Carnival Cruises 2009 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 of the 2009 Carnival Cruises annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 59

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59

Interest Rate Risks
We have interest rate swaps at November 30, 2009, which effectively changed $625 million of fixed rate
debt to U.S. dollar LIBOR and GBP LIBOR-based floating rate debt. Based upon a hypothetical 10% change in
the November 30, 2009 market interest rates, assuming no change in currency exchange rates, the fair value of all
our debt and interest rate swaps would change by approximately $200 million. In addition, based upon a
hypothetical 10% change in the November 30, 2009 interest rates, our annual interest expense on floating rate
debt, including the effect of our interest rate swaps, would change by an insignificant amount.
Finally, based upon a hypothetical 10% change in Carnival Corporation’s November 30, 2009 common
stock price, the fair value of our convertible notes would have an insignificant change.
These hypothetical amounts are determined by considering the impact of the hypothetical interest rates and
common stock on our existing debt and interest rate swaps. This analysis does not consider the effects of the
changes in the level of overall economic activity that could exist in such environments or any relationships which
may exist between interest rate and stock price movements. Furthermore, substantially all of our fixed rate debt
can only be called or prepaid by incurring significant break fees, therefore it is unlikely we will be able to take
any significant steps in the short-term to mitigate our exposure in the event of a significant decrease in market
interest rates.
Fuel Price Risks
We do not use financial instruments to hedge our exposure to fuel price market risk. We estimate that our
fiscal 2010 fuel expense would change by approximately $3.4 million for each $1 per metric ton corresponding
change in our average fuel price.
51