dollar against our other major currencies, will adversely affect our U.S. dollar financial results and will reduce the U.S. dollar amount received upon conversion of these currencies into U.S. dollars. We partially mitigate some of our newbuild currency exchange rate risk by purchasing currency derivative instruments.

• The DLC arrangement involves risks not associated with the more common ways of combining the operations of two companies and these risks may have an adverse effect on the economic performance of the companies and their respective share prices.

The DLC arrangement is a relatively uncommon way of combining the management and operations of two companies and it involves different issues and risks from those associated with the other more common ways of impacting a business combination, such as a merger or exchange offer to create a wholly owned subsidiary. In our DLC arrangement, the combination is effected primarily by means of contracts between Carnival Corporation and Carnival plc and not by operation of a statute or court order. The legal effect of these contractual rights may be different from the legal effect of a merger or amalgamation under statute or court order, and there may be difficulties in enforcing these contractual rights. Shareholders and creditors of either company might challenge the validity of the contracts or their lack of standing to enforce rights under these contracts, and courts may interpret or enforce these contracts in a manner inconsistent with the express provisions and intentions we included in such contracts. In addition, shareholders and creditors of other companies might successfully challenge other DLC arrangements and establish legal precedents that could increase the risk of a successful challenge to our DLC arrangement.

Cautionary Note Concerning Factors That May Affect Future Results

Some of the statements, estimates or projections contained in this Strategic Report are "forward-looking statements" that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, outlooks, plans, goals and other events which have not yet occurred. All statements other than statements of historical facts are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts and projections about the business in which we operate and the beliefs and assumptions of our management. We have tried, whenever possible, to identify these statements by using words like "will," "may," "could," "should," "would," "believe," "depends," "expect," "goal," "anticipate," "forecast," "project," "future," "intend," "plan," "estimate," "target," "indicate" and similar expressions of future intent or the negative of such terms.

Forward-looking statements include those statements that may impact, among other things, the forecasting of our non-GAAP earnings per share; net revenue yields; booking levels; pricing; occupancy; operating, financing and tax costs, including fuel expenses; net cruise costs per available lower berth day; estimates of ship depreciable lives and residual values; liquidity; goodwill and trademark fair values and outlook.

Certain of the risks and uncertainties we are exposed to are identified in this Strategic Report above. This Strategic Report contains important cautionary statements and a discussion of the known factors that we consider could materially affect the accuracy of our forward-looking statements and adversely affect our business, results of operations and financial position. It is not possible to predict or identify all such risks and uncertainties. There may be additional risks and uncertainties that we consider immaterial or which are not known.

Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant stock exchange rules, we expressly disclaim any obligation to disseminate, after the date of this Strategic Report, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.

5. Repurchase Authorizations and Stock Swap Programs.

A. Repurchase Authorizations

In September 2007, our Boards of Directors authorized, subject to certain restrictions, the repurchase of up to an aggregate of \$1 billion of Carnival Corporation common stock and/or Carnival plc ordinary shares (the "Repurchase Program"). In January 2013, the Boards of Directors increased the remaining \$165 million under the Repurchase Program back to \$1 billion. The Repurchase Program does not have an expiration date and may be discontinued by our Boards of Directors at any time.

During the three months ended November 30, 2013, there were no repurchases of Carnival Corporation common stock or Carnival plc ordinary shares under the Repurchase Program. Since March 2013, the remaining availability under the Repurchase Program has been \$975 million.

Carnival plc ordinary share repurchases under both the Repurchase Program and the Stock Swap programs require annual shareholder approval. The existing shareholder approval is limited to a maximum of 21.5 million ordinary shares and is valid until the earlier of the conclusion of the Carnival plc 2014 annual general meeting or October 16, 2014. Depending on market conditions and other factors, we may repurchase shares of Carnival Corporation common stock and/or Carnival plc ordinary shares under the Repurchase Program and the Stock Swap programs concurrently.

B. Stock Swap Programs

We use the Stock Swap programs in situations where we can obtain an economic benefit because either Carnival Corporation common stock or Carnival plc ordinary shares are trading at a price that is at a premium or discount to the price of Carnival plc ordinary shares or Carnival Corporation common stock, as the case may be. Any realized economic benefit under the Stock Swap programs is used for general corporate purposes, which could include repurchasing additional stock under the Repurchase Program.

In the event Carnival Corporation common stock trades at a premium to Carnival plc ordinary shares, we may elect to issue and sell shares of Carnival Corporation common stock through a sales agent, from time to time at prevailing market prices in ordinary brokers' transactions, and use the sale proceeds to repurchase Carnival plc ordinary shares in the UK market on at least an equivalent basis. Based on an authorization provided by the Board of Directors in October 2008, Carnival Corporation was authorized to issue and sell up to 19.2 million shares of its common stock in the U.S. market and had 18.1 million shares remaining at February 20, 2014. Any sales of Carnival Corporation shares have been or will be registered under the Securities Act.

In the event Carnival Corporation common stock trades at a discount to Carnival plc ordinary shares, we may elect to sell existing ordinary shares of Carnival plc, with such sales made by Carnival Corporation or Carnival Investments Limited through a sales agent, from time to time at prevailing market prices in ordinary brokers' transactions, and use the sale proceeds to repurchase shares of Carnival Corporation common stock in the U.S. market on at least an equivalent basis. Based on an authorization provided by the Board of Directors in January 2013, Carnival Corporation or Carnival Investments Limited was authorized to sell up to 32.8 million Carnival plc ordinary shares in the UK market and had 32.0 million shares remaining at February 20, 2014. Any sales of Carnival plc ordinary shares have been or will be registered under the Securities Act.

This Strategic Report, as set out on pages 2 to 67, has been approved by the Board.

By order of the Board

Micky Arison Chairman of the Board of Directors February 20, 2014

CARNIVAL PLC GROUP STATEMENTS OF INCOME

(in millions, except per share data)

		Years Ended November 30,
	2013	2012
Revenues
Cruise
Passenger tickets	\$ 5,315	\$ 5,134
Onboard and other	1,284	1,185
Tour and other	208	206
	6,807	6,525
Operating Costs and Expenses
Cruise
Commissions, transportation and other	1,102	1,122
Onboard and other.	229	223
Fuel	895	965
Payroll and related	710	683
Food	375	349
Other ship operating	1,295	1,082
Tour and other	158	154
	4,764	4,578
Selling and administrative	770	702
Depreciation and amortisation	649	610
Impairment losses.	189	207
	6,372	6,097
Operating Income	435	428
Nonoperating (Expense) Income
Interest income	5	5
Interest expense, net of capitalised interest	(119)	(137)
Other expense, net	(20)	(16)
	(134)	(148)
Income Before Income Taxes	301	280
Income Tax Expense, Net	(1)	(15)
Net Income	\$ 300	\$ 265
Earnings Per Share
Basic	\$ 1.39	\$ 1.23
Diluted	\$ 1.39	\$ 1.23

The accompanying notes are an integral part of these financial statements. These financial statements only present the Carnival plc consolidated IFRS Financial Statements and, accordingly, do not include the consolidated IFRS results of Carnival Corporation. In accordance with Section 408 of the Companies Act 2006, the Company has not presented its own Statements of Income or Statements of Comprehensive Income.

Within the DLC arrangement the most appropriate presentation of Carnival plc's results and financial position is considered to be by reference to the DLC Financial Statements (see Note 1). For information, set out below is the U.S. GAAP and Non-GAAP consolidated earnings per share included within the DLC Financial Statements of the DLC Annual Report and the MD&A section of the Strategic Report, respectively, for the years ended November 30:

	2013		2012
DLC U.S. GAAP basic earnings per share	\$ 1.39	\$	1.67
DLC U.S. GAAP diluted earnings per share	\$ 1.39	\$	1.67
DLC Non-GAAP diluted earnings per share	\$ 1.58	\$	1.94

CARNIVAL PLC GROUP STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

		Years Ended November 30,
	2013	2012
Net Income	\$ 300	\$ 265
Other Comprehensive Income (Expense) Items that will not be reclassified through the Statements of Income Actuarial losses on post-employment benefit obligations	(6)	(5)
Items that may be reclassified through the Statements of Income
Changes in foreign currency translation adjustment	329	(4)
Net (losses) gains on hedges of net investments in foreign operations	(10)	11
Net gains on cash flow derivative hedges	1	-
	320	7
Other Comprehensive Income	314	2
Total Comprehensive Income	\$ 614	\$ 267

Within the DLC arrangement the most appropriate presentation of Carnival plc's results and financial position is considered to be by reference to the DLC Financial Statements (see Note 1).

CARNIVAL PLC BALANCE SHEETS

(in millions)

	Group Company
				November 30,
		2013		2012	2013		2012
ASSETS
Current Assets
Cash and cash equivalents	\$	263	\$	295	\$ 144	\$	186
Trade and other receivables, net		184		177	71		75
Insurance recoverables		373		472	-		-
Inventories, net		142		159	43		49
Prepaid expenses and other		109		83	36		22
Total current assets		1,071		1,186	294		332
Property and Equipment, Net		14,303		13,898	4,361		4,388
Amount Owed from Subsidiaries		-		-	1,336		1,457
Intangibles.		723		706	179		176
Other Assets		169		213	32		32
Investments in Subsidiaries		-		-	5,106		4,982
	\$	16,266	\$	16,003	\$ 11,308	\$	11,367
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term borrowings	\$	60	\$	56	\$ -	\$	-
Current portion of long-term debt		373		1,145	318		1,094
Amount owed to the Carnival Corporation group		2,265		1,855	1,943		1,685
Amount owed to subsidiaries		-		-	104		423
Accounts payable		353		300	88		74
Dividends payable		54		162	54		162
Claims reserve		378		474	7		6
Accrued liabilities and other		325		279	116		95
Customer deposits		1,253		1,226	721		751
Total current liabilities		5,061		5,497	3,351		4,290
Long-Term Debt		2,049		1,770	1,515		1,214
Other Long-Term Liabilities		227		217	66		47
Shareholders' Equity
Share capital		358		357	358		357
Share premium		136		134	128		130
Retained earnings		7,287		7,200	5,775		5,307
Other reserves		1,148		828	115		22
Total shareholders' equity		8,929		8,519	6,376		5,816
	\$	16,266	\$	16,003	\$ 11,308	\$	11,367

The Carnival plc Group financial statements contained on pages 68 to 113 were approved by the Board of Directors on February 20, 2014 and signed on their behalf by

Micky Arison Chairman of the Board of Directors

Arnold Donald Director, President and Chief Executive Officer

Within the DLC arrangement the most appropriate presentation of Carnival plc's results and financial position is considered to be by reference to the DLC Financial Statements (see Note 1).

CARNIVAL PLC STATEMENTS OF CASH FLOWS

(in millions)

		Group		Company
		Years Ended November 30,
	2013	2012		2013	2012
OPERATING ACTIVITIES
Income before income taxes \$		301 \$	280 \$	682 \$	563
Adjustments to reconcile income before income taxes to net cash provided by
operating activities
Depreciation and amortisation	649	610		209	212
Goodwill and trademark impairment losses	13	173		-	-
Gain on liquidation of subsidiary		-	-	-	(322)
Losses (gains) on ship sales including impairments, net	176		27	-	(5)
Share-based compensation		7	7	4	3
Interest expense, net	114	132		65	68
Other, net	17		(5)	7	5
	1,277	1,224		967	524
Changes in operating assets and liabilities
Receivables		(1)	(17)	6	2
Inventories.	20		(7)	5	5
Insurance recoverables, prepaid expenses and other	418	171		(5)	3
Accounts payable	42		-	13	(13)
Claims reserve and accrued and other liabilities	(423)	(133)		-	1
Customer deposits	27		(35)	(19)	5
Cash provided by operations before interest and taxes	1,360	1,203		967	527
Interest received		5	5	1	2
Interest paid	(117)	(161)		(61)	(80)
Income taxes paid, net		(5)	(13)	(1)	(2)
Net cash provided by operating activities	1,243	1,034		906	447

INVESTING ACTIVITIES Additions to property and equipment	(729)	(1,316)		(153)	(115)
Insurance proceeds for the ship		- 508		-	-
Other, net	17		74	1	2

Net cash used in investing activities	(712)	(734)		(152)	(113)
FINANCING ACTIVITIES
Changes in loans with the Carnival Corporation group and Group companies	689	187		387	1
Proceeds from (repayments of) short-term borrowings, net		4 (117)		2	(55)
Principal repayments of long-term debt	(1,232)	(530)		(1,183)	(427)
Proceeds from issuance of long-term debt	311	383		311	383
Dividends paid	(323)	(215)		(323)	(215)
Other, net		(5)	(15)	(5)	(14)
Net cash used in financing activities	(556)	(307)		(811)	(327)
Effect of exchange rate changes on cash and cash equivalents		(7)	(26)	15	(3)
Net (decrease) increase in cash and cash equivalents	(32)		(33)	(42)	4
Cash and cash equivalents at beginning of year	295	328		186	182

Cash and cash equivalents at end of year \$		263 \$	295 \$	144 \$	186

Certain prior period amounts related to interest expense, net and losses (gains) on ship sales including impairments, net have been reclassified in the Statements of Cash Flows to conform to the current period presentation.

Within the DLC arrangement the most appropriate presentation of Carnival plc's results and financial position is considered to be by reference to the DLC Financial Statements (see Note 1).

CARNIVAL PLC GROUP STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in millions)

					Other reserves			Total
	Share capital	Share premium	Retained earnings	Translation reserve	Cash flow hedges	Merger Reserve	Total	shareholders' equity
Balances at
November 30, 2011 \$	357 \$	132 \$	7,257	\$ (685)	\$ 3	\$ 1,503 \$	821	\$ 8,567
Comprehensive income
Net income	-	-	265	-	-	-	-	265
Changes in foreign
currency translation
adjustment	-	-	-	(4)	-	-	(4)	(4)
Net gains on hedges of net
investments in foreign
operations	-	-	-	11	-	-	11	11
Actuarial losses on post
employment benefit
obligations	-	-	(5)	-	-	-	-	(5)
Total comprehensive
income	-	-	260	7	-	-	7	267
Cash dividends declared	-	-	(324)	-	-	-	-	(324)
Other, net	-	2	7	-	-	-	-	9
Balances at
November 30, 2012	357	134	7,200	(678)	3	1,503	828	8,519
Comprehensive income
Net income	-	-	300	-	-	-	-	300
Changes in foreign
currency translation
adjustment	-	-	-	329	-	-	329	329
Net losses on hedges of net
investments in foreign
operations	-	-	-	(10)	-	-	(10)	(10)
Net gains on cash flow
derivative hedges	-	-	-	-	1	-	1	1
Actuarial losses on post
employment benefit
obligations	-	-	(6)	-	-	-	-	(6)
Total comprehensive
income	-	-	294	319	1	-	320	614
Cash dividends declared	-	-	(215)	-	-	-	-	(215)
Other, net	1	2	8	-	-	-	-	11
Balances at
November 30, 2013 \$	358 \$	136 \$	7,287	\$ (359)	\$ 4	\$ 1,503 \$	1,148	\$ 8,929

Within the DLC arrangement the most appropriate presentation of Carnival plc's results and financial position is considered to be by reference to the DLC Financial Statements (see Note 1).

CARNIVAL PLC COMPANY STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in millions)

					Other reserves		Total
	Share capital	Share premium	Retained earnings	Translation reserve	Cash flow hedges	Merger Reserve	Total	shareholders' equity
Balances at
November 30, 2011 \$	357 \$	128 \$	5,076	\$ (146)	\$ 3	\$ 36 \$	(107)	\$ 5,454
Comprehensive income
Net income	-	-	562	-	-	-	-	562
Changes in foreign currency
translation adjustment	-	-	-	118	-	-	118	118
Net gains on hedges of net
investments in foreign
operations	-	-	-	11	-	-	11	11
Actuarial losses on post
employment benefit
obligations	-	-	(5)	-	-	-	-	(5)
Total comprehensive income	-	-	557	129	-	-	129	686
Cash dividends declared	-	-	(324)	-	-	-	-	(324)
Other, net	-	2	(2)	-	-	-	-	-
Balances at
November 30, 2012	357	130	5,307	(17)	3	36	22	5,816
Comprehensive income
Net income	-	-	681	-	-	-	-	681
Changes in foreign currency
translation adjustment	-	-	-	102	-	-	102	102
Net losses on hedges of net
investments in foreign
operations	-	-	-	(10)	-	-	(10)	(10)
Net gains on cash flow
derivative hedges	-	-	-	-	1	-	1	1
Actuarial losses on post
employment benefit
obligations	-	-	(6)	-	-	-	-	(6)
Total comprehensive income	-	-	675	92	1	-	93	768
Cash dividends declared	-	-	(215)	-	-	-	-	(215)
Other, net	1	(2)	8	-	-	-	-	7
Balances at
November 30, 2013 \$	358 \$	128 \$	5,775	\$ 75	\$ 4	\$ 36 \$	115	\$ 6,376

Within the DLC arrangement the most appropriate presentation of Carnival plc's results and financial position is considered to be by reference to the DLC Financial Statements (see Note 1).

