Royal Caribbean Cruise Lines 2011 Annual Report Download - page 80

2011 ANNUAL REPORT 76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
all of fiscal year 2011. The adoption of this guidance
did not have an impact on our consolidated financial
statements.
In September 2011, we adopted authoritative guidance
regarding the periodic testing of goodwill for impair-
ment. The new guidance allows an entity to assess
qualitative factors to determine if it is more-likely-
than-not that goodwill might be impaired and based
on this assessment determine whether it is necessary
to perform the two-step goodwill impairment test.
This guidance is effective for our annual and interim
goodwill impairment tests performed for fiscal years
beginning after December 15, 2011 and early adoption
is permitted. We early adopted this guidance when
performing our annual goodwill impairment testing in
the fourth quarter of 2011. See Note 3. Goodwill for
our disclosures related to this guidance.
Recently Adopted Accounting Pronouncements
In May 2011, authoritative guidance was issued to
achieve consistent fair value measurements and to
clarify certain disclosure requirements for fair value
measurements. The new guidance includes clarifica-
tion about when the concept of highest and best use
is applicable to fair value measurements, requires
quantitative disclosures about inputs used and quali-
tative disclosures about the sensitivity of recurring
Level 3 measurements, and requires the classification
of all assets and liabilities measured at fair value in
the fair value hierarchy, including those assets and
liabilities which are not recorded at fair value but for
which fair value is disclosed. The guidance will be
effective for our interim and annual reporting periods
beginning after December 15, 2011. Based on our cur-
rent fair value measurements, the adoption of this
issued guidance is not expected to have an impact
on our consolidated financial statements.
In June 2011, authoritative guidance was issued on the
presentation of comprehensive income. Specifically,
the guidance allows an entity to present components
of net income and other comprehensive income in one
continuous statement, referred to as the statement of
comprehensive income, or in two separate but con-
secutive statements. The new guidance eliminates the
current option to report other comprehensive income
and its components in the statement of changes in
equity. This guidance must be applied retrospectively
and will be effective for our interim and annual report-
ing periods beginning after December 15, 2011. We
expect to add a new primary consolidated statement
of other comprehensive income which will immediately
follow our consolidated statements of operations to
our filings beginning in the first quarter of 2012. In
addition, the original guidance issued required that
any reclassifications from comprehensive income to
net income to be shown on the face of the income
statement by income statement line item, however,
in December 2011, this guidance was deferred until
further notice.
Reclassifications
During 2011, we separately presented gains on our
fuel call options of $18.9 million in our consolidated
statement of cash flows. As a result, the related prior
year amounts were reclassified from other, net to
(gain) loss on fuel call options within net cash flows
provided by operating activities in order to conform to
the current year presentation.
NOTE 3. GOODWILL
In 2011, 2010 and 2009, we completed our annual
goodwill impairment test and determined there was no
impairment. The carrying amount of goodwill attribut-
able to our Royal Caribbean International and the
Pullmantur reporting units was as follows (in thousands):
Royal
Caribbean
International
Pullmantur Total
Balance at
December 31, 2009    
Foreign currency
translation
adjustment — () ()
Balance at
December 31, 2010    
Foreign currency
translation
adjustment — () ()
Balance at
December 31, 2011    
During the fourth quarter of 2011, we performed a
qualitative assessment of whether it was more-likely-
than-not that our Royal Caribbean International report-
ing unit’s fair value was less than its carrying amount
before applying the two-step goodwill impairment
test. The qualitative analysis included assessing the
impact of certain factors such as general economic
conditions, limitations on accessing capital, changes
in forecasted operating results, changes in fuel prices
and fluctuations in foreign exchange rates. Based on
our qualitative assessment, we concluded that it was
more-likely-than-not that the estimated fair value
of the Royal Caribbean International reporting unit
exceeded its carrying value as of December 31, 2011
and thus, did not proceed to the two-step goodwill
impairment test. No indicators of impairment exist
primarily because the reporting unit’s fair value has
consistently exceeded its carrying value by a signifi-
cant margin, its financial performance has been solid