Carnival Cruises 2011 Annual Report Download - page 31

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Concentrations of Credit Risk
As part of our ongoing control procedures, we monitor concentrations of credit risk associated with financial and other
institutions with which we conduct significant business. Our maximum exposure under foreign currency and fuel
derivative contracts and interest rate swap agreements that are in-the-money, which were not significant at
November 30, 2011, is the replacement cost, net of any collateral received, which includes the value of the contracts, in
the event of nonperformance by the counterparties to the contracts, all of which are currently our lending banks. We
seek to minimize credit risk exposure, including counterparty nonperformance primarily associated with our cash
equivalents, investments, committed financing facilities, contingent obligations, derivative instruments, insurance
contracts and new ship progress payment guarantees, by normally conducting business with large, well-established
financial institutions and insurance companies, and by diversifying our counterparties. In addition, we have guidelines
regarding credit ratings and investment maturities that we follow to help safeguard liquidity and minimize risk. We
normally do require collateral and/or guarantees to support notes receivable on significant asset sales, long-term ship
charters and new ship progress payments to shipyards. We currently believe the risk of nonperformance by any of our
significant counterparties is remote.
We also monitor the creditworthiness of travel agencies and tour operators in Europe and credit card providers to
which we extend credit in the normal course of our business. Our credit exposure includes contingent obligations
related to cash payments received directly by travel agents and tour operators for cash collected by them on cruise sales
in most of the European Union for which we are obligated to provide credit in a like amount to these guests even if we
do not receive payment from the travel agents or tour operators. Concentrations of credit risk associated with these
receivables and contingent obligations are not considered to be material, primarily due to the large number of unrelated
accounts within our customer base, the amount of these contingent obligations and their short maturities. We have
experienced only minimal credit losses on our trade receivables and related contingent obligations. We do not normally
require collateral or other security to support normal credit sales.
NOTE 11 – Segment Information
We have three reportable cruise segments that are comprised of our (1) North America cruise brands, (2) EAA cruise
brands and (3) Cruise Support. In addition, we have a Tour and Other segment.
Our North America cruise segment includes Carnival Cruise Lines, Holland America Line, Princess and Seabourn. Our
EAA cruise segment includes AIDA, Costa, Cunard, Ibero, P&O Cruises (Australia) and P&O Cruises (UK). These
individual cruise brand operating segments have been aggregated into two reportable segments based on the similarity
of their economic and other characteristics, including types of customers, regulatory environment, maintenance
requirements, supporting systems and processes and products and services they provide. Our Cruise Support segment
represents certain of our port and related facilities and other corporate-wide services that are provided for the benefit of
our cruise brands. Our Tour and Other segment represents the hotel, tour and transportation operations of Holland
America Princess Alaska Tours and our two owned ships that we charter to an unaffiliated entity. The significant
accounting policies of our segments are the same as those described in Note 2 – “Summary of Significant Accounting
Policies.”
Selected information for our Cruise and Tour and Other segments as of and for the years ended November 30 was as
follows (in millions):
Revenues
Operating
expenses
Selling
and
administrative
Depreciation
and
amortization
Operating
income
(loss)
Capital
expenditures
Total
assets
2011
North America Cruise Brands ....... $ 8,921 $ 5,848 $ 938 $ 869 $1,266 $1,232 $21,642
EAA Cruise Brands ............... 6,504 4,244 655 579 1,026 1,380 15,626
Cruise Support ................... 90 3 103 31 (47) 68 795
Tour and Other ................... 392 318 21 43 10 16 574(b)
Intersegment elimination (a) ........ (114) (114) - - - - -
$15,793 $10,299 $1,717 $1,522 $2,255 $2,696 $38,637
30