CARNIVAL PLC NOTES TO GROUP AND COMPANY IFRS FINANCIAL STATEMENTS

NOTE 1 - Summary of Significant Accounting Policies

The following accounting policies have been applied consistently in dealing with items which are considered material in relation to Carnival plc (the "Company"), its subsidiaries and associates (referred to collectively in these IFRS financial statements as the "Group," "our," "us," and "we"). Carnival plc was incorporated in England and Wales in 2000 and its headquarters is located at Carnival House, 5 Gainsford Street, London, SE1 2NE, UK (registration number 4039524).

As of February 20, 2014, our cruise brands' summary information is as follows:

Cruise Brands	Passenger Capacity (a)	Percentage of Total Capacity	Number of Cruise Ships	Primary Markets (b)
Costa Cruises ("Costa")	32,136	37%	14	Italy, France and Germany
AIDA Cruises ("AIDA")	18,636	21	10	Germany
P&O Cruises (UK)	14,736	17	7	United Kingdom ("UK")
Cunard	6,672	8	3	UK and North America
Princess Cruises ("Princess") (c)	6,036	7	3	Australia and Asia
P&O Cruises (Australia)	4,804	5	3	Australia
Ibero Cruises ("Ibero")	2,932	3	2	Spain and Argentina
Carnival Cruise Lines (c)	2,124	2	1	Australia
	88,076	100%	43

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

(b) Represents the primary regions or countries where guests are sourced.
(c) Princess and Carnival Cruise Lines, two of Carnival Corporation's North America cruise brands, time charter three and one of their ships, respectively, to us to operate year-round from Australia and/or Asia. In addition, Princess time charters another two ships to us on a seasonal basis, which also operate from Australia or Asia. From September 2014, Carnival Cruise Lines will begin time chartering another ship to us that will operate seasonally from Australia.

Basis of Preparation

The Carnival plc Group and Company financial statements are presented in U.S. dollars unless otherwise noted, as this is the Group's and Company's presentation currency. They are prepared on the historical cost basis, except for certain financial assets and liabilities (including derivative instruments) that are stated at fair value.

The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS and International Financial Reporting Interpretations Committee interpretations. The financial statements have been prepared on a going concern basis.

The preparation of Group and Company financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of policies and reported and disclosed amounts in the financial statements. The estimates and underlying assumptions are based on historical experience and various other factors that we believe to be reasonable under the circumstances, and form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates used in preparing the financial statements.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

A review of the critical accounting estimates made by management is included within the MD&A section of the Strategic Report on pages 39 to 41.

Basis of Consolidation

The Carnival plc Group IFRS Financial Statements include the results of the Company and all its controlled subsidiaries, as typically evidenced by a voting control of greater than 50%, and incorporate the Group's interest in its associates under the equity method of accounting, as typically evidenced by a voting control of 20% to 50%. All significant intra-Group balances and transactions are eliminated in consolidation.

Carnival Corporation and Carnival plc operate a dual listed company ("DLC"), known as Carnival Corporation & plc, whereby the businesses of Carnival Corporation and Carnival plc are combined through a number of contracts and through provisions in Carnival Corporation's Articles of Incorporation and By-Laws and Carnival plc's Articles of Association. The two companies operate as if they are a single economic enterprise, but each has retained its separate legal identity. Each company's shares are publicly traded; on the New York Stock Exchange ("NYSE") for Carnival Corporation and the London Stock Exchange for Carnival plc. In addition, Carnival plc American Depository Shares are traded on the NYSE. The contracts governing the DLC arrangement provide that Carnival Corporation and Carnival plc each continue to have separate boards of directors, but the boards of directors and senior executive management of both companies are identical. Further details relating to the DLC arrangement are included in Note 3 of the DLC Financial Statements.

In order to provide the Carnival Corporation and Carnival plc shareholders with the most meaningful picture of their economic interest in the DLC arrangement, consolidated financial statements of Carnival Corporation & plc are included in the DLC Annual Report. The DLC Financial Statements have been prepared under purchase accounting principles whereby the DLC transaction was accounted for as an acquisition of Carnival plc by Carnival Corporation.

The Group and Company IFRS Financial Statements are required to satisfy reporting requirements of the Companies Act 2006 and do not include the IFRS consolidated results and financial position of Carnival Corporation and its subsidiaries. Accordingly, the Directors consider that, within the DLC arrangement, the most appropriate presentation of Carnival plc's results and financial position is by reference to the U.S. generally accepted accounting principles ("U.S. GAAP") DLC Financial Statements, on the basis that all significant financial and operating decisions affecting the DLC companies are made on the basis of U.S. GAAP information and consequences. Accordingly, the DLC Financial Statements on pages 6 to 40 in the DLC Annual Report, which form part of these financial statements, are incorporated into the Carnival plc IFRS Financial Statements as additional disclosures. Finally, the Carnival plc Directors' Report, Part II of the Carnival plc Directors' Remuneration Report and the Carnival plc Corporate Governance Report, included as Annexes A, B and C, respectively, to the Notice of Annual Meetings and Proxy Statement, dated February 20, 2014 ("Proxy Statement"), Part I of the Carnival plc Directors' Remuneration Report, contained within the Proxy Statement and the Strategic Report are all included as part of the 2013 Carnival plc Annual Report. Additional information related to environmental, social and governance issues can be found in our Strategic Report, Carnival plc Directors' Report and Carnival plc Corporate Governance Report.

All of the documents mentioned above can be found at the Carnival Corporation & plc website at www.carnivalcorp.com or www.carnivalplc.com.

Cash and Cash Equivalents

Cash and cash equivalents include investments with maturities of three months or less at acquisition, which are stated at cost.

Inventories

Inventories consist substantially of food and beverage, hotel and restaurant products and supplies, fuel and gift shop merchandise held for resale, which are all carried at the lower of cost or net realisable value. Cost is determined using the weighted-average or first-in, first-out methods.

Property and Equipment

Property and equipment, including ships, are stated at cost less accumulated depreciation.

Depreciation and amortisation is calculated to write-off the costs to the estimated residual value using the straight-line method over our estimates of average useful lives and residual values, as a percentage of original cost, as follows:

	Years	Residual Values
Ships	30	15%
Ship improvements	Shorter of remaining ship life or
	useful life (3-28)	0% or 15%
Buildings and improvements	10-35	0% or 10%
Computer hardware and software	2-10	0% or 10%
Transportation equipment and other	2-20	0% or 10%
Leasehold improvements, including port facilities	Shorter of lease term or
	related asset life (3-30)	-

The cruise business is very capital intensive. Each year, a capital program is developed for the improvement of our ships, as well as asset replacements to enhance efficiency of operations, gain strategic benefits or provide newer improved product offerings to our guests. Ship improvement costs that we believe add value to our ships, such as those incurred for refurbishments, safety and operational efficiencies, are capitalised to the ships and depreciated over the shorter of their or the ships' estimated remaining useful life, while costs of repairs and maintenance, including minor improvement costs, are charged to expense as incurred. We capitalise interest as part of the cost of acquiring ships and other capital projects during their construction period. The specifically identified or estimated cost and accumulated depreciation of previously capitalised ship components are writtenoff upon retirement, which may result in a loss on disposal that is included in other ship operating expenses.

Dry-dock costs primarily represent planned major maintenance activities that are incurred when a ship is taken out-of-service for scheduled maintenance. These costs are expensed as incurred and included in other ship operating expenses.

We reviewed our long-lived assets, principally our ships, for impairment whenever events or changes in circumstances indicate that the carrying amounts of these assets may not be fully recoverable. Upon the occurrence of a triggering event, the assessment of possible impairment is based on our ability to recover the carrying value of our asset based on our estimate of its recoverable amount, which is the higher of the fair value less cost to sell and its value in use. As it relates to our ships, the lowest level for which we maintain identifiable cash flows that are independent of the cash flows of other assets and liabilities is at the individual ship level.

A significant amount of judgment is required in estimating the future cash flows and fair values of our cruise ships.

Intangibles

Goodwill represents the excess of the purchase price over the fair value of identifiable net assets acquired in a business acquisition. Goodwill is allocated to our business units, also referred to as cruise brands, on the basis of expected benefit resulting from the acquisition and is stated at cost less accumulated goodwill impairment losses. We review our goodwill for impairment at least annually and, when events or circumstances dictate, more frequently. The recoverability of goodwill is determined by comparing the carrying amount of the net assets allocated to each cash-generating unit ("CGU" or "cruise brand") with its recoverable amount. The estimated recoverable amount is the higher of the cruise brand fair value less cost to sell and its value in use, and if the recoverable amount is greater than the cruise brand net asset carrying value, then the goodwill amount is deemed recoverable. A significant amount of judgment is required in estimating the recoverable amounts of our cruise brands' goodwill.

Trademarks are estimated to have an indefinite useful life and, therefore, are not amortisable, but are reviewed for impairment at least annually and, when events or circumstances dictate, more frequently. Our trademarks would be considered impaired if their carrying value exceeds their estimated recoverable amount. The costs of developing and maintaining our trademarks are expensed as incurred.

Revenue and Expense Recognition

Revenue comprises sales to third-parties and excludes VAT and other similar sales taxes. Guest cruise deposits represent unearned revenues and are initially recorded as customer deposit liabilities generally when received (see MD&A section on page 54 within the Strategic Report for additional discussion of customer deposits). Customer deposits are subsequently recognised as cruise revenues, together with revenues from onboard and other activities, and all associated direct costs and expenses of a voyage are recognised as cruise costs and expenses, upon completion of voyages with durations of ten nights or less and on a pro rata basis for voyages in excess of ten nights. The impact of recognising these shorter duration cruise revenues and costs and expenses on a completed voyage basis versus on a pro rata basis is not material. Future travel discount vouchers issued to guests are recorded as a reduction of cruise passenger ticket revenues when such vouchers are utilised. Cancellation fees are recognised in cruise passenger ticket revenue at the time of the cancellation.

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

Cruise passenger ticket revenues include fees and taxes levied by governmental authorities and collected by us from our guests. A portion of these fees and taxes vary with guest head counts and are directly imposed on a revenue-producing arrangement. This portion of the fees and taxes is expensed in commissions, transportation and other costs when the corresponding revenues are recognised. The remaining portion of governmental fees and taxes are also included in passenger ticket revenues but are expensed in other ship operating expenses when the corresponding revenues are recognised.

Revenues and expenses from our hotel and transportation operations, which are included in our Tour and Other segment, are recognised at the time the services are performed or expenses are incurred. Revenues from the longterm leasing of ships, which are also included in our Tour and Other segment, are recognised ratably over the term of the charter agreement using the straight-line method.

Insurance

We maintain insurance, including under Carnival Corporation & plc's group risk sharing programs, to cover a number of risks including, illness and injury to crew, guest injuries, pollution, other third-party claims in connection with our cruise activities, damages to hull and machinery for each of our ships, war risks, workers' compensation, employee health, directors and officers liability, property damages and general liabilities for thirdparty claims. We recognize insurance recoverables from third-party insurers for incurred expenses at the time the recovery is virtually certain and upon realization for amounts in excess of incurred expenses. All of our insurance policies are subject to coverage limits, exclusions and deductible levels. The liabilities associated with crew illnesses and crew and guest injury claims, including all legal costs, are estimated based on the specific merits of the individual claims or actuarially estimated based on historical claims experience, loss development factors and other assumptions. While we believe our estimated accrued claims reserves are adequate, the ultimate losses may differ.

At November 30, 2013 and 2012, substantially all of our aggregated short-term and long-term insurance recoverables relate to crew, guest and other third-party claims for the 2012 Costa Concordia incident ("2012 Ship Incident"). At November 30, 2013 and 2012, primarily all of our aggregated short-term and long-term claims reserves also relate to the 2012 Ship Incident. At November 30, 2013 and 2012, our long-term insurance recoverables and long-term claim reserve are included in other assets and other long-term liabilities, respectively, and are not material.

Selling and Administrative Expenses

Selling expenses include a broad range of advertising, such as marketing and promotional expenses. Advertising is charged to expense as incurred. Administrative expenses represent the costs of shoreside ship support, reservations and other administrative functions, and include, among others, salaries and related benefits, professional fees and occupancy costs, which are typically expensed as incurred.

Foreign Currency Translations and Transactions

Each business determines its functional currency by reference to its primary economic environment. We translate the assets and liabilities of our foreign operations that have functional currencies other than the U.S. dollar at exchange rates in effect at the balance sheet date. Revenues and expenses of these foreign operations are translated at weighted-average exchange rates for the period. Their equity is translated at historical rates and the resulting foreign currency translation adjustments are included in the translation reserve, which is a separate component of other reserves within shareholders' equity. Therefore, the U.S. dollar value of these non-equity translated items in our Group and Company financial statements will fluctuate from period to period, depending on the changing value of the U.S. dollar versus these currencies.

Our underlying businesses execute transactions in a number of different currencies, principally the euro, sterling, and Australian, Canadian and U.S. dollars. Exchange rate gains and losses arising from the remeasurement of monetary assets and liabilities and foreign currency transactions denominated in a currency other than the functional currency of the entity involved are recognised currently in nonoperating earnings, unless such monetary liabilities have been designated to act as hedges of net investments in our foreign operations. These net gains or losses included in nonoperating earnings were insignificant in 2013 and 2012. In addition, the unrealised gains or losses on long-term intercompany receivables and payables denominated in a non-functional currency, which are not expected to be repaid in the foreseeable future and are therefore considered to form part of our net investments, are recorded as foreign currency translation adjustments, which are included in the translation reserve.

Share-Based Compensation

We recognise compensation expense for all share-based compensation awards using the fair value method. For time-based share awards, we recognise compensation cost ratably using the straight-line attribution method over the expected vesting period or to the retirement eligibility date, if less than the vesting period, when vesting is not contingent upon any future performance. For performance-based share awards, we generally recognise compensation cost ratably using the straight line attribution method over the expected vesting period based on the probability of the performance condition being achieved. If all or a portion of the performance condition is not expected to be met, the appropriate amount of previously recognized compensation expense will be reversed and future compensation expense will be adjusted accordingly. In addition, we estimate the amount of expected forfeitures, based on historical forfeiture experience, when calculating compensation cost. If the actual forfeitures that occur are significantly different from the estimate, then we revise our estimates.

Pensions

The Group operates both defined benefit and defined contribution plans. The net deficit or surplus for each defined benefit pension plan is calculated in accordance with IAS 19, based on the present value of the defined benefit obligation at the balance sheet date less the fair value of the plan assets. The calculation is performed by a qualified actuary using the projected unit credit method. The discount rate is the yield at the balance sheet date on AA credit rated bonds or local equivalents that have maturity dates approximating the terms of the pension plans' obligations.

Actuarial gains and losses that arise in calculating the pension plans' obligations are recognised in the period in which they arise directly in the Group Statements of Comprehensive Income.

The operating and financing costs of defined benefit pension plans are recognised in the Group Statements of Income; current service costs are spread systematically over the expected average remaining service lives of employees and financing costs are recognised in the periods within which they arise. To the extent that the benefits vest immediately, the expense is recognised immediately in the Group Statements of Income.

Defined contribution plan expenses are recognised in the period to which they relate. We contribute to these plans based on employee contributions, salary levels and length of service.

Derivatives and Other Financial Instruments

We utilise derivative and nonderivative financial instruments, such as foreign currency forwards, options and swaps, foreign currency debt obligations and foreign currency cash balances, to manage our exposure to fluctuations in certain foreign currency exchange rates, and interest rate swaps to manage our interest rate exposure in order to achieve a desired proportion of fixed and floating rate debt. Our policy is not to use any financial instruments for trading or other speculative purposes.

