SEC Filing | Carnival Corporation & plc

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Filed pursuant to Rule 424(b)(4)
File No. 333-13997

20,300,000 SHARES
[CARNIVAL CORPORATION LOGO]
CARNIVAL CORPORATION

CLASS A COMMON STOCK
(PAR VALUE $.01 PER SHARE)

-------------------

Of the 20,300,000 shares of Class A Common Stock offered, 16,240,000 shares
are being offered hereby in the United States and 4,060,000 shares are being
offered in a concurrent international offering outside the United States. The
initial public offering price and the aggregate underwriting discount per share
are identical for both offerings. See "Underwriting".

All of the 20,300,000 shares of Class A Common Stock offered are being sold
by certain shareholders of the Company. See "Selling Shareholders". The Company
will not receive any of the proceeds from the sale of the shares being sold by
the Selling Shareholders.

The last reported sale price of the Class A Common Stock, which is quoted
under the symbol "CCL," on the New York Stock Exchange on November 13, 1996 was
$29.625 per share. See "Price Range of Class A Common Stock and Dividends".

-------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

-------------------

INITIAL
PUBLIC PROCEEDS TO
OFFERING UNDERWRITING SELLING
PRICE DISCOUNT(1) SHAREHOLDERS(2)
------------- ------------ -------------

Per Share........................................ $29.50 $0.89 $28.61
Total(3)......................................... $598,850,000 $18,067,000 $580,783,000

- ------------

(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

(2) Before deducting estimated expenses of $265,000 payable by the Company and
$236,639 payable by the Selling Shareholders.

(3) Certain Selling Shareholders have granted the U.S. Underwriters an option
for 30 days to purchase up to an additional 2,276,000 shares at the initial
public offering price per share, less the underwriting discount, solely to
cover over-allotments. Additionally, certain Selling Shareholders have
granted the International Underwriters a similar option with respect to an
additional 569,000 shares as part of the concurrent international offering.
If such options are exercised in full, the total initial public offering
price, underwriting discount and proceeds to Selling Shareholders will be
$682,777,500, $20,599,050 and $662,178,450, respectively. See
"Underwriting".

----------------------

The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
November 19, 1996, against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO.

BEAR, STEARNS & CO. INC.

LEHMAN BROTHERS

MERRILL LYNCH & CO.
-------------------

The date of this Prospectus is November 13, 1996.

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CLASS A COMMON
STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-
THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
-------------------

AVAILABLE INFORMATION

Carnival Corporation (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy materials and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy materials and other information concerning the Company and the
Registration Statement (as defined below) can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 or at its Regional Offices located at Suite 1400,
500 West Madison Street, Chicago, Illinois 60661 and 7 World Trade Center, 13th
Floor, New York, New York 10048. Copies can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission maintains a web site on the World Wide
Web that contains reports, proxy and other information regarding issuers that
file electronically with the Commission. The address of such site is
"http://www.sec.gov". In addition, reports, proxy statements and other
information concerning the Company can also be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, on
which the Company's Class A Common Stock, par value $.01 per share (the "Class A
Common Stock"), and 4 1/2% Convertible Subordinated Notes Due July 1, 1997 (the
"Convertible Notes") are listed.

The Company has filed with the Commission a registration statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act"), with respect to the shares of Class A Common Stock offered hereby (the
"Shares"). This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which have been omitted in accordance
with the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement including the exhibits
filed as a part thereof and otherwise incorporated therein. Statements made in
this Prospectus as to the contents of any documents referred to are not
necessarily complete, and in each instance reference is made to such exhibit for
a more complete description and each such statement is qualified in its entirety
by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the fiscal year ended November
30, 1995 filed with the Commission (File No. 1-9610) pursuant to the Exchange
Act, the Company's Quarterly Reports on Form 10-Q for the quarters ended
February 28, 1996, May 31, 1996 and August 31, 1996, the Company's Current
Report on Form 8-K dated April 23, 1996 and the description of the Company's
Class A Common Stock contained in its Registration Statement on Form 8-A dated
October 31, 1991 filed with the Commission pursuant to Section 12(d) of the
Exchange Act, including any amendments or reports filed for the purpose of
updating such description, are incorporated herein by reference.

All other documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Shares made hereby shall be
deemed incorporated by reference in this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated herein by reference, or contained in
this Prospectus, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom this
Prospectus has been delivered, upon written or oral request of such person, a
copy (without exhibits other than exhibits specifically incorporated by
reference) of any or all documents incorporated by reference into this
Prospectus. Requests for such copies should be directed to Investor Relations,
Carnival Corporation, 3655 N.W. 87th Avenue, Miami, Florida 33178-2428;
telephone number (305) 599-2600.

PROSPECTUS SUMMARY

The following is a summary of certain information contained in this
Prospectus. This summary is not intended to be complete and should be read in
conjunction with, and is qualified in its entirety by, the more detailed
information and financial statements appearing elsewhere in this Prospectus or
incorporated herein by reference. Unless indicated otherwise, the information
contained in this Prospectus assumes the Underwriters' over-allotment options
are not exercised. For all periods, the information contained in this Prospectus
reflects a two for one stock split of the Company's Common Stock that was
effective on November 30, 1994. Investors should carefully consider the
information set forth in "Certain Considerations" before making any decision to
invest in the Class A Common Stock. Certain Statements in this Prospectus
(including this Prospectus Summary) constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). See "Special Note Regarding Forward-Looking Statements."

THE COMPANY

Carnival Corporation is the world's largest multiple-night cruise company
based on the number of passengers carried and revenues generated. The Company
offers a broad range of cruise products, serving the contemporary cruise market
through Carnival Cruise Lines, the premium market through Holland America Line
and the luxury market through Windstar Cruises and the Company's joint venture,
Seabourn Cruise Line. In total, the Company owns and operates 21 cruise ships
(not including three ships owned by the Seabourn joint venture), with an
aggregate capacity of 28,195 passengers based on two passengers per cabin. The
ten Carnival Cruise Lines ships have an aggregate capacity of 17,690 passengers
with itineraries in the Caribbean, the Mexican Riviera and Alaska. The eight
Holland America Line ships have an aggregate capacity of 10,061 passengers, with
itineraries in the Caribbean, the Mediterranean and Alaska and through the
Panama Canal, as well as other worldwide itineraries. The three Windstar ships
have an aggregate capacity of 444 passengers with itineraries in the Caribbean,
the South Pacific, the Mediterranean and the Far East. The three Seabourn ships
have an aggregate capacity of 612 passengers with itineraries in the Caribbean,
the Baltic, the Mediterranean and the Far East.

The Company has signed agreements with a Finnish shipyard providing for the
construction of two additional SuperLiners, each with a capacity of 2,040
passengers, for Carnival Cruise Lines with delivery expected in March 1998 and
November 1998. The Company also has agreements with an Italian shipyard for the
construction of two cruise ships, each with a capacity of 2,640 passengers, for
Carnival Cruise Lines with delivery expected in October 1996 and mid-1999 and
for the construction of one cruise ship with a capacity of 1,320 passengers and
two cruise ships, each with a capacity of 1,440 passengers, for Holland America
Line, with delivery expected in October 1997, February 1999 and September 1999,
respectively. As a result of this shipbuilding program and planned ship sales
and retirements, the Company currently expects its passenger capacity to
increase by 11,463 to 39,658 in mid-1999.

The Company also operates a tour business, through Holland America
Line-Westours Inc. ("Holland America Westours"), which markets sightseeing tours
both separately and as a part of Holland America Line cruise/tour packages.
Holland America Westours operates 16 hotels in Alaska and the Canadian Yukon,
two luxury day-boats offering tours to the glaciers of Alaska and the Yukon
River, over 290 motor coaches used for sightseeing and charters in the states of
Washington and Alaska and in the Canadian Rockies and 13 private domed rail cars
which are run on the Alaskan railroad between Anchorage and Fairbanks.

In April 1996, the Company acquired a 29.5% interest in Airtours plc
("Airtours") for approximately $307 million. Airtours is a leisure travel
company publicly traded on the London Stock Exchange and provides air inclusive
packaged holidays to the British, Scandinavian and North American markets.
Airtours provides holidays to approximately 4.4 million people per year and owns
or operates 41 hotels, 3 cruise ships and 31 aircraft. The Company's investment
in Airtours significantly broadens the Company's geographic reach, providing
enhanced access to the important European and Canadian markets. The investment
also serves to expand the Company's scope of operations into other segments of
the leisure travel industry.

In September 1996, the Company entered into a joint venture agreement with
Hyundai Merchant Marine Co., Ltd. ("HMM") to develop the Asian cruise vacation
market. Under the joint venture agreement, the Company and HMM will each make a
capital contribution of $10 million to the new joint venture which intends to
create a cruise product specifically tailored to the desires and tastes of the
growing middle-class market of Asian vacation travelers. The Company has also
entered into an agreement with the joint venture to sell Carnival Cruise Lines'
cruise ship Tropicale to the joint venture, subject to the immediate charter
back of the vessel to the Company. A charter agreement between the Company and
the joint venture will allow the Company to operate the Tropicale until the
joint venture begins its cruise operations, which is currently expected to occur
in the spring of 1998. The closing of the joint venture is subject to the
consummation of certain ancillary agreements, which are expected to be entered
into in the near future.

The Company was incorporated under the laws of the Republic of Panama in
November 1974. The Company's executive offices are located at 3655 N.W. 87th
Avenue, Miami, Florida 33178-2428, telephone number (305) 599-2600. The
Company's registered office in Panama is located at 10 Elvira Mendez Street,
Interseco Building, Panama, Republic of Panama.

THE OFFERINGS

Class A Common Stock offered by the Selling Shareholders(1):
U.S. Offering................................ 16,240,000 shares
International Offering....................... 4,060,000 shares
Total........................................ 20,300,000 shares
Class A Common Stock
outstanding (2)............................ 239,519,675 shares of Class A Common Stock.
In addition, 54,957,142 shares of the
Company's Class B Common Stock, par value
$.01 per share (the "Class B Common Stock"
and, collectively with the Class A Common
Stock, the "Common Stock"), are outstanding.
NYSE Symbol.................................. CCL
Use of Proceeds.............................. The Company will not receive any proceeds
from the sale of the Shares being sold by the
Selling Shareholders (as defined below). See
"Use of Proceeds".
Selling Shareholders......................... The selling shareholders are Ted Arison, The
Arison Foundation, Inc., The Royal Bank of
Scotland Trust Company (Jersey) Limited, as
trustee for the Ted Arison Charitable Trust,
and New World Symphony Supporting Foundation,
Inc. (collectively, the "Selling
Shareholders"). Ted Arison is selling his
Shares for certain estate planning and other
related purposes.

- ------------

(1) Ted Arison and New World Symphony Supporting Foundation, Inc. ("New World
Symphony") have granted the U.S. and International Underwriters
over-allotment options to purchase a total of 2,845,000 additional shares of
Class A Common Stock.

(2) Excludes approximately 2,545,140 shares of Class A Common Stock subject to
outstanding options granted under the Company's stock option plans and
approximately 2,599,954 shares that are reserved for issuance upon
conversion of the Convertible Notes.

SUMMARY FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

NINE MONTHS ENDED
AUGUST 31, YEAR ENDED NOVEMBER 30,
----------------------- --------------------------------------------------------------
1996(1) 1995(1) 1995 1994 1993 1992(2) 1991
---------- ---------- ---------- ---------- ---------- ---------- ----------

OPERATIONS DATA:
Revenues.............. $1,737,613 $1,545,244 $1,998,150 $1,806,016 $1,556,919 $1,473,614 $1,404,704
Operating income
before income from
affiliated
operations............ 458,360 397,300 490,038 443,674 347,666 324,896 315,905
Income from affiliated
operations(3)......... 12,956 -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income...... 471,316 397,300 490,038 443,674 347,666 324,896 315,905
Income from continuing
operations............ 451,479 366,863 451,091 381,765 318,170 281,773 253,824
Discontinued
operations(4)......... -- -- -- -- -- -- (168,836)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income............ 451,479 366,863 451,091 381,765 318,170 276,584 84,988
Earnings per share:
Continuing
operations............ $ 1.56 $ 1.29 $ 1.59 $ 1.35 $ 1.13 $ 1.00 $ .93
Net income.......... $ 1.56 $ 1.29 $ 1.59 $ 1.35 $ 1.13 $ .98 $ .31
Dividends declared per
share................. $ .27 $ .225 $ .315 $ .285 $ .280 $ .280 $ .245
Weighted average
shares................ 288,524 283,921 284,220 282,744 282,474 281,686 273,832
Passenger cruise
days.................. 8,088 6,825 9,201 8,102 7,003 6,766 6,365
Percentage of total
cruise capacity(5).... 109.7% 105.1% 105.0% 104.0% 105.3% 105.3% 105.7%

AUGUST 31,
1996
------------

BALANCE SHEET DATA:
Cash and cash equivalents and short-term investments.................................... $ 104,673
Total current assets.................................................................... 263,695
Total assets............................................................................ 4,703,096
Customer deposits(6).................................................................... 311,765
Total current liabilities............................................................... 689,568
Long-term debt and convertible notes.................................................... 1,059,519
Total shareholders' equity.............................................................. 2,937,219

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(1) In the nine months ended August 31, 1996, the Company recognized a $32.0
million gain from the settlement of bankruptcy claims against Wartsila (as
defined herein) and a loss of $15.8 million on the sale of notes receivable
generated from the sale of Carnival's Crystal Palace Resort and Casino (the
"CCP Resort"). In the nine months ended August 31, 1995, the Company
recognized a $14.4 million gain from the settlement of litigation with Metra
Oy, the former parent of Wartsila.

(2) In the fiscal year ended November 30, 1992, the Company took an
extraordinary charge of $5.2 million in connection with the early redemption
of its Zero Coupon Convertible Subordinated Notes due 2005.

(3) Represents income from affiliated companies, including Airtours. The Company
acquired a 29.5% interest in Airtours in April 1996 and starting with the
quarter ended August 31, 1996, the Company's share of Airtours' operating
results is being recorded by the Company on a two-month lag basis.

