Carnival Cruises 2011 Annual Report Download - page 24

In fiscal 2009, we also sold 450,000 shares of Carnival Corporation common stock for $9 million of net
proceeds, substantially all of which were used to fund the repurchase of 450,000 shares of Carnival plc ordinary
shares. We sold Carnival Corporation common stock in the U.S., only to the extent we were able to purchase
shares of Carnival plc in the UK on at least an equivalent basis under the “Stock Swap” program.
At November 30, 2011, there were 28.3 million shares of Carnival Corporation common stock reserved for
issuance under its employee benefit and dividend reinvestment plans. In addition, Carnival plc shareholders have
authorized 17.8 million ordinary shares for future issuance under its employee benefit plans.
At November 30, 2011 and 2010, accumulated other comprehensive loss consisted of the following (in millions):
2011 2010
Cumulative foreign currency translation adjustments, net ................................ $(123) $ (99)
Unrecognized pension expenses .................................................... (96) (91)
Unrealized loss on marketable security .............................................. (17) (16)
Net gains (losses) on cash flow derivative hedges ...................................... 27 (48)
$(209) $(254)
NOTE 10 – Fair Value Measurements, Derivative Instruments and Hedging Activities
Fair Value Measurements
U.S. accounting standards establish a fair value hierarchy that prioritizes the inputs used to measure fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). This
hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs.
The three levels of inputs used to measure fair value are as follows:
• Level 1 measurements are based on unadjusted quoted prices in active markets for identical assets or
liabilities that we have the ability to access. Valuation of these items does not entail a significant amount of
judgment.
• Level 2 measurements are based on quoted prices for similar assets or liabilities in active markets, quoted
prices for identical or similar assets or liabilities in markets that are not active or market data other than
quoted prices that are observable for the assets or liabilities.
• Level 3 measurements are based on unobservable data that are supported by little or no market activity and
are significant to the fair value of the assets or liabilities.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between independent and knowledgeable market participants at the measurement date. Therefore, even when
market assumptions are not readily available, our own assumptions are set to reflect those that we believe market
participants would use in pricing the asset or liability at the measurement date.
The fair value measurement of a financial asset or financial liability must reflect the nonperformance risk of the
counterparty and us. Therefore, the impact of our counterparty’s creditworthiness was considered when in an
asset position, and our creditworthiness was considered when in a liability position in the fair value measurement
of our financial instruments. Creditworthiness did not have a material impact on the fair values of our financial
instruments at November 30, 2011 and 2010. Both the counterparties and we are expected to continue to perform
under the contractual terms of the instruments. Considerable judgment may be required in interpreting market
data used to develop the estimates of fair value. Accordingly, certain estimates of fair values presented herein are
not necessarily indicative of the amounts that could be realized in a current or future market exchange.
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