All derivatives are recorded at fair value. The changes in fair value are recognised currently in earnings if the derivatives do not qualify as effective hedges. Subject to specific criteria, derivatives, financial assets and financial liabilities may be designated as forming hedge relationships, as a result of which changes in their fair value are offset in the Group Statements of Income or recognised directly in the Group Statements of Comprehensive Income, depending on the nature of the hedge relationship. Hedging derivatives fall into three classifications: fair value hedges, cash flow hedges and hedges of a net investment. Changes in the fair value of fair value hedge derivatives are offset against the changes in the fair value of the underlying hedged items in the Group Statements of Income. The effective portion of the changes in fair value of cash flow hedge derivatives are recognised in the Group Statements of Comprehensive Income until the underlying hedged item is recognised in earnings or the forecasted transaction is no longer probable. Changes in the fair value of hedges of a net investment are recognised in the Group Statements of Comprehensive Income to offset a portion of the change in the translated value of the net investment being hedged. In the event that a previously hedged investment is disposed of, the accumulated amount previously recognised from hedging is required to be removed from the hedging reserve within shareholders' equity and reflected in net income. We formally document hedging relationships for all derivative and nonderivative hedges and the underlying hedged items, as well as our risk management objectives and strategies for undertaking the hedge transactions.

We classify the fair values of all derivative contracts as either current or long-term, depending on whether the maturity date of the derivative contract is within or beyond one year from the balance sheet date. The cash flows from derivatives treated as hedges are classified in the Statements of Cash Flows in the same category as the item being hedged.

Interest-bearing debt and bank overdrafts are recorded at their initial fair value, which normally reflects the proceeds received by us, net of debt issuance costs, and subsequently stated at amortised cost, including accrued interest. Any difference between the proceeds after debt issuance costs and the premium and redemption values are amortised to interest expense over the term of the debt, typically on a straight-line basis which approximates the effective interest method.

Income Taxes

Deferred income taxes are provided using the liability method. Deferred income tax assets are recognised to the extent that it is probable that future taxable income will be available against which the temporary differences can be utilised. Deferred income taxes are measured at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantially enacted by the balance sheet date. Current income taxes are the taxes payable on the taxable income for the year, applying current rates and any adjustments in respect of previous years.

Earnings Per Share

Basic earnings per share is computed by dividing net income by the weighted-average number of ordinary shares outstanding during each period. Diluted earnings per share is computed by dividing net income by the weightedaverage number of ordinary shares and common stock equivalents outstanding during each period.

Dividends

Dividend distributions are recognised in the period in which the dividends are declared, since under the DLC arrangement the declaration of a dividend by the Boards of Directors of Carnival Corporation and Carnival plc establishes a liability for Carnival plc.

Changes in Accounting Policy and Disclosures

New and Amended Standards That Have Been Adopted By Us

Amendments to IAS 1, "Presentation of Financial Statements on OCI" effective for Annual periods beginning on or after July 1, 2012 and
IFRS 13, "Fair Value Measurement," effective for annual periods beginning on or after January 1, 2013.

New Standards and Interpretations Not Yet Adopted

Amendments to IAS 19, "Employee Benefits," effective for annual periods beginning on or after January 1, 2013;
IFRS 12, "Disclosure of Interests in Other Entities," effective for annual periods beginning on or after January 1, 2013;
Amendments to IAS 39, "Financial Instruments: Recognition and Measurement on Novation of Derivatives and Hedge Accounting" effective for annual periods beginning on or after January 1, 2014 and
Amendments to IAS 36, "Impairments of Assets on Recoverable Amount Disclosures" effective for annual periods beginning on or after January 1, 2014.

Management does not believe the adoption of these new standards, amendments and interpretations will have a material impact on the Group or Company results and financial position.

NOTE 2 - Segment Information

IFRS 8 "Operating Segments" requires that an entity's operating segments are reported on the same basis as the internally reported information that is provided to the chief operating decision maker ("CODM"), who for us is the President and Chief Executive Officer of Carnival Corporation and Carnival plc.

As previously discussed, within the DLC arrangement the most appropriate presentation of Carnival plc's results and financial position is by reference to the DLC Financial Statements. Accordingly, decisions to allocate resources and assess performance for Carnival plc are made by the CODM upon review of the U.S. GAAP segment results across all of Carnival Corporation & plc's cruise brands and other segments. Carnival Corporation & plc has three reportable cruise segments that are comprised of its (1) North America cruise brands, (2) Europe, Australia & Asia ("EAA") cruise brands and (3) Cruise Support. In addition, Carnival Corporation & plc has a Tour and Other segment.

The Carnival Corporation & plc North America cruise segment includes Carnival Cruise Lines, Holland America Line, Princess and Seabourn. The Carnival Corporation & plc EAA cruise segment includes AIDA, Costa, Cunard, Ibero, P&O Cruises (Australia) and P&O Cruises (UK). These individual cruise brand operating segments have been aggregated into two reportable segments based on the similarity of their economic and other characteristics, including types of customers, regulatory environment, maintenance requirements, supporting systems and processes and products and services they provide. The Carnival Corporation & plc Cruise Support segment represents certain of its port and related facilities and other corporate-wide services that are provided for the benefit of its cruise brands. The Carnival Corporation & plc Tour and Other segment represents the hotel and transportation operations of Holland America Princess Alaska Tours. In 2012, the Tour and Other segment also included two ships that it chartered to an unaffiliated entity. In April 2013, a subsidiary of Carnival Corporation sold one of these two ships and recognised a \$15 million gain as a reduction of Tour and Other operating expenses. Accordingly, subsequent to this 2013 sale, the Tour and Other segment included only one ship. The significant accounting policies of these segments are the same as those described in Note 2 of the DLC Financial Statements.

Selected information for the Carnival Corporation & plc segments and the reconciliation to the corresponding Carnival plc amounts as of and for the years ended November 30 was as follows (in millions):

	Revenues	Operating expenses	Selling and administrative	Depreciation and amortisation	Operating income (loss)	Capital expenditures	Total assets
2013
North America Cruise
Brands (a) \$	9,370 \$	6,439	\$ 1,048	\$ 927 \$	956	\$ 1,350	\$ 22,448
EAA Cruise Brands	5,906	4,137(b)	686	599	471(c)	642	16,126
Cruise Support	96	31	136	26	(97)	108	1,016
Tour and Other (a)	210	143	9	36	22	49	514(d)
Intersegment elimination (a)	(126)	(126)	-	-	-	-	-
Carnival Corporation & plc – U.S. GAAP	15,456	10,624	1,879	1,588	1,352	2,149	40,104
Carnival Corporation, U.S.
GAAP vs. IFRS differences
and eliminations (e)	(8,649)	(5,860)	(1,109)	(939)	(917)	(1,420)	(23,838)
Carnival plc – IFRS \$	6,807 \$	4,764	\$ 770	\$ 649 \$	435	\$ 729	\$ 16,266
2012
North America Cruise
Brands (a) \$	9,364 \$	6,240	\$ 949	\$ 898 \$	1,277	\$ 990	\$ 21,893
EAA Cruise Brands	5,827	4,010	650	561	433(c)	1,291	15,894
Cruise Support	86	22	114	28	(78)	33	888
Tour and Other (a)	211	154	7	40	10	18	486(d)
Intersegment elimination (a)	(106)	(106)	-	-	-	-	-
Carnival Corporation & plc –
U.S. GAAP	15,382	10,320	1,720	1,527	1,642	2,332	39,161
Carnival Corporation, U.S. GAAP vs. IFRS differences
and eliminations (e)	(8,857)	(5,742)	(1,018)	(917)	(1,214)(f)	(1,016)	(23,158)
Carnival plc – IFRS \$	6,525 \$	4,578	\$ 702	\$ 610 \$	428	\$ 1,316	\$ 16,003

(a) A portion of the North America cruise brands' segment revenues includes revenues for the tour portion of a cruise when a land tour package is sold along with a cruise by Holland America Line and Princess. These intersegment tour revenues, which are included in the Tour and Other segment, are eliminated directly against the North America cruise brands' segment revenues and operating expenses in the line "Intersegment elimination."
(b) Includes \$176 million of ship impairments related to two smaller Costa ships.
(c) Includes \$13 million in 2013 and \$173 million in 2012 of impairment losses related to Ibero's goodwill and trademarks.
(d) Tour and Other segment assets primarily include hotels and lodges in the state of Alaska and the Canadian Yukon, motorcoaches used for sightseeing and charters, glass-domed railcars, which run on the Alaska Railroad and Carnival Corporation & plc owned ships that it leased out under long-term charters to an unaffiliated entity.
(e) Carnival Corporation consists primarily of cruise brands that do not form part of the Group; however, these brands are included in Carnival Corporation & plc and thus represent substantially all of the reconciling items. These Carnival Corporation cruise brands are Carnival Cruise Lines, Princess, Holland America Line

and Seabourn. The U.S. GAAP vs. IFRS accounting differences principally relate to differences in the carrying value of ships and related depreciation expenses and are not material to Carnival Corporation's financial statements.

(f) Includes \$34 million of impairment losses related to Costa Allegra.

IFRS 8 also requires disclosure of certain geographical information that is in addition to the requirement to disclose information reviewed by the CODM. The Group's geographical information presented below reflects the principal regions from where our guests are sourced and not the cruise brands on which they sailed. See Note 1 for the primary regions or countries where our guests are sourced.

The Group's revenues by geographic area were as follows (in millions):

		Years Ended November 30,
		2013	2012
North America	\$	880	\$ 830
Europe		4,675	4,591
Australia and Asia		878	707
Others		374	397
	\$	6,807	\$ 6,525

Substantially all of our cruise assets are ships and our cruise capital expenditures are substantially all incurred for ships and ships under construction. Our ships move between geographic regions and, therefore, it is not meaningful to allocate these ship assets and ship capital expenditures to particular regions. In addition, segment information relating to liabilities is not reported to or used by the CODM in order to assess performance and allocate resources to a segment. Our Tour operations' guests are primarily sourced from North America, which is where all our Tour operations' assets and capital spending are located.

NOTE 3 - Income, Expense and Auditors' Remuneration

Operating lease expenses were as follows (in millions):

	Years Ended November 30,
	2013		2012
Ships	\$ 337	\$	215
Property	25		21
Other	6		6
	\$ 368	\$	242
Auditors' remuneration was as follows (in millions):
Fees payable to the Company's auditor for the audit of the Group and Company financial statements	\$ 1	\$	1
Fees payable to the Company's auditor and their associates for the audit of
the Company's subsidiaries pursuant to legislation	1		1
	\$ 2	\$	2

During 2013:

The Group recognised \$176 million of ship impairment charges related to two of Costa's smaller ships in other ship operating expenses. One of these ships was laid–up in November 2013.
The Group recognised impairment charges of \$13 million for Ibero's remaining trademarks' carrying value and \$14 million related to an investment.

During 2012:

The Group wrote-off the net carrying value of Costa Concordia ("the ship") in the amount of €381 million (or \$515 million) and received €395 million (or \$508 million) of hull and machinery insurance proceeds for the total loss of the ship. As a result, the Group recognised €14 million (or \$17 million) of proceeds in excess of the net carrying value of the ship as a reduction of other ship operating expenses. In addition, the Group incurred \$19 million for the 2012 Ship Incident related expenses that were not covered by insurance. These expenses are principally included in other ship operating expenses.
Costa Allegra suffered fire damage and, accordingly, the Group decided to withdraw this ship from operations resulting in a \$34 million impairment loss. In addition, the Group incurred \$5 million for Costa Allegra incident-related expenses, which are substantially all included in other ship operating expenses. In October 2012, the Group sold Costa Allegra.
The Group and Company recognised a \$17 million gain from Cunard's litigation settlement related to Queen Mary 2's propulsion pods as a reduction of other ship operating expenses.
The Group impaired the entire goodwill and the majority of trademarks of Ibero, which resulted in impairment losses of \$173 million (see Note 11 for additional discussion).

Selling and administrative expenses include advertising and promotion expenses of \$278 million and \$263 million and payroll and related expenses of \$355 million and \$307 million in 2013 and 2012, respectively.

NOTE 4 - Income and Other Taxes

Income tax (expense) benefit, comprised entirely of overseas taxes incurred outside the UK, was as follows (in millions):

				Years Ended November 30,
		2013	2012
Current taxes Deferred taxes	\$	(24) 23	\$	(23) 8
Income tax expense, net	\$	(1)	\$	(15)

The total income tax (expense) benefit is reconciled to income taxes calculated at the UK standard tax rate as follows (in millions):

		Years Ended November 30,
		2013	2012
Income before income taxes	\$	301	\$	280
Notional tax expense at UK standard tax rate (2013-23.3% and 2012-24.7%)		(90)		(76)
Effect of reversal of uncertain tax positions and valuation allowance		20		7
Effect of Italian and UK tonnage tax and other overseas taxes at different rates		69		54
	\$	(1)	\$	(15)

We do not expect to incur income taxes on future distributions of undistributed earnings of foreign subsidiaries and, accordingly, no deferred income taxes have been provided for the distribution of these earnings. All interest expense related to income tax liabilities is included in income tax expense. In addition to or in place of income taxes, virtually all jurisdictions where our ships call impose taxes and/or fees based on guest counts, ship tonnage, passenger capacity or some other measure, and these taxes and fees are included in commissions, transportation and other costs and other ship operating expenses.

UK and Australian Income Tax

For a company to be eligible for the regime, it must be subject to UK corporation tax and operate qualifying ships that are strategically and commercially managed in the UK. Companies within UK tonnage tax are also subject to a seafarer training requirement.

P&O Cruises (Australia) and all of the other cruise ships operated internationally by Carnival plc in the Australian market are exempt from Australian corporation tax by virtue of the UK/Australian income tax treaty.

Italian Income Tax

Portuguese, Spanish and German Income Tax

Ibero's Spanish operations are minimal and, therefore, its Spanish income taxes are minimal.

Substantially all of AIDA's earnings are exempt from German corporation tax by virtue of the Italy/Germany income tax treaty.

Brazilian, Chinese and Japanese Income and Other Taxes

Substantially all of Costa's income from its international operations in China is exempt from Chinese corporation tax by virtue of the Italy/China Maritime tax treaty.

U.S. Federal and State Income Taxes

We believe that the U.S. source transportation income we earn currently qualifies for exemption from U.S. federal income tax under applicable bilateral U.S. income tax treaties.

Our domestic U.S. operations, principally the hotel and transportation business of Holland America Princess Alaska Tours, are subject to federal and state income taxation in the U.S., at a combined rate that approximates 40%.

NOTE 5 - Dividends

The Board of Directors declared regular quarterly dividends for the first, second, third and fourth quarters at \$0.25 per share in 2013 and 2012, respectively. On November 15, 2012, our Board of Directors declared a special dividend to holders of Carnival plc ordinary shares of \$0.50 per share, or \$108 million, which was paid in December 2012. Our quarterly dividend declarations amounted to \$54 million, \$54 million, \$53 million and \$54 million or an aggregate of \$215 million in 2013 and our regular quarterly and special dividend declarations amounted to \$54 million, \$53 million, \$55 million and \$162 million or an aggregate of \$324 million in 2012.

NOTE 6 - Earnings per Share

Our basic and diluted earnings per share were computed as follows (in millions, except per share data):

		Years Ended November 30,
	2013	2012
Net income for basic and diluted earnings per share	\$ 300	\$ 265
Weighted-average ordinary shares outstanding	215	215
Dilutive effect of equity plans	1	1
Diluted weighted-average shares outstanding	216	216
Basic earnings per share	\$ 1.39	\$ 1.23
Diluted earnings per share	\$ 1.39	\$ 1.23

As described in Note 1, Carnival Corporation and Carnival plc operate as a DLC. Under the contracts governing the DLC arrangement, the Carnival Corporation & plc consolidated earnings accrue equally to each share of Carnival Corporation common stock and each Carnival plc ordinary share. For this reason, the U.S. GAAP earnings per share for Carnival Corporation & plc are provided for information on page 68.

