Carnival Cruises 2009 Annual Report Download - page 11

reported and disclosed in our financial statements. Actual results could differ from these estimates. All
significant intercompany balances and transactions are eliminated in consolidation. In our accompanying
Consolidated Statements of Cash Flows we have revised our presentation of proceeds from and principal
repayments of our principal revolving credit facility to reflect the cash flows in connection with the underlying
borrowings and repayments under this revolver. This revision had no impact on the net proceeds from and
principal repayments of this revolver, or on our net cash used in financing activities. We have evaluated
subsequent events through January 28, 2010, and determined that no subsequent events have occurred that would
require recognition in the consolidated financial statements or disclosure in the notes thereto other than as
disclosed in the accompanying notes.
NOTE 2 – Summary of Significant Accounting Policies
Basis of Presentation
We consolidate entities over which we have control (see Notes 3 and 15), as typically evidenced by a direct
ownership interest of greater than 50%. For affiliates where significant influence over financial and operating
policies exists, as typically evidenced by a direct ownership interest from 20% to 50%, the investment is
accounted for using the equity method.
Cash and Cash Equivalents
Cash and cash equivalents include investments with maturities of three months or less at acquisition, which
are stated at cost. At November 30, 2009 and 2008, cash and cash equivalents are comprised of cash on hand,
money market funds and time deposits.
Marketable Securities
We account for our marketable securities as trading or available-for-sale. As of November 30, 2009 and
2008, our marketable securities were not significant and we had $16 million and $20 million of unrealized
holding losses at such dates, respectively. All income generated from these investments is recorded as interest
and investment income.
Purchases and sales of short-term investments included in our 2007 Consolidated Statement of Cash Flows
consisted of investments with original maturities greater than three months with floating interest rates, which
typically reset every 28 days. Despite the long-term nature of their stated contractual maturities, prior to
November 30, 2007 we had the ability to quickly liquidate these securities so they were considered short-term
investments.
Inventories
Inventories consist primarily of food and beverage provisions, hotel and restaurant products and supplies,
gift shop and art merchandise held for resale and fuel, which are all carried at the lower of cost or market. Cost is
determined using the weighted-average or first-in, first-out methods.
Property and Equipment
Property and equipment are stated at cost. Depreciation and amortization were computed using the straight-line
method over our estimates of average useful lives and residual values, as a percentage of original cost, as follows:
Residual
Values Years
Ships ........................................................ 15% 30
Ship improvements ............................................. 0%or15% 3-28
Buildings and improvements ...................................... 0-10% 5-35
Computer hardware and software .................................. 0-10% 3-7
Transportation equipment and other ................................ 0-15% 2-20
Leasehold improvements, including port facilities ..................... Shorter of lease term
or related asset life
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