Carnival Cruises 2009 Annual Report Download - page 24

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• Level 3 measurements are based on unobservable data that are supported by little or no market activity
and are significant to the fair value of the assets or liabilities.
Fair value is a market-based measure considered from the perspective of a market participant who holds the
asset or owes the liability rather than an entity-specific measure. Therefore, even when market assumptions are
not readily available, our own assumptions are set to reflect those that we believe market participants would use
in pricing the asset or liability at the measurement date.
Financial Instruments that ARE NOT measured at Fair Value on a Recurring Basis
The estimated carrying and fair values of our financial instrument assets and (liabilities) that are not
measured at fair value on a recurring basis were as follows (in millions):
November 30, 2009 November 30, 2008
Carrying
Value Fair Value
Carrying
Value Fair Value
Cash and cash equivalents (a) ................................ $ 324 $ 324 $ 345 $ 345
Long-term other assets (b) .................................. $ 187 $ 181 $ 243 $ 227
Debt, non-convertible (c) ................................... $(9,443) $(9,376) $(8,477) $(6,591)
Publicly-traded convertible notes (d) .......................... $ (604) $ (627) $ (866) $ (754)
(a) Cash and cash equivalents are comprised of cash on hand and time deposits and due to their short maturities
the carrying values approximate their fair values.
(b) At both November 30, 2009 and 2008,long-term other assets included notes and other receivables. At
November 30, 2008, U.S. Treasury strip securities were also included in long-term other assets. The fair
values of notes and other receivables were based on estimated future cash flows discounted at appropriate
market interest rates. The fair values of U.S. Treasury strip securities were based on quoted market prices.
(c) The net difference between the fair value of our non-convertible debt and its carrying value was due to the
market interest rates in existence at the respective measurement dates being higher than the current interest
rates on our debt obligations, including the impact of changes in our credit ratings. The fair values of our
publicly-traded notes were based on their quoted market prices. The fair values of our other debt were
estimated based on appropriate market interest rates being applied to this debt.
(d) The net difference between the fair values of our publicly-traded convertible notes and their carrying values
was primarily due to the impact of changes in the Carnival Corporation common stock price underlying the
value of our convertible notes at November 30, 2009, and higher market interest rates than our convertible
notes’ interest rates at November 30, 2008. Their fair values were based on quoted market prices.
Financial Instruments that ARE measured at Fair Value on a Recurring Basis
The estimated fair value and basis of valuation of our financial instrument assets and (liabilities) that are
measured at fair value on a recurring basis were as follows (in millions):
November 30, 2009 November 30, 2008
Level 1 Level 2 Level 1 Level 2
Cash equivalents (a) ............................................ $214 $305
Marketable securities held in rabbi trusts (b) ......................... $106 $ 17 $ 92 $ 21
Derivatives:
Ship foreign currency forwards and options (c) ..................... $41 $(20)
Net investment hedges (d) ..................................... $(33) $ 13
Debt related currency swaps (e) ................................. $104
Interest rate swaps (f) ......................................... $ 3 $ 5
(See next page for footnotes.)
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