Carnival Cruises 2009 Annual Report Download - page 50

available for borrowing under our principal revolver and back-up revolving credit facilities and $3.6 billion under
committed financings. Of this $3.6 billion of committed facilities, $1.3 billion, $1.3 billion and $1.0 billion is
expected to be funded in 2010, 2011 and 2012, respectively. Substantially all of our revolving credit facilities
mature in 2012. We rely on, and have banking relationships with, numerous banks that have credit ratings of A or
above, which we believe will assist us in attempting to access multiple sources of funding in the event that some
lenders are unwilling or unable to lend to us. However, we believe that our revolving credit facilities and
committed financings will be honored as required pursuant to their contractual terms.
Substantially all of our debt agreements contain financial covenants as described in Note 5 in the
accompanying consolidated financial statements. Generally, if an event of default under any debt agreement
occurs, then pursuant to cross default acceleration clauses, substantially all of our outstanding debt and derivative
contract payables could become due, and all debt and derivative contracts could be terminated.
At November 30, 2009, we believe we were in compliance with all of our debt covenants. In addition, based
on our forecasted operating results, financial condition and cash flows for fiscal 2010, we expect to be in
compliance with our debt covenants during fiscal 2010. However, our forecasted cash flow from operations and
access to the capital markets can be adversely impacted by numerous factors outside our control including, but
not limited to, those noted under “Cautionary Note Concerning Factors That May Affect Future Results.”
We continue to generate substantial cash from operations and have investment grade credit ratings of A3
from Moody’s Investors Service and BBB+ from Standard & Poor’s Rating Services (“S&P”), which provide us
with flexibility in most financial credit market environments to obtain debt, as necessary. In March 2009, our
A- credit rating from S&P was downgraded to BBB+ and assigned a negative outlook, which reflected S&P’s
concerns that the weakened state of the economy and the pullback in consumer spending would pressure our
ability to sustain our BBB+ credit rating. However in late January 2010, S&P changed our outlook from negative
to stable. This change reflects S&P’s expectation that the improving trend in our advance bookings will continue,
as well as S&P’s expectations of improving pricing trends, consumer spending patterns and gross domestic
product growth in the U.S. and Europe.
Based primarily on our historical results, current financial condition and forecasts, we believe that our
existing liquidity (assuming we can refinance our principal revolver before its 2012 maturity) and cash flow from
future operations will be sufficient to fund all of our expected capital projects (including shipbuilding
commitments), debt service requirements, convertible debt redemptions, working capital and other firm
commitments over the next several years.
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.
Quantitative and Qualitative Disclosures About Market Risk
For a discussion of our hedging strategies and market risks see the discussion below and “Note 10 - Fair
Value Measurements, Derivative Instruments and Hedging Activities,” in the accompanying consolidated
financial statements.
Foreign Currency Exchange Rate Risks
Operational and Investment Currency Risk
We have $526 million of foreign currency swaps and forwards that are designated as hedges of our net
investments in foreign operations, which have a euro-denominated functional currency, thus partially offsetting
this foreign currency exchange rate risk. Based upon a 10% hypothetical change in the U.S. dollar compared to
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