Carnival Cruises 2015 Annual Report Download - page 33

Valuation of Goodwill and Other Intangibles
The reconciliation of the changes in the carrying amounts of our goodwill, which has been allocated to our North
America and EAA cruise brands, was as follows (in millions):
North America
Cruise Brands
EAA
Cruise Brands Total
Balance at November 30, 2013 .................................. $1,898 $1,312 $3,210
Foreign currency translation adjustment ........................... - (83) (83)
Balance at November 30, 2014 .................................. 1,898 1,229 3,127
Foreign currency translation adjustment ........................... - (117) (117)
Balance at November 30, 2015 .................................. $1,898 $1,112 $3,010
At July 31, 2015, all of our cruise brands carried goodwill, except for Seabourn and Fathom. As of that date, we
performed our annual goodwill impairment reviews, which included performing a qualitative assessment for
Carnival Cruise Line, Costa, Cunard and P&O Cruises (UK). Qualitative factors such as industry and market
conditions, macroeconomic conditions, changes to the weighted-average cost of capital (“WACC”), overall
financial performance, changes in fuel prices and capital expenditures were considered in the qualitative
assessment to determine how changes in these factors would affect each of these cruise brands’ estimated fair
values. Based on our qualitative assessments, we determined it was more-likely-than-not that each of these cruise
brands’ estimated fair values exceeded their carrying values and, therefore, we did not proceed to the two-step
quantitative goodwill impairment reviews.
As of July 31, 2015, we also performed our annual goodwill impairment reviews of AIDA’s, Holland America
Line’s, P&O Cruises (Australia)’s and Princess’ goodwill. We did not perform a qualitative assessment but
instead proceeded directly to step one of the two-step quantitative goodwill impairment review and compared
each of AIDA’s, Holland America Line’s, P&O Cruises (Australia)’s and Princess’ estimated fair value to the
carrying value of their allocated net assets. Their estimated cruise brand fair value was based on a discounted
future cash flow analysis. The principal assumptions used in our cash flow analyses consisted of forecasted
operating results, including net revenue yields and net cruise costs including fuel prices; capacity changes,
including the expected rotation of vessels into, or out of, Holland America Line, P&O Cruises (Australia) and
Princess; WACC of market participants, adjusted for the risk attributable to the geographic regions in which
AIDA, Holland America Line, P&O Cruises (Australia) and Princess operate; capital expenditures; proceeds
from forecasted dispositions of ships and terminal values, which are all considered Level 3 inputs. Based on the
discounted cash flow analyses, we determined that each of AIDA’s, Holland America Line’s, P&O Cruises
(Australia)’s and Princess’ estimated fair value significantly exceeded their carrying value and, therefore, we did
not proceed to step two of the impairment reviews.
The reconciliation of the changes in the carrying amounts of our intangible assets not subject to amortization,
which represent trademarks that have been allocated to our North America and EAA cruise brands, was as
follows (in millions):
North America
Cruise Brands
EAA
Cruise Brands Total
Balance at November 30, 2013 .................................. $927 $359 $1,286
Foreign currency translation adjustment ........................... - (21) (21)
Balance at November 30, 2014 .................................. 927 338 1,265
Foreign currency translation adjustment ........................... - (31) (31)
Balance at November 30, 2015 .................................. $927 $307 $1,234
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