Carnival Cruises 2009 Annual Report Download - page 34

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NOTE 14 – Supplemental Cash Flow Information
Total cash paid for interest was $403 million, $449 million and $414 million in fiscal 2009, 2008 and 2007,
respectively. In addition, cash paid for income taxes was $27 million, $23 million and $14 million in fiscal 2009,
2008 and 2007, respectively. Finally, in 2007 $8 million of our convertible notes were converted through a
combination of the issuance of Carnival Corporation treasury stock and newly issued Carnival Corporation
common stock, which represented a noncash financing activity.
NOTE 15 – Acquisition
In September 2007, we entered into an agreement with Orizonia Corporation, Spain’s largest travel
company, to operate Ibero, a Spanish cruise line, for an investment of $403 million, which we funded with $146
million of cash and $257 million in proceeds that Ibero borrowed under a portion of our principal
revolver. Orizonia contributed $49 million of assets, principally trademarks and goodwill, for their 25% interest
in the venture. Ibero operated two contemporary Spanish cruise ships in September 2007, the 834-passenger
capacity Grand Voyager, and the 1,244-passenger capacity Grand Mistral, which were built in 2000 and 1999,
respectively. For reporting purposes, we have included Ibero’s results of operations within our consolidated
financial results since September 1, 2007. The pro forma impact of including Ibero in our results as if the
acquisition took place on December 1, 2006 has not been presented due to its immaterial effect.
The 2007 acquisition was accounted for as a business purchase combination using the purchase method of
accounting. The purchase price was allocated to tangible and identifiable intangible assets acquired based on
their estimated fair values at the acquisition date. The $451 million purchase price was allocated as follows: $254
million to ships, $161 million to goodwill, $35 million to trademarks and $1 million to other. In July 2009, we
purchased the remaining 25% interest in Ibero that we did not own for $33 million, which approximated this
minority interests’ carrying value.
NOTE 16 – Recent Accounting Pronouncement
In May 2008, the FASB issued a staff position that requires the issuer of certain convertible debt
instruments that may be settled in cash, or other assets, on conversion to separately account for the debt and
equity components in a manner that reflects the issuer’s non-convertible debt borrowing rate. This
pronouncement was adopted by us on December 1, 2009 on a retrospective basis. The impact of adopting this
pronouncement will not have any effect on previously reported diluted earnings per share. However, our net
income for the years ended November 30, 2008 and 2007 will be reduced by approximately $5 million and $13
million, respectively. In addition, as of November 30, 2007 our additional paid-in capital will be increased by
approximately $210 million, which will be almost fully offset by a $205 million reduction in our retained
earnings.
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