The weighted-average number of ordinary shares has been reduced for shares in the Company held by the Company's Employee Benefit Trust for the satisfaction of equity awards that have not vested unconditionally. These Employee Benefit Trust held shares do not receive any dividends.

The dilutive shares relate to ordinary shares to be issued on vesting of restricted stock units and performancebased share awards and the exercise of employee share options. Details of employee share-based compensation are discussed in Note 20.

NOTE 7 - Cash and Cash Equivalents

Cash and cash equivalents were as follows (in millions):

	Group				Company

		2013		2012		2013		2012
Cash on ships.	\$	55	\$	57	\$	16	\$	17
Cash used for current operations		95		89		43		37
Money market funds and time deposits		113		149		85		132
	\$	263	\$	295	\$	144	\$	186

NOTE 8 - Trade and Other Receivables, Net

Trade and other receivables, net, were as follows (in millions):

		Group		Company
			November 30,
	2013		2012		2013		2012
Trade, net	\$ 162	\$	123	\$	63	\$	63
VAT Income taxes and other	12 10		39 15		6 2		9 3
	\$ 184	\$	177	\$	71	\$	75

The aging of trade receivables was as follows (in millions):

	Group		Company
			November 30,
	2013		2012		2013		2012
Current	\$ 147	\$	105	\$	62	\$	62
1 to 30 days	7		11		2		2
31 to 90 days	7		5		1		1
91 to 180 days	3		4		-		-
Over 180 days	8		9		-		1
	\$ 172	\$	134	\$	65	\$	66

The allowance account movements were as follows (in millions):

	Group			Company
	2013	2012		2013		2012
Allowance for bad debts at December 1,	\$ 11	\$ 8	\$	3	\$	1
Expenses (recoveries) Write-offs.	- (1)	3 -		(1) -		2 -
Allowance for bad debts at November 30,	\$ 10	\$ 11	\$	2	\$	3

NOTE 9 - Inventories, Net

Inventories, net were as follows (in millions):

	Group					Company
				November 30,
		2013	2012		2013			2012
Food and beverage provisions and hotel and restaurant products and supplies, net	\$	81	\$	86	\$	25	\$	29
Fuel		45		48		17		19
Merchandise held for resale, net	\$	16 142	\$	25 159	\$	1 43	\$	1 49

The amount of inventories recognised as a Group cost or expense was \$1.5 billion in each of 2013 and 2012.

NOTE 10 - Property and Equipment

Property and equipment movements were as follows (in millions):

		Group			Company
	Ships and ship improvements	Other property and equipment	Total	Ships and ship improvements	Other property and equipment	Total
Cost at November 30, 2011	\$ 16,691	\$ 1,145	\$ 17,836	\$ 5,703	\$ 71	\$ 5,774
Exchange movements	46	(7)	39	280	5	285
Additions	1,226	67	1,293	84	14	98
Disposals	(1,035)	(12)	(1,047)	(320)	(1)	(321)
Cost at November 30, 2012	16,928	1,193	18,121	5,747	89	5,836
Exchange movements	557	52	609	-	7	7
Additions	615	114	729	145	8	153
Disposals	(52)	(18)	(70)	(32)	(1)	(33)
Cost at November 30, 2013	\$ 18,048	\$ 1,341	\$ 19,389	\$ 5,860	\$ 103	\$ 5,963
Accumulated depreciation at
November 30, 2011	\$ (3,420)	\$ (510)	\$ (3,930)	\$ (1,326)	\$ (32)	\$ (1,358)
Exchange movements	(125)	4	(121)	(131)	(2)	(133)
Depreciation and
amortisation	(535)	(75)	(610)	(202)	(10)	(212)
Impairment (a)	(34)	-	(34)	-	-	-
Disposals	460	12	472	254	1	255
Accumulated depreciation at
November 30, 2012	(3,654)	(569)	(4,223)	(1,405)	(43)	(1,448)
Exchange movements Depreciation and	(53)	(56)	(109)	28	(2)	26
amortisation	(569)	(73)	(642)	(199)	(10)	(209)
Impairment (a)	(176)	-	(176)	-	-	-
Disposals	46	18	64	27	2	29
Accumulated depreciation at November 30, 2013	\$ (4,406)	\$ (680)	\$ (5,086)	\$ (1,549)	\$ (53)	\$ (1,602)
Net book value
At November 30, 2013	\$ 13,642	\$ 661	\$ 14,303	\$ 4,311	\$ 50	\$ 4,361
At November 30, 2012	\$ 13,274	\$ 624	\$ 13,898	\$ 4,342	\$ 46	\$ 4,388

(a) See Note 3 for ship impairment losses. Due to the ongoing challenging economic environment in Europe and certain ship-specific facts and circumstances, such as their size, age, condition, viable alternative itineraries and historical operating cash flows, we performed discounted future cash flow analyses on all three of our Ibero ships and two of our smaller Costa ships as of July 31, 2013 to determine if these ships were impaired. The principal assumptions used in our discounted cash flow analyses consisted of forecasted future operating results, including net revenue yields and net cruise costs including fuel prices, estimated residual values and the expected November 2013 rebranding of Ibero's Grand Mistral into the Costa fleet as Costa neoRiviera, which are all considered Level 3 inputs. Based on these discounted cash flow analyses, we determined that the net carrying value of the two Costa ships exceeded their estimated discounted future cash flows. As a result, we recognised \$176 million of ship impairment charges during 2013.

The determination of fair value includes numerous assumptions that are subject to various risks and uncertainties, unless a comparable, viable actively-traded market exists, which is usually not the case for cruise ships. Our ships' fair values are typically estimated based either on ship sales price negotiations or discounted future cash flows. However, if there is a change in assumptions used or if there is a change in the conditions or circumstances influencing fair values in the future, then we may need to recognise an impairment loss.

Ships under construction include progress payments for the construction of new ships, as well as design and engineering fees, capitalised interest, construction oversight costs and various owner supplied items. Capitalised interest, substantially all on our ships under construction, amounted to \$7 million in each of 2013 and 2012. The interest capitalisation rate is based on the weighted-average interest rates applicable to borrowings within the DLC during each period. During 2013 and 2012, the average capitalisation rate was 3.4% and 3.9%, respectively.

During 2013, the Group took delivery of one new ship, the 2,194 passenger AIDAstella. During 2012, the Group took delivery of two new ships, the 2,194 passenger AIDAmar and the 2,984 passenger Costa Fascinosa. During 2013 and 2012, the Group made stage payments for ships under construction.

At November 30, 2013 and 2012, the cost of ships under construction included above totalled \$271 million and \$185 million, respectively. At November 30, 2013 and 2012, the net book value of ship assets is shown after deducting government construction grants of \$149 million and \$150 million, respectively. At November 30, 2013 and 2012, the book value of our land was \$23 million and \$24 million, respectively.

See Note 3 for additional ship-related discussions.

NOTE 11 - Intangibles

Intangible movements were as follows (in millions):

	Group							Company
		Goodwill	Trademarks			Total		Goodwill
At November 30, 2011	\$	856	\$	34	\$	890	\$	170
Ibero impairment losses (a)		(153)		(20)		(173)		-
Exchange movements		(10)		(1)		(11)		6
At November 30, 2012		693		13		706		176
Ibero impairment losses (a)		-		(13)		(13)		-
Exchange movements		30		-		30		3
At November 30, 2013	\$	723	\$	-	\$	723	\$	179

(a) During 2012, given the state of the Spanish economy and considering the low level of Ibero estimated recoverable amount in excess of its carrying amount, we performed an interim impairment review of Ibero's goodwill and trademarks. The interim discounted future cash flow analysis that was used to estimate Ibero's estimated recoverable amounts were primarily impacted by slower than anticipated Ibero capacity growth. As a result, Ibero's estimated recoverable amounts no longer exceeded its carrying values. Accordingly, we recognised a goodwill impairment loss of \$153 million, which represented Ibero's entire goodwill balance and a \$20 million trademark impairment loss. In 2013, we recognised a \$13 million impairment loss, which related to Ibero's remaining trademarks' carrying value.

At November 30, 2013 and 2012, the net book value of each of our CGUs' or cruise brands' goodwill balance was as follows: AIDA, \$157 million (2012 \$149 million), Costa, \$387 million (2012 \$368 million) and Cunard \$179 million (2012 \$176 million). As of July 31, 2013, we performed our annual goodwill impairment reviews to assess the recoverable amount of each cruise brand's goodwill. For the impairment reviews, the estimated recoverable amounts were based on the higher of the cruise brands' fair value less costs to sell and its value in use. Recoverable amounts for our brands that carried goodwill were determined using the 10-year discounted future cash flow analysis. Our annual impairment reviews resulted in no goodwill impairments.

The principal assumptions, all of which are considered level 3 inputs, used in our cash flow analyses relate to forecasting future operating results and are as follows:

net revenue yields and net cruise costs including fuel prices;
capacity changes, including the expected deployment of vessels into, or out of, the cruise brands, including, but not limited to, the new ships discussed in Note 22;
weighted-average cost of capital pre-tax discount rates, which ranged from 8.8% to 11.1% of market participants, adjusted for the risk attributable to the geographic region in which the brands operate;
capital expenditures, terminal values and 3% for long-term perpetuity growth rates and
in the case of Costa, forecasted net revenue yields we assumed to recover over the next few years compared to current levels as we continue to rebuild this brand.

The cash flows were estimated based on those a market participant would expect to derive from the businesses. For all the cruise brands, we used relevant past experience in determining an estimate of future cash flows.

For AIDA and Cunard, significant headroom exists in each cruise brand and, based on the sensitivity analysis performed no reasonably possible changes in the assumptions would cause the carrying amount of the brands' goodwill to exceed its recoverable amount.

The determination of our cruise brands' goodwill recoverable amounts includes numerous assumptions that are subject to various risks and uncertainties. We believe that we have made reasonable estimates and judgments in determining whether our goodwill has been impaired. However, if there is a change in assumptions used or if there is a change in the conditions or circumstances influencing fair values in the future, then we may need to recognise an impairment loss. The fair value of the Costa goodwill currently exceeds the carrying value by a significant amount. Changes in assumptions would cause the recoverable amount to fall below the carrying amount as follows:

a reduction in the perpetuity growth rate after 10 years from the 3% assumption applied to a revised assumption of a 1.0% growth rate or less or
an increase in the discount rate from the 11.1% assumption applied to a revised assumption of 12.1% or more or
a reduction in the projected operating cash flows across ten years by 12.5% or more.

Our brand's estimated recoverable amount significantly exceeded their value in use and there have not been any events or circumstances subsequent to July 31, 2013, which we believe require us to perform interim goodwill or trademark impairment test.

NOTE 12 - Other Assets

Other assets were as follows (in millions):

			Group		Company
				November 30,
	2013					2013		2012
Other receivables, including VAT	\$	80	\$	107	\$	-	\$	1
Insurance recoverables		22		38		-		-
Prepaid expenses and other		35		33		19		20
Deferred taxes		19		22		-		-
Derivative contract receivables		13		11		13		11
Income tax receivables		-		2		-		-
	\$	169	\$	213	\$	32	\$	32

Substantially all deferred tax assets relate to net operating losses expected to be recovered against future taxable income. At November 30, 2013 and 2012, the Group had gross deferred tax assets of \$118 million and \$134 million and the Company had gross deferred tax assets of \$98 million and \$106 million, respectively, which were not recognised.

NOTE 13 - Investments in Subsidiaries

The Company's investments in subsidiaries movements were as follows (in millions):

At November 30, 2011	\$ 4,949
Additions	88
Exchange movements	(55)
At November 30, 2012	4,982
Additions	1
Exchange movements.	123
At November 30, 2013	\$ 5,106

At November 30, 2013, the Company's principal operating subsidiary was Costa Crociere S.p.A., which is incorporated in Italy and is 99.97% directly owned by the Company. This subsidiary owns and operates the Costa and AIDA cruise brands, and also operates the Ibero ships.

The following wholly owned UK subsidiaries are exempt from the requirement to prepare individual audited accounts or individual accounts (as further specified below) for the year ended November 30, 2013:

Company	Companies House Registration Number
P&O Princess Cruises International Limited (a)	03902746
SeaVacations Limited (a)	03681272
SeaVacations UK Limited (a)	03633566
Carnival (UK) Limited (b)	03141044
Costa Cruise Lines UK Limited (b)	02482631
P&O Princess American Holdings (b)	01453164
P&O Princess Cruises Pension Trustee Limited (b)	04069014
P&O Travel Limited (b)	00773151

(a) Exempt from preparing individual audited accounts by virtue of Section 479A of the Companies Act 2006. (b) Exempt from preparing individual accounts by virtue of Section 394A of the Companies Act 2006.

In order to obtain the above exemptions, the Company has guaranteed the outstanding liabilities to which each of the above companies is subject at November 30, 2013.

The full information for all of the Carnival plc subsidiaries will be annexed to the Company's next annual return.

NOTE 14 - Unsecured Debt

Long-term debt and short-term borrowings consisted of the following (in millions):

		Group		Company
			November 30,
	2013	2012	2013	2012
Long-Term Debt
Export Credit Facilities
Fixed rate	\$ 260	\$ 323	\$ 260	\$ 323
Euro fixed rate	372	388	-	-
Euro floating rate (a)	863	625	701	457
Bank Loans (b)
Fixed rate (c).	388	149	388	149
Floating rate	-	100	-	100
Private Placement Notes
Euro fixed rate	166	185	166	185
Long-Term Debt	2,049	1,770	1,515	1,214

Current Portion of Long-Term Debt
Export Credit Facilities
Fixed rate	65	66	65	66
Euro fixed rate	40	38	-	-
Euro floating rate (a)	102	70	87	57
Bank Loans
Fixed rate (c).	37	-	37	-
Floating rate	100	-	100	-
Private Placement Notes
Euro fixed rate	29	-	29	-
Publicly-Traded Notes
Euro fixed rate	-	971	-	971
Current Portion of Long-Term Debt .	373	1,145	318	1,094
Floating Rate Short-Term Borrowings
Euro bank loans	60	56	-	-
Short-Term Borrowings	60	56	-	-
Total Debt	\$2,482	\$2,971	\$1,833	\$2,308

(a) In 2013, we borrowed \$311 million under a euro-denominated export credit facility, the proceeds of which were used to pay for a portion of AIDAstella's purchase price and is due in semi-annual instalments through March 2025.

In 2012, we borrowed \$383 million under a euro-denominated export credit facility, the proceeds of which were used to pay for a portion of AIDAmar's purchase price and is due in semi-annual instalments through May 2024.

(b) In 2013, we entered into a \$265 million euro-denominated floating rate revolving bank loan facility. This facility has a perpetual term, although we can terminate it at any time and the bank can terminate the facility at any time upon nine months notice. The facility can be drawn beginning in May 2014.
(c) In 2013, the Group and Company assumed a Carnival Corporation debt obligation for \$312 million that matures in 2021.

Carnival plc, Carnival Corporation and certain of Carnival plc's subsidiaries are party to a five-year multicurrency revolving credit facility for \$2.5 billion (comprised of \$1.6 billion, €450 million and £150 million) (the "Facility"), which expires in May 2016. The Facility currently bears interest at LIBOR/EURIBOR plus a margin of 70 basis points ("bps"). The margin varies based on changes to Carnival Corporation's and Carnival plc's long-term senior unsecured credit ratings. Carnival Corporation & plc is required to pay a commitment fee of 35% of the margin per annum on any undrawn portion. If more than one-third or if more than two-thirds of the Facility is drawn, Carnival Corporation & plc will incur an additional 15 bps or 30 bps utilisation fee, respectively, on the total amount outstanding.

In September 2013, we entered into a seven-year \$300 million floating rate revolver, which expires in September 2020 and is undrawn as of November 30, 2013. In addition, at November 30, 2013, we had another undrawn revolving credit facility in the amount of \$82 million, which expires in 2015. These revolving credit facilities provide us with additional liquidity. At November 30, 2013, \$2.8 billion was available under all of our revolving credit facilities.

The debt table above does not include the impact of our foreign currency and interest rate swaps. Amounts falling due within one year include accrued interest. The floating rate is based on LIBOR or EURIBOR. Substantially all of our fixed rate debt can only be called or prepaid by incurring costs. Further detail relating to the Group's policies on managing currency and interest rate risks and additional information on debt and committed financings are provided in Notes 1 and 24 herein, in Notes 5 and 10 of the DLC Financial Statements and within the MD&A section of the Strategic Report.

