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Carnival฀Corporation฀&฀plc฀|฀page฀21
In฀connection฀with฀our฀cruise฀ships฀under฀contract฀for฀
construction฀listed฀above,฀we฀have฀paid฀$922฀million฀through฀
November฀30,฀2006฀and฀anticipate฀paying฀the฀remaining฀esti-
mated฀total฀costs฀as฀follows:฀$2.65฀billion,฀$2.51฀billion,฀$2.43฀
billion,฀$1.69฀billion฀and฀$617฀million฀in฀fiscal฀2007,฀2008,฀2009,฀
2010฀and฀2011,฀respectively.
Operating฀Leases
Rent฀expense฀under฀our฀operating฀leases,฀primarily฀for฀office฀
and฀warehouse฀space,฀was฀$47฀million฀in฀fiscal฀2006฀and฀฀
$50฀million฀in฀each฀of฀fiscal฀2005฀and฀2004.฀At฀November฀30,฀
2006,฀minimum฀annual฀rentals฀for฀our฀operating฀leases,฀with฀
initial฀or฀remaining฀terms฀in฀excess฀of฀one฀year,฀were฀as฀follows฀
(in฀millions):฀$40,฀$36,฀$34,฀$31,฀$29฀and฀$180฀in฀fiscal฀2007฀
through฀2011฀and฀thereafter,฀respectively.
Port฀Facilities฀and฀Other
At฀November฀30,฀2006,฀we฀had฀commitments฀through฀
2052,฀with฀initial฀or฀remaining฀terms฀in฀excess฀of฀one฀year,฀to฀
pay฀minimum฀amounts฀for฀our฀annual฀usage฀of฀port฀facilities฀
and฀other฀contractual฀commitments฀as฀follows฀(in฀millions):฀
$107,฀$97,฀$83,฀$74,฀$61฀and฀$217฀in฀fiscal฀2007฀through฀
2011฀and฀thereafter,฀respectively.
NOTE฀7—Contingencies
Litigation
On฀September฀21,฀2006,฀a฀class฀action฀complaint฀was฀filed฀
on฀behalf฀of฀a฀purported฀class฀of฀past฀passengers฀against฀
Holland฀America฀Line฀(“HAL”)฀in฀the฀U.S.฀The฀complaint฀
alleges฀that฀HAL฀(a)฀failed฀to฀disclose฀that฀shore฀excursion฀
vendors฀paid฀HAL฀to฀promote฀their฀services฀as฀required฀by฀an฀
Alaska฀statute,฀and฀(b)฀collected฀and฀retained฀payment฀from฀
passengers฀for฀Passenger฀Vessel฀Service฀Act฀(“PSVA”)฀viola-
tions฀in฀certain฀instances฀when฀HAL฀did฀not฀actually฀incur฀the฀
fines.฀The฀complaint฀seeks฀(i)฀certification฀as฀a฀class฀action,฀
(ii)฀statutory฀damages฀under฀Alaska’s฀consumer฀protection฀
statutes,฀(iii)฀damages฀for฀each฀PSVA฀fine฀collected฀and฀addi-
tional฀damages฀for฀each฀PSVA฀fine฀collected฀where฀no฀fine฀
was฀imposed,฀(iv)฀injunctive฀relief฀and฀(v)฀attorneys’฀fees,฀
costs฀and฀interest.฀The฀ultimate฀outcome฀of฀this฀action฀cannot฀
be฀determined฀at฀this฀time.฀However,฀we฀believe฀that฀we฀have฀
meritorious฀defenses฀to฀these฀claims฀and฀intend฀to฀vigorously฀
defend฀this฀matter.
In฀January฀2006,฀a฀lawsuit฀was฀filed฀against฀Carnival฀
Corporation฀and฀its฀subsidiaries฀and฀affiliates,฀and฀other฀non-
affiliated฀cruise฀lines฀in฀New฀York฀on฀behalf฀of฀a฀purported฀
class฀of฀owners฀of฀intellectual฀property฀rights฀to฀musical฀plays฀
and฀other฀works฀performed฀in฀the฀U.S.฀The฀plaintiffs฀claim฀
infringement฀of฀copyrights฀to฀Broadway,฀off฀Broadway฀and฀other฀
plays.฀The฀suit฀seeks฀payment฀of฀(i)฀damages,฀(ii)฀disgorgement฀
of฀alleged฀profits฀and฀(iii)฀an฀injunction฀against฀future฀infringe-
ment.฀In฀the฀event฀that฀an฀award฀is฀given฀in฀favor฀of฀the฀plain-
tiffs,฀the฀amount฀of฀damages,฀if฀any,฀which฀Carnival฀Corporation฀
and฀its฀subsidiaries฀and฀affiliates฀would฀have฀to฀pay฀is฀not฀
currently฀determinable.฀The฀ultimate฀outcome฀of฀this฀matter฀
cannot฀be฀determined฀at฀this฀time.฀However,฀we฀intend฀to฀
vigorously฀defend฀this฀matter.
In฀the฀normal฀course฀of฀our฀business,฀various฀other฀claims฀
and฀lawsuits฀have฀been฀filed฀or฀are฀pending฀against฀us.฀Most฀
of฀these฀claims฀and฀lawsuits฀are฀covered฀by฀insurance฀and,฀
accordingly,฀the฀maximum฀amount฀of฀our฀liability,฀net฀of฀any฀
insurance฀recoverables,฀is฀typically฀limited฀to฀our฀self-insurance฀
retention฀levels.฀However,฀the฀ultimate฀outcome฀of฀these฀
claims฀and฀lawsuits฀which฀are฀not฀covered฀by฀insurance฀
cannot฀be฀determined฀at฀this฀time.
Contingent฀Obligations
At฀November฀30,฀2006,฀Carnival฀Corporation฀had฀contingent฀
obligations฀totaling฀approximately฀$1.07฀billion฀to฀participants฀
in฀lease฀out฀and฀lease฀back฀type฀transactions฀for฀three฀of฀its฀
ships.฀At฀the฀inception฀of฀the฀leases,฀the฀entire฀amount฀of฀the฀
contingent฀obligations฀was฀paid฀by฀Carnival฀Corporation฀to฀
major฀financial฀institutions฀to฀enable฀them฀to฀directly฀pay฀these฀
obligations.฀Accordingly,฀these฀obligations฀were฀considered฀
extinguished,฀and฀neither฀the฀funds฀nor฀the฀contingent฀obliga-
tions฀have฀been฀included฀on฀our฀balance฀sheets.฀Carnival฀
Corporation฀would฀only฀be฀required฀to฀make฀any฀payments฀
under฀these฀contingent฀obligations฀in฀the฀remote฀event฀of฀
nonperformance฀by฀these฀financial฀institutions,฀all฀of฀which฀
have฀long-term฀credit฀ratings฀of฀AA฀or฀higher.฀In฀addition,฀
Carnival฀Corporation฀obtained฀a฀direct฀guarantee฀from฀AA฀or฀
higher฀rated฀financial฀institutions฀for฀$284฀million฀of฀the฀above฀
noted฀contingent฀obligations,฀thereby฀further฀reducing฀the฀
already฀remote฀exposure฀to฀this฀portion฀of฀the฀contingent฀
obligations.฀In฀certain฀cases,฀if฀the฀credit฀ratings฀of฀the฀major฀
financial฀institutions฀who฀are฀directly฀paying฀the฀contingent฀