Carnival Cruises 2007 Annual Report Download - page 24

CARNIVAL CORPORATION & PLC | 21
See Note 16 for additional discussion related to the adop-
tion of Financial Accounting Standards Board (“FASB”)
Interpretation No. 48, “Accounting for Uncertainty in Income
Taxes” (“FIN 48”).
NOTE 9—SHAREHOLDERS’ EQUITY
Carnival Corporation’s articles of incorporation authorize its
Board of Directors, at its discretion, to issue up to 40 million
shares of preferred stock, and Carnival plc has 100,000 autho-
rized preference shares. At November 30, 2007 and 2006,
no Carnival Corporation preferred stock had been issued and
only a nominal amount of Carnival plc preference shares had
been issued.
In June 2006, the Boards of Directors authorized the repur-
chase of up to an aggregate of $1 billion of Carnival Corporation
Common Stock and/or Carnival plc ordinary shares subject to
certain restrictions. On September 19, 2007, the Boards of
Directors increased the remaining $578 million authorization
back to $1 billion. During fiscal 2007, 2006 and 2005, we
purchased 0.2 million, 18.7 million and 8.0 million shares of
Carnival Corporation common stock, respectively, and 7.3
million and 0.6 million shares of Carnival plc ordinary shares
in fiscal 2007 and 2006, respectively. At January 28, 2008,
the remaining availability pursuant to our repurchase program
was $788 million. No expiration date has been specified for
this authorization and the Carnival plc share repurchase
authorization requires annual shareholder approval.
At November 30, 2007, there were 71.1 million shares of
Carnival Corporation common stock reserved for issuance
pursuant to its convertible notes and its employee benefit and
dividend reinvestment plans. In addition, Carnival plc share-
holders have authorized 12.8 million ordinary shares for future
issuance under its employee benefit plans.
At November 30, 2007 and 2006, accumulated other
comprehensive income was as follows (in millions):
2007 2006
Cumulative foreign currency translation
adjustments, net .......................... $1,338 $689
Minimum pension liability adjustments . . . . . . . . . . (17)
Unrecognized pension expenses . . . . . . . . . . . . . . . (32)
Unrealized loss on marketable security . . . . . . . . . . (5)
Unrealized losses on cash flow
derivative hedges, net ...................... (5) (11)
$1,296 $661
NOTE 10—FINANCIAL INSTRUMENTS
Whenever possible, quoted prices in active markets are
used to determine the fair value of financial instruments.
However, considerable judgment is required in interpreting
data to develop estimates for fair values for which there is no
active market and, accordingly, amounts are not necessarily
indicative of the amounts that we could realize in an active
market exchange. Our financial instruments are not held for
trading or other speculative purposes.
Cash and Cash Equivalents
The carrying amounts of our cash and cash equivalents
approximate their fair values due to their short maturities.
Other Assets
At November 30, 2007 and 2006, long-term other assets
included notes and other receivables and marketable securities,
including those held in rabbi trusts for certain of our nonquali-
fied benefit plans. These assets had carrying and fair values
of $558 million and $551 million, respectively, at November 30,
2007 and carrying and fair values of $445 million and $440
million at November 30, 2006, respectively. Fair values were
based on public market prices or estimated discounted future
cash flows.
Debt
The fair values of our non-convertible debt and convertible
notes were $7.41 billion and $1.60 billion, respectively, at
November 30, 2007 and $6.50 billion and $1.73 billion at
November 30, 2006, respectively. These fair values were
(lower) or greater than the related carrying values by $(49)
million and $205 million, respectively, at November 30, 2007
and greater than the related carrying values by $50 million and
$338 million at November 30, 2006, respectively. The net
difference between the fair value of our non-convertible debt
and its carrying value was due primarily to the market interest
rates in existence at the respective measurement dates being
higher or lower than the rates on our fixed interest rate debt
obligations. The net difference between the fair value of our
convertible notes and their carrying value is largely due to the
impact of changes in the Carnival Corporation common stock
price on the value of our convertible notes on those measure-
ment dates. The fair values of our unsecured fixed rate public
notes, convertible notes, Sterling notes and unsecured 4.4%
Euro notes were based on their public market prices. The fair
values of our other debt were estimated based on appropriate
market interest rates being applied to this debt.