(4) In November 1991, the Company adopted a formal plan to dispose of the CCP
Resort, which comprised the entire resort and casino segment of the
Company's operations. At that time, the Company recorded a provision for the
loss on disposal of the CCP Resort of approximately $135 million,
representing a write-down of $95 million to record the property at its
estimated net realizable value and a provision of $40 million for the
possible funding of the CCP Resort prior to disposal.

(5) In accordance with cruise industry practice, total capacity is calculated
based on two passengers per cabin even though some cabins can accommodate
three or four passengers. The percentages in excess of 100% indicate that
more than two passengers occupied some cabins.

(6) Represents customer deposits for cruises and tours which will be recognized
as revenue when earned in the future.

CERTAIN CONSIDERATIONS

TAXATION OF THE COMPANY

The Company believes that it is not subject to United States corporate tax
on its income from the international operation of ships ("Shipping Income").
(Certain of the Company's United States source income, such as Holland America
Line's income from bus, hotel and tour operations, is not Shipping Income, and
thus is subject to United States tax.) The applicable exemption from United
States corporate income tax, which is provided by Section 883 of the Internal
Revenue Code of 1986, as amended (the "Code"), is available under current United
States law for as long as the Company and its subsidiaries that earn Shipping
Income (collectively, the "Shipping Companies") meet both an "Incorporation
Test" and a "CFC Test".

A corporation meets the Incorporation Test if it is organized under the laws
of a foreign country that grants an equivalent exemption to corporations
organized in the United States (an "equivalent exemption jurisdiction"). The
Company believes that all of the Shipping Companies are organized in equivalent
exemption jurisdictions.

A Shipping Company meets the CFC Test if it is a controlled foreign
corporation ("CFC"), as defined in Section 957(a) of the Code. A foreign
corporation is a CFC if stock representing more than 50% of such corporation's
voting power or equity value is owned (or considered as owned) by United States
persons each of whom owns (or is considered to own) stock representing 10% or
more of the corporation's voting power.

The Company and the Shipping Companies meet the CFC Test because stock of
the Company representing more than 50% of the voting power of all the Company's
stock is owned by the Micky Arison 1994 "B" Trust, a United States trust whose
primary beneficiary is Micky Arison (the "B Trust"). If the Company and the
Shipping Companies were to cease to meet the CFC test, and no other basis for
exemption were available, much of their income would become subject to taxation
by the United States at higher than normal corporate tax rates.

CONTROL BY PRINCIPAL SHAREHOLDERS

Following the sale of the Shares, Ted Arison, the B Trust, certain members
of the Arison family, trusts for the benefit of Mr. Ted Arison's children and
the Arison Foundation, Inc., a private foundation established by Ted Arison
(collectively, the "Principal Shareholders"), will beneficially own, in the
aggregate, approximately 48.24% of the outstanding capital stock and will
control, in the aggregate, approximately 70.37% of the voting power of the
Company. For as long as the B Trust holds a majority of the shares of the Class
B Common Stock and the number of outstanding shares of Class B Common Stock is
at least 12 1/2% of the number of outstanding shares of both Class A and Class B
Common Stock, the B Trust will have the power to elect at least 75% of the
directors and to substantially influence the Company's affairs and policies.
Micky Arison, the Chairman and Chief Executive Officer of the Company, has the
sole right to vote and direct the sale of the Class B Common Stock held by the B
Trust, subject, during Ted Arison's lifetime, to the consent of the trustee of
the B Trust. The Company has agreed under certain loan agreements to ensure that
Ted Arison or members of his immediate family beneficially own, directly or
indirectly, a number of shares of the Company's capital stock at least
sufficient to elect the majority of the directors.

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Shares being
sold by the Selling Shareholders. Ted Arison is selling his Shares for certain
estate planning and other related purposes.

PRICE RANGE OF CLASS A COMMON STOCK AND DIVIDENDS

The Company's Class A Common Stock is listed on the New York Stock Exchange
under the symbol "CCL". There is no established public trading market for the
Company's Class B Common Stock.

The following table sets forth for the periods indicated the high and low
intra-day prices for the Class A Common Stock, as reported on the New York Stock
Exchange-Composite Transactions, and dividends paid on the Class A Common Stock.

CLASS A
COMMON STOCK
PRICES
------------------
HIGH LOW DIVIDENDS
------- ------- ---------

1996:
Fourth Quarter (through November 13, 1996)................ $31.875 $29.250 $.110
Third Quarter............................................. 31.500 24.500 .090
Second Quarter............................................ 30.125 26.125 .090
First Quarter............................................. 29.000 22.750 .090
1995:
Fourth Quarter............................................ 27.125 20.625 .090
Third Quarter............................................. 24.250 20.375 .075
Second Quarter............................................ 26.625 22.125 .075
First Quarter............................................. 23.750 19.125 .075
1994:
Fourth Quarter............................................ 23.125 20.563 .075
Third Quarter............................................. 24.063 21.750 .070
Second Quarter............................................ 25.438 21.000 .070
First Quarter............................................. 26.125 23.000 .070

As of November 11, 1996, there were approximately 3,741 holders of record of
the Company's Class A Common Stock. All of the issued and outstanding shares of
Class B Common Stock are held by the B Trust. The last reported sale price of
the Class A Common Stock on the New York Stock Exchange on November 13, 1996 was
$29.625 per share.

DIVIDEND POLICY

The Company declared cash dividends of $.070 per share in each of the first
three quarters of fiscal 1994, $.075 per share in the fourth quarter of fiscal
1994 and the first three quarters of fiscal 1995, $.090 per share in the fourth
quarter of fiscal 1995 and the first three quarters of fiscal 1996 and $.110 per
share in the fourth quarter of fiscal 1996. Payment of future quarterly
dividends will depend, among other factors, upon the Company's earnings,
financial condition and capital requirements and certain tax considerations of
certain of the Principal Shareholders, some of whom are required to include a
portion of the Company's earnings in their taxable income whether or not the
earnings are distributed. The Company may also declare special dividends to all
shareholders in the event that the Principal Shareholders are required to pay
additional income taxes by reason of their ownership of the Common Stock, either
because of an income tax audit of the Company or the Principal Shareholders or
because of certain actions by the Company (such as a failure by the Company to
maintain its investment in shipping assets at a certain level) that would
trigger adverse tax consequences to the Principal Shareholders under the special
tax rules applicable to them.

Any dividend declared by the Board of Directors on the Company's Common
Stock will be paid concurrently at the same rate on the Class A Common Stock and
the Class B Common Stock.

While no tax treaty currently exists between the Republic of Panama and the
United States, under current law the Company believes that distributions to its
shareholders are not subject to taxation under the laws of the Republic of
Panama. Dividends paid by the Company will be taxable as ordinary income for
United States Federal income tax purposes to the extent of the Company's current
or accumulated earnings and profits, but generally will not qualify for any
dividends-received deduction.

The payment and amount of any dividend is within the discretion of the Board
of Directors, and it is possible that the amount of any dividend may vary from
the levels discussed above. If the law regarding the taxation of the Company's
income to the Principal Shareholders were to change so that the amount of tax
payable by the Principal Shareholders were increased or reduced, the amount of
dividends paid by the Company might be more or less than is currently
contemplated.

CAPITALIZATION

The following table sets forth the capitalization of the Company at August
31, 1996. The information set forth below should be read in conjunction with the
financial statements and related notes incorporated in this Prospectus by
reference.

AUGUST 31, 1996
-----------------
(AMOUNTS IN
THOUSANDS)

Current portion of long-term debt......................................... $ 72,525
-----------------
-----------------
Long-term debt and convertible notes:
Mortgages and other loans payable bearing interest at rates ranging from
8% to 9.9%, secured by vessels........................................ $ 98,446
Unsecured Revolving Credit Facility Due 2000............................ 25,000
Multi-currency Revolving Credit Facility Due 2001....................... 166,000
Other loans payable..................................................... 75,336
5.75% Notes Due March 15, 1998.......................................... 200,000
6.15% Notes Due October 1, 2003......................................... 124,951
7.70% Notes Due July 15, 2004........................................... 99,910
7.05% Notes Due May 15, 2005............................................ 99,826
7.20% Debentures Due October 1, 2023.................................... 124,870
4.50% Convertible Subordinated Notes Due July 1, 1997................... 45,180
-----------------
Total long-term debt and convertible notes.......................... $ 1,059,519
-----------------
Shareholders' equity:
Class A Common Stock ($.01 par value; one vote per share; 399,500 shares
authorized; 239,348 shares issued and outstanding)........................ $ 2,393
Class B Common Stock ($.01 par value; five votes per share; 100,500
shares authorized; 54,957 shares issued and outstanding).............. 550
Paid-in capital......................................................... 812,808
Retained earnings....................................................... 2,125,374
Less--other............................................................. (3,906)
-----------------
Total shareholders' equity.......................................... 2,937,219
-----------------
Total capitalization................................................ $ 3,996,738
-----------------
-----------------

SELECTED FINANCIAL DATA

The selected financial data presented below for the fiscal years ended
November 30, 1991 through 1995 and as of the end of each such fiscal year are
derived from the financial statements of the Company and should be read in
conjunction with such financial statements and the related notes incorporated in
this Prospectus by reference. The selected financial data for the nine-month
periods ended August 31, 1996 and 1995 are unaudited and, in the opinion of
management, include all adjustments, consisting of only normal recurring
accruals, necessary for a fair presentation of such data. The Company's
operations are seasonal, and results for interim periods are not necessarily
indicative of the results for the entire year. Certain amounts in prior years
have been reclassified to conform with the current year's presentation.

OPERATIONS DATA:
Revenues.................. $1,737,613 $1,545,244 $1,998,150 $1,806,016 $1,556,919 $1,473,614 $1,404,704
Costs and expenses:
Operating expenses....... 962,435 865,311 1,131,113 1,028,475 907,925 865,587 810,317
Selling and
administrative............ 209,221 187,880 248,566 223,272 207,995 194,298 193,316
Depreciation and
amortization.............. 107,597 94,753 128,433 110,595 93,333 88,833 85,166
---------- ---------- ---------- ---------- ---------- ---------- ----------
1,279,253 1,147,944 1,508,112 1,362,342 1,209,253 1,148,718 1,088,799
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income before
income from affiliated
operations................ 458,360 397,300 490,038 443,674 347,666 324,896 315,905
Income from affiliated
operations(3)............. 12,956 -- -- -- -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Operating income.......... 471,316 397,300 490,038 443,674 347,666 324,896 315,905
Nonoperating income
(expense):
Interest income.......... 17,280 10,311 14,403 8,668 11,527 16,946 10,596
Interest expense, net of
capitalized interest...... (49,889) (48,583) (63,080) (51,378) (34,325) (53,792) (65,428)
Other income (expense)... 23,778 18,931 19,104 (9,146) (1,201) 2,731 1,746
Income tax expense....... (11,006) (11,096) (9,374) (10,053) (5,497) (9,008) (8,995)
---------- ---------- ---------- ---------- ---------- ---------- ----------
(19,837) (30,437) (38,947) (61,909) (29,496) (43,123) (62,081)
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income from continuing
operations................ 451,479 366,863 451,091 381,765 318,170 281,773 253,824
Discontinued operations:
Loss from operations of
hotel and casino
segment(4)................ -- -- -- -- -- -- (33,373)
Estimated loss on
disposal of hotel and
casino segment(4)...... -- -- -- -- -- -- (135,463)
Extraordinary item:
Loss on early
extinguishment of
debt(2)................... -- -- -- -- -- (5,189) --
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income................ $ 451,479 $ 366,863 $ 451,091 $ 381,765 $ 318,170 $ 276,584 $ 84,988
---------- ---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ---------- ----------
Earnings per share:
Continuing operations.... $ 1.56 $ 1.29 $ 1.59 $ 1.35 $ 1.13 $ 1.00 $ .93
Net income............... $ 1.56 $ 1.29 $ 1.59 $ 1.35 $ 1.13 $ .98 $ .31
Dividends declared per
share..................... $ .270 $ .225 $ .315 $ .285 $ .280 $ .280 $ .245
Weighted average shares... 288,524 283,921 284,220 282,744 282,474 281,686 273,832
Passenger cruise days..... 8,088 6,825 9,201 8,102 7,003 6,766 6,365
Percent of total cruise
capacity(5)............... 109.7% 105.1% 105.0% 104.0% 105.3% 105.3% 105.7%

AUGUST 31, NOVEMBER 30,
---------- --------------------------------------------------------------
1996(1) 1995(1) 1994 1993 1992(1) 1991
---------- ---------- ---------- ---------- ---------- ----------
(AMOUNTS IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents and
short-term investments.............. $ 104,673 $ 103,760 $ 124,220 $ 148,920 $ 226,062 $ 278,136
Total current assets................. 263,695 256,378 240,449 253,798 311,424 363,788
Total assets......................... 4,703,096 4,105,487 3,669,823 3,218,920 2,645,607 2,650,252
Customer deposits(6)................. 311,765 292,606 257,505 228,153 178,945 167,723
Total current liabilities............ 689,568 594,710 564,957 549,994 474,781 551,287
Long-term debt and convertible
notes................................ 1,059,519 1,150,031 1,161,904 1,031,221 776,600 921,689
Total shareholders' equity........... 2,937,219 2,344,873 1,928,934 1,627,206 1,384,845 1,171,129

- ------------
(1) In the nine months ended August 31, 1996, the Company recognized a $32.0
million gain from the settlement of bankruptcy claims against Wartsila and a
loss of $15.8 million on the sale of notes receivable generated from the
sale of the CCP Resort. In the nine months ended August 31, 1995, the
Company recognized a $14.4 million gain from the settlement of litigation
with Metra Oy, the former parent of Wartsila.

(4) In November 1991, the Company adopted a formal plan to dispose of Carnival's
Crystal Palace Resort and Casino (the "CCP Resort"), which comprised the
entire resort and casino segment of the Company's operations. At that time,
the Company recorded a provision for the loss on disposal of the CCP Resort
of approximately $135 million, representing a write-down of $95 million to
record the property at its estimated net realizable value and a provision of
$40 million for the possible funding of the CCP Resort prior to disposal.