Scheduled annual maturities of our debt were as follows (in millions):

			Group		Company
	November 30,
Fiscal		2013		2012		2013		2012
2013			\$	1,201			\$	1,094
2014	\$	433		441	\$	318		393
2015		231		166		182		119
2016		483		263		433		215
2017		232		166		182		118
2018		270		201		220		156
Thereafter		833		533		498		213
	\$	2,482	\$	2,971	\$	1,833	\$	2,308

Our debt is denominated in different currencies, including the effect of foreign currency swaps, as follows (in millions):

			Group		Company
				November 30,
	2013 2012		\$		2013				2012
Euro		1,906	\$	2,332	\$	1,257	\$	1,669
U.S. dollar		576		639		576		639
	\$	2,482	\$	2,971	\$	1,833	\$	2,308

NOTE 15 - Other Long-Term Liabilities

Other long-term liabilities were as follows (in millions):

	Group				Company
			November 30,
	2013		2012		2013		2012
Post-employment benefits (Note 18)	\$ 65	\$	69	\$	31	\$	35
Claims reserve	51		60		11		9
Deferred income taxes	35		37		-		-
Customer deposits	32		-		18		-
Income taxes	23		36		-		1
Other	21		15		6		2
	\$ 227	\$	217	\$	66	\$	47

The Group and Company claims reserve includes estimated liabilities for illness and injury to crew, guest injuries and other third party claims primarily all related to the 2012 Ship Incident.

Deferred income tax liabilities are principally related to differences between the (1) book and tax methods of calculating depreciation expense in our Holland America Princess Alaska Tours business and other North America operations and (2) the timing of recognising our Cozumel, Mexico port hurricane insurance settlement.

Other liabilities of the Group and Company primarily include liabilities for contractual disputes and property lease obligations. These lease obligations are expected to be settled over their term.

NOTE 16 - Share Capital

The issued and fully paid Carnival plc ordinary share capital was as follows (dollars in millions):

	Number of Shares	Share Capital
At November 30, 2011	214,275,313	\$ 357
Shares issued	132,102	-
At November 30, 2012	214,407,415	357
Shares issued	67,494	1
At November 30, 2013	214,474,909	\$ 358

During 2013 and 2012, the Company issued 63,030 and 120,200 ordinary shares, respectively, following the exercise of share options, for total consideration of \$1.6 million and \$3 million, respectively, and for the issuance of restricted share awards ("RSAs"), Restricted Stock Units ("RSUs") and Performance Based Shares ("PBSs"); and issued 4,464 and 6,705 ordinary shares in connection with the Carnival plc Employee Stock Purchase Plan, respectively. During 2012, the Company issued 5,197 ordinary shares to a former executive in connection with his deferred bonus plan. In addition, 183,400 and 610,600 ordinary shares were issued in 2013 and 2012, respectively, to the Carnival plc Employee Benefit Trust, which are not included above as they were recorded as treasury stock. At November 30, 2013, there were 1,219,000 cumulative outstanding ordinary shares issued to the Carnival plc Employee Benefit Trust.

The Company has 50,000 allotted but unissued redeemable preference shares of £1 each. These redeemable preference shares are entitled to a cumulative fixed dividend of 8% per annum. The preference shares, which carry no voting rights, rank behind other classes of shares in relation to the payment of capital on certain types of distributions from the Company. The Company also has two allotted and issued subscriber shares of £1 each, that carry no voting rights and no right to receive any dividend or any amount paid on return of capital. Finally, the Company has one special voting share of £1 issued to Carnival Corporation in connection with the DLC transaction to enable Carnival Corporation's shareholders to vote as a group on Company shareholder matters.

NOTE 17 - Reserves and Other Equity Activity

The Group merger reserve relates to the difference between the book value and the fair value of certain businesses sold to Carnival Corporation during 2004 as part of a DLC corporate restructuring, which was accounted for as a group reconstruction.

At November 30, 2013 and 2012, the Carnival plc Employee Benefit Trust held 250,486 and 302,702 ordinary shares of Carnival plc, respectively, with an aggregate par value of \$0.4 million and \$0.5 million at November 30, 2013 and 2012, respectively. At November 30, 2013 and 2012, the market value of these shares was \$9 million and \$12 million, respectively. If they had been sold at this market value there would have been no tax liability in either 2013 or 2012 on the capital gain arising from the sale.

The income attributable to shareholders of the Company was \$0.7 billion and \$0.6 billion in 2013 and 2012, respectively. Retained earnings is comprised of \$4.1 billion and \$3.6 billion of distributable reserves, and \$1.7 billion and \$1.7 billion of nondistributable reserves at November 30, 2013 and 2012, respectively.

In September 2007, the Board of Directors authorised, subject to certain restrictions, the repurchase of up to an aggregate of \$1 billion of the Carnival plc ordinary shares and/or Carnival Corporation common stock (the "Repurchase Program"). In January 2013, the Boards of Directors increased the remaining \$165 million under the Repurchase Program back to \$1.0 billion. The Repurchase Program does not have an expiration date and may be discontinued by the Board of Directors at any time. During 2013 and 2012, there were no repurchases of Carnival plc ordinary shares under the Repurchase Program. Since March 2013, the remaining availability under the Repurchase Program has been \$975 million.

In addition to the Repurchase Program, the Board of Directors authorised, in October 2008, the repurchase of up to 19.2 million Carnival plc ordinary shares and, in January 2013, the repurchase of up to 32.8 million of Carnival Corporation common stock under the Stock Swap programs described below. Depending on market conditions and other factors, Carnival Corporation & plc may repurchase shares of Carnival plc ordinary shares under the Repurchase Program and the Stock Swap programs concurrently. Carnival Corporation & plc use the Stock Swap programs in situations where it can obtain an economic benefit because either Carnival Corporation common stock or Carnival plc ordinary shares are trading at a price that is at a premium or discount to the price of Carnival plc ordinary shares or Carnival Corporation commons stock, as the case may be. Any realized economic benefit under the Stock Swap Programs is used for general corporate purposes, which could include repurchasing additional stock under the Repurchase Program. Carnival plc ordinary share repurchases under both the Repurchase Program and the Stock Swap programs require annual shareholder approval. During 2013, Carnival Investments Limited, a subsidiary of Carnival Corporation, sold 0.9 million of Carnival plc ordinary shares for net proceeds of \$35 million. Substantially all of the net proceeds from these sales were used to repurchase 0.9 million shares of Carnival Corporation common stock. Pursuant to our Stock Swap programs, Carnival Corporation sold these Carnival plc ordinary shares owned by Carnival Investments Limited only to the extent it was able to repurchase shares of Carnival Corporation common stock in the U.S. market on at least an equivalent basis. During 2012, no Carnival Corporation common stock or Carnival plc ordinary shares were sold or repurchased under the Stock Swap programs. At February 20, 2014, the remaining availability under the Stock Swap programs was 18.1 million Carnival plc ordinary shares and 32.0 million shares of Carnival Corporation common stock.

See the Statements of Changes in Shareholders' Equity for movements in capital and other reserves.

NOTE 18 - Post-Employment Benefits

Employee Benefit Plans

Carnival plc is a contributing employer to three defined benefit pension plans, the P&O Cruises (UK) pension plan ("Company's UK Plan"), the multiemployer Merchant Navy Officers Pension Fund ("MNOPF") and the multiemployer Merchant Navy Ratings Pension Fund ("MNRPF"). The defined benefit plans are formally valued triennially by independent qualified actuaries.

The Company's UK Plan's assets are managed on behalf of the trustee by independent fund managers and are fully funded at November 30, 2013. The Company's UK Plan is closed to new membership.

The MNOPF is a funded defined benefit multiemployer plan in which British officers employed by companies within the Group have participated and continue to participate. The MNOPF is divided into two sections, the "New Section" and the "Old Section," each of which covers a different group of participants, with the Old Section closed to further benefit accrual and the New Section only closed to new membership. The MNOPF is accounted for as a defined benefit plan. Based on the most recent actuarial reviews of the New Section at March 31, 2013, it was determined that this plan was 85% funded and the deficits are to be recovered through funding contributions from participating employers.

The Old Section covers predecessor employers' officers employed prior to 1978 and is fully funded. In December 2012, the fund's trustee completed a buy-in of the Old Section liabilities with a third-party insurer, whereby the insurer will pay the officers' pension liabilities as they become due. Therefore, we believe our obligation to share in any future funding is remote.

The MNRPF is a defined benefit multiemployer pension plan available to certain of P&O Cruises (UK)'s shipboard British personnel. This plan is closed to new membership and at March 31, 2013 was 74% funded and, accordingly, has a funding deficit. In 1999, we withdrew from the plan, but continued making voluntary payments through 2006. However, pursuant to a 2011 court order, it was determined that P&O Cruises (UK), along with other unrelated employers, were required to continue to be named participating employers of the plan. The MNRPF was previously being accounted for as a defined contribution plan, however, in November 2012 our percentage of the plan deficit was reasonably determinable and, accordingly we commenced accounting for the MNRPF as a defined benefit pension plan and recorded our obligation as an adjustment to our pension benefit obligations.

The recorded assets and liabilities on the Group's balance sheets for the Company's UK Plan, the Group's share of the MNOPF New Section and the MNRPF and other post-employment benefit liabilities were as follows (in millions):

	November 30,
	2013	2012
Long-term assets Employee benefit plan surplus	\$ 3	\$ 3
Long-term liabilities Employee benefit plan deficits Other post-employment benefits.	\$ 31 34	\$ 36 33
	\$ 65	\$ 69

The employee benefit plan information provided below relates to the Company's UK Plan, the Group's share of the MNOPF New Section and the MNRPF.

The pension liabilities for accounting purposes were calculated at November 30, 2013 and 2012 by the Group's qualified actuary. The principal assumptions used were as follows:

	Company's UK Plan (%)
	2013	2012	2013	2012	2013	2012
Discount rates	4.5	4.6	4.3	4.2	4.3	4.2
Expected rates of salary increases	3.9	4.0	3.9	4.0	3.9	4.0
Pension increases
Deferment	2.4	2.2	2.4	2.2	2.4	2.2
Payment	3.2	2.9	3.2	2.9	3.2	2.9
Inflation	3.4	3.0	3.4	3.0	3.4	3.0
Expected rates of return on plan assets	4.5	5.4	4.3	5.1	4.3	5.3

Assumptions regarding future mortality experience are set based on the Self Administered Pension Schemes tables for the "base" mortality tables. The weighted-average life expectancy in years of a 65-year old pensioner on the balance sheet dates was as follows:

	November 30,
	2013	2012
Male	22.4	22.4
Female	25.0	24.9

The weighted-average life expectancy in years of a 45-year old future pensioner retiring at age 65 was as follows:

		November 30,
	2013	2012
Male	25.0	24.9
Female	27.6	27.4

With regard to the Company's UK plan, management considers the types of investment classes in which pension plan assets are invested and the expected compound return that the portfolio can reasonably be expected to earn over time, based on long-term real rates of return experienced in the respective markets.

The amounts recognised in the balance sheets for these plans were determined as follows (in millions):

			November 30,
	2013	2012	2011	2010	2009
Present value of obligations Fair value of plans' assets	\$ (548) 524	\$ (486) 453	\$ (332) 331	\$ (306) 307	\$ (307) 267
Net (liabilities) assets recognised in the balance sheets	\$ (24)	\$ (33)	\$ (1)	\$ 1	\$ (40)

Actuarial gains and losses for these plans were as follows (in millions):

		Years Ended November 30,
	2013	2012	2011	2010	2009
(Losses) gains on plans' liabilities Gains (losses) on plans' assets, including restriction on assets	\$ (37) 32	\$ (20) 15	\$ (13) 7	\$ 19 (3)	\$ (86) 27
	\$ (5)	\$ (5)	\$ (6)	\$ 16	\$ (59)

The cumulative actuarial losses recognised in the Group or Company Statements of Shareholders' Equity at November 30, 2013 and 2012 for these plans were \$40 million and \$35 million, respectively.

The amounts recognised in the Group Statements of Income for these plans were as follows (in millions):

	Years Ended November 30,
	2013	2012
Current service cost	\$ 8	\$ 8
Interest cost	20	17
Expected return on plan assets	(24)	(20)
Total included in payroll and related expenses	\$ 4	\$ 5

Our estimated contributions expected to be paid into these plans during 2014 are \$7 million for the Company's UK Plan and \$1 million for the MNOPF New Section.

Analysis of the movements in the balance sheet assets (liabilities) for these plans was as follows (in millions):

	2013	2012
Net liabilities at December 1	\$ (33)	\$ (1)
Expenses (see above)	(4)	(5)
Amounts recognised in the Group Statements of Comprehensive Income	(5)	(5)
Employer contributions	16	7
Adjustment in Group share of MNRPF	-	(29)
Exchange movements	2	-
Net liabilities at November 30	\$ (24)	\$(33)

Changes in the present value of defined benefit obligations for these plans were as follows (in millions):

	2013	2012
Present value of obligations at December 1	\$ 486	\$ 332
Current service cost	8	8
Interest cost	20	17
Contributions from employees	1	1
Benefits paid	(14)	(11)
Administrative expenses	(1)	-
Actuarial losses on plan liabilities.	10	20
Adjustment in Group share of MNRPF	-	108
Loss due to change in share of MNOPF	27	-
Exchange movements	11	11
Present value of obligations at November 30	\$ 548	\$ 486

Changes in the fair value of these plans' assets were as follows (in millions):

	2013	2012
Fair value of plans' assets at December 1	\$ 453	\$ 331
Expected return on plan assets	24	20
Employer contributions	16	8
Contributions from employees	1	1
Benefits paid	(14)	(11)
Actuarial gains on plan assets	17	7
Restriction on assets	(14)	7
Adjustment in Group's share of MNRPF	-	79
Loss due to change in share of MNOPF	29	-
Administrative expenses	(1)	-
Exchange movements	13	11
Fair value of plans' assets at November 30	\$ 524	\$ 453

IAS 19 "Employee Benefits" was amended and will be effective for the Group beginning on December 1, 2013. The impact of this amendment is that management's estimates of the expected return on pension plan assets will be based on the plan's liability discount rates. Accordingly, if this amendment had been applied for the Group's 2013 pension expenses they would have increased by \$4 million.

The actual gains on these plans' assets in 2013 and 2012 were \$41 million and \$27 million, respectively.

These plans' assets were comprised as follows (in millions, except percentages):

		November 30,
	2013			2012
		%			%
Equities	\$ 256	47.6	\$	208	45.9
Property	14	2.6		7	1.6
Corporate bonds	93	17.3		74	16.3
Fixed interest gilts.	90	16.7		87	19.2
Liability matching investments	85	15.8		77	17.0
	538	100.0		453	100.0
Restriction on assets (a)	(14)			-
	\$ 524		\$	453

(a) These assets are restricted because they related to a multiemployer plan.

The Company's net pension balance represents substantially all of the Group's funded employee benefit plans.

Defined Contribution Plans

The Group has several defined contribution plans available to most of its shore staff employees. During 2013 and 2012 the Group expensed \$8 million and \$6 million, respectively, for these plans.

NOTE 19 - Key Management

The aggregate compensation of the Group's key management was as follows (in millions):

		Years Ended November 30,
	2013		2012
Fees	\$ 1	\$	1
Salaries and benefits	4		4
Performance related bonuses	6		4
Total short-term employment benefits	11		9
Share-based compensation	13		6
	\$ 24	\$	15

The key management, which consists of the Board of Directors, has responsibility and authority for controlling, directing and planning Carnival plc's activities. Their aggregate compensation includes amounts paid by both Carnival Corporation and Carnival plc.

During 2013 and 2012, there were no exercises of share options by executive directors of Carnival plc ordinary shares. Further details on Directors' remuneration, including RSA, RSU and PBS awards, share options and pension entitlements, are set out in Parts I and II of the Carnival plc Directors' Remuneration Report.

