Carnival Cruises 2008 Annual Report Download - page 73

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F-14
matures in October 2012, except for $39 million which matures in October 2011. At November
30, 2008, $1.2 billion was available under the Facility, using the November 30, 2008 exchange
rates.
At November 30, 2008, we also had $660 million available under two other revolving
credit facilities. The first facility of $470 million was to mature on December 31, 2008,
but was terminated earlier in December 2008. The second euro-denominated facility is for
$190 million (€150 million based on the November 30, 2008 exchange rate), and matures in
November 2011.
In December 2008, we entered into a $100 million unsecured revolving credit facility,
which matures in January 2012.
Convertible Notes
At November 30, 2008, Carnival Corporation's 2% convertible notes ("2% Notes") and 1.75%
convertible notes ("1.75% Notes") are convertible into 15.2 million shares and 5.1 million
shares (a maximum of 9.9 million shares if certain Carnival Corporation share prices are
achieved) of Carnival Corporation common stock, respectively.
The 2% Notes are convertible at a conversion price of $39.14 per share, subject to
adjustment, during any fiscal quarter for which the closing price of the Carnival Corporation
common stock is greater than $43.05 per share for a defined duration of time in the preceding
fiscal quarter. The conditions for conversion of the 2% Notes were not satisfied during
2008, however they were satisfied throughout 2007, and during the first and last quarters of
fiscal 2006. Since their issuance in 2000, only a nominal amount of our 2% Notes have been
converted.
The 1.75% Notes are convertible at a conversion price of $53.65 per share, subject to
adjustment, during any fiscal quarter for which the closing price of the Carnival Corporation
common stock is greater than a specified trigger price for a defined duration of time in the
preceding fiscal quarter. During the fiscal quarters ending from August 31, 2003 through
April 29, 2008, the trigger price was $63.73 per share. Since April 29, 2008, this
conversion trigger price has been increasing each quarter based on an annual rate of 1.75%,
until maturity. The conditions for conversion of the 1.75% Notes have not yet been
satisfied. In addition, holders may also surrender the 1.75% Notes for conversion if the
1.75% Notes credit rating is Baa3 or lower by Moody's Investors Service and BBB- or lower by
Standard & Poor's Rating Services. Since April 30, 2008, the 1.75% Notes have no longer
required a 1.75% cash interest payment, but interest has begun to accrete at a 1.75% yield to
maturity.
In April 2008, we amended the terms of the 1.75% Notes to give the holders another put
option, which, if exercised, requires us to repurchase all or a portion of the outstanding
1.75% Notes on October 29, 2009 at their accreted value, and suspended our right to redeem
the 1.75% Notes until that date. The $8 million estimated fair value of this new put option
is being amortized to interest expense over its eighteen-month term using the straight-line
method, which approximates the effective interest rate method. The terms of the 1.75% Notes
were also amended to include an additional semi-annual cash interest payment of 0.5% per
annum through October 29, 2009 and certain other covenants and agreements were changed for
the benefit of the holders of this debt. On April 30, 2008, as a result of certain holders
exercising their April 29, 2008 put option, we repurchased $302 million of the outstanding
1.75% Notes at their accreted value, plus accrued interest, leaving $271 million of the 1.75%
Notes outstanding at their accreted value.
At November 30, 2008, the 1.75% Notes have a 4.6% yield through October 29, 2009. At
November 30, 2008, these 1.75% Notes were classified as current liabilities, since we may be
required to repurchase all or a portion of these notes at the option of the noteholders on
October 29, 2009. If the 1.75% noteholders do not exercise their options, then we will
change the classification of the 1.75% Notes to long-term, as the next holders' optional
redemption date does not occur until April 29, 2013.
On October 24, 2008, we repurchased substantially all the then outstanding Zero-coupon
convertible notes ("Zero-Coupon Notes") at their accreted value, leaving a nominal amount
outstanding. In addition, during fiscal 2007 and 2006, $4 million and $69 million of Zero-