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Carnival฀Corporation฀&฀plc฀|฀page฀23
If฀we฀were฀found฀not฀to฀qualify฀for฀exemption฀pursuant฀to฀
applicable฀income฀tax฀treaties฀or฀under฀the฀Internal฀Revenue฀
Code฀or฀if฀the฀income฀tax฀treaties฀or฀Internal฀Revenue฀Code฀
were฀to฀be฀changed฀in฀a฀manner฀adverse฀to฀us,฀a฀portion฀of฀
our฀income฀would฀become฀subject฀to฀taxation฀by฀the฀U.S.฀at฀
higher฀than฀normal฀corporate฀tax฀rates.
P&O฀Cruises,฀Cunard,฀Ocean฀Village,฀P&O฀Cruises฀Australia,฀
Swan฀Hellenic,฀AIDA฀and฀Costa,฀since฀the฀beginning฀of฀fiscal฀
2005,฀are฀subject฀to฀income฀tax฀under฀the฀tonnage฀tax฀regimes฀
of฀either฀the฀United฀Kingdom฀or฀Italy.฀Under฀both฀tonnage฀tax฀
regimes,฀shipping฀profits,฀as฀defined฀under฀the฀applicable฀law,฀
are฀subject฀to฀corporation฀tax฀by฀reference฀to฀the฀net฀tonnage฀
of฀qualifying฀vessels.฀Income฀not฀considered฀to฀be฀shipping฀
profits฀under฀tonnage฀tax฀rules฀is฀taxable฀under฀either฀the฀
normal฀UK฀income฀tax฀rules฀or฀the฀Italian฀tax฀regime฀applica-
ble฀to฀Italian-registered฀ships.฀We฀believe฀that฀substantially฀฀
all฀of฀the฀ordinary฀income฀attributable฀to฀these฀brands฀consti-
tutes฀shipping฀profits฀and,฀accordingly,฀Italian฀and฀UK฀income฀
tax฀expenses฀for฀these฀operations฀have฀been฀and฀are฀expected฀
to฀be฀minimal฀under฀the฀current฀tax฀regimes.
We฀do฀not฀expect฀to฀incur฀income฀taxes฀on฀future฀distri-
butions฀of฀undistributed฀earnings฀of฀foreign฀subsidiaries฀and,฀
accordingly,฀no฀deferred฀income฀taxes฀have฀been฀provided฀for฀
the฀distribution฀of฀these฀earnings.
In฀addition฀to฀or฀in฀place฀of฀income฀taxes,฀virtually฀all฀juris-
dictions฀where฀our฀ships฀call฀impose฀taxes฀based฀on฀passenger฀
counts,฀ship฀tonnage฀or฀some฀other฀measure.฀These฀taxes,฀
other฀than฀those฀directly฀charged฀to฀and/or฀collected฀from฀
passengers฀by฀us฀on฀a฀per฀passenger฀headcount฀basis,฀are฀
recorded฀as฀operating฀expenses฀in฀the฀accompanying฀
Consolidated฀Statements฀of฀Operations.
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,฀2006฀and฀2005,฀฀
no฀Carnival฀Corporation฀preferred฀stock฀had฀been฀issued฀and฀
only฀a฀nominal฀amount฀of฀Carnival฀plc฀preference฀shares฀had฀
been฀issued.
During฀2004,฀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.฀We฀com-
pleted฀this฀$1฀billion฀repurchase฀program฀on฀June฀29,฀2006.฀
An฀additional฀$1฀billion฀repurchase฀authorization฀was฀approved฀
by฀the฀Boards฀of฀Directors฀in฀June฀2006฀subject฀to฀certain฀
restrictions.฀During฀fiscal฀2006฀and฀2005,฀we฀purchased฀18.7฀
million฀and฀8.0฀million฀shares฀of฀Carnival฀Corporation฀common฀
stock,฀respectively,฀and฀0.6฀million฀shares฀of฀Carnival฀plc฀ordi-
nary฀shares฀in฀fiscal฀2006.฀At฀February฀9,฀2007,฀the฀remaining฀
availability฀pursuant฀to฀our฀2006฀share฀repurchase฀program฀
was฀$773฀million.฀No฀expiration฀date฀has฀been฀specified฀for฀
this฀authorization.
At฀November฀30,฀2006,฀there฀were฀71.7฀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฀12.9฀million฀ordinary฀shares฀for฀future฀
issuance฀under฀its฀employee฀benefit฀plans.
At฀November฀30,฀2006฀and฀2005,฀accumulated฀other฀com-
prehensive฀income฀was฀as฀follows฀(in฀millions):
2006 2005
Cumulative฀foreign฀currency฀translation฀฀
฀ adjustments,฀net฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀. $689 $193
Minimum฀pension฀liability฀adjustments฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀. (17) (19)
Unrealized฀losses฀on฀cash฀flow฀derivative฀฀
฀ hedges,฀net฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀.฀. (11) (15)
$661 $159
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฀and฀Short-Term฀Investments
The฀carrying฀amounts฀of฀our฀cash฀and฀cash฀equivalents฀฀
and฀short-term฀investments฀approximate฀their฀fair฀values฀due฀
to฀their฀short฀maturities฀or฀variable฀interest฀rates.
Other฀Assets
At฀November฀30,฀2006฀and฀2005,฀long-term฀other฀assets฀
included฀notes฀and฀other฀receivables฀and฀marketable฀securi-
ties฀held฀in฀rabbi฀trusts฀for฀certain฀of฀our฀nonqualified฀benefit฀
plans.฀These฀assets฀had฀carrying฀and฀fair฀values฀of฀$440฀million฀