NOTE 20 - Employees

The average number of our employees was as follows:

		Years Ended November 30,
	2013	2012
Shore staff	6,337	5,866
Sea staff	29,429	27,784
	35,766	33,650

The aggregate payroll and related expenses included in both cruise operating expenses and selling and administrative expenses were as follows (in millions):

		Years Ended November 30,
	2013	2012
Salaries, wages and benefits	\$ 883	\$ 805
Social security and payroll taxes	60	51
Pensions	22	11
Share-based compensation	7	7
	\$ 972	\$ 874

Share-based compensation included \$0.2 million in 2013 and \$0.1 million in 2012 that were recharged by Carnival Corporation in respect of RSU and PBS awards, and options granted over Carnival Corporation common stock to certain U.S.-based Carnival plc Group employees.

Equity Plans

We issue our share-based compensation awards under the Carnival plc stock plan, which has 18.0 million shares available for future grant at November 30, 2013. This plan allows us to issue time-based share ("TBS") awards, which include RSA, RSU and PBS awards and stock options (collectively "equity awards"). Equity awards are principally granted to management level employees and members of our Boards of Directors. The plans are administered by a committee of our independent directors (the "Committee") that determines which employees are eligible to participate, the monetary value or number of shares for which equity awards are to be granted and the amounts that may be exercised or sold within a specified term. These plans allow us to fulfill our equity award obligations using shares purchased in the open market or with unissued or treasury shares. Certain equity awards provide for accelerated vesting if we have a change in control, as defined.

TBS and PBS Awards

Carnival plc grants RSUs that substantially all vest at the end of three years and accrue forfeitable dividend equivalents on each outstanding RSU, in the form of additional RSUs, based on dividends declared. The share-based compensation expense for TBSs is based on the quoted market price of the Carnival plc shares on the date of grant.

In 2012 and 2011, the Committee approved PBS awards to be granted to certain key Carnival Corporation & plc executives. The share-based compensation expense for these PBS awards is based on the quoted market price of the Carnival plc shares on the date of grant and the probability of Carnival Corporation & plc earnings per share growth over a three-year period being achieved. These PBS awards provide an opportunity to earn from zero to 200% of the number of target shares underlying the award achieved at the end of the third year. At November 30, 2013, no expense has been recognized on a cumulative basis for the 2012 and 2011 PBS awards as it is not deemed probable that the performance targets will be met.

In 2013, the Committee approved PBS awards to be granted to certain Carnival Corporation & plc executives. The share-based compensation expense for these PBS awards is based on the quoted market price of the Carnival plc shares on the date of grant and the probability of Carnival Corporation & plc annual earnings target for each year over a three-year period being achieved. These PBS awards provide an opportunity to earn from zero to 150% of the number of target shares underlying the award achieved for each year over a three-year period and may be further increased or decreased by 25% based on our total shareholder return rank relative to certain peer companies at the end of the third year.

The Group awarded 316,271 and 398,748 RSUs and PBSs at a weighted-average price of £ 24.82 and £19.28 in 2013 and 2012, respectively, principally to certain officers and management level employees.

Awards of RSUs and PBSs do not receive dividends or have voting rights. Each RSU and PBS awarded is credited with dividend equivalents equal to the value of cash and stock dividends, if any, paid on Carnival plc ordinary shares. The cash and stock dividend equivalents will be, if any, distributed upon the settlement of the RSUs and PBSs upon vesting.

Prior to granting RSUs and PBSs, the Committees granted options over ordinary shares, under the Carnival plc 2005 Employee Share Plan and the Carnival plc Executive Share Option Plan, which typically vested three years after the date of the grant, provided the employee remained employed within Carnival Corporation & plc or upon the grantee becoming retirement eligible, and have maximum terms of up to seven years for options granted after October 2006. Options granted prior to October 2006 have maximum terms of up to ten years. The number and weighted-average exercise price of Carnival plc options were as follows:

	2013		2012
	Number of options	Weighted average exercise price	Number of options	Weighted average exercise price
Outstanding at December 1	1,371,196	\$ 45.88	1,653,717	\$ 42.54
Exercised	(63,231)	\$ 25.57	(120,200)	\$ 23.33
Forfeited or expired	(568,258)	\$ 50.47	(162,321)	\$ 42.80
Outstanding and exercisable at November 30	739,707	\$ 45.82	1,371,196	\$ 45.88

At November 30, 2013, our outstanding options had an exercise price ranging from \$40.00 to \$49.99 and a weighted-average remaining life of 0.8 years.

The obligations underlying the Company's stock options, RSUs and PBS awards are settled through the issuance of Carnival plc ordinary shares.

NOTE 21 - Related Party Transactions

Group

During 2013 and 2012, Holland America Line and Princess purchased land tours from us totalling \$126 million and \$106 million, respectively, and packaged these land tours for sale with their cruises. In addition, during 2013 and 2012, we sold \$2.6 million and \$2.5 million, respectively, of pre- and post-cruise vacations, shore excursions and transportation services to the Carnival Corporation group.

At November 30, 2013 and 2012, we owed \$2.3 billion and \$1.9 billion, respectively, to the Carnival Corporation group, which was unsecured and repayable on demand. Of our total liability to the Carnival Corporation group at November 30, 2013, \$256 million is euro-denominated and bears interest, and the remaining balance of \$2.0 billion is non-interest bearing.

Within the DLC arrangement, there are instances where we provide services to Carnival Corporation group companies, and also where Carnival Corporation group companies provide services to us. For example, we participate in Carnival Corporation & plc's group risk-sharing programs related to hull and machinery for ships and crew and guest claims. Additional disclosures of related party transactions are discussed in Note 3 of the DLC Financial Statements.

Within our operational and organisational structure, the key management personnel, as defined under IAS 24 "Related Party Disclosures," is considered to consist of the Directors of the Company. Details of the Directors' remuneration are provided in the Carnival plc Directors' Remuneration Report and any relevant transactions are given in the "Certain Relationships and Related Party Transactions" section, both of which are included within the Proxy Statement. The aggregate emoluments of our key management are shown in Note 19.

Company

At November 30, 2013 and 2012, Carnival Corporation owned 1,115,450, or 0.5% of the Company's ordinary shares, which are non-voting. During 2013 and 2012, Carnival Investment Limited did not purchase any ordinary shares of Carnival plc. At November 30, 2013 and 2012, Carnival Investments Limited owned 30,848,634, or 14% and 31,713,734 or 15%, respectively, of the Company's ordinary shares, which are also non-voting.

During 2013, Carnival Investments Limited sold 0.9 million of Carnival plc ordinary shares for net proceeds of \$35 million. Substantially all of the net proceeds from these sales were used to repurchase 0.9 million shares of Carnival Corporation common stock. Pursuant to our Stock Swap Programs, Carnival Corporation sold these Carnival plc ordinary shares owned by Carnival Investments Limited only to the extent it was able to repurchase shares of Carnival Corporation common stock in the U.S. market on at least an equivalent basis.

In 2013 and 2012, Carnival Corporation and Carnival Investments Limited received dividends on their Carnival plc ordinary shares in the aggregate amount of \$49 million and \$33 million, respectively.

During 2013, the Company had multi-year ship charter agreements with Princess for three ships (2012 two ships) and Carnival Cruise Lines for one ship operating year-round in Australia and/or Asia. In addition, Princess time charters another two ships seasonally in Australia or Asia to the Company. Both the year-round and seasonal charters are accounted for as operating leases. Princess and Carnival Cruise Lines are subsidiaries of Carnival Corporation. The total charter payments in 2013 and 2012 were \$337 million and \$212 million, respectively, which were included in other ship operating expenses.

During 2013, the Company provided a guarantee to the MNOPF for certain employees who have transferred from the Company to a subsidiary of Carnival Corporation.

The key management personnel of the Company comprise members of the Boards of Directors. Except for some share-based compensation and some fees for UK-based services, the Directors did not receive any remuneration from the Company in 2013 and 2012, as their emoluments were borne by other companies within the DLC. Details of the Company's share-based compensation to Directors are disclosed in the Carnival plc Directors' Remuneration Report, which is included in the Proxy Statement. The Company did not have any transactions with the Directors during 2013 and 2012, other than those discussed in our Directors' Remunerations Report.

Transactions with Subsidiaries

The Company enters into loans with its subsidiaries at both fixed and floating rates of interest, generally at rates agreed to between the parties from time to time. At November 30, 2013, the Company had receivables from its subsidiaries totalling \$1.3 billion of floating rate euro-denominated loans due in 2017. In addition at November 30, 2013, the Company had net payables of \$104 million (\$423 million at November 30, 2012) due to its subsidiaries, which are payable on demand.

NOTE 22 - Commitments

Group

At November 30, 2013, we had four ships under contract for construction with an aggregate passenger capacity of more than 13,900 lower berths with two for AIDA and one each for Costa and P&O Cruises (UK). The estimated total cost of these ships is \$2.8 billion, which includes the contract prices with the shipyards, design and engineering fees, capitalised interest, construction oversight costs and various owner supplied items. We have paid \$0.3 billion through November 30, 2013 and our remaining cruise ship commitments, aggregated based on each ship's delivery date, are expected to be, \$0.7 billion, \$1.3 billion and \$0.6 billion in 2014, 2015 and 2016, respectively.

Future minimum lease and port facility commitments, aggregated based on the lease and port facility expiration dates, for noncancellable operating leases and port facility agreements were as follows (in millions):

November 30,
Fiscal		2013		2012
2013			\$	242
2014	\$	77		8
2015		344		8
2016		12		17
2017		8		7
2018		14		-
Thereafter		450		435
Total	\$	905	\$	717

Company

At November 30, 2013 and 2012, the Company had \$768 million and \$760 million, respectively, of contracted capital commitments relating to ship construction contracts. Ship capital commitments included contract payments to the shipyards, design and engineering fees, capitalised interest, construction oversight costs and various owner supplied items.

NOTE 23 - Contingent Liabilities

The cross guarantees provided to and from Carnival Corporation as a result of the DLC arrangement, as further discussed within Notes 3, 5 and 10 of the DLC Financial Statements and within the MD&A section of the Strategic Report, provide that Carnival plc has guaranteed all Carnival Corporation's indebtedness and certain other of their monetary obligations and Carnival Corporation has provided similar guarantees to Carnival plc.

Some of the debt contracts that we enter into include indemnification provisions that obligate the Group to make payments to the counterparty if certain events occur. These contingencies generally relate to changes in taxes and changes in laws that increase lender capital costs and other similar costs. The indemnification clauses are often standard contractual terms and were entered into in the normal course of business. There are no stated or notional amounts included in the indemnification clauses, and the Group is not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses. The Group has not been required to make any material payments under such indemnification clauses in the past and, under current circumstances, we do not believe a request for material future indemnification payments is probable.

As a result of the 2012 Ship Incident, litigation claims, enforcement actions, regulatory actions and investigations, including, but not limited to, those arising from personal injury, loss of life, loss of or damage to personal property, business interruption losses or environmental damage to any affected coastal waters and the surrounding areas, have been and may be asserted or brought against various parties, including us. The existing assertions are ongoing and there are significant jurisdictional uncertainties. The ultimate outcome of these matters cannot be determined at this time. However, we do not expect these matters to have a significant impact on our results of operations because we have insurance coverage for these types of third-party claims.

Additionally, in the normal course of our business, various claims and lawsuits have been filed or are pending against us. Most of these claims and lawsuits are covered by insurance and, accordingly, the maximum amount of our liability, net of any insurance recoverables, is typically limited to our self-insurance retention levels. Management believes the ultimate outcome of these claims and lawsuits will not have a material adverse impact on the Group and Company financial statements.

NOTE 24 - Financial Instruments

The fair value of cross guarantees within the DLC arrangement (see Note 23) are not significant at November 30, 2013 or 2012, and are not expected to result in any material loss.

Financial assets were as follows (in millions):

		Group		Company
				November 30,
	2013		2012	2013	2012
Cash and cash equivalents	\$ 263	\$	295	\$ 144	\$ 186
Loans, receivables and other
Current trade receivables, net	154		123	63	63
Current insurance recoverables (a).	373		472	-	-
Current other receivables	13		8	2	3
Amounts owed from subsidiaries	-		-	1,336	1,457
Long-term other receivables	15		27	3	4
Long-term insurance recoverables	22		38	-	-
Derivative contract receivables	13		11	13	11
	\$ 853	\$	974	\$ 1,561	\$ 1,724

Current derivative contracts receivable are included in "Prepaid expenses and other" in the balance sheets.

(a) Substantially all of our insurance recoverables relate to crew, guest and other third-party claims from the 2012 Ship Incident.

The summary of the maturity profiles of the financial liabilities at November 30, 2013 and 2012 was as follows (in millions):

Group

2013	2014	2015	2016	2017	2018	There after	Total
Floating rate debt \$	268 \$	109 \$	112 \$	115 \$	115 \$	537 \$	1,256
Fixed rate debt	222	187	431	163	196	407	1,606
Undiscounted cash flow obligations of debt,
including future interest	490	296	543	278	311	944	2,862
Amounts owed to Carnival Corporation group	2,265	-	-	-	-	-	2,265
Claims reserve (a)	378	-	-	-	-	-	378
Trade payables, accrued liabilities and other	1,110	-	-	-	-	-	1,110
Other liabilities	9	49	14	13	14	34	133
At November 30, 2013 \$	4,252 \$	345 \$	557 \$	291 \$	325 \$	978 \$	6,748

2012	2013	2014		2015	2016		There after	Total
Floating rate debt \$	132 \$	176 \$		76 \$	77 \$	78 \$	398 \$	937
Fixed rate debt	1,166	322		137	230	121	438	2,414
Undiscounted cash flow obligations of debt,
including future interest	1,298	498		213	307	199	836	3,351
Amounts owed to Carnival Corporation group	1,855		-	-	-	-	-	1,855
Claims reserve (a)	474		-	-	-	-	-	474
Trade payables, accrued liabilities and other	1,215		-	-	-	-	-	1,215
Other liabilities	14	37		30	9	14	38	142
At November 30, 2012 \$	4,856 \$	535 \$		243 \$	316 \$	213 \$	874 \$	7,037

(a) Primarily all of our claims reserve relate to crew, guest and other third-party claims from the 2012 Ship Incident.

Company

				There
2013	2014	2015	2016	2017	2018	After	Total
Floating rate debt \$	192 \$	93 \$		95 \$	97 \$	98 \$ 409 \$	984
Fixed rate debt	169	135	381	115	149	148	1,097
Undiscounted cash flow obligations of debt,
including future interest	361	228	476	212	247	557	2,081
Amounts owed to Carnival Corporation group	1,943	-	-	-	-	-	1,943
Amounts owed to subsidiaries	104	-	-	-	-	-	104
Trade payables, accrued liabilities and other	265	-	-	-	-	-	265
Other liabilities	3	32	1	1	2	8	47
At November 30, 2013 \$	2,676 \$	260 \$	477 \$	213 \$	249 \$	565 \$	4,440

2012	2013	2014		2015	2016	2017	There After	Total
Floating rate debt \$	61 \$	161 \$		60 \$	61 \$		62 \$ 261 \$	666
Fixed rate debt	1,112	270		87	181	74	144	1,868
Undiscounted cash flow obligations of debt, including future interest	1,173	431		147	242	136	405	2,534
Amounts owed to Carnival Corporation group	1,685		-	-	-	-	-	1,685
Amounts owed to subsidiaries	423		-	-	-	-	-	423
Trade payables, accrued liabilities and other	337		-	-	-	-	-	337
Other liabilities	9		6	1	1	6	24	47
At November 30, 2012 \$	3,627 \$	437 \$		148 \$	243 \$	142 \$	429 \$	5,026

Substantially all financial liabilities are held at amortised cost.

As noted below the Group's liquidity is considered on a consolidated Carnival Corporation & plc basis. Included in the "Future Commitments and Funding Sources" section within the MD&A section of the Strategic Report is a schedule of the maturity profiles of the recorded and unrecorded contractual cash obligations of Carnival Corporation & plc at November 30, 2013.

