Carnival Cruises 2015 Annual Report Download - page 21

Under the terms of the DLC transaction documents, Carnival Corporation and Carnival plc are permitted to
transfer assets between the companies, make loans to or investments in each other and otherwise enter into
intercompany transactions. The companies have entered into some of these types of transactions and may enter
into additional transactions in the future to take advantage of the flexibility provided by the DLC arrangement,
and to operate both companies as a single unified economic enterprise in the most effective manner. In addition,
under the terms of the Equalization and Governance Agreement and the deeds of guarantee, the cash flows and
assets of one company are required to be used to pay the obligations of the other company, if necessary.
Given the DLC arrangement, we believe that providing separate financial statements for each of Carnival
Corporation and Carnival plc would not present a true and fair view of the economic realities of their operations.
Accordingly, separate financial statements for both Carnival Corporation and Carnival plc have not been
presented.
NOTE 4 – Property and Equipment
Property and equipment consisted of the following (in millions):
November 30,
2015 2014
Ships, including ship improvements .......................................... $42,401 $ 42,955
Ships under construction .................................................. 839 536
43,240 43,491
Land, buildings and improvements, including leasehold improvements and port
facilities ............................................................. 1,161 1,088
Computer hardware and software, transportation equipment and other ............... 1,389 1,322
Total property and equipment .............................................. 45,790 45,901
Less accumulated depreciation and amortization ................................ (13,902) (13,082)
$ 31,888 (a) $ 32,819 (a)
(a) At November 30, 2015 and 2014, the net carrying values of ships and ships under construction for our North
America, EAA, Cruise Support and Tour and Other segments were $18.5 billion, $11.7 billion, $0.3 billion
and $0.1 billion and $18.7 billion, $12.6 billion, $0.3 billion and $0.1 billion, respectively.
Ships under construction include progress payments for the construction of new ships, as well as design and
engineering fees, capitalized interest, construction oversight costs and various owner supplied items. Capitalized
interest, substantially all included in our ships under construction, amounted to $22 million in 2015, $21 million
in 2014 and $15 million in 2013.
Repairs and maintenance expenses, including minor improvement costs and dry-dock expenses, were $1.0 billion
in 2015, $936 million in 2014 and $974 million in 2013, and are substantially all included in other ship operating
expenses.
See Note 11 for a discussion regarding ship sales and impairments.
NOTE 5 – Other Assets
We have a 40% noncontrolling interest in Grand Bahama Shipyard Ltd. (“Grand Bahama”), a ship repair and
maintenance facility, and we account for this investment under the equity method of accounting. This facility
serves cruise and cargo ships, oil and gas tankers and offshore units. We utilize this facility, among other ship
repair facilities, for our regularly scheduled dry-docks and certain emergency repairs as may be required. Grand
Bahama provided services to us of $33 million in 2015, $41 million in 2014 and $39 million in 2013. The
carrying value of our investment in Grand Bahama was $69 million at November 30, 2015 and November 30,
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