(6) Represents customer deposits for cruises and tours which will be recognized
as revenue when earned in the future.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Certain statements contained in "Management's Discussion of Financial
Condition and Results of Operations" constitute forward-looking statements under
the Reform Act. See "Special Note Regarding Forward-Looking Statements."

RESULTS OF OPERATIONS

The Company earns cruise revenues primarily from (i) the sale of passenger
tickets, which include accommodations, meals, airfare and substantially all
shipboard activities, and (ii) the sale of goods and services on board its
cruise ships, such as casino gaming, liquor sales, gift shop sales and other
related services. The Company also derives revenues from the tour and related
operations of HAL Antillen N.V., a subsidiary of the Company ("HAL").

The following table presents statements of operations data expressed as a
percentage of total revenues and selected statistical information for the
periods indicated:

NINE MONTHS ENDED
AUGUST 31 YEAR ENDED NOVEMBER 30,
---------------------- -----------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------

REVENUES......................... 100 % 100 % 100 % 100 % 100 %
OPERATING COSTS AND EXPENSES:
Operating expenses............. 56 56 57 57 58
Selling and administrative..... 12 12 12 12 14
Depreciation and
amortization....................... 6 6 6 6 6
--- --- --- --- ---
OPERATING INCOME BEFORE INCOME
FROM AFFILIATED OPERATIONS......... 26 26 25 25 22
INCOME FROM AFFILIATED
OPERATIONS......................... 1 -- -- -- --
--- --- --- --- ---
OPERATING INCOME................. 27 26 25 25 22
NONOPERATING INCOME (EXPENSE).... (1) (2) (2) (4) (2)
--- --- --- --- ---
INCOME FROM CONTINUING
OPERATIONS......................... 26 % 24 % 23 % 21 % 20 %
--- --- --- --- ---
--- --- --- --- ---
SELECTED STATISTICAL INFORMATION:
Passengers carried............... 1,351,000 1,139,000 1,543,000 1,354,000 1,154,000
Passenger cruise days............ 8,088,000 6,825,000 9,201,000 8,102,000 7,003,000
Occupancy percentage............. 109.7 % 105.1 % 105.0 % 104.0 % 105.3 %

GENERAL

The growth in the Company's revenues during the last three fiscal years has
primarily been a function of the expansion of its fleet capacity.

Fixed costs, including depreciation, fuel, insurance, and crew costs
represent more than one-third of the Company's operating expenses and do not
significantly change in relation to changes in passenger loads and aggregate
passenger ticket revenue. The Company's different businesses experience varying
degrees of seasonality. The Company's revenue from the sale of passenger tickets
for Carnival Cruise Lines' ("Carnival") ships is moderately seasonal.
Historically, demand for Carnival cruises has been greater during the periods
from late June through August and lower during the fall months. HAL cruise
revenues are more seasonal than Carnival's cruise revenues. Demand for HAL
cruises is strongest during the summer months when HAL ships operate in Alaska
and Europe and HAL typically obtains higher pricing for these summer products.
Demand for HAL

cruises is lower during the winter months when HAL ships sail in more
competitive markets. The Company's tour revenues are extremely seasonal with a
large majority of tour revenues generated during the late spring and summer
months in conjunction with the Alaska cruise season.

In April 1996, the Company made an investment in Airtours which it records
using the equity basis of accounting. Starting with the Company's quarter ending
August 31, 1996, the Company's share of Airtours' operating results is being
recorded by the Company on a two month lag basis. Airtours' earnings are
seasonal due to the seasonal nature of the European leisure travel industry.
During the last two fiscal years, Airtours' third and fourth fiscal quarters,
ending June 30 and September 30, respectively, have been profitable, with the
fourth quarter being its most profitable quarter. During this same period,
Airtours experienced seasonal losses in its first and second fiscal quarters
ending on December 31 and March 31, respectively.

Average capacity is expected to increase 8.2% during the fourth fiscal
quarter of 1996 as compared with the same period in 1995, as a result of the
introduction into service of the Inspiration in March 1996 and the Veendam in
May 1996. See "Special Note Regarding Forward-Looking Statements."

NINE MONTHS ENDED AUGUST 31, 1996 COMPARED TO NINE MONTHS ENDED AUGUST 31, 1995

REVENUES

The increase in total revenues of $192.4 million, or 12.4%, from the first
nine months of 1995 to the first nine months of 1996 was primarily comprised of
a $180.2 million, or 13.2%, increase in cruise revenues. The increase in cruise
revenues was primarily the result of a 13.5% increase in capacity for the period
resulting from the addition of the Carnival cruise ships Imagination in July
1995 and Inspiration in March 1996 and Holland America Line's cruise ship
Veendam in May 1996. Occupancy rates were up 4.4% and gross pricing was down
4.5% resulting in a decrease of 0.3% in gross yield (total revenue per lower
berth). Net yields, i.e., net revenue per lower berth (net revenue is total
revenues less travel agent commissions, airfare costs and other less significant
cruise costs), increased 1.1% during the first nine months of the year due to
improved occupancy rates. Also affecting cruise revenues during 1995 were lost
revenues caused by the shipboard incident described under "--Nonoperating Income
(Expense)" below.

Revenues from the Company's tour operations increased $20.9 million, or
9.6%, to $238.6 million in 1996 from $217.7 million in 1995. The increase was
primarily the result of an increase in tour and transportation revenues due to
an increase in the number of tour passengers.

COSTS AND EXPENSES

Operating expenses increased $97.1 million, or 11.2%, from the first nine
months of 1995 to the first nine months of 1996. Cruise operating costs
increased by $85.0 million, or 11.4%, to $827.9 million in the first nine months
of 1996 from $742.9 million in the first nine months of 1995, primarily due to
additional costs associated with the increased capacity.

Tour operating expenses increased $20.8 million, or 12.7%, from the first
nine months of 1995 to the first nine months of 1996, primarily due to an
increase in the number of tour passengers.

Selling and administrative costs increased $21.3 million, or 11.4%, mainly
due to an increase in advertising expenses and an increase in payroll and
related costs associated with the increase in capacity during the first nine
months of 1996 as compared with the same period of 1995.

Depreciation and amortization increased by $12.8 million, or 13.6%, to
$107.6 million in the first nine months of 1996 from $94.8 million in the first
nine months of 1995, primarily due to the addition of the Imagination,
Inspiration and the Veendam.

AFFILIATED OPERATIONS

During April 1996, the Company acquired a 29.5% interest in Airtours and is
recording its share of Airtours' earnings on a two-month lag basis. During the
Company's quarter ended August 31, 1996, the Company's share of earnings for
Airtours was recorded for Airtours' quarter ended June 30, 1996. The Company
also began reporting its equity in earnings of certain other affiliates.

NONOPERATING INCOME (EXPENSE)

Total nonoperating expense (net of nonoperating income) decreased to $19.8
million for the first nine months of 1996 from $30.4 million in the first nine
months of 1995. Interest income increased $7.0 million primarily due to the
Company's holding of 13% Senior Secured Notes (which were redeemed in April
1996) of Norwegian Cruise Line, Ltd. (the "NCL Bonds") and, to a lesser degree,
increases in cash balances. Cash balances, up to the closing of the Airtours
transaction in April 1996, increased due to United Kingdom regulatory
requirements applicable to the Company's tender offer to acquire its interest in
Airtours. Gross interest expense (excluding capitalized interest) increased $6.6
million primarily as a result of additional borrowings required in connection
with the acquisition of Airtours. Capitalized interest increased $5.3 million
due to higher investment levels in vessels under construction.

Other income increased to $23.8 million in the first nine months of 1996
primarily as a result of a $32.0 million gain from settlement of bankruptcy
claims against Wartsila (see "Business-- Litigation"), less a loss on the sale
of the notes receivable generated from the sale of CCP Resort of $15.8 million.
Other income of $18.9 million in the first nine months of 1995 included a $14.4
million gain from the settlement of litigation with Metra Oy (see
"Business--Litigation") and a gain on the sale of the Company's entire interest
in Epirotiki Cruise Line less a loss of $3.0 million from a fire on Carnival
Cruise Lines' Celebration as well as other non-related, non-recurring items. In
addition, the Company estimated the loss of revenue, net of related variable
expense, from the Celebration being out of service due to the fire reduced
operating income and net income by an additional $7.3 million in the third
quarter of 1995.

FISCAL YEAR ENDED NOVEMBER 30, 1995 COMPARED TO FISCAL YEAR ENDED
NOVEMBER 30, 1994

REVENUES

The increase in total revenues of $192.1 million from 1994 to 1995 was
comprised primarily of a $177.7 million, or 10.9%, increase in cruise revenues.
The increase in cruise revenues was primarily the result of a 12.5% increase in
capacity for the period resulting from the addition of Carnival's cruise ship
Fascination in July 1994, HAL's Ryndam in October 1994, and Carnival's
Imagination in July 1995, partially offset by the discontinuation of the
FiestaMarina division of Carnival in September 1994. Also affecting cruise
revenues were lower gross passenger per diems. The gross passenger per diems
decreased primarily due to a reduction in the percentage of passengers electing
the Company's air program. When a passenger elects to purchase his/her own air
transportation, rather than use the Company's air program, both the Company's
cruise revenues and operating expenses decrease by approximately the same
amount. Occupancy rates increased by approximately 1%. Also affecting cruise
revenues in 1995 and 1994 were lost revenues caused by the incidents described
under "--Nonoperating Income (Expense)" below.

Revenues from the Company's tour operations increased $14.3 million, or
6.3%, to $241.9 million in 1995 from $227.6 million in 1994. The increase was
primarily the result of an increase in the tour and transportation revenues
generated by the Company's tour business and Gray Line of Alaska tour and
motorcoach operations.

COSTS AND EXPENSES

Operating expenses increased $102.6 million, or 10.0%, from 1994 to 1995.
Cruise operating costs increased by $93.8 million, or 10.5%, to $990.0 million
in 1995 from $896.3 million in 1994, primarily due to additional costs
associated with the increased capacity in 1995.

Tour operating expenses increased $8.7 million, or 4.9%, from 1994 to 1995,
primarily due to an increase in tour passengers.

Selling and administrative expenses increased $25.3 million, or 11.3%,
primarily due to a 14.6% increase in advertising expenses and an increase in
payroll and related costs during 1995 as compared with the same period in 1994.

Depreciation and amortization increased by $17.8 million, or 16.1%, to
$128.4 million in 1995 from $110.6 million in 1994 primarily due to the addition
of the Ryndam, the Fascination and the Imagination.

NONOPERATING INCOME (EXPENSE)

Total nonoperating expense (net of nonoperating income) decreased to $38.9
million in 1995 from $61.9 million in 1994. Interest income increased $5.7
million in 1995 due to the recognition of interest income on notes received from
the sale of the CCP Resort and higher investment balances. Total interest
expense increased to $81.9 million in 1995 from $73.2 million in 1994, primarily
as a result of increased average debt levels and higher variable interest rates.
The higher debt levels were the result of expenditures made in connection with
the ongoing construction and delivery of new cruise ships. Capitalized interest
decreased to $18.8 million in 1995 from $21.9 million in 1994 due to lower
levels of investments in vessels under construction.

Other income increased to $19.1 million in 1995 primarily as a result of a
$14.4 million gain from the settlement of litigation with Metra Oy and a gain
from the sale of the Company's entire interest in Epirotiki Cruise Line. These
gains were partially offset by the loss from the Celebration incident discussed
below and certain other non-related, non-recurring items. See "Business--
Litigation."

In June 1995, a fire, which was quickly extinguished, broke out in the
engine control room on Carnival's Celebration. There were no injuries to
passengers or crew, however, there was damage to one of the vessel's electrical
control panels. The time necessary to complete repairs to the Celebration as a
result of this incident caused the cancellation of four one-week cruises. Costs
associated with repairs to the ship, passenger handling and various other
expenses, net of estimated insurance recoveries, amounted to $3.0 million and
were included in other expenses. In addition, the Company estimates that the
loss of revenue, net of related variable expenses, from the Celebration being
out of service, reduced operating income and net income by an additional $7.3
million in 1995.

Other expenses of $9.1 million in 1994 were primarily the result of two
events. In September 1994, the Company discontinued its FiestaMarina division
because of lower than expected passenger occupancy levels which resulted in a
charge of $3.2 million to other expenses. In August 1994, HAL's Nieuw Amsterdam
ran aground in Alaska resulting in the cancellation of three one-week cruises.
Costs associated with repairs to the ship, passenger handling and various other

expenses, net of estimated insurance recoveries, amounted to $6.4 million and
were included in other expenses. In addition, the Company estimates that the
loss of revenue, net of related variable expenses, from the Nieuw Amsterdam
being out of service during that three-week period, reduced operating income and
net income by an additional $4.5 million in 1994.

FISCAL YEAR ENDED NOVEMBER 30, 1994 COMPARED TO FISCAL YEAR ENDED
NOVEMBER 30, 1993

REVENUES

The increase in total revenues of $249.1 million from 1993 to 1994 was
comprised of a $241.6 million, or 17.5%, increase in cruise revenues and an
increase of $7.5 million, or 4.3%, in tour revenues for the period. The increase
in cruise revenues was primarily the result of a 17.2% increase in capacity for
the period. This capacity increase resulted from additional capacity provided by
Carnival's SuperLiners Sensation and Fascination which entered service in
November 1993 and July 1994, respectively, and Holland America Line's Maasdam
and Ryndam which entered service in December 1993 and October 1994,
respectively. Also affecting cruise revenues were slightly higher yields,
slightly lower occupancies and lost revenues related to the grounding of the
Nieuw Amsterdam which resulted in the cancellation of three one-week cruises in
August 1994. See "--Nonoperating Income (Expense)" above.

Revenues from the Company's tour operations increased to $227.6 million in
1994 from $214.4 million in 1993 primarily due to an increase in the number of
tour passengers.

COSTS AND EXPENSES

Operating expenses increased $120.6 million, or 13.3%, from 1993 to 1994.
Cruise operating costs increased by $113.4 million, or 14.5%, to $896.3 million
in 1994 from $782.8 million in 1993. Cruise operating costs increased primarily
due to costs associated with the increased capacity in 1994.

