Carnival Cruises 2014 Annual Report Download - page 70

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Interest Rate Risks
At November 30, 2014, we have interest rate swaps that have effectively changed $500 million of fixed rate debt
to U.S. dollar LIBOR-based floating rate debt and $750 million of EURIBOR-based floating rate euro debt to
fixed rate euro debt. Based on a 10% hypothetical change in the November 30, 2014 market interest rates, the fair
value of all our debt and related interest rate swaps would change by $96 million. In addition, based on a 10%
hypothetical change in the November 30, 2014 market interest rates, our annual interest expense on floating rate
debt, including the effect of our interest rate swaps, would change by an insignificant amount. Substantially all of
our fixed rate debt can only be called or prepaid by incurring additional costs.
Fuel Price Risks
Our exposure to market risk for changes in fuel prices substantially all relates to the consumption of fuel on our
ships. We expect to consume approximately 3.2 million metric tons of fuel in 2015. Based on a 10% hypothetical
change in our December 19, 2014 guidances’ forecasted average fuel price, we estimate that our 2015 fuel
expense, excluding the effect of zero cost collar fuel derivatives, would change by $139 million.
We mitigate a portion of our economic risk attributable to potential fuel price increases through the use of Brent
zero cost collars. The actual fuel we use on our ships is marine fuel. See Note 10 – “Fair Value Measurements,
Derivative Instruments and Hedging Activities” in the consolidated financial statements for additional discussion
of our fuel derivatives.
At November 30, 2014, our fuel derivatives cover a portion of our estimated fuel consumption through 2018. At
November 30, 2014, the estimated fair value of our outstanding fuel derivative contracts was a net liability of
$229 million. Based on a 10% hypothetical increase or decrease in the November 30, 2014 Brent forward price
curve, we estimate the fair value of our fuel derivatives would increase $127 million or decrease $152 million,
respectively.
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