Carnival Cruises 2008 Annual Report Download - page 83

F-24
Defined Benefit Pension Plans
We have several single-employer defined benefit pension plans, which cover some of our
shipboard and shoreside employees. The U.S. and UK shoreside employee plans are closed to
new membership and are funded at or above the level required by U.S. or UK regulations. The
remaining defined benefit plans are primarily unfunded. In determining all of our plans'
benefit obligations at November 30, 2008, we assumed a weighted-average discount rate of
7.1%. The net assets or liabilities related to the obligations under these single-employer
defined benefit pension plans are not material.
In addition, P&O Cruises, Princess and Cunard participate in an industry-wide British
Merchant Navy Officers Pension Fund ("MNOPF"), a defined benefit multiemployer pension plan
available to certain of their British shipboard officers. The MNOPF is divided into two
sections, the "New Section" and the "Old Section," each of which covers a different group of
participants, with the Old Section closed to further benefit accrual and the New Section only
closed to new membership. At November 30, 2008, both the New Section and the Old Section
were estimated to have funding deficits.
Substantially all of any MNOPF New Section deficit liability which we may have relates
to the obligations of P&O Cruises and Princess, which existed prior to the combination in
2003 of Carnival Corporation's and Carnival plc's businesses into a DLC. However, since the
MNOPF New Section is a multiemployer plan and it was not probable that we would withdraw from
the plan nor was our share of the liability certain, we could not record our estimated share
of the ultimate deficit as a Carnival plc acquisition liability that existed at the DLC
transaction date. The amount of our share of the fund's ultimate deficit could vary
considerably if different pension assumptions and/or estimates were used. Therefore, we
expense our portion of any deficit as amounts are invoiced by, and become due and payable to,
the fund's trustee. In 2007, we received a special assessment invoice from the fund for what
the trustee calculated to be our additional share of the entire MNOPF New Section liability,
based on their most recent actuarial valuation. Accordingly, we recorded the full invoiced
liability of $20 million in cruise payroll and related expense in 2007. It is still possible
that the fund's trustee may invoice us for additional amounts in the future for various
reasons, including if they believe the fund requires further contributions.
As of the DLC formation date in April 2003 and through November 30, 2007, the MNOPF's
Old Section had a funding surplus and, accordingly, no expenses had been recorded for this
section of the plan in our financial statements. However, as noted above, the Old Section is
currently estimated to have a deficit, which could result in the fund's trustee invoicing us
for amounts in the future, if they believe the fund requires further contributions. Our
share of the Old Section deficit, if any, which covers predecessor employers' officers prior
to 1978, is not currently known and, accordingly, the amount of any such contribution is not
currently determinable.
Total expense for all defined benefit pension plans, including multiemployer plans, was
$42 million, $55 million and $28 million in fiscal 2008, 2007 and 2006, respectively.
On November 30, 2007, we adopted SFAS No. 158, "Employers' Accounting for Defined
Benefit Pension and Other Postretirement Plans – an amendment to FASB Statements No. 87, 88,
106 and 132(R)" ("SFAS No. 158"). SFAS No. 158 required us upon adoption to recognize the
funded status of our defined benefit single employer pension plans. Accordingly, as of
November 30, 2007, we recorded an increase in our pension plan assets and liabilities of $17
million and $24 million, respectively, and a reduction to AOCI of $7 million. The adoption
of SFAS No. 158 had no effect on our Consolidated Statement of Operations for fiscal 2007, or
for any prior period presented, and it will not effect our results of operations in future
periods.
Defined Contribution Plans
We have several defined contribution plans available to most of our employees. We
contribute to these plans based on employee contributions, salary levels and length of
service. Total expense for these plans was $22 million, $18 million and $17 million in
fiscal 2008, 2007 and 2006, respectively.