Carnival Cruises 2008 Annual Report Download - page 84

F-25
NOTE 13 - Earnings Per Share
Our basic and diluted earnings per share were computed as follows (in millions, except
per share data):
Years Ended November 30,
2008 2007 2006
Net income $2,330 $2,408 $2,279
Interest on dilutive convertible notes 34 34 36
Net income for diluted earnings per share $2,364 $2,442 $2,315
Weighted-average common and ordinary shares outstanding 786 793 801
Dilutive effect of convertible notes 28 33 33
Dilutive effect of stock plans 2 2 2
Diluted weighted-average shares outstanding 816 828 836
Basic earnings per share $ 2.96 $ 3.04 $ 2.85
Diluted earnings per share $ 2.90 $ 2.95 $ 2.77
Options to purchase 11.9 million, 8.3 million and 8.5 million shares for fiscal 2008,
2007 and 2006, respectively, were excluded from our diluted earnings per share computation
since the effect of including them was anti-dilutive.
NOTE 14 - Supplemental Cash Flow Information
Total cash paid for interest was $449 million, $414 million and $363 million in fiscal
2008, 2007 and 2006, respectively. In addition, cash paid for income taxes was $23 million,
$14 million and $47 million in fiscal 2008, 2007 and 2006, respectively. Finally, in 2007
and 2006, $8 million and $69 million of our convertible notes were converted through a
combination of the issuance of Carnival Corporation treasury stock and newly issued Carnival
Corporation common stock, which represented a noncash financing activity.
NOTE 15 – Acquisition
In September 2007, we entered into an agreement with Orizonia Corporation, Spain's
largest travel company to operate Ibero, a Spanish cruise line, for an investment of $403
million, which we funded with $146 million of cash and $257 million in proceeds that Ibero
borrowed under a portion of our Facility. Orizonia contributed $49 million of assets,
principally trademarks and goodwill, for their 25% interest in the venture. Ibero operated
two contemporary Spanish cruise ships in September 2007, the 834-passenger capacity Grand
Voyager, and the 1,244-passenger capacity Grand Mistral, which were built in 2000 and 1999,
respectively. For reporting purposes, we have included Ibero's results of operations within
our consolidated financial results since September 1, 2007. The pro forma impact of including
Ibero in our results as if the acquisition took place on December 1, 2005 and December 1,
2006 has not been presented due to its immaterial effect.
The acquisition was accounted for as a business purchase combination using the purchase
method of accounting under the provisions of SFAS No. 141, "Business Combinations". The
purchase price was allocated to tangible and identifiable intangible assets acquired based on
their estimated fair values at the acquisition date. The $451 million purchase price was
allocated as follows: $254 million to ships, $161 million to goodwill, $35 million to
trademarks and $1 million to other.
NOTE 16 – Recent Accounting Pronouncement
In May 2008, the FASB issued Financial Accounting Standards Board Staff Position
Accounting Principles Board 14-1 "Accounting for Convertible Debt Instruments That May Be
Settled in Cash upon Conversion (Including Partial Cash Settlement)" ("APB 14-1"). APB 14-1
requires the issuer of certain convertible debt instruments that may be settled in cash, or
other assets, on conversion to separately account for the debt and equity components in a
manner that reflects the issuer's non-convertible debt borrowing rate. APB 14-1 will be
adopted by us in the first quarter of fiscal 2010 on a retrospective basis. We believe that
the impact of adopting APB 14-1 will not have a material effect on previously reported
diluted earnings per share, however, our net income will be reduced. We are still in the
process of determining the amount of such net income reductions.