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

3 Months Ended

Feb. 28, 2014

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Estimated Carrying and Fair Values of Financial Instrument Assets and (Liabilities) Not Measured at Fair Value on a Recurring Basis

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

	February 28, 2014								November 30, 2013
	Carrying Value		Fair Value						Carrying Value		Fair Value
			Level 1		Level 2		Level 3				Level 1		Level 2		Level 3
Assets
Cash and cash equivalents (a)	$	233	$	233	$	—	$	—	$	349	$	349	$	—	$	—
Long-term other assets (b)	114		1		56		52		110		1		58		50
Total	$	347	$	234	$	56	$	52	$	459	$	350	$	58	$	50
Liabilities
Fixed rate debt (c)	$	5,508	$	—	$	5,901	$	—	$	5,574	$	—	$	5,941	$	—
Floating rate debt (c)	4,102		—		4,086		—		3,986		—		3,997		—
Total	$	9,610	$	—	$	9,987	$	—	$	9,560	$	—	$	9,938	$	—

(a) Cash and cash equivalents are comprised of cash on hand, and at November 30, 2013, also include time deposits and, due to their short maturities, the carrying values approximate their fair values.

(b) At February 28, 2014 and November 30, 2013, substantially all of our long-term other assets were comprised of notes and other receivables. The fair values of our Level 1 and Level 2 notes and other receivables were based on estimated future cash flows discounted at appropriate market interest rates. The fair values of our Level 3 notes receivable were estimated using risk-adjusted discount 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 February 28, 2014 and November 30, 2013 being lower than the fixed interest rates on these debt obligations, including the impact of any changes in our credit ratings. At February 28, 2014 and November 30, 2013, 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 February 28, 2014 and November 30, 2013, being higher and slightly lower, respectively, than the floating interest rates on these debt obligations, including the impact of any changes in our credit ratings. The fair values of our publicly-traded notes were based on their unadjusted quoted market prices in markets that are not sufficiently active to be Level 1. The fair values of our other debt were estimated based on appropriate market interest rates being applied to this debt.

Estimated Fair Value and Basis of Valuation of Financial Instrument Assets and (Liabilities) Measured at Fair Value 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):

	February 28, 2014						November 30, 2013
	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets
Cash equivalents (a)	$	188	$	—	$	—	$	113	$	—	$	—
Restricted cash (b)	29		—		—		28		—		—
Marketable securities held in rabbi trusts (c)	112		10		—		113		10		—
Derivative financial instruments (d)	—		37		—		—		60		—
Long-term other assets (e)	—		—		20		—		—		17
Total	$	329	$	47	$	20	$	254	$	70	$	17
Liabilities
Derivative financial instruments (d)	$	—	$	31	$	—	$	—	$	31	$	—
Total	$	—	$	31	$	—	$	—	$	31	$	—

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

(b) Restricted cash is primarily comprised of money market funds.

(c) At February 28, 2014, marketable securities held in rabbi trusts were substantially comprised of Level 1 bonds and frequently-priced mutual funds invested in common stocks and Level 2 other investments. At November 30, 2013, marketable securities held in rabbi trusts were principally comprised of Level 1 frequently-priced mutual funds invested in common stocks and Level 2 other investments. Their use is restricted to funding certain deferred compensation and non-qualified U.S. pension plans.

(d) See “Derivative Instruments and Hedging Activities” section below for detailed information regarding our derivative financial instruments.

(e) Long-term other assets are comprised of an auction-rate security. The fair value was based on a broker quote in an inactive market, which is considered a Level 3 input. During the three months ended February 28, 2014, there were no purchases or sales pertaining to this auction-rate security and, accordingly, the change in its fair value was based solely on the strengthening of the underlying credit.