Selling and administrative expenses increased $15.3 million, or 7.3%, from
1993 to 1994. These increases were attributable to additional advertising and
other costs associated primarily with the increase in capacity.

Depreciation and amortization increased by $17.3 million, or 18.5%, to
$110.6 million in 1994 from $93.3 million in 1993. Depreciation and amortization
increased primarily due to the additional capacity discussed above. Also, the
depreciable lives of four of the Carnival ships built in the 1980s were extended
from 20 or 25 years to 30 years to conform to industry standards. This resulted
in a reduction of depreciation of approximately $4 million during 1994.

NONOPERATING INCOME (EXPENSE)

Total nonoperating expense (net of nonoperating income) increased in 1994 to
$61.9 million from $29.5 million in 1993. Interest income decreased to $8.7
million in 1994 from $11.5 million in 1993 due to a lower level of investments
in 1994. Interest expense increased to $73.3 million in 1994 from $58.9 million
in 1993 as a result of increased debt levels. Both the lower investment levels
and higher debt levels were the result of expenditures made in connection with
the ongoing construction and delivery of cruise ships. Capitalized interest
decreased to $21.9 million in 1994 from $24.6 million in 1993.

Other expenses increased to $9.1 million in 1994 because of two events which
occurred during 1994 which are discussed in the nonoperating income (expense)
section for the fiscal year ended November 30, 1995 compared to fiscal year
ended November 30, 1994, above.

Income tax expense increased to $10.1 million in 1994, primarily as a result
of taxes, of approximately $3.0 million on a dividend paid by the tour company,
a U.S. company, to its parent company, a foreign shipping company.

LIQUIDITY AND CAPITAL RESOURCES

SOURCES AND USES OF CASH

The Company's business provided $587.2 million of net cash from operations
during the year ended November 30, 1995 (an increase of 9.3% over the comparable
period in 1994) and $656.2 million of net cash from operations during the nine
months ended August 31, 1996 (an increase of 25.6% over the comparable period in
1995). The increase in fiscal 1995 was primarily the result of higher net income
for the period. The increase during the nine months ended August 31, 1996 was
primarily the result of an increase in net income and changes in working capital
accounts.

In April 1995, the Company received $47 million of net proceeds from the
sale of 2.1 million shares of Class A Common Stock by the Company pursuant to
the underwriters' exercise of an overallotment option in a secondary offering by
certain shareholders of the Company. Also during fiscal 1995, the Company issued
$100 million of 7.05% Notes Due May 15, 2005 and received approximately $99.2
million in cash proceeds net of underwriting fees and other costs and made
borrowings of $269 million under its $750 million revolving credit facility due
2000 (the "$750 Million Revolver").

During fiscal 1995 and the nine months ended August 31, 1996, the Company
spent approximately $484 million and $514 million, respectively, on capital
projects. During fiscal 1995, $432 million was spent in connection with its
ongoing shipbuilding program, and $34 million was spent on the purchase and
expansion of the Company's shore side operations facilities located in Miami,
Florida. During the nine months ended August 31, 1996, $447 million was spent in
connection with the Company's ongoing ship-building program, and $36 million was
spent on the expansion of the Company's shore side operations facilities located
in Miami, Florida.

The Company also made scheduled principal payments during fiscal 1995,
totaling approximately $79.6 million, under various individual vessel mortgage
loans and repaid $322 million of the outstanding balance on the $750 Million
Revolver. During the nine months ended August 31, 1996, the Company made
scheduled principal payments totaling approximately $43 million under various
individual vessel mortgage loans and a repayment of $160 million on the $750
Million Revolver. During the nine months ended August 31, 1996, the Company
borrowed and repaid $475 million under the $750 Million Revolver for the final
payment on the Inspiration and the Veendam.

Additionally, approximately $70 million of the Company's $115 million of
Convertible Notes were converted into approximately four million shares of the
Company's Class A Common Stock during the nine months ending August 31, 1996.

During the year ended November 30, 1995 and the nine months ended August 31,
1996, the Company paid cash dividends of approximately $85 million and $77
million, respectively.

In October 1995, the Company purchased $101 million face amount of NCL Bonds
for $81 million. In February 1996, the Company sold an option to NCL Holding AS,
the parent company of Norwegian Cruise Line, Ltd. (formerly named Kloster Cruise
Ltd.), to purchase the NCL Bonds. The

option was exercised in April 1996, and the Company sold the NCL Bonds to NCL
Holding AS. The transaction resulted in a small gain.

In April 1996, the Company acquired a 29.5% interest in Airtours. The
Company paid approximately $163 million in cash and funded the remaining $144
million through the issuance of 5,301,186 shares of the Company's Class A Common
Stock. The Company borrowed $168 million under a $200 million multi-currency
revolving credit facility due 2001 (the "$200 Million Multi-currency Revolver")
to fund the cash portion of the Airtours investment described above.

FUTURE COMMITMENTS

The Company is scheduled to take delivery of seven new vessels over the next
three years. The Company will pay approximately $374 million in the twelve month
period ending August 31, 1997 related to the construction and delivery of ships
and $1.7 billion beyond August 31, 1997. In addition, the Company has $1.1
billion of outstanding long-term debt and convertible notes of which
approximately $73 million is due in the twelve month period ending August 31,
1997. The Company also enters into forward foreign currency contracts and
interest rate swap agreements to hedge the impact of foreign currency and
interest rate fluctuations. See "Special Note Regarding Forward-Looking
Statements."

FUNDING SOURCES

Cash from operations is expected to be the Company's principal source of
capital to fund its debt service requirements and ship construction costs. In
addition, the Company may fund a portion of the construction cost of new ships
from borrowings under the revolving credit facilities and/or through the
issuance of long-term debt in the public or private markets. At August 31, 1996,
approximately $725 million was available for borrowing by the Company under the
$750 Million Revolver, $34 million was available under the $200 Million
Multi-currency Revolver and an additional $250 million was available under a
short-term general purpose revolving credit facility (the "$250 Million
Revolver"). The Company intends to initiate a $1 billion commercial paper
program that is supported by the $750 Million Revolver and the $250 Million
Revolver.

To the extent that the Company should require or choose to fund future
capital commitments from sources other than operating cash or from borrowings
under the $200 Million Multi-Currency Revolver, the $750 Million Revolver, the
$250 Million Revolver, or the commercial paper program, the Company believes
that it will be able to secure such financing from banks or through the offering
of debt and/or equity securities in the public or private markets. In this
regard, the Company has filed two Registration Statements on Form S-3 (the
"Shelf Registration") relating to a shelf offering of up to $500 million
aggregate principal amount of debt or equity securities. Through August 31,
1996, the Company had issued $230 million of debt securities under the shelf. A
balance of $270 million aggregate principal amount of debt or equity securities
remains available for issuance under the Shelf Registration.

BUSINESS

The Company is the world's largest multiple-night cruise company based on
the number of passengers carried and revenues generated. The Company offers a
broad range of cruise products, serving the contemporary cruise market through
Carnival Cruise Lines, the premium market through Holland America Line and the
luxury market through Windstar Cruises and the Company's joint venture, Seabourn
Cruise Line. In total, the Company owns and operates 21 cruise ships (not
including three ships held through the Seabourn joint venture) with an aggregate
capacity of 28,195 passengers based on two passengers per cabin. The Company
also operates a tour business through Holland America Westours.

Certain statements under this heading "Business" constitute "forward-looking
statements" under the Reform Act. See "Special Note Regarding Forward-Looking
Statements."

CRUISE SHIP SEGMENT

INDUSTRY

The passenger cruise industry as it exists today began in approximately
1970. Over time, the industry has evolved from a trans-ocean carrier service
into a vacation alternative to land-based resorts and sight-seeing destinations.
According to Cruise Lines International Association ("CLIA"), an industry trade
group, approximately 500,000 North American passengers took cruises in 1970 for
three consecutive nights or more. CLIA estimates that this number reached 4.4
million passengers in 1995, an average compound annual growth rate of 9% since
1970. Also, according to CLIA, by the end of 1995 the number of ships in service
totaled 124 with an aggregate capacity of approximately 106,000 berths.

CLIA estimates that the number of cruise passengers will grow to 4.8 million
in 1996. CLIA also projects that by the end of 1996, North America will be
served by 120 vessels having an aggregate capacity of approximately 112,000
berths.

The following table sets forth the North American industry and Company
growth over the past five years based on passengers carried for at least three
consecutive nights:

NORTH AMERICAN COMPANY CRUISE
CRUISE PASSENGERS
YEAR PASSENGERS CARRIED
- ----------------------------------------- -------------- --------------

CALENDAR (FISCAL)
1995..................................... 4,378,000 1,543,000
1994..................................... 4,448,000 1,354,000
1993..................................... 4,480,000 1,154,000
1992..................................... 4,136,000 1,153,000
1991..................................... 3,979,000 1,100,000

- ------------

Source: CLIA.

From 1991 through 1995, the Company's average compound annual growth rate in
number of passengers carried was 8.8% versus the industry average of 2.0%.

The Company's passenger capacity has grown from 17,973 at November 30, 1991
to 28,195 at August 31, 1996. The delivery of the Statendam, Sensation and
Maasdam in 1993 increased capacity by 4,572 passengers, more than offsetting a
capacity decrease of 906 passengers related to the sale of the Mardi Gras in
that year. During 1994, net capacity increased by 2,369 passengers due to the
delivery of the Fascination and Ryndam, net of the 937 decrease in

passenger capacity related to the sale of the FiestaMarina. In 1995, with the
delivery of the Imagination, capacity increased by 2,040. To date in 1996, net
capacity increased by 2,158 passengers due to the delivery of the Inspiration
and the Veendam, net of the 1,146 decrease in passenger capacity related to the
charter of the Festivale to Dolphin Cruise LIne. See "--Other Cruise
Activities".

In spite of the cruise industry's growth since 1970, the Company believes
cruises represent only approximately 2% of the applicable North American
vacation market, defined as persons who travel for leisure purposes on trips of
three nights or longer involving at least one night's stay in a hotel. Only an
estimated 7% of the North American population has ever cruised.

CRUISE SHIPS AND ITINERARIES

Under the Carnival Cruise Lines name, the Company serves the contemporary
market with ten ships (collectively, the "Carnival Ships"). All of the Carnival
Ships were designed by and built for Carnival, including nine SuperLiners which
are among the largest in the cruise industry. Eight of the Carnival Ships
operate in the Caribbean and two Carnival Ships call on ports in the Mexican
Riviera. During 1996, the Carnival ship Tropicale began operating in Alaska
during the summer season. Carnival also offers cruises through the Panama Canal
and to the Hawaiian Islands. See "--Sales and Marketing."

Through its subsidiary, HAL, the Company operates eleven ships offering
premium or luxury specialty vacations. Eight of these ships, the Rotterdam, the
Nieuw Amsterdam, the Noordam, the Westerdam, the Statendam, the Maasdam, the
Ryndam and the Veendam are operated under the Holland America Line name (the
"HAL Ships"). The remaining three ships, the Wind Star, the Wind Song and the
Wind Spirit, are operated under the Windstar Cruises name (the "Windstar
Ships"). Seven of the HAL Ships were designed by and built for HAL. The three
Windstar Ships were built for Windstar Sail Cruises, Ltd. ("WSCL") between 1986
and 1988.

HAL offers premium cruises of various lengths in the Caribbean, Alaska,
Panama Canal, Europe, the Mediterranean, Hawaii, Mexico, South Pacific, South
America and the Orient. Cruise lengths for HAL vary from one to 99 days, with a
large proportion being seven or ten days in length. Periodically, the HAL Ships
make longer grand cruises or operate on short-term special itineraries. For
example, in 1996, the Rotterdam made a 50-day world cruise and a 99-day Grand
South America voyage. HAL will continue to offer these special and longer
itineraries in order to increase travel opportunities for its customers and
strengthen its cruise offerings in view of the fleet expansion. The majority of
the HAL Ships operate in the Caribbean during fall to late spring and in Alaska
during late spring to early fall. The three Windstar Ships currently operate in
the Caribbean, the Mediterranean and the South Pacific.

The following table presents summary information concerning the Company's
ships. Areas of operation are based on current itineraries and are subject to
change.

GROSS
PASSENGER REGISTERED PRIMARY AREAS
VESSEL REGISTRY BUILT CAPACITY(1) TONS OF OPERATION
- ----------------------------------- ------------ ----- ----------- ---------- -----------------

CARNIVAL CRUISE LINES:
Inspiration........................ Panama 1996 2,040 70,367 Caribbean
Imagination........................ Panama 1995 2,040 70,367 Caribbean
Fascination........................ Panama 1994 2,040 70,367 Caribbean
Sensation.......................... Panama 1993 2,040 70,367 Caribbean
Ecstasy............................ Liberia 1991 2,040 70,367 Caribbean
Fantasy............................ Liberia 1990 2,044 70,367 Bahamas
Celebration........................ Liberia 1987 1,486 47,262 Caribbean
Jubilee............................ Panama 1986 1,486 47,262 Mexican Riviera
Holiday............................ Panama 1985 1,452 46,052 Mexican Riviera
Tropicale.......................... Liberia 1982 1,022 36,674 Caribbean, Alaska
-----------
Total Carnival Ships Capacity.... 17,690
-----------

HOLLAND AMERICA LINE:
Veendam............................ Bahamas 1996 1,266 55,451 Alaska, Caribbean
Ryndam............................. Netherlands 1994 1,266 55,451 Alaska, Caribbean
Maasdam............................ Netherlands 1993 1,266 55,451 Europe, Caribbean
Statendam.......................... Netherlands 1993 1,266 55,451 Alaska, Caribbean
Westerdam.......................... Netherlands 1986 1,494 53,872 Canada, Caribbean
Noordam............................ Netherlands 1984 1,214 33,930 Alaska, Caribbean
Nieuw Amsterdam.................... Netherlands 1983 1,214 33,930 Alaska, Caribbean
Rotterdam.......................... Netherlands 1959 1,075 37,783 Alaska, Worldwide
-----------
Total HAL Ships Capacity......... 10,061
-----------

WINDSTAR CRUISES:
Wind Spirit........................ Bahamas 1988 148 5,736 Caribbean,
Mediterranean
Wind Song.......................... Bahamas 1987 148 5,703 South Pacific
Wind Star.......................... Bahamas 1986 148 5,703 Caribbean,
Mediterranean
-----------
Total Windstar Ships Capacity.... 444
-----------
Total Capacity................... 28,195
-----------
-----------

Carnival Corporation also owns the Festivale, a 1,146 berth vessel built in
196`1, which it currently charters to Dolphin Cruise Line. In addition, Holland
America Line's Rotterdam is expected to be replaced in September 1997 by the
Rotterdam VI, which is currently under construction, and the Tropicale is
expected to enter service with the HMM joint venture in the spring of 1998.

