Carnival Cruises 2006 Annual Report Download - page 46

page฀42 | Carnival Corporation & plc
In฀June฀2006,฀a฀$1฀billion฀stock฀repurchase฀authorization฀
was฀approved฀by฀the฀Boards฀of฀Directors฀subject฀to฀certain฀
restrictions฀(“2006฀Purchase฀Program”).฀This฀2006฀Purchase฀
Program฀does฀not฀have฀an฀expiration฀date฀and฀may฀be฀discon-
tinued฀by฀our฀Boards฀of฀Directors฀at฀any฀time.฀At฀February฀9,฀
2007,฀the฀remaining฀availability฀pursuant฀to฀our฀2006฀Purchase฀
Program฀was฀$773฀million.
At฀November฀30,฀2006,฀we฀had฀liquidity฀of฀$5.60฀billion,฀
which฀consisted฀of฀$1.18฀billion฀of฀cash,฀cash฀equivalents฀and฀
short-term฀investments,฀$1.87฀billion฀available฀for฀borrowing฀
under฀our฀revolving฀credit฀facility฀and฀$2.55฀billion฀under฀com-
mitted฀ship฀financing฀facilities.฀Our฀revolving฀credit฀facility฀
matures฀in฀2011.฀A฀key฀to฀our฀access฀to฀liquidity฀is฀the฀main-
tenance฀of฀our฀strong฀credit฀ratings.
Based฀primarily฀on฀our฀historical฀results,฀current฀financial฀
condition฀and฀future฀forecasts,฀we฀believe฀that฀our฀existing฀
liquidity฀and฀cash฀flow฀from฀future฀operations฀will฀be฀sufficient฀
to฀fund฀most฀of฀our฀expected฀capital฀projects,฀debt฀service฀
requirements,฀dividend฀payments,฀working฀capital฀and฀other฀
firm฀commitments.฀In฀addition,฀based฀on฀our฀future฀forecasted฀
operating฀results฀and฀cash฀flows฀for฀fiscal฀2007,฀we฀expect฀to฀
be฀in฀compliance฀with฀our฀debt฀covenants฀during฀2007.฀How-
ever,฀our฀forecasted฀cash฀flow฀from฀future฀operations,฀as฀well฀
as฀our฀credit฀ratings,฀may฀be฀adversely฀affected฀by฀various฀
factors฀including,฀but฀not฀limited฀to,฀those฀factors฀noted฀under฀
“Cautionary฀Note฀Concerning฀Factors฀That฀May฀Affect฀Future฀
Results.”฀To฀the฀extent฀that฀we฀are฀required,฀or฀choose,฀to฀
fund฀future฀cash฀requirements,฀including฀our฀future฀shipbuilding฀
commitments,฀from฀sources฀other฀than฀as฀discussed฀above,฀
we฀believe฀that฀we฀will฀be฀able฀to฀secure฀such฀financing฀from฀
banks฀or฀through฀the฀offering฀of฀debt฀and/or฀equity฀securities฀
in฀the฀public฀or฀private฀markets.฀However,฀we฀cannot฀be฀cer-
tain฀that฀our฀future฀operating฀cash฀flow฀will฀be฀sufficient฀to฀
fund฀future฀obligations฀or฀that฀we฀will฀be฀able฀to฀obtain฀addi-
tional฀financing,฀if฀necessary.
Off-Balance฀Sheet฀Arrangements
We฀are฀not฀a฀party฀to฀any฀off-balance฀sheet฀arrangements,฀
including฀guarantee฀contracts,฀retained฀or฀contingent฀interests,฀
certain฀derivative฀instruments฀and฀variable฀interest฀entities,฀
that฀either฀have,฀or฀are฀reasonably฀likely฀to฀have,฀a฀current฀or฀
future฀material฀effect฀on฀our฀financial฀statements.
Foreign฀Currency฀Exchange฀Rate฀Risks
Our฀growing฀international฀business฀operations฀are฀con-
ducted฀primarily฀through฀AIDA฀in฀Germany,฀Costa฀in฀Southern฀
Europe฀and฀China,฀P&O฀Cruises฀and฀Ocean฀Village฀in฀the฀UK฀
and฀P&O฀Cruises฀Australia฀in฀Australia,฀which฀subject฀us฀to฀an฀
increasing฀level฀of฀foreign฀currency฀exchange฀risk฀related฀to฀
the฀euro,฀sterling฀and฀Australian฀dollar฀because฀these฀opera-
tions฀have฀either฀the฀euro,฀sterling฀or฀Australian฀dollar฀as฀their฀
functional฀currency.฀Accordingly,฀exchange฀rate฀fluctuations฀฀
of฀the฀euro,฀sterling฀or฀Australian฀dollar฀against฀the฀U.S.฀dollar฀
will฀affect฀our฀reported฀financial฀results฀since฀the฀reporting฀
currency฀for฀our฀consolidated฀financial฀statements฀is฀the฀U.S.฀
dollar฀and฀the฀functional฀currency฀for฀our฀international฀opera-
tions฀is฀generally฀the฀local฀currency.฀Any฀weakening฀of฀the฀
U.S.฀dollar฀against฀these฀local฀functional฀currencies฀has฀the฀
financial฀statement฀effect฀of฀increasing฀the฀U.S.฀dollar฀values฀
reported฀for฀cruise฀revenues฀and฀cruise฀expenses฀in฀our฀
Consolidated฀Statements฀of฀Operations.฀Strengthening฀of฀the฀
U.S.฀dollar฀has฀the฀opposite฀effect.
We฀seek฀to฀minimize฀the฀impact฀of฀fluctuations฀in฀foreign฀
currency฀exchange฀rates฀through฀our฀normal฀operating฀and฀
financing฀activities,฀including฀netting฀certain฀exposures฀to฀take฀
advantage฀of฀any฀natural฀offsets฀and,฀when฀considered฀appro-
priate,฀through฀the฀use฀of฀derivative฀financial฀instruments.฀The฀
financial฀impacts฀of฀these฀hedging฀instruments฀are฀generally฀
offset฀by฀corresponding฀changes฀in฀the฀underlying฀exposures฀
being฀hedged.฀Our฀policy฀is฀to฀not฀use฀any฀financial฀instruments฀
for฀trading฀or฀other฀speculative฀purposes.
MANAGEMENT’S฀DISCUSSION฀AND฀ANALYSIS฀OF฀FINANCIAL฀CONDITION฀AND฀RESULTS฀OF฀OPERATIONS
(continued)