The carrying and fair values of debt at November 30, 2013 and 2012 were as follows (in millions) (a):

Group		2013		2012
	Carrying Value		Fair Value		Carrying Value	Fair Value
Floating rate
Euro export credit facilities.	\$ 965	\$	958	\$	695	\$	686
Bank loans	100		100		100		101
Short-term euro bank loans	60		60		56		56
	\$ 1,125	\$	1,118	\$	851	\$	843
Fixed rate
Bearing interest at 2.0% to 2.9%	\$ 150	\$	159	\$	-	\$	-
Bearing interest at 3.0% to 3.9%	486		520		150		156
Bearing interest at 4.0% to 4.9%	527		577		1,786		1,916
Bearing interest at 6.0% to 6.9%	26		29		26		29
Bearing interest at 7.0% to 7.9%	168		202		158		199
	\$ 1,357	\$	1,487	\$	2,120	\$	2,300
Company
Floating rate
Euro export credit facilities.	\$ 788	\$	779	\$	514	\$	505
Bank loans	100		100		100		101
	\$ 888	\$	879	\$	614	\$	606
Fixed rate
Bearing interest at 2.0% to 2.9%	\$ 150	\$	159	\$	-	\$	-
Bearing interest at 3.0% to 3.9%	275		298		150		156
Bearing interest at 4.0% to 4.9%	326		354		1,360		1,436
Bearing interest at 6.0% to 6.9%	26		29		26		29
Bearing interest at 7.0% to 7.9%	168		202		158		199
	\$ 945	\$	1,042	\$	1,694	\$	1,820

(a) The net difference between the fair value of our fixed rate debt and its carrying value was due to the market interest rates in existence at November 30, 2013 and 2012 being lower than the fixed interest rates on these debt obligations, including the impact of any changes in our credit ratings. At November 30, 2013, the net difference between the fair value of our floating rate debt and its carrying value was due to the market interest rates in existence at November 30, 2013 being slightly lower than the floating interest rates on these debt obligations, including the impact of any changes in our credit ratings. The fair values of our publiclytraded notes were based on their unadjusted quoted market prices in active markets that are not sufficiently active to be considered Level 1 and, accordingly, are considered Level 2. The fair values of our other debt were estimated based on appropriate market interest rates being applied to this debt. The fair values of our financial liabilities not included in the table above approximate their book values.

Fair Value Measurements

IFRS establishes a fair value hierarchy that prioritises the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This hierarchy requires entities to maximise the use of observable inputs and minimise the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of judgment.
Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active or market data other than quoted prices that are observable for the assets or liabilities.
Level 3 measurements are based on unobservable data that are supported by little or no market activity and are significant to the fair value of the assets or liabilities.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between independent and knowledgeable market participants at the measurement date. Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that we believe market participants would use in pricing the asset or liability at the measurement date.

The fair value measurement of a financial asset or financial liability must reflect the nonperformance risk of the counterparty and us. Therefore, the impact of our counterparty's creditworthiness was considered when in an asset position, and our creditworthiness was considered when in a liability position in the fair value measurement of our financial instruments. Creditworthiness did not have a significant impact on the fair values of our financial instruments at November 30, 2013 and 2012. Both the counterparties and we are expected to continue to perform under the contractual terms of the instruments. Considerable judgment may be required in interpreting market data used to develop the estimates of fair value. Accordingly, certain estimates of fair values presented herein are not necessarily indicative of the amounts that could be realised in a current or future market exchange.

The estimated fair value and basis of valuation of our financial instrument assets and (liabilities) that are measured at fair value on a recurring basis were as follows (in millions):

Group

		November 30, 2013			November 30, 2012
	Level 1		Level 2		Level 1		Level 2
Cash equivalents (a)	\$	113	\$ -	\$	149	\$	-
Derivatives
Net investment hedges (b)	\$	-	\$ (2)	\$	-	\$	7
Interest rate swaps (c)	\$	-	\$ (4)	\$	-	\$	-
Foreign currency zero cost collars (d)	\$	-	\$ 8	\$	-	\$	5
Company
Cash equivalents (a)	\$	85	\$ -	\$	131	\$	-
Derivatives
Net investment hedges (b)	\$	-	\$ -	\$	-	\$	7
Interest rate swaps (c)	\$	-	\$ (4)	\$	-	\$	-
Foreign currency zero cost collars (d)	\$	-	\$ 8	\$	-	\$	5

(a) Cash equivalents are comprised of money market funds.

(b) At November 30, 2013 and 2012, we had foreign currency forwards totalling \$578 million and \$235 million, respectively, that are designated as hedges of our net investments in foreign operations, which have a eurodenominated functional currency. At November 30, 2013, \$460 million of our foreign currency forwards matured through February 2014 and \$118 million mature through July 2017.

(c) At November 30, 2013, we had euro interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments. At November 30, 2013, these interest rate swap agreements have changed, or will effectively change, \$657 million of EURIBORbased floating rate euro debt to fixed rate euro debt. These interest rate swaps settle through March 2025.

(d) At November 30, 2013 and 2012, we have foreign currency derivatives consisting of foreign currency zero cost collars that are designated as foreign currency cash flow hedges for a portion of our euro-denominated ship building payments totalling \$301 million and \$286 million, respectively.

We measure our derivatives using valuations that are calibrated to the initial trade prices. Subsequent valuations are based on observable inputs and other variables included in the valuation model such as interest rate and yield price curves, forward currency exchange rates, credit spreads, maturity dates, volatilities and netting arrangements. We use the income approach to value derivatives for foreign currency options and forwards and interest rate swaps using observable market data for all significant inputs and standard valuation techniques to convert future amounts to a single present value amount, assuming that participants are motivated, but not compelled to transact. We also corroborate our fair value estimates using valuations provided by our counterparties.

Capital Management

Within the DLC arrangement, the consolidated Carnival Corporations & plc group's primary financial goals are to profitably grow its cruise business thus increasing its return on invested capital, while maintaining a strong balance sheet. Their ability to generate significant operating cash flows allows Carnival Corporation & plc to internally fund all of their capital investment programs. Over time Carnival Corporation & plc expects to have higher levels of free cash flow, which they intend to return to shareholders in the form of dividends and opportune share buybacks. Carnival Corporation & plc is also committed to maintaining its strong investment grade credit ratings. The Group manages its capital on a consolidated Carnival Corporation & plc basis, applying U.S. GAAP. For additional information see the "Liquidity, Financial Condition and Capital Resources" section within the MD&A section of the Strategic Report. The net debt to capital ratio of the Group at November 30, 2013 and 2012 were calculated as follows (in millions):

	2013	2012
Total debt Less cash and cash equivalents	\$ 2,482 (263)	\$	2,971 (295)
Net debt Shareholders' equity	2,219 8,929		2,676 8,519
Total capital	\$ 11,148	\$	11,195
Net debt to capital ratio	19.9%		23.9%

At November 30, 2013 and 2012, the net debt to capital ratio for the consolidated Carnival Corporation & plc group, applying U.S. GAAP and prepared on the same basis as above, was 27.0% and 26.1%, respectively. Substantially all of our Group and Company debt agreements, including our Facility, contain one or more financial covenants that require us, among other things, to maintain minimum debt service coverage and minimum shareholders' equity and to limit our debt to capital and debt to equity ratios and the amounts of our secured assets and secured and other indebtedness. Generally, if an event of default under any debt agreement occurs, including those held by Carnival Corporation, then pursuant to cross default acceleration clauses, substantially all of our outstanding debt and derivative contract payables could become due, and all debt and derivative contracts could be terminated. At November 30, 2013, we believe we were in compliance with all of our debt covenants.

Liquidity Risk

Within the DLC arrangement, liquidity and liquidity risk is assessed on a consolidated Carnival Corporation & plc basis and there are cross guarantees between the two parent companies that result in there being little substantive difference in the availability of debt financing for either Carnival Corporation or Carnival plc. Typically, the Carnival Corporation & plc debt financing agreements allow for either Carnival Corporation or Carnival plc to draw under the facilities, with the non-borrowing parent as guarantor. For additional information see the "Liquidity, Financial Condition and Capital Resources" section within the MD&A section of the Strategic Report.

As noted in the "Future Commitments and Funding Sources" section within the MD&A section of the Strategic Report, at November 30, 2013 the consolidated Carnival Corporation & plc group had \$2.8 billion available for borrowing under its revolving credit facilities and \$3.5 billion under committed ship financings, in addition to \$187 million of cash and cash equivalents, which excludes \$275 million of cash on hand used for current operations.

Interest Rate Risk

The interest rate profiles of the book value of financial assets and (liabilities) at November 30, 2013 were as follows (in millions):

Group

	2014	2015	2016		2017	2018		There after	Total
Floating rate
Cash and cash equivalents \$	263 \$	- \$		- \$	- \$		- \$	- \$	263
Euro export credit facilities	(102)	(98)	(98)		(98)	(98)		(471)	(965)
Bank loans	(100)	-	-		-	-		-	(100)
Short-term euro bank loans	(60)	-	-		-	-		-	(60)
	\$ 1 \$	(98) \$	(98) \$		(98) \$	(98) \$		(471) \$	(862)
Fixed rate
Bearing interest at 2.0% to 2.9% \$	- \$	- \$	(150) \$		- \$		- \$	- \$	(150)
Bearing interest at 3.0% to 3.9%	(59)	(51)	(51)		(51)	(52)		(222)	(486)
Bearing interest at 4.0% to 4.9%	(85)	(80)	(81)		(81)	(54)		(146)	(527)
Bearing interest at 6.0% to 6.9%	(26)	-	-		-	-		-	(26)
Bearing interest at 7.0% to 7.9%	(1)	-	(102)		-	(65)		-	(168)
	\$	(171) \$ (131) \$			(384) \$ (132) \$	(171) \$		(368) \$	(1,357)
Company
Floating rate
Cash and cash equivalents \$	144 \$	- \$		- \$	- \$		- \$	- \$	144
Euro export credit facilities	(86)	(85)	(85)		(85)	(85)		(362)	(788)
Bank loans	(100)	-	-		-	-		-	(100)
	\$ (42) \$	(85) \$	(85) \$		(85) \$	(85) \$		(362) \$	(744)
Fixed rate
Bearing interest at 2.0% to 2.9% \$	- \$	- \$	(150) \$		- \$		- \$	- \$	(150)
Bearing interest at 3.0% to 3.9%	(38)	(33)	(33)		(34)	(34)		(103)	(275)
Bearing interest at 4.0% to 4.9%	(67)	(62)	(62)		(63)	(36)		(36)	(326)
Bearing interest at 6.0% to 6.9%	(26)	-	-		-	-		-	(26)
Bearing interest at 7.0% to 7.9%	(1)	-	(102)		-	(65)		-	(168)
	\$ (132) \$	(95) \$	(347) \$		(97) \$	(135) \$		(139) \$	(945)

The interest rate profiles of financial assets and (liabilities) at November 30, 2012 were as follows (in millions):

Group

	2013	2014	2015	2016	2017	There after	Total
Floating rate
Cash and cash equivalents	\$ 295	\$ -	\$ -	\$ -	\$ -	\$ -	\$ 295
Euro export credit facilities	(70)	(69)	(68)	(68)	(68)	(352)	(695)
Bank loans	-	(100)	-	-	-	-	(100)
Short-term euro bank loans	(56)	-	-	-	-	-	(56)
	\$ 169	\$ (169)	\$ (68)	\$ (68)	\$ (68)	\$ (352)	\$ (556)
Fixed rate
Bearing interest at 3.0% to 3.9%	\$ -	\$ (150)	\$ -	\$ -	\$ -	\$ -	\$ (150)
Bearing interest at 4.0% to 4.9%	(1,075)	(97)	(98)	(98)	(97)	(321)	(1,786)
Bearing interest at 6.0% to 6.9%	-	(26)	-	-	-	-	(26)
Bearing interest at 7.0% to 7.9%	-	-	-	(96)	-	(62)	(158)
	\$ (1,075)	\$ (273)	\$ (98)	\$ (194)	\$ (97)	\$ (383)	\$ (2,120)
Company
Floating rate
Cash and cash equivalents	\$ 186	\$ -	\$ -	\$ -	\$ -	\$ -	\$ 186
Euro export credit facilities	(56)	(56)	(56)	(56)	(55)	(235)	(514)
Bank loans	-	(100)	-	-	-	-	(100)
	\$ 130	\$ (156)	\$ (56)	\$ (56)	\$ (55)	\$ (235)	\$ (428)
Fixed rate
Bearing interest at 3.0% to 3.9%	\$ -	\$ (150)	\$ -	\$ -	\$ -	\$ -	\$ (150)
Bearing interest at 4.0% to 4.9%	(1,038)	(62)	(63)	(63)	(63)	(71)	(1,360)
Bearing interest at 6.0% to 6.9%	-	(26)	-	-	-	-	(26)
Bearing interest at 7.0% to 7.9%	-	-	-	(96)	-	(62)	(158)
	\$ (1,038)	\$ (238)	\$ (63)	\$ (159)	\$ (63)	\$ (133)	\$ (1,694)

The Group and Company have floating rate debt. Based upon a 10% hypothetical change in the November 30, 2013 market interest rates, our annual interest expense on floating rate debt would change by an insignificant amount. Substantially all of our fixed rate debt can only be called or prepaid by incurring costs, therefore, it is unlikely we will be able to take significant steps in the short-term to mitigate our fixed rate debt exposure in the event of a significant decrease in market interest rates. Within the DLC arrangement, interest rate risks are considered on a combined Carnival Corporation & plc basis. For additional information see Note 10 of the DLC Financial Statements and within the MD&A section of the Strategic Report.

Foreign Currency Risks

At November 30, 2013, the equivalent of 97% of Group net operating assets were denominated in non-U.S. dollar currencies, specifically 70% were denominated in euros, 25% were in sterling and 2% were in Australian dollars, with the remaining 3% of net operating assets denominated in U.S. dollars. As a result of this currency composition, the Group's U.S. dollar consolidated balance sheet can be affected by currency movements. The Group partially mitigates the effect of such movements by having some borrowings in the same currencies as those in which the assets are denominated.

A significant portion of Group operating income is generated by businesses with functional currencies other than the U.S. dollar, principally the euro, sterling and Australian dollar. The results of these businesses are translated into U.S. dollars at weighted-average exchange rates for the purposes of consolidation. The impact of currency movements on net income is mitigated partially by some interest expenses being incurred in euros. Within the DLC arrangement, foreign currency risks are considered on a combined Carnival Corporation & plc basis. For additional information see Note 10 of the DLC Financial Statements and within the MD&A section of the Strategic Report.

The exchange rates for each of our major currencies as of and for the year ended November 30, 2013 and 2012 were as follows:

		2013			2012
	£:U.S.\$	euro:U.S.\$	Aus\$:U.S.\$	£:U.S.\$	euro:U.S.\$	Aus\$:U.S.\$
November 30 exchange rates	1.63	1.36	0.91	1.60	1.30	1.05
Average yearly exchange rates	1.56	1.32	0.98	1.58	1.28	1.03

At November 30, the fair value of derivatives included in the Group and Company balance sheets at November 30, 2013 and 2012 were as follows (in millions):

	2013
		Notional		Assets	Liabilities		Notional		Assets		Liabilities
Foreign currency forwards- net investment hedges	\$	578	\$	-	\$	2	\$	235	\$	7	\$	-
Debt related interest rate swaps- cash flow hedge	\$	657		-		4	\$	-		-		-
Foreign currency zero cost collars-ships	\$	301		8		-	\$	286		5		-
			\$	8	\$	6			\$	12	\$	-

At November 30, 2013, the Group and Company have \$578 million of foreign currency forwards that are designated as hedges of our net investments in foreign operations, which have a euro-denominated functional currency, thus partially offsetting this foreign currency exchange rate risk. Based on a 10% hypothetical change in the U.S. dollar to euro exchange rate as of November 30, 2013, we estimate that these foreign currency forwards' fair values would change by \$51 million, which would be offset by a corresponding change of \$51 million in the U.S. dollar value of our net investments. In addition, based on a 10% hypothetical change in the U.S. dollar to euro, sterling and Australian dollar exchange rates as of November 30, 2013, which are the functional currencies that we translate into our U.S. dollar reporting currency, we estimate that our 2013 net income would change by \$120 million. Similarly, we estimate based upon a 10% hypothetical change in the U.S. dollar to these currencies exchange rates our 2013 cumulative translation adjustment would have changed by \$568 million.

There are no amounts excluded from the assessment of hedge effectiveness, and there are no credit risk related contingent features in our derivative agreements. The amount of estimated cash flow hedges' unrealised gains and losses that are expected to be reclassified to earnings in the next twelve months is not significant. Ineffectiveness arising on cash flow hedges was not material during 2013 and 2012 and, accordingly, all cash flow hedges were considered effective.