- ------------

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

CRUISE SHIP CONSTRUCTIONS

The Company is currently constructing four cruise ships to be operated under
the Carnival name and three cruise ships to be operated under the Holland
America Line name. The following table presents summary information concerning
ships under construction:

EXPECTED PASSENGER APPROXIMATE
VESSEL SERVICE DATE SHIPYARD CAPACITY(1) TONS COST
- --------------------------- -------------- --------------- ----------- ------- --------------
(IN THOUSANDS)

CARNIVAL CRUISE LINES:
Carnival Destiny........... November 1996 Fincantieri(2) 2,640 101,000 $ 430,000
Elation.................... March 1998 Masa-Yards 2,040 70,367 300,000
Paradise................... December 1998 Masa-Yards 2,040 70,367 300,000
Carnival Triumph........... July 1999 Fincantieri(2) 2,640 101,000 415,000
----------- --------------
Total Carnival Ships..... 9,360 $1,445,000
----------- --------------

HOLLAND AMERICA LINE:
Rotterdam VI............... October 1997 Fincantieri(2) 1,320 62,000 235,000
To Be Named................ February 1999 Fincantieri(2) 1,440 63,000 300,000
To Be Named................ September 1999 Fincantieri(2) 1,440 63,000 300,000
----------- --------------
Total HAL Ships.......... 4,200 835,000
----------- --------------
Total.................... 13,560 $2,280,000
----------- --------------
----------- --------------

- ------------

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

(2) The construction contracts with such shipyards are denominated in Italian
Lire. Contracts denominated in foreign currencies have been fixed into U.S.
Dollars through the utilization of forward currency contracts.

OTHER CRUISE ACTIVITIES

In April 1992, the Company acquired 25% of the capital stock of Seabourn
Cruise Line Limited ("Seabourn"). As part of the transaction, the Company also
made a subordinated secured ten-year loan of $15 million to Seabourn and a $10
million convertible loan to Seabourn. In December 1995, the $10 million
convertible loan was converted by the Company into an additional 25% equity
interest in Seabourn. Seabourn operates three ultra-luxury ships, which have an
aggregate capacity of 612 passengers and have itineraries in the Caribbean, the
Baltic, the Mediterranean and the Far East.

CRUISE TARIFFS

The table below sets forth certain price information for the Company's
cruises. Unless otherwise noted, brochure prices include round trip airfare from
over 175 cities in the United States and Canada. If a passenger chooses not to
have the Company provide air transportation, the ticket price is reduced.
Brochure prices vary depending on size and location of cabin, the time of year
that the voyage takes place, and when the booking is made. The cruise brochure
price includes a wide variety of activities and facilities, such as a fully
equipped casino, nightclubs, theatrical shows, movies, parties, a discotheque, a
health club and swimming pools on each ship. The brochure price also includes
numerous dining opportunities daily.

Brochure pricing information below is per person based on double occupancy:

AREA OF OPERATION CRUISE LENGTH PRICE RANGE
- ----------------------------------------------------------- ------------- --------------

CARNIVAL CRUISE LINES:
Caribbean.................................................. 3-day $ 579- 1,199
4-day 679- 1,369
7-day 1,399- 2,469
Mexico..................................................... 3-day 579- 1,199
4-day 679- 1,369
7-day 1,369- 2,469
HOLLAND AMERICA LINE (1):
Alaska..................................................... 7-day $ 975- 7,000
Caribbean.................................................. 7-day 1,212- 5,775
10-day 2,030- 6,000
Europe..................................................... 10- to 12-day 3,335-14,045
Panama Canal............................................... 10- to 22-day 2,795-15,400

WINDSTAR CRUISES (1):
Caribbean.................................................. 7-day $3,195- 3,295
Mediterranean.............................................. 7- to 16-day 2,695- 6,095
South Pacific.............................................. 7-day 3,195- 3,495

- ------------

(1) Prices represent cruise only.

Brochure prices are regularly discounted through the Company's early booking
discount program and other promotions.

ON-BOARD AND OTHER REVENUES

The Company derives revenues from certain on-board activities and services
including casino gaming, liquor sales, gift shop sales, shore tours, photography
and promotional advertising by merchants located in ports of call.

The casinos, which contain slot machines and gaming tables including
blackjack, craps, roulette and stud poker, are open when the ships are at sea in
international waters. The Company also earns revenue from the sale of alcoholic
beverages. Certain onboard activities are managed by independent concessionaires
from which the Company collects a percentage of revenues, while certain other
activities are managed by the Company.

The Company receives additional revenue from the sale to its passengers of
shore excursions at each ship's ports of call. On the Carnival Ships, such shore
excursions are operated by independent tour operators and include bus and taxi
sight-seeing excursions, local boat and beach parties, and nightclub and casino
visits. On the HAL Ships, shore excursions are operated by Holland America
Westours and independent parties.

In conjunction with its cruise vacations on the Carnival Ships, the Company
sells pre- and post-cruise land packages. Such packages generally include one,
two or three-night vacations at locations such as Walt Disney World in Orlando,
Florida or resorts in the South Florida and the San Juan, Puerto Rico areas.

In conjunction with its cruise vacations on the HAL Ships, HAL sells
pre-cruise and post-cruise land packages which are more fully described below.
See "--Tour Segment".

PASSENGERS

The following table sets forth the aggregate number of passengers carried
and percentage occupancy for the Company's ships for the periods indicated:

YEAR ENDED NOVEMBER 30,
NINE MONTHS ENDED -----------------------------------
AUGUST 31, 1996 1995 1994 1993
----------------- --------- --------- ---------

Number of Passengers................. 1,351,000 1,543,000 1,354,000 1,154,000
Occupancy Percentage(1).............. 109.7% 105.0% 104.0% 105.3%

- ------------

(1) In accordance with cruise industry practice, total capacity is calculated
based on two passengers per cabin even though some cabins can accommodate
three or four passengers. Occupancy percentages in excess of 100% indicate
that more than two passengers occupied some cabins.

The following table sets forth the actual occupancy percentage for all
cruises on the Company's ships for each quarter since the third quarter of
fiscal 1994:

OCCUPANCY
QUARTER ENDING PERCENTAGE
- -------------------------------------------------------------- ----------

August 31, 1996............................................... 114.5%
May 31, 1996.................................................. 107.2
February 28, 1996............................................. 107.1
November 30, 1995............................................. 104.6
August 31, 1995............................................... 114.6
May 31, 1995.................................................. 100.3
February 28, 1995............................................. 99.9
November 30, 1994............................................. 100.9
August 31, 1994............................................... 113.4

SALES AND MARKETING

The Company's products are positioned to appeal to the contemporary, premium
and luxury specialty segments. The luxury specialty segment, which is not as
large as the other segments, is served by cruises with per diems of $300 or
higher. The premium segment typically is served by cruises that last for seven
to 14 days or more at per diem rates of $250 or higher, and appeal principally
to more affluent customers. The contemporary segment, on the other hand, is
served typically by cruises that are seven days or shorter in length, are priced
at per diem rates of $200 or less, and feature a casual ambience. The Company
believes that the success and growth of the Carnival cruises is attributable in
large part to its early recognition of this market segmentation and its efforts
to reach and promote the expansion of the contemporary segment.

Carnival believes that its success is due in large part to its unique
product positioning within the industry. Carnival markets the Carnival Ship
cruises not only as alternatives to competitors' cruises, but as vacation
alternatives to land-based resorts and sight-seeing destinations. Carnival seeks
to attract passengers from the broad vacation market, including those who have
never been on a cruise ship before and who might not otherwise consider a cruise
as a vacation alternative. Carnival's strategy has been to emphasize the cruise
experience itself rather than particular destinations, as well as the advantages
of a prepaid, all-inclusive vacation package. Carnival markets the Carnival Ship
cruises as the "Fun Ships(R)" experience, which includes a wide variety of
shipboard activities and entertainment, such as full-scale casinos and
nightclubs, an atmosphere of pampered service and unlimited food.

The Company markets the Carnival Ships as the "Fun Ships(R)" and uses the
themes "Carnival's Got the Fun(R)" and "The Most Popular Cruise Line in the
World(R)", among others. Carnival advertises nationally directly to consumers on
network television and through extensive print media featuring its spokesperson,
Kathie Lee Gifford. Carnival believes its advertising generates interest in
cruise vacations generally and results in a higher degree of consumer awareness
of the "Fun Ships(R)" concept and the "Carnival(R)" name. Substantially all of
Carnival's cruise bookings are made through travel agents, which arrangement is
encouraged as a matter of policy. In fiscal 1995, Carnival took reservations
from about 29,000 of approximately 45,000 travel agencies in the United States
and Canada. Travel agents receive a standard commission of 10% (15% in the State
of Florida), plus the potential of an additional commission based on sales
volume. Moreover, because cruise vacations are substantially all-inclusive,
sales of Carnival cruise vacations yield a significantly higher commission to
travel agents than selling air tickets and hotel rooms. During fiscal 1995, no
one travel agency accounted for more than 2% of Carnival's revenues.

Carnival engages in substantial promotional efforts designed to motivate and
educate retail travel agents about its "Fun Ships(R)" cruise vacations. Carnival
employs approximately 90 field sales representatives and 30 in-house service
representatives to motivate independent travel agents and promote its cruises.
Carnival believes it has the largest sales force in the industry.

To facilitate access and to simplify the reservation process, Carnival
employs approximately 360 reservation agents to take bookings from independent
travel agents. Carnival's fully-automated reservation system allows its
reservation agents to respond quickly to book cabins on its ships. Carnival has
a policy of pricing comparable cabins (based on size, location and length of
voyage) on its various ships at the same rate ("common rating"). Such common
rate includes round-trip airfare, which means that any passenger can fly from
any one of over 140 cities in the United States and Canada to ports of
embarkation for the same price. Through common rating, Carnival is able to offer
customers a wider variety of voyages for the same price, which the Company
believes improves occupancy on all its cruises. However, discounts from brochure
prices may vary depending upon the ship, intinerary, time of year and demand for
each cruise.

Carnival's cruises generally are substantially booked several months in
advance of the sailing date. This lead time allows Carnival to adjust its
prices, if necessary, in relation to demand for available cabins, as indicated
by the level of advance bookings. Carnival's SuperSaver fares, introduced
several years ago, are designed to encourage potential passengers to book cruise
reservations earlier, which helps the Company to more effectively manage yields
(pricing and occupancy). Carnival's payment terms require that a passenger pay
approximately 15% of the cruise price within seven days of the reservation date
and the balance not later than 45 days before the sailing date for three- and
four-day cruises and 60 days before the sailing date for seven-day cruises.

The HAL and Windstar Ships cater to the premium and luxury specialty
markets, respectively. The Company believes that the hallmarks of the HAL
experience are beautiful ships and gracious attentive service. HAL communicates
this difference as "A Tradition of Excellence(R)", a reference to its long
standing reputation as a first class and grand cruise line.

Substantially all of HAL's bookings are made through travel agents, which
arrangement HAL encourages as a matter of policy. In fiscal 1995, HAL took
reservations from about 20,000 of approximately 45,000 travel agencies in the
United States and Canada. Travel agents receive a standard commission of between
10% and 15%, depending on the specific cruise product sold, with the potential
for override commissions based upon sales volume. During 1995, no one travel
agency accounted for more than 1% of HAL's total revenue.

HAL has focused much of its recent sales effort at creating an excellent
relationship with the travel agency community. This is related to the HAL
marketing philosophy that travel agents have a

large impact on the consumer cruise selection process, and will recommend HAL
more often because of its excellent reputation for service to both consumers and
independent travel agents. HAL solicits continuous feedback from consumers and
the independent travel agents making bookings with HAL to insure they are
receiving excellent service.

HAL's marketing communication strategy is primarily composed of newspaper
and magazine advertising, large scale brochure distribution and direct mail
solicitations to past passengers (referred to as "alumni") and television. HAL
engages in substantial promotional efforts designed to motivate and educate
retail travel agents about its products. HAL employs approximately 50 field
sales representatives, 15 teleaccount sales representatives and 15 sales and
service representatives to support the field sales force. Carnival's field sales
representatives also promote HAL products. To facilitate access to HAL and to
simplify the reservation process for the HAL ships, HAL employs approximately
260 reservation agents to take bookings from travel agents. HAL's cruises
generally are booked several months in advance of the sailing date. The Company
solicits current and former passengers of the Carnival Ships to take future
cruises on the HAL and Windstar Ships.

Windstar Cruises has its own marketing and reservations staff. Field sales
representatives for both HAL and Carnival act as field sales representatives for
Windstar. Marketing efforts are primarily devoted to (a) travel agent support
and awareness, (b) direct mail solicitation of past passengers, and (c)
distribution of brochures. The marketing features the distinctive nature of the
graceful, modern sail ships and the distinctive "casually elegant" experience on
"intimate itineraries" (apart from the normal cruise experience). Windstar's
cruise market positioning is embodied in the phrase "180 deg. from ordinary".

SEASONALITY

The Company's revenue from the sale of passenger tickets for the Carnival
Ships is moderately seasonal. Historically, demand for Carnival cruises has been
greater during the periods from late June through August. Demand traditionally
is lower during the period from September through mid-December and during May.
To allow for full availability during peak periods, drydocking maintenance is
usually performed in September, October and early December. HAL cruise revenues
are more seasonal than Carnival's cruise revenues. Demand for HAL cruises is
strongest during the summer months when HAL ships operate in Alaska and Europe
and HAL typically obtains higher prices for these summer products. Demand for
HAL cruises is lower during the winter months when HAL ships sail in more
competitive markets.

