Fair Value Measurements, Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

May 31, 2011

Cost and Fair Value of Financial Instruments Disclosure

The estimated carrying and fair values of our financial instrument assets and (liabilities) that are not measured at fair value on a recurring basis were as follows (in millions):

	May 31, 2011						November 30, 2010
	Carrying Value			Fair Value			Carrying Value			Fair Value
Cash and cash equivalents (a)	$	532		$	532		$	404		$	404
Long-term other assets (b)	$	104		$	97		$	191		$	178
Fixed rate debt (c)	$	(6,648	)	$	(6,972	)	$	(6,689	)	$	(7,076	)
Floating rate debt (c)	$	(3,194	)	$	(3,141	)	$	(2,669	)	$	(2,630	)
Other	$	-		$	-		$	(6	)	$	(7	)

(a) Cash and cash equivalents are comprised of cash on hand and time deposits and, due to their short maturities, the carrying values approximate their fair values.

(b) At May 31, 2011 and November 30, 2010, substantially all of our long-term other assets were comprised of notes and other receivables. The fair values of notes and other receivables were based on estimated future cash flows discounted at appropriate market interest rates.

(c) The net difference between the fair value of our fixed rate debt and its carrying value was due to the market interest rates in existence at May 31, 2011 and November 30, 2010 being lower than the fixed interest rates on these debt obligations, including the impact of changes in our credit ratings, if any. The net difference between the fair value of our floating rate debt and its carrying value was due to the market interest rates in existence at May 31, 2011 and November 30, 2010 being higher than the floating interest rates on these debt obligations, including the impact of changes in our credit ratings, if any. The fair values of our publicly-traded notes were based on their quoted market prices in active markets. The fair values of our other debt were estimated based on appropriate market interest rates being applied to this debt.

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The estimated fair value and basis of valuation of our financial instrument assets and (liabilities) that are measured at fair value on a recurring basis were as follows (in millions):

	May 31, 2011					November 30, 2010
	Level 1		Level 2			Level 1		Level 2
Cash equivalents (a)	$	25	$	-		$	25	$	-
Marketable securities held in rabbi trusts (b)	$	114	$	19		$	105	$	21
Derivatives
Ship foreign currency options (c)	$	-	$	-		$	-	$	8
Net investment hedges (d)	$	-	$	(7	)	$	-	$	12
Interest rate swaps (e)	$	-	$	4		$	-	$	1

(a) Cash equivalents are comprised of money market funds.

(b) Level 1 and 2 marketable securities are held in rabbi trusts and are primarily comprised of frequently-priced mutual funds invested in common stocks and other investments, respectively. Their use is restricted to funding certain deferred compensation and non-qualified U.S. pension plans.

(c) At November 30, 2010, we had foreign currency options totaling $785 million that were designated as foreign currency cash flow hedges for certain of our euro-denominated shipbuilding contracts. These foreign currency options matured through May 2011.

(d) At May 31, 2011 and November 30, 2010, we have foreign currency forwards totaling $216 million and $352 million, respectively, that are designated as hedges of our net investments in foreign operations, which have a euro-denominated functional currency and were principally entered into to convert U.S. dollar-denominated debt into euro debt. These foreign currency forwards mature through July 2017.

(e) We have both U.S. dollar and sterling interest rate swaps designated as fair value hedges whereby we receive fixed interest rate payments in exchange for making floating interest rate payments. At May 31, 2011 and November 30, 2010, these interest rate swap agreements effectively changed $530 million and $512 million, respectively, of fixed rate debt to U.S. dollar LIBOR or GBP LIBOR-based floating rate debt. In addition, we have euro interest rate swaps designated as cash flow hedges whereby we receive floating interest rate payments in exchange for making fixed interest rate payments. At May 31, 2011 and November 30, 2010, these interest rate swap agreements effectively changed $344 million and $333 million, respectively, of EURIBOR-based floating rate euro debt to fixed rate debt. These interest rate swaps mature through February 2022.

Schedule of Goodwill

The carrying amount of our goodwill has been allocated to our North America and EAA cruise brands as follows (in millions):

	North America Cruise Brands		EAA Cruise Brands		Total
Balance at November 30, 2010	$	1,898	$	1,422	$	3,320
Foreign currency translation adjustment		-		104		104
Balance at May 31, 2011	$	1,898	$	1,526	$	3,424

Schedule of Indefinite-lived Intangible Assets by Segment

The carrying amount of our intangible assets not subject to amortization, which represents trademarks, has been allocated to our North America and EAA cruise brands as follows (in millions):

	North America Cruise Brands		EAA Cruise Brands		Total
Balance at November 30, 2010	$	927	$	384	$	1,311
Foreign currency translation adjustment		-		29		29
Balance at May 31, 2011	$	927	$	413	$	1,340