Credit Risk

As part of our ongoing control procedures, we monitor concentrations of credit risk associated with financial and other institutions with which we conduct significant business. Our maximum exposure under foreign currency contracts and interest rate swap agreements that are in-the-money, which were not material at November 30, 2013, is the replacement cost in the event of nonperformance by the counterparties to the contracts, all of which are currently our lending banks. We seek to minimise credit risk exposure, including counterparty nonperformance primarily associated with our cash equivalents, investments, committed financing facilities, derivative instruments, insurance contracts and new ship progress payment guarantees, by normally conducting

business with large, well-established financial institutions, insurance companies and export credit agencies, and by diversifying our counterparties. In addition, we have guidelines regarding credit ratings and investment maturities that we follow to help safeguard liquidity and minimise risk. We normally do require collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship charters and new ship progress payments to shipyards. We currently believe the risk of nonperformance by any of our significant counterparties is remote.

We also monitor the creditworthiness of travel agencies and tour operators in Europe and credit card providers to which we extend credit in the normal course of our business. Our credit exposure includes contingent obligations related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales in most of Europe where we are obligated to extend credit in a like amount to these guests even if we do not receive payment from the travel agents or tour operators. Concentrations of credit risk associated with these receivables and contingent obligations are not considered to be material, primarily due to the large number of unrelated accounts within our customer base, the amount of these contingent obligations and their short maturities. We have experienced only minimal credit losses on our trade receivables and related contingent obligations. We do not normally require collateral or other security to support normal credit sales.

Derivatives

The Group and Company use derivative and nonderivative financial instruments, such as foreign currency forwards, options and swaps, foreign currency debt obligations and foreign currency cash balances, to manage our exposure to fluctuations in certain foreign currency exchange rates, and interest rate swaps to manage our interest rate exposure in order to achieve a desired proportion of fixed and floating rate debt.

Our shipbuilding contracts are typically denominated in euros. Our decisions regarding whether or not to hedge a non-functional currency ship commitment for our UK brands are made on a case-by-case basis, taking into consideration the amount and duration of the exposure, market volatility, currency exchange rate correlation, economic trends, our overall expected net cash flows by currency and other offsetting risks. We use foreign currency derivative contracts and have used nonderivative financial instruments to manage foreign currency exchange rates risk for some of our ship construction payments.

In July 2012, we entered into foreign currency zero cost collars that are designated as cash flow hedges for a portion of P&O Cruises (UK) Britannia's euro-denominated shipyard payments. These collars mature in February 2015 at a weighted-average ceiling rate of £0.83 to the euro, or \$300 million, and a weighted-average floor rate of £0.77 to the euro, or \$278 million. If the spot rate is between these two rates on the date of maturity, then we would not owe or receive any payments under these collars. Based on a 10% hypothetical increase or decrease in the November 30, 2013 sterling to euro exchange rates, we estimate the fair value of these collars would increase \$15 million or decrease \$12 million, respectively.

At November 30, 2013, substantially all our remaining newbuild currency exchange rate risk relates to the euro denominated construction payments for a portion of Britannia, which has remaining unhedged outstanding commitments of \$377 million. The sterling cost of this portion of Britannia will increase or decrease based on changes in the GBP exchange rate until the payments are made under the shipbuilding contract, or we enter into a foreign currency hedge. Based upon a 10% hypothetical change in the U.S. dollar and sterling to euro exchange rates as of November 30, 2013, the unpaid cost of this ship would have a corresponding change of \$38 million.

Additional detail relating to the Group's and Company's financial risk management objectives and policies is included in Note 10 of the DLC Financial Statements and within the MD&A section of the Strategic Report and Note 1.

Report on the financial statements

Our opinion

In our opinion:

The financial statements, defined below, give a true and fair view of:
the state of the Group's and of the Parent Company's affairs as at November 30, 2013; and
the Group's income and the Group's and Parent Company's cash flows for the year then ended;
The Group financial statements have been properly prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted by the European Union;
The Parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; and
The financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

This opinion is to be read in the context of what we say in the remainder of this report.

What we have audited

The Group financial statements and Parent Company financial statements (the "financial statements"), which are prepared by Carnival plc, comprise:

the Group and Parent Company balance sheets as at November 30, 2013;
the Group statement of income and statement of comprehensive income for the year then ended;
the Group and Parent Company statements of cash flows and statements of changes in shareholders' equity for the year then ended; and
the notes to the financial statements, which include a summary of the significant accounting policies and other explanatory information.

The financial reporting framework that has been applied in their preparation comprises applicable law and IFRSs as adopted by the European Union and, as regards the Parent Company, as applied in accordance with the provisions of the Companies Act 2006.

Certain disclosures required by the financial reporting framework have been presented elsewhere in the Carnival plc IFRS financial statements (the "Annual Report"), rather than in the notes to the financial statements. These are cross-referenced from the financial statements and are identified as audited.

What an audit of financial statements involves

We conducted our audit in accordance with International Standards on Auditing (UK & Ireland) ("ISAs" (UK & Ireland)). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of:

whether the accounting policies are appropriate to the Group's and Parent Company's circumstances and have been consistently applied and adequately disclosed;
the reasonableness of significant accounting estimates made by the directors; and
the overall presentation of the financial statements.

In addition, we read all the financial and nonfinancial information in the Annual Report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Overview of our audit approach

Materiality

We set certain thresholds for materiality. These helped us to determine the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the Group financial statements as a whole to be \$38.1million, determined using the average income before taxes from continuing operations of the past three years, adjusted for the goodwill, trademarks and ship impairment charges to avoid the volatility that such items would create.

Overview of the scope of our audit

In establishing the overall approach to the audit, we determined the type of work that needed to be performed at reporting units, which are based on the Group's brands, by us, as the Group engagement team or component auditors from other PwC network firms operating under our group audit instructions. Where the work was performed by component auditors, we determined the level of involvement we needed to have in the audit work at those reporting units to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the financial statements as a whole.

Carnival plc has six operating units which fall into two reporting segments. Three operating units were subject to an audit of their complete financial information due to their size. Additionally, specific audit procedures were performed on certain balances and transactions in respect of the other operating units, including the carrying value of certain ships. This together with additional procedures performed at the Group level, gave us the evidence we needed for our opinion on the financial statements as a whole.

Areas of particular audit focus

In preparing the financial statements, the directors made a number of subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. We primarily focused our work in these areas by assessing the directors' judgements against available evidence, forming our own judgements, and evaluating the disclosures in the financial statements.

In our audit, we tested and examined information, using sampling and other auditing techniques, to the extent we considered necessary to provide a reasonable basis for us to draw conclusions. We obtained audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both.

We considered the following areas to be those that required particular focus in the current year. This is not a complete list of all risks or areas of focus identified by our audit. We discussed these areas of focus with the Audit Committee. Their report on those matters that they considered to be significant issues in relation to the financial statements is set out on pages C-6 and C-7 in Annex C to the Proxy Statement.

Area of focus	How the scope of our audit addressed the area of focus
Impairment review of Costa goodwill Accounting standards require a review of the value at which goodwill is carried every year. The 2012 ship incident related to the Costa Cruises ("Costa") brand had a significant impact on the review this year, changing a number of the forecasts and assumptions made by the Group. No impairment charge was taken as a result of this review. Carrying value of Costa and Ibero Cruises' ("Ibero") ships	We evaluated the future cash flow forecasts for Costa including comparing them to the latest Board approved plans and against other external industry data. We challenged the directors and management on their key assumptions that drove the forecasts for the Costa brand that were used in their impairment review. The key assumptions relate to net revenue yield, net cruise costs, including fuel price, new ship additions, long-term growth rate and the discount rate. We performed sensitivity analysis on each of the key assumptions individually and collectively, considering the likelihood of each scenario occurring in the context of the current and recent performance of the Costa business. We assessed the related financial statement disclosures. We evaluated the future cash flow forecasts for those ships that experienced an event that would potentially trigger an impairment review in the current year including comparing them to the latest Board approved plans and against other external industry
The economic situation in the Italian and Spanish markets led the directors to evaluate the carrying value of the assets of certain Costa and Ibero ships. As a result of these reviews, an impairment charge was taken in relation to two Costa ships.	data. We challenged the directors and management on their key assumptions that drove the forecasts for the relevant ships that were used in their impairment review. The key assumptions relate to net revenue yield, net cruise costs, including fuel price, remaining life of the ship, long-term growth rate and the discount rate. We also considered the likelihood of management being able to redeploy ships into other markets, should the need arise, where carrying values could be recovered. We performed sensitivity analysis on each of the key assumptions individually and collectively, considering the likelihood of each scenario occurring in the context of the current and recent performance of the Costa and Ibero businesses and the economic environments in which they operate. We assessed the related financial statement disclosures.
Costa Concordia incident The directors have had to make judgements about the exposure to wreck removal costs and legal claims and the amounts recoverable under insurance. At November 30, 2013, there was a provision in relation to this incident and an insurance recoverable.	We examined the terms of the wreckage removal contract and held independent discussions with the Group's insurance providers with respect to the status of the insurance claim under the contract. In evaluating the wreck removal costs and incident related legal claims from guests and crew, we considered the views of both internal and external legal counsel of the Group. We also examined the evidence available from the costs incurred to date. We evaluated the Group's accounting for the insurance claim and the cash received to date. We also challenged the directors' assumptions relating to the remaining costs to be incurred, taking into account the expectations and reports of the engineers contracted by the Group and the insurance providers.
Risk of fraud in relation to revenue recognition Auditing standards presume there is a risk of fraud in revenue recognition. We focused on the nature and timing of revenue recognition and its presentation in the Statement of Income because of; certain inherent risks associated with the Group's revenue streams and whether the revenue had been recognised on transactions which had not occurred or had been recognised in the incorrect period.	We examined the appropriateness of accounting policies surrounding revenue recognition. We identified separate revenue streams and assessed specific risks associated with each, adapting our audit procedures appropriately. Our audit procedures included: Testing relevant financial controls over revenue; • Performing substantive procedures that tested, on a sample basis, that revenue • transactions were correctly accounted for; Testing revenue journals on a sample basis; • • Evaluating the allocation assessment across the year and any resulting adjustments; and • Testing the revenue received in advance, before the cruise took place, at the year end with reference to cruise voyage schedules to determine the appropriateness of related customer deposits.
Risk of management override of internal controls Auditing standards require that we consider this because any override of control could have a pervasive impact on the financial statements.	We assessed the overall control environment of the Group, including the arrangements for staff to "whistle-blow" inappropriate actions, and interviewed senior management and the Group's internal audit functions. We followed up any such actions as we considered appropriate in the conduct of our audit. We also considered whether there was evidence of bias by the directors in the significant accounting estimates and judgements relevant to the financial statements. We examined the rationale behind significant transactions outside of the normal course of business (such as the costs incurred in relation to the Costa ship incident and the impairment assessments carried out over the carrying values of the goodwill and certain ships) and tested a sample of manual journal entries to determine the rationale for the adjustment.

Going concern

Under the Listing Rules we are required to review the directors' statement, set out on page C-11 in Annex C to the Proxy Statement, in relation to going concern. We have nothing to report having performed this review.

As noted in the directors' statement, the directors have concluded that it is appropriate to prepare the Group's and Parent Company's financial statements using the going concern basis of accounting. The going concern basis presumes that the Group and Parent Company have adequate resources to remain in operation, and that the directors intend them to do so, for at least one year from the date the financial statements were signed. As part of our audit we have concluded that the directors' use of the going concern basis is appropriate.

However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Group's and Parent Company's ability to continue as a going concern.

Opinions on matters prescribed by the Companies Act 2006

In our opinion:

• the information given in the Strategic Report included within the Annual Report and the Directors' Report set out in Annex A to the Proxy Statement for the financial year for which the financial statements are prepared is consistent with the financial statements; • the part of the Directors' Remuneration Report in Annex B to the Proxy Statement, dated February 20, 2014, to be audited has been properly prepared in accordance with the Companies Act 2006.

Other matters on which we are required to report by exception Adequacy of accounting records and information and explanations received

Under the Companies Act 2006 we are required to report to you if, in our opinion:

we have not received all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
the Parent Company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Directors' remuneration

Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors' remuneration specified by law have not been made, and under the Listing Rules we are required to review certain elements of the report to shareholders by the Board on directors' remuneration. We have no exceptions to report arising from these responsibilities.

Corporate Governance Statement

Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to the Company's compliance with nine provisions of the UK Corporate Governance Code ("the Code"). We have nothing to report having performed this review.

On page A-8 in Annex A to the Proxy Statement, which forms part of the Annual Report, as required by the Code Provision C.1.1, the directors state that they consider the Annual Report taken as a whole to be fair, balanced and understandable and provides the information necessary for members to assess the Group's and Parent's performance, business model

and strategy. On pages C-6 and C-7 in Annex C to the Proxy Statement, as required by C.3.8 of the Code, the Audit Committee has set out the significant issues that it considered in relation to the financial statements, and how they were addressed. Under ISAs (UK & Ireland), we are required to report to you if, in our opinion:

the statement given by the directors is materially inconsistent with our knowledge of the Group and Parent acquired in the course of performing our audit; or
the section of the Annual Report describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee.

We have no exceptions to report arising from this responsibility.

Other information in the Annual Report

Under ISAs (UK & Ireland), we are required to report to you if, in our opinion, information in the Annual Report is:

materially inconsistent with the information in the audited financial statements; or
apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group and Parent Company acquired in the course of performing our audit; or
is otherwise misleading.

We have no exceptions to report arising from this responsibility.

Responsibilities for the financial statements and the audit

Our responsibilities and those of the directors

As explained more fully in the Directors' Responsibilities Statement set out on page A-8 in Annex A to the Proxy Statement, the directors are responsible for the preparation of the Group and Parent Company financial statements and for being satisfied that they give a true and fair view.

Our responsibility is to audit and express an opinion on the Group and Parent Company financial statements in accordance with applicable law and ISAs (UK & Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

This report, including the opinions, has been prepared for and only for the Company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Nicholas Smith (Senior Statutory Auditor) for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors London February 20, 2014

AI assistant

Carnival PLC — Annual Report 2013

4799_er_2013-11-30_86fd9142-ac35-4883-9847-91e8e305f5a8.pdf

Strategic Report

1. Letters to Shareholders.

A. Chairman's Letter to Shareholders

B. Chief Executive Officer's Letter to Shareholders

Dear Shareholders,

2013 Overview

Sustainability

Vision

2. Business.

A. Overview

I. Summary

II. Mission and Related Strategies

III. Cruise Programs

B. Cruise Business

I. Overview

a. Summary

b. Favorable Characteristics of the Cruise Industry

1. Exceptional Value Proposition

2. Relatively Low Penetration Levels

3. Wide Appeal

4. Positive Demographics

5. Ship Mobility

6. High Guest Satisfaction Rates

7. Favorable Supply Versus Demand Balance

c. Global Cruise Industry

II. Segment Information

III. North America

CARNIVAL CRUISE LINES

PRINCESS

HOLLAND AMERICA LINE

SEABOURN

IV. Europe, Australia & Asia

a. Europe

1. United Kingdom

P&O CRUISES (UK)

CUNARD

2. Continental Europe

COSTA

AIDA

IBERO

b. Australia

P&O CRUISES (AUSTRALIA)

PRINCESS

CARNIVAL CRUISE LINES

1. China

COSTA

PRINCESS

2. Japan

PRINCESS

V. Ships Under Contract for Construction

VI. Cruise Ports and Destination Developments

VII. Cruise Ship Repair Facility

VIII. Cruise Pricing and Payment Terms

IX. Onboard and Other Revenues

X. Sales Relationships

XI. Marketing Activities

XII. Seasonality

XIII. Competition

XIV. Governmental Regulations

a. Maritime Regulations

1. General

2. Maritime Safety Regulations

3. Maritime Security Regulations

4. Maritime Environmental Regulations

i. International Regulations

ii. U.S. Federal and State Regulations

iii. EU Regulations

iv. Low Sulfur Fuel Regulations

v. Greenhouse Gas Emissions

5. Maritime Health Regulations

6. Maritime Labor Regulations

b. Consumer Regulations

c. Regulations for Guests with Disabilities

C. Employees

D. Suppliers

E. Insurance

I. General

Carnival PLC Annual Report 2013