COMPETITION

Cruise lines compete for consumer disposable leisure time dollars with other
vacation alternatives such as land-based resort hotels and sight-seeing
destinations, and public demand for such activities is influenced by general
economic conditions.

The Carnival Ships compete with cruise ships operated by six different
cruise lines which operate year round from Florida, California and Puerto Rico
with similar itineraries and with ten other cruise lines operating seasonally
from other ports in Florida, California, and Puerto Rico, including cruise ships
operated by HAL. Competition for cruise passengers in South Florida is
substantial. Ships operated by Royal Caribbean Cruise Line and Norwegian Cruise
Line sail regularly from Miami on itineraries similar to those of the Carnival
Ships. Carnival competes year round with ships operated by Royal Caribbean
Cruise Line and Princess Cruises embarking from Los Angeles to the west coast of
Mexico. Cruise lines such as Norwegian Cruise Lines, Royal Caribbean Cruise
Line, Costa Cruise Lines, Cunard and Princess Cruises offer voyages competing
with Carnival from San Juan to the Caribbean.

In the Alaska market, HAL and Carnival compete directly with cruise ships
operated by ten different cruise lines with the largest competitors being
Princess Cruises and Royal Caribean Cruise Lines. Over the past several years,
there has been a steady increase in the available capacity among all cruise
lines in the Alaska market.

In the Caribbean market, HAL competes with cruise ships operated by 16
different cruise lines, its primary competitors being Princess Cruises, Royal
Caribbean Cruise Line and Norwegian Cruise Line, as well as the Carnival Ships.

GOVERNMENTAL REGULATION

The Ecstasy, Fantasy, Celebration and Tropicale are Liberian flagged ships,
the Festivale is a Bahamian flagged ship, and the balance of the Carnival Ships
are registered in Panama. The, Ryndam, Maasdam, Statendam, Westerdam, Noordam,
Nieuw Amsterdam and Rotterdam are registered in the Netherlands, while the
Veendam is flagged in the Bahamas. The Windstar Ships are registered in the
Bahamas. The ships are subject to inspection by the United States Coast Guard
for compliance with the Convention for the Safety of Life at Sea and by the
United States Public Health Service for sanitary standards. The Company is also
regulated by the Federal Maritime Commission, which, among other things,
certifies ships on the basis of the ability of the Company to meet obligations
to passengers for refunds in case of non-performance. The Company believes it is
in compliance with all material regulations applicable to its ships and has all
licenses necessary to the conduct of its business. In connection with a
significant portion of its Alaska cruise operations, HAL relies on a concession
permit from the National Park Service to operate its cruise ships in Glacier Bay
National Park, which is periodically renewed. There can be no assurance that the
permits will continue to be renewed or that regulations relating to the renewal
of such permits, including preference rights, will remain unchanged in the
future.

The International Maritime Organization has adopted safety standards as part
of the "Safety of Life at Sea" ("SOLAS") Convention, applicable generally to all
passenger ships carrying 36 or more passengers. Generally, SOLAS imposes
enhanced vessel structural requirements designed to improve passenger safety.
The SOLAS requirements are phased in through the year 2010. However, certain
stringent SOLAS fire safety requirements must be implemented by 1997. Only two
of the Company's vessels, the Festivale (which is chartered to Dolphin Cruise
Line) and the Rotterdam are expected to be significantly affected by the SOLAS
1997 requirements. The Rotterdam will be retired from service effective
September 30, 1997. The decision regarding the additional SOLAS related
investment for the Festivale has not yet been made, but such expenditures would
not be material to the Company.

Public Law 89-777 administered by the Federal Maritime Commission ("FMC")
requires most cruise line operators to establish financial responsibility for
nonperformance of transportation. The FMC's regulations require that a cruise
line demonstrate its financial responsibility through a guaranty, escrow
arrangement, surety bond, insurance or self-insurance. Currently, the amount
required must equal 110% of the cruise line's highest amount of customer
deposits over a two-year period up to a maximum coverage level of $15 million
subject to a sliding scale. The FMC has proposed increasing the coverage
requirements under the FMC regulations. The proposed new regulations are viewed
favorably by the Company and are not expected to have a material effect on the
Company. The FMC has received public comments regarding the proposed regulations
and may take final action at any time.

From time to time various other regulatory and legislative changes have been
or may in the future be proposed that could have an effect on the cruise
industry in general.

TOUR SEGMENT

In addition to its cruise business, HAL markets sight-seeing tours
separately and as a part of cruise/tour packages under the Holland America
Westours name. Tour operations are based in Alaska, Washington State and western
Canada. Since a substantial portion of Holland America Westours' business is
derived from the sale of tour packages in Alaska during the summer tour season,
tour operations are highly seasonal.

HOLLAND AMERICA WESTOURS

Holland America Westours is a wholly-owned subsidiary of HAL. The group of
subsidiaries which together comprise the tour operations perform three
independent yet interrelated functions. During 1995, as part of an integrated
travel program to destinations in Alaska, the tour service group offered 35
different tour programs varying in length from seven to 19 days. The
transportation group and hotel group support the tour service group by supplying
facilities needed to conduct tours. Facilities include dayboats, motor coaches,
rail cars and hotels.

Two luxury dayboats perform an important role in the integrated Alaska
travel program offering tours to the glaciers and fjords of Alaska and the Yukon
River. The Yukon Queen cruises the Yukon River between Dawson City, Yukon
Territory and Eagle, Alaska and the Ptarmigan operates on Portage Lake in
Alaska. The two dayboats have a combined capacity of 249 passengers.

A fleet of over 290 motor coaches using the trade name Gray Line operates in
Alaska, Washington and western Canada. These motor coaches are used for extended
trips, city sight-seeing tours and charter hire. HAL conducts its tours both as
part of a cruise/tour package and as individual sight-seeing products sold under
the Gray Line name. In addition, HAL operates express Gray Line motor coach
service between downtown Seattle and the Seattle-Tacoma International Airport.

Thirteen private domed rail cars, which are called "McKinley Explorers", run
on the Alaska railroad between Anchorage and Fairbanks, stopping at Denali
National Park.

In connection with its tour operations, HAL owns or leases motor coach
maintenance shops in Seattle, and at Juneau, Denali Park, Fairbanks, Anchorage,
Skagway and Ketchikan in Alaska. HAL also owns or leases service offices at
Anchorage, Fairbanks, Juneau, Ketchikan and Skagway in Alaska, at Whitehorse in
the Yukon Territory, in Seattle and at Vancouver in British Columbia. Certain
real property facilities on federal land are used in HAL's tour operations
pursuant to permits from the applicable federal agencies.

WESTMARK HOTELS

HAL owns and/or operates 16 hotels in Alaska and the Canadian Yukon under
the name Westmark Hotels. Four of the hotels are located in Canada's Yukon
Territory and offer a combined total of 585 rooms. The remaining 12 hotels, all
located throughout Alaska, provide a total of 1,649 rooms, bringing the total
number of hotel rooms to 2,234.

The hotels play an important role in HAL's tour program during the summer
months when they provide accommodations to the tour passengers. The hotels
located in the larger metropolitan areas remain open during the entire year,
acting during the winter season as centers for local community activities while
continuing to accommodate the traveling public. HAL hotels include dining,
lounge and conference or meeting room facilities. Certain hotels have gift shops
and other tourist services on the premises.

The hotels are summarized in the following table:

OPEN DURING
HOTEL NAME LOCATION ROOMS 1996 SEASON
- ------------------------------------------------------- ------------ ----- -----------

ALASKA HOTELS:
Westmark Anchorage................................... Anchorage 198 year-round
Westmark Inn......................................... Anchorage 90 seasonal
Westmark Inn......................................... Fairbanks 173 seasonal
Westmark Fairbanks................................... Fairbanks 238 year-round
Westmark Juneau...................................... Juneau 105 year-round
The Baranof.......................................... Juneau 193 year-round
Westmark Cape Fox.................................... Ketchikan 72 year-round
Westmark Kodiak...................................... Kodiak 81 year-round
Westmark Shee Atika.................................. Sitka 101 year-round
Westmark Inn Skagway................................. Skagway 209 seasonal
Westmark Tok......................................... Tok 92 seasonal
Westmark Valdez...................................... Valdez 97 year-round

CANADIAN HOTELS (YUKON TERRITORY):
Westmark Inn......................................... Beaver Creek 174 seasonal
Westmark Klondike Inn................................ Whitehorse 99 seasonal
Westmark Whitehorse.................................. Whitehorse 181 year-round
Westmark Inn......................................... Dawson 131 seasonal

Thirteen of the hotels are owned by a HAL subsidiary. The remaining three
hotels, Westmark Anchorage, Westmark Cape Fox and Westmark Shee Atika, are
operated by Westmark under arrangements involving third parties such as
management agreements and leases.

For the hotels that operate year-round, the occupancy percentage for 1995
was 58.9%, and for the hotels that operate only during the summer months, the
occupancy percentage for 1995 was 76.7%.

SEASONALITY

The Company's tour revenues are extremely seasonal with a large majority
generated during the late spring and summer months in connection with the Alaska
cruise season. Holland America Westours' tours are conducted in Washington and
Alaska. The Alaska tours coincide to a great extent with the Alaska cruise
season, May through September. Washington tours are conducted year-round
although demand is greatest during the summer months. During periods in which
tour demand is low, HAL seeks to maximize its motor coach charter activity such
as operating charter tours to ski resorts in Washington and Canada.

SALES AND MARKETING

HAL tours are marketed both separately and as part of cruise-tour packages.
Although most HAL cruise-tours include a HAL cruise as the cruise segment, other
cruise lines also market HAL tours as a part of their cruise tour packages and
sight-seeing excursions. Tours sold separately are marketed through independent
travel agents and also directly by HAL, utilizing sales desks in major hotels.
General marketing for the hotels is done through various media in Alaska, Canada
and the continental United States. Travel agents, particularly in Alaska, are
solicited, and displays are used

in airports in Seattle, Washington, Portland, Oregon and various Alaskan cities.
Rates at Westmark Hotels are on the upper end of the scale for hotels in Alaska
and the Canadian Yukon.

CONCESSIONS

Certain tours in Alaska are conducted on federal property requiring
concession permits from the applicable federal agencies such as the National
Park Service or the United States Forest Service.

COMPETITION

Holland America Westours competes with independent tour operators and motor
coach charter operators in Washington, Alaska and the Canadian Rockies. The
primary competitors in Alaska are Princess Tours (which owns approximately 130
motor coaches and three hotels) and Alaska Sightseeing/Trav-Alaska (which owns
approximately 43 motor coaches). The primary competitor in Washington is Gazelle
(with approximately 18 motor coaches). The primary competitors in the Canadian
Rockies are Tauck Tours, Princess Tours and Brewster Transportation.

Westmark Hotels compete with various hotels throughout Alaska, including the
Super 8 national motel chain, many of which charge prices below those charged by
HAL. Dining facilities in the hotels also compete with the many restaurants in
the same geographic areas.

GOVERNMENT REGULATION

HAL's motor coach operations are subject to regulation both at the federal
and state levels, including primarily the U.S. Department of Transportation, the
Washington Utilities Department of Transportation, the British Columbia Motor
Carrier Commission and the Alaska Department of Transportation. Certain of HAL's
tours involve federal properties and are subject to regulation by various
federal agencies such as the National Park Service, the Federal Maritime
Administration and the U.S. Forest Service.

In connection with the operation of its beverage facilities in the Westmark
Hotels, HAL is required to comply with state, county and/or city ordinances
regulating the sale and consumption of alcoholic beverages. Violations of these
ordinances could result in fines, suspensions or revocation of such licenses and
preclude the sale of any alcoholic beverages by the hotel involved.

In the operation of its hotels, HAL is required to comply with applicable
building and fire codes. Changes in these codes have in the past and may in the
future, require substantial capital expenditures to insure continuing compliance
such as the installation of sprinkler systems.

AIRTOURS

In April 1996, the company acquired a 29.5% interest in Airtours for
approximately $307 million. Airtours is a leisure travel company publicly traded
on the London Stock Exchange and provides air inclusive packaged holidays to the
British, Scandinavian and North American markets. Airtours provides holidays to
approximately 4.4 million people per year and owns or operates 41 hotels, 3
cruise ships and 31 aircraft.

Airtours was founded in the United Kingdom in 1972 and is currently the
second largest provider of air inclusive packages in the United Kingdom. In
1994, Airtours entered the Scandinavian market via the acquisition of the
Scandinavian Leisure Group and expanded its share of this market in 1996 with
the acquisition of Spies. In 1995 Airtours acquired Sunquest Vacations, a
Canadian tour operator. Today Airtours is the market leader in Scandinavia and
is one of Canada's leading tour operators.

Airtours principal brands in the United Kingdom are Airtours, Aspro and
Tradewinds. Airtours and Aspro offer packaged tours on charter flights primarily
to the Mediterranean, Canary Islands, Caribbean and Florida. Tradewinds focuses
on long haul destinations and offers scheduled flights. In addition , Eurosites
provides self drive camping holidays mainly to the south of France. Eurosites is
also sold in Germany, Holland and Denmark.

In Scandinavia, Airtours' primary brands are Ving, Spies, Tjacreborg, Saga
and Always. Each brand is focused on a particular segment of the Scandinavian
market and primarily provides holidays to the Mediterranean and Canary Islands.

Sunquest and Alba are Airtours main brands in Canada and their principal
destinations are the Caribbean, the United States and Mexico. In contrast to the
United Kingdom and Scandinavia, Canada's peak season is the winter. Alba also
offers a summer program to Italy.

Under the Going Places brand, Airtours owns over 700 retail travel branches,
most of which offer foreign exchange facilities. Going Places is the second
largest travel agency in the United Kingdom and distributes Airtours's own
products together with those of other tour operators. In 1994, Airtours acquired
Late Escapes, a telephone sales business specializing in the sale of vacations
within eight weeks of departure.

Airtours operates 18 aircraft exclusively for its U.K. tour operators
providing a large proportion of their flying requirements. In addition,
Airtours' subsidiary Premiair operates a fleet of 13 aircraft, which provides
most of the flying requirements for Airtours' Scandinavian tour operators.

Airtours owns or operates 41 hotels (6,500 rooms) which provide rooms to
Airtours' tour operators principally in the Mediterranean and the Canary
Islands. 16 of the hotels are marketed by Airtours' tour operators under the
exclusive Sunwing brand. In addition, Airtours has a 50% interest in Tenerife
Sol, a joint venture with Sol Hotels Group of Spain, which owns and operates
three hotels in the Canary Islands providing 1,300 rooms.

Through its subsidiary Sun Cruises, Airtours owns and operates two cruise
ships. Both the 800-berth MS Seawing and the 1,062-berth MS Carousel commenced
operations in 1995. Recently, Airtours acquired a third ship, the MS Song of
Norway, which is a sister ship of the MS Carousel. The MS Song of Norway is
expected to commence operations in May 1997. The ships operate in the
Mediterranean, the Caribbean and around the Canary Islands and are sold
exclusively by Airtours' tour operators.

LITIGATION

Wartsila Marine Industries Incorporated ("Wartsila") operated a Finnish
shipyard and had contracted to build three ships for the Company in the late
1980s. Wartsila filed for bankruptcy in 1989 without completing construction of
the vessels, causing the Company to incur incremental costs to complete the
ships and to lose profits because of the delay in their delivery. During 1995,
the Company received $40 million in cash from the settlement of litigation with
Metra Oy, the former parent company of Wartsila, related to losses suffered in
connection with the construction of these three ships. Of the $40 million
received, $6.2 million was used to pay related legal fees, $14.4 million was
recorded as other income and $19.4 million was used to reduce the cost basis of
certain ships which had been the subject of the Company's lawsuit against Metra
Oy.

On June 25, 1996, the Company reached an agreement with the trustees of
Wartsila and creditors for the bankruptcy which resulted in an additional cash
payment of approximately $80 million. Of the $80 million received, $5 million
was used to pay certain costs, $32 million was recorded as other income and $43
million was used to reduce the cost basis of certain ships which had been
affected by the bankruptcy.

The United States Attorney for the District of Alaska has commenced an
investigation to determine if a Holland America Line vessel discharged bilge
water, alleged to have contained oil or oily mixtures, at various locations
allegedly within United States territorial waters at various times during the
summer and early fall of 1994. It is unknown whether any proceedings will be
initiated and, if so, what violations will be alleged. To date, no penalties
have been sought or imposed. Management does not believe that the amount of
potential penalties will have a material impact on the Company.

In April 1996, a complaint was filed in the Circuit Court of the Eleventh
Judicial Circuit against the Company and a complaint was filed in the Superior
Court of Washington against Holland America Westours (the "Port Charges
Complaints"). The Port Charges Complaints, brought on behalf of a purported
class of all persons who traveled on a Company ship within the past four years
and paid "Port Charges" to the Company, allege that statements made by the
Company in advertising and promotional materials concerning Port Charges were
false and misleading. The Port Charges Complaints allege claims of negligent
misrepresentation and unjust enrichment and violations of the Washington
Consumer Protection Act and seek unspecified compensatory damages on behalf of
the purported class (or, alternatively, refunds of Port Charges allegedly in
excess of certain charges levied by governmental authorities), attorney's fees
and costs and punitive damages and injunctive relief. Two other complaints
containing allegations similar to those set forth in the Port Charges Complaints
have been filed in the Circuit Court of the Eleventh Judicial Circuit against
the Company since the filing of the Port Charges Complaints.

In June and August 1996, respectively, two complaints were filed against
both the Company and Holland America Westours in the Superior Court for the
State of California for the County of Los Angeles (the "Travel Agent
Complaints"). The Travel Agent Complaints, brought on behalf of a class of all
travel agencies who during the past four years booked a cruise with the Company,
contain allegations that the Company's advertising practices regarding Port
Charges resulted in an improper and concealed form of commission bypass. The
Travel Agent Complaints allege claims of breach of contract, negligent
misrepresentation, unjust enrichment, unlawful business practices and common law
fraud and seek unspecified compensatory damages (or alternatively, the payment
by the Company of usual and customary commissions on Port Charges in excess of
certain charges levied by government authorities), attorneys' fees and costs,
punitive damages and injunctive relief.

The Port Charges Complaints and the Travel Agent Complaints are in
preliminary stages and it is not now possible to determine the ultimate outcome
of the lawsuits. Management of the Company believes that the Company has
substantial and meritorious defenses to the claims and intends to vigorously
defend the lawsuits. Management understands that purported class action lawsuits
similar to the Port Charges Complaints and the Travel Agent Complaints have been
filed against five other cruise lines.

In the normal course of business, various other claims and lawsuits have
been filed or are pending against the Company. The majority of these claims and
lawsuits are covered by insurance. Management believes the outcome of any such
suits which are not covered by insurance would not have a material adverse
effect on the Company's financial condition or results of operations.

SELLING SHAREHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Class A Common Stock as of November 11, 1996, and as adjusted
to reflect the sale of the Shares offered hereby, for the Selling Shareholders:

SHARES OF CLASS A SHARES OF CLASS A
COMMON STOCK COMMON STOCK TO BE
BENEFICIALLY OWNED BENEFICIALLY OWNED
BEFORE SALE UNDER THIS AFTER SALE UNDER THIS
PROSPECTUS PROSPECTUS
NAME OF SELLING ----------------------- SHARES TO BE -----------------------
SHAREHOLDER NUMBER PERCENTAGE SOLD NUMBER PERCENTAGE
- ------------------------------- ---------- ---------- ------------ ---------- ----------

Ted Arison(1).................. 74,289,600 31.0% 15,225,000(2) 59,064,600 24.7%
Arison Foundation, Inc.(3)..... 3,175,000 1.3% 3,175,000 0 0%
The Royal Bank of Scotland
Trust Company (Jersey)
Limited,
as Trustee for the
Ted Arison Charitable Trust... 1,900,000 (5) 1,900,000 0 0%
New World Symphony Supporting
Foundation, Inc................ 1,300,000(4) (5) (4) 1,300,000(4) (5)
---------- ----- ------------ ---------- ----------
79,364,600 33.1% 20,300,000 59,064,600 24.7%
---------- ----- ------------ ---------- ----------
---------- ----- ------------ ---------- ----------

- ------------

(1) Includes 2,332,458 shares of Class A Common Stock held by TAMMS Investment
Company, Limited Partnership ("TAMMS"). TAMMS' general partners are Ted
Arison and TAMMS Management Corporation ("TAMMS Corp."), a corporation
wholly-owned by Ted Arison. By virtue of his interest in TAMMS Corp., Ted
Arison may be deemed to beneficially own all of the 2,332,458 shares of
Class A Common Stock owned by TAMMS. Ted Arison disclaims beneficial
ownership of 1,810,364 of such shares, which are beneficially owned by the
partners of TAMMS (other than TAMMS Corp.).

(2) Ted Arison has granted the U.S. and International Underwriters
over-allotment options to purchase a total of 1,545,000 additional shares of
Class A Common Stock. If such options are exercised, Ted Arison will
beneficially own 57,519,600 shares of Class A Common Stock, representing
24.0% of the total issued and outstanding shares of Class A Common Stock.

(3) Shari Arison, Ted Arison's daughter, is a director of the Company and
President of the Arison Foundation, Inc. (the "Foundation"). The Foundation
is directed by six trustees, a majority of whom are affiliates of Ted
Arison. Ted Arison disclaims beneficial ownership of the 3,175,000 shares
owned by the Foundation. In addition, Micky Arison, the Chairman of the
Board and Chief Executive Officer of the Company, is the son of Ted Arison.

(4) New World Symphony has granted the U.S. and International Underwriters
over-allotment options to purchase a total of 1,300,000 shares of Class A
Common Stock. If such options are exercised in full, New World Symphony will
not beneficially own any shares of Class A Common Stock.

(5) Less than one percent of the outstanding shares of Class A Common Stock.

CERTAIN RELATED TRANSACTIONS

CONSULTING AGREEMENT. In November 1990, subsequent to his resignation as
Chairman of the Board, Ted Arison and the Company entered into a consulting
agreement (the "Consulting Agreement") whereby Ted Arison agreed to act as a
consultant to the Company with respect to the construction of cruise ships. In
July 1992, the Consulting Agreement was replaced by a new consulting agreement
(the "New Consulting Agreement") between the Company and Arison Investments Ltd.
("AIL"), a corporation affiliated with Ted Arison. The New Consulting Agreement
was amended in August 1996 to extend the terms of the agreement to November 25,
1999. Under the New Consulting Agreement, the Company has agreed to pay AIL
$500,000 per year and to

reimburse it for all customary and usual expenses. The New Consulting Agreement
also has a non-competition clause under which AIL has agreed that during the
term of the New Consulting Agreement it will not, and will cause its affiliate
not to compete in any way with the Company. In each of fiscal 1993, 1994, and
1995, $500,000 in fees were paid to AIL under the New Consulting Agreement. In
connection with the performance of his consulting services, Mr. Arison
periodically utilizes an airplane leased by the Company. Mr. Arison reimburses
the Company for his personal use of the airplane. In 1994 and 1995, Mr. Arison
paid the Company $396,720 and $264,000, respectively, for his personal use of
the airplane.

REGISTRATION RIGHTS AGREEMENT. Under a registration rights agreement (the
"Arison Registration Rights Agreement"), the Company has granted certain
registration rights to Ted Arison with respect to the shares of Class A Common
Stock beneficially owned by Ted Arison (the "Arison Shares"). If, at any time,
Ted Arison makes a written demand for the registration of any number of the
Arison Shares, subject to a minimum amount of 500,000 shares, the Company will
within 90 days prepare and file with the SEC a registration statement, subject
to certain limitations. In addition, if the Company determines to file a
registration statement on its behalf or on behalf of any security holders (other
than a registration statement filed for the purpose of registering shares
issuable to employees under an employee benefit plan or in connection with a
business combination) relating to its Common Stock or any class of securities
convertible into Common Stock, Ted Arison may register the Arison Shares
pursuant to such registration statement, subject to certain limitations. The
Company has agreed to bear all expenses relating to such demand and piggyback
registrations, except for fees and disbursements of counsel for Ted Arison,
selling costs, underwriting discounts and applicable filing fees. In April 1995,
the Company filed a registration statement at the request of certain trusts for
the sale of 13,800,000 shares of the Company's Class A Common Stock pursuant to
the terms of the Arison Registration Rights Agreement. The Company incurred
approximately $300,000 in expenses in connection with the registration of such
shares. In addition, this Registration Statement was filed at the request of Ted
Arison pursuant to the terms of the Arison Registration Rights Agreement and the
Company expects to incur approximately $265,000 of expenses in connection with
this offering.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The Company's authorized capital stock consists of 399,500,000 shares of
Class A Common Stock and 100,500,000 shares of Class B Common Stock.

VOTING

Holders of Class A Common Stock and Class B Common Stock vote as a single
class on all matters submitted to a vote of the shareholders, with each share of
Class A Common Stock entitled to one vote and each share of Class B Common Stock
entitled to five votes, except (i) for the election of directors, and (ii) as
otherwise provided by law. In the annual election of directors, the holders of
Class A Common Stock, voting as a separate class, are entitled to elect 25% of
the directors to be elected (rounded up to the nearest whole number). The
holders of Class B Common Stock, voting as a separate class, are entitled to
elect 75% of the directors to be elected (rounded down to the nearest whole
number), so long as the number of outstanding shares of Class B Common Stock is
at least 12 1/2% of the number of outstanding shares of both classes of Common
Stock. If the number of outstanding shares of Class B Common Stock falls below
12 1/2%, directors that would have been elected by a separate vote of that class
will instead be elected by the holders of both classes of Common Stock, with
holders of Class A Common Stock having one vote per share and holders of Class B
Common Stock having five votes per share.

Directors may be removed, with or without cause, by the holders of the class
or classes of Common Stock that elected them. Vacancies in a directorship may be
filled by the vote of the class of shares that had previously filled that
vacancy, or by the remaining directors of that class; if there are no such
directors, however, the vacancy may be filled by the remaining directors of the
other class.

Except for the election or removal of directors as described above and
except for class votes as required by law, holders of both classes of Common
Stock vote or consent as a single class on all matters, with each share of Class
A Common Stock having one vote per share and each share of Class B Common Stock
having five votes per share.

CONVERSION

At the option of the holder of record, each share of Class B Common Stock is
convertible at any time into one share of Class A Common Stock. Shares of Class
A Common Stock are not convertible into shares of Class B Common Stock.

DIVIDENDS

The holders of the Common Stock are entitled to receive such dividends, if
any, as may be declared by the Board of Directors in its discretion out of funds
legally available therefor. Any dividend declared by the Board of Directors on
the Company's Common Stock must be paid concurrently at the same rate on the
Class A Common Stock and the Class B Common Stock. Panamanian law permits the
payment of dividends to the extent of retained earnings.

OTHER PROVISIONS

Upon liquidation or dissolution of the Company, the holders of shares of
Common Stock are entitled to receive on a pro rata basis all assets remaining
for distribution to common stockholders. The Common Stock has no preemptive or
other subscription rights and there are no other

conversion rights or redemption or sinking fund provisions with respect to such
shares. All shares of Class A Common Stock that are currently outstanding are
fully paid and non-assessable.

The B Trust is a party to an amended and restated shareholders agreement
with the Company and certain other parties pursuant to which the B Trust may not
voluntarily transfer its shares of Class B Common Stock until July 1, 1997,
except under certain conditions designed to ensure, to the extent feasible, that
the transfer will not affect the Company's CFC status. In addition, until such
date, pursuant to the shareholder's agreement, the B Trust may not cause the
Company to authorize or issue any securities, if after giving effect to the
issuance thereof and to any related transactions, the Company would cease to be
a CFC. The B Trust also may not convert its shares of Class B Common Stock into
Class A Common Stock until July 1, 1997.

Neither Panamanian law nor the Company's Articles of Incorporation or
By-laws impose limitations on the right of non-resident or foreign owners to
hold or vote shares of the Common Stock. While no tax treaty currently exists
between the Republic of Panama and the United States, under current law the
Company believes that distributions to its shareholders are not subject to
taxation under the laws of the Republic of Panama.

Under Panamanian law, directors of the Company may vote by proxy.

The Company's transfer agent and registrar for the Class A Common Stock is
First Union National Bank of North Carolina.

TAXATION

The following discussion summarizes certain United States Federal income tax
consequences to United States persons holding the Company's Class A Common
Stock. This discussion is a summary for general information only, and is not a
complete analysis of the tax considerations that may be applicable to a
prospective investor. This discussion also does not address the tax consequences
that may be relevant to particular categories of investors subject to special
treatment under certain Federal income tax laws, such as dealers in securities,
tax-exempt entities, banks, insurance companies and foreign individuals and
entities. In addition, it does not describe any tax consequences arising out of
the tax laws of any state, locality or foreign jurisdiction. The discussion is
based upon currently existing provisions of the Code, existing and proposed
regulations thereunder and current administrative rulings and court decisions.
All of the foregoing are subject to change and any such change could affect the
continuing validity of this discussion. In connection with the foregoing,
investors should be aware that the Tax Reform Act of 1986 (hereinafter, the
"1986 Tax Act") changed significantly the United States Federal income tax rules
applicable to the Company and certain holders of its stock (including the
Principal Shareholders). Although the relevant provisions of the 1986 Tax Act
are discussed herein, those provisions have not yet been the subject of
extensive administrative or judicial interpretation. Accordingly, there can be
no assurance that such interpretation will not have an adverse impact on an
investment in the Class A Common Stock.

PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES TO THEM OF ANY INVESTMENT IN THE CLASS A COMMON
STOCK, INCLUDING THE APPLICATION OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.

DIVIDENDS; UNDISTRIBUTED INCOME OF THE COMPANY

A United States person whose holdings of the Company's Class A Common Stock
(including shares such person is considered to own under applicable attribution
rules) represent less than 10 percent of the total combined voting power of all
classes of the Company's capital stock, generally is not required to recognize
income by reason of the Company's earnings until such earnings are distributed.
Dividends paid by the Company to such a shareholder will be taxable to such
shareholder as dividend income to the extent of the Company's current or
accumulated earnings and profits. Such dividends generally will not be eligible
for any dividends-received deduction. The same treatment will apply to any
dividends that may be distributed to all shareholders by reason of certain tax
liabilities of the Principal Shareholders.

If, however, the Company is a CFC for an uninterrupted period of 30 days
during any taxable year of the Company, a United States person who owns (or is
considered to own) 10% or more of the Company's voting power (a "Ten Percent
Shareholder") on the last day of such taxable year on which the Company is a CFC
will generally be required to include in ordinary income his pro rata share of
the Company's "subpart F income" for that taxable year and, in addition, certain
other items, including, under certain circumstances, the Company's increase in
earnings invested in United States property, and amounts of previously excluded
subpart F income withdrawn by the Company from investment in certain shipping
and related assets, whether or not any amounts are actually distributed to
shareholders. "Subpart F income" includes, among other things, "foreign base
company shipping income," which is defined to include income derived from using
or chartering a vessel in foreign commerce or from the sale, exchange or other
disposition of a vessel. Accordingly, a substantial part of the Company's
earnings will be subpart F income. Earnings and profits of the Company already
included in income by a Ten Percent Shareholder by reason of the CFC provisions
discussed above are not again included in income by such Ten Percent Shareholder
or his assignee when an actual distribution is made. Other distributions by the

Company by way of dividends with respect to the Common Stock out of current or
accumulated earnings and profits will be taxed to Ten Percent Shareholders as
ordinary income.

The Company is currently a CFC and thus, the special rules discussed above
will apply to certain of the Principal Shareholders.

DISPOSITIONS OF CLASS A COMMON STOCK

In general, any gain or loss on the sale or exchange of Class A Common Stock
of the Company by a United States shareholder will be capital gain or loss,
provided such stock is held as a capital asset. However, any United States
person who was a Ten Percent Shareholder of the Company at any time during the
five-year period ending on the date of sale or exchange (or a distribution
liquidation) when the Company was a CFC may be required to treat all or a
portion of the gain from a sale or exchange of Class A Common Stock as ordinary
income (to the extent of his proportionate share of certain earnings and profits
of the Company) rather than as capital gain. Any capital gain or loss recognized
on a sale or exchange of Class A Common Stock will be long-term capital gain or
loss if the shareholder has held the Class A Common Stock for more than one
year.

OTHER JURISDICTIONS

The Company anticipates that distributions to its shareholders will not be
subject to taxation under the laws of the Republic of Panama.

UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement
among the Company, the Selling Shareholders and the U.S. Underwriters named
below, each of the Selling Shareholders has severally agreed to sell to each of
the U.S. Underwriters, and each of such U.S. Underwriters, for whom Goldman,
Sachs & Co., Bear, Stearns & Co. Inc., Lehman Brothers Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated are acting as representatives, has severally
agreed to purchase from the Selling Shareholders the respective number of shares
of Class A Common Stock set forth opposite its name below:

NUMBER OF SHARES
OF CLASS A
UNDERWRITER COMMON STOCK
- ---------------------------------------------------------------- ----------------

Goldman, Sachs & Co............................................. 2,872,500
Bear, Stearns & Co. Inc......................................... 2,872,500
Lehman Brothers Inc. ........................................... 2,872,500
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.......................................... 2,872,500
Advest, Inc..................................................... 250,000
Burnham Securities Inc.......................................... 150,000
Dean Witter Reynolds Inc........................................ 315,000
Dillon, Read & Co. Inc.......................................... 315,000
Donaldson, Lufkin & Jenrette Securities Corporation............. 315,000
A.G. Edwards & Sons, Inc........................................ 315,000
First Southwest Company......................................... 150,000
Edward D. Jones & Co., L.P...................................... 250,000
Legg Mason Wood Walker Incorporated............................. 250,000
Montgomery Securities........................................... 315,000
Oppenheimer & Co., Inc.......................................... 315,000
Raymond James & Associates, Inc................................. 315,000
The Robinson-Humphrey Company, Inc.............................. 250,000
Salomon Brothers Inc............................................ 315,000
Scott & Stringfellow, Inc....................................... 150,000
Smith Barney Inc................................................ 315,000
Southeast Research Partners, Inc................................ 150,000
Wasserstein Perella Securities, Inc............................. 315,000
----------------
Total..................................................... 16,240,000
----------------
----------------

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The U.S. Underwriters propose to offer the shares of Class A Common Stock in
part directly to the public at the initial public offering price set forth on
the cover page of this Prospectus and in part to certain securities dealers at
such price less a concession of $0.50 per share. The U.S. Underwriters may
allow, and such dealers may reallow, a concession not in excess of $0.10 per
share to certain brokers and dealers. After the shares of Class A Common Stock
are released for sale to the public, the offering price and other selling terms
may from time to time be varied by the representatives.

The Company and the Selling Shareholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of 4,060,000 shares of Class A Common Stock in an
international offering outside the United States. The offering price and
aggregate underwriting discounts and commissions per share for the two offerings
are identical.

The closing of the offering made hereby is a condition to the closing of the
international offering, and vice versa. The representatives of the International
Underwriters are Goldman Sachs International, Bear, Stearns International
Limited, Lehman Brothers International (Europe) and Merrill Lynch International.

Pursuant to an agreement between the U.S. and international underwriting
syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters named herein has agreed that, as a part of the distribution of
the shares offered hereby and subject to certain exceptions, it will offer, sell
or deliver the shares of Class A Common Stock, directly or indirectly, only in
the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for purposes of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof and
whose office most directly involved with the purchase is located in the United
States. Each of the International Underwriters has agreed or will agree pursuant
to the Agreement Between that, as part of the distribution of the shares offered
as a part of the international offering, and subject to certain exceptions, it
will (i) not, directly or indirectly, offer, sell or deliver shares of Class A
Common Stock, (a) in the United States or to any U.S. persons or (b) to any
person who it believes intends to reoffer, resell or deliver the shares in the
United States or to any U.S. persons, and (ii) cause any dealer to whom it may
sell such shares at any concession to agree to observe a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Class A Common Stock as may be mutually agreed. The price of any shares so sold
shall be the initial public offering price, less an amount not greater than the
selling concession.

Ted Arison and New World Symphony have granted the U.S. Underwriters an
option exercisable for 30 days after the date of this Prospectus to purchase up
to an aggregate of 2,276,000 additional shares of Class A Common Stock solely to
cover over-allotments, if any. If the U.S. Underwriters exercise their
over-allotment option, the U.S. Underwriters have severally agreed, subject to
certain conditions, to purchase approximately the same percentage thereof that
the number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the 16,240,000 shares of Class A Common Stock offered. Ted
Arison and New World Symphony have granted the International Underwriters a
similar option to purchase up to an aggregate of 569,000 additional shares of
Common Stock.

For a period of 90 and 365 days, respectively, after the date of this
Prospectus, the Company and the Selling Shareholders have agreed not to offer,
sell, contract to sell or otherwise dispose of any shares of Class A Common
Stock or any security substantially similar thereto, or any other security
convertible into, or exchangeable for, shares of Class A Common Stock of the
Company or any security substantially similar thereto, other than the conversion
of shares of Class B Common Stock into shares of Class A Common Stock, without
the prior written consent of Goldman, Sachs & Co., except for any securities
issued by the Company pursuant to employee benefit plans or upon the conversion
of convertible or exchangeable securities currently outstanding. However, if the
over-allotment options are not exercised in full by the U.S. and International
Underwriters, New World Symphony will not be subject to any of the foregoing
restrictions. In addition, for a period of 365 days after the date of this
Prospectus, each of Ted Arison and Micky Arison has agreed not to consent to any
such disposition by any trust that owns shares of Class A Common Stock, Class B
Common Stock or other securities of the type described in the preceding sentence
over which such person has voting or dispositive power, other than the
conversion of shares of Class B Common Stock into shares of Class A Common
Stock, without the prior written consent of Goldman, Sachs & Co.

The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the Act.

This Prospectus may be used by underwriters and dealers in connection with
offers and sales of Class A Common Stock, including shares initially sold in the
international offering, to persons located in the United States.

Mr. Uzi Zucker, a Director of the Company, is a Senior Managing Director of
Bear, Stearns & Co. Inc. ("Bear Stearns"). Bear Stearns is one of the investment
banking firms serving as a U.S. Underwriter in this offering and Bear, Stearns
International Limited is one of the International Underwriters in the
International Offering. In addition, Bear Stearns (i) is one of the investment
banking firms serving as an agent of the Company in connection with the
Company's ongoing offering of $100,000,000 of Medium Term Notes and (ii) has
served as an underwriter in previous public offerings by the Company. In
addition, Bear Stearns has provided other investment banking and consulting
services to the Company during the fiscal years ended November 30, 1995, 1994
and 1993, and during the current fiscal year. It is expected that Bear Stearns
may continue to provide investment banking and consulting services to the
Company when so requested by the Company.

VALIDITY OF SECURITIES

The validity of the Shares will be passed upon by Tapia Linares y Alfaro,
Panama City, Republic of Panama. Paul, Weiss, Rifkind, Wharton & Garrison, New
York, New York, has acted as special United States counsel to the Company in
connection with the offering of the Shares. Sullivan & Cromwell, New York, New
York, has acted as counsel for the Underwriters. James M. Dubin, a partner of
Paul, Weiss, Rifkind, Wharton & Garrison, is the sole stockholder of the trustee
of the B Trust and a director of the Company. Paul, Weiss, Rifkind, Wharton &
Garrison also serves as counsel to Micky Arison. See "Certain
Considerations--Control by Principal Shareholders".

EXPERTS

The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-K for the year ended November 30, 1995, have been so
incorporated in reliance on the report of Price Waterhouse LLP, independent
certified public accountants, given on the authority of said firm as experts in
auditing and accounting.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements under the headings "Prospectus Summary," "The Company,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business" and elsewhere in this Prospectus constitute
"forward-looking statements" within the meaning of the Reform Act. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the actual results, performances or achievements
of the Company to be materially different from any future results, performance
or achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions which may impact levels of disposable income of consumers and pricing
and passenger yields for the Company's cruise products; increases in cruise
industry capacity in the Caribbean and Alaska; changes in tax laws and
regulations (especially any change affecting the Company's status as a
"controlled foreign corporation" as defined in Section 957(a) of the Code (see
"Certain Considerations--Taxation of the Company")); the ability of the Company
to implement its shipbuilding program and to expand its business outside the
North American market where it has less experience; delivery of new vessels on
schedule and at the contracted price; weather patterns in the Caribbean;
unscheduled ship repairs and drydocking; incidents involving cruise vessels at
sea; and changes in laws and government regulations applicable to the Company
(including the implementation of the "Safety of Life at Sea Convention" and
changes in Federal Maritime Commission surety and guaranty arrangements).

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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

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TABLE OF CONTENTS

PAGE
----

Available Information................. 2
Incorporation of Certain Documents by
Reference............................. 2
Prospectus Summary.................... 3
Certain Considerations................ 7
Use of Proceeds....................... 8
Price Range of Class A Common Stock
and Dividends......................... 8
Dividend Policy....................... 9
Capitalization........................ 10
Selected Financial Data............... 11
Management's Discussion and Analysis
of Financial Condition and Results
of Operations......................... 13
Business.............................. 20
Selling Shareholders.................. 34
Description of Capital Stock.......... 36
Taxation.............................. 38
Underwriting.......................... 40
Validity of Securities................ 42
Experts............................... 42
Special Note Regarding Forward-Looking
Statements............................ 42

20,300,000 SHARES

CARNIVAL CORPORATION

CLASS A COMMON STOCK

(PAR VALUE $.01 PER SHARE)

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[CARNIVAL CORPORATION LOGO]

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GOLDMAN, SACHS & CO.

BEAR, STEARNS & CO. INC.

LEHMAN BROTHERS

MERRILL LYNCH & CO.

REPRESENTATIVES OF THE UNDERWRITERS

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