Reconciliation of Changes in Carrying Amounts of Goodwill

The reconciliation of the changes in the carrying amounts of our goodwill, which goodwill has been allocated to our North America and Europe, Australia & Asia (“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	—		16		16
Balance at February 28, 2014	$	1,898	$	1,328	$	3,226

Reconciliation of Changes in Carrying Amounts of Intangible Assets Not Subject to Amortization, which Represents Trademarks

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	—		4		—	4
Balance at February 28, 2014	$	927	$	363		$	1,290

Estimated Fair Values of Derivative Financial Instruments and Location on Consolidated Balance Sheets

The estimated fair values of our derivative financial instruments and their location on the Consolidated Balance Sheets were as follows (in millions):

	Balance Sheet Location	February 28, 2014		November 30, 2013
Derivative assets
Derivatives designated as hedging instruments
Net investment hedges (a)	Other assets – long-term	$	1	$	2
Foreign currency zero cost collars (b)	Prepaid expenses and other	6		—
	Other assets – long-term	—		8
Interest rate swaps (c)	Prepaid expenses and other	1		1
	Other assets – long-term	—		5
		8		16
Derivatives not designated as hedging instruments
Fuel (d)	Prepaid expenses and other	10		14
	Other assets – long-term	19		30
		29		44
Total derivative assets		$	37	$	60
Derivative liabilities
Derivatives designated as hedging instruments
Net investment hedges (a)	Accrued liabilities and other	$	—	$	4
Interest rate swaps (c)	Accrued liabilities and other	14		13
	Other long-term liabilities	15		13
		29		30
Derivatives not designated as hedging instruments
Fuel (d)	Other long-term liabilities	2		1
		2		1
Total derivative liabilities		$	31	$	31

(a) At February 28, 2014 and November 30, 2013, we had foreign currency forwards totaling $103 million and $578 million, respectively, that are designated as hedges of our net investments in foreign operations, which have a euro-denominated functional currency. At February 28, 2014, these outstanding foreign currency forwards mature through July 2017.

(b) At February 28, 2014 and November 30, 2013, we had foreign currency derivatives consisting of foreign currency zero cost collars that are designated as foreign currency cash flow hedges for a portion of our euro-denominated shipbuilding payments. See “Newbuild Currency Risks” below for additional information regarding these derivatives.

(c) 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 February 28, 2014 and November 30, 2013, these interest rate swap agreements effectively changed $900 million and $909 million, respectively, of EURIBOR-based floating rate euro debt to fixed rate euro debt. These interest rate swaps settle through March 2025. In addition, at February 28, 2014 and November 30, 2013 we had U.S. dollar interest rate swaps designated as fair value hedges whereby we receive fixed interest rate payments in exchange for making floating interest rate payments. These interest rate swap agreements effectively changed $500 million of fixed rate debt to U.S. dollar LIBOR-based floating rate debt. These interest rate swaps settle through February 2016.

(d) At February 28, 2014, we had fuel derivatives consisting of zero cost collars on Brent crude oil (“Brent”) to cover a portion of our estimated fuel consumption through 2018. See “Fuel Price Risks” below for additional information regarding these fuel derivatives. At November 30, 2013, we had fuel derivatives consisting of zero cost collars on Brent to cover a portion of our estimated fuel consumption through 2017.

Offsetting Derivative Instruments [Table Text Block]

Our derivative contracts include rights of offset with our counterparties. We have elected to net certain of our derivative assets and liabilities within counterparties. The amounts recognized within assets and liabilities were as follows (in millions):

	February 28, 2014
	Gross Amounts		Gross Amounts Offset in the Balance Sheet			Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet			Net Amounts
Assets	$	110	$	(73	)	$	37	$	(3	)	$	34
Liabilities	$	104	$	(73	)	$	31	$	(3	)	$	28
	November 30, 2013
	Gross Amounts		Gross Amounts Offset in the Balance Sheet			Total Net Amounts Presented in the Balance Sheet		Gross Amounts not Offset in the Balance Sheet			Net Amounts
Assets	$	137	$	(77	)	$	60	$	(7	)	$	53
Liabilities	$	108	$	(77	)	$	31	$	(7	)	$	24

Derivatives Qualifying and Designated as Hedging Instruments Recognized in Other Comprehensive Income

The effective portions of our derivatives qualifying and designated as hedging instruments recognized in other comprehensive income (loss) were as follows (in millions):

	Three Months Ended February 28,
	2014			2013
Net investment hedges	$	2		$	(3	)
Foreign currency zero cost collars – cash flow hedges	$	(3	)	$	13
Interest rate swaps – cash flow hedges	$	(4	)	$	2

Fuel Derivatives Outstanding

At February 28, 2014, our outstanding fuel derivatives consisted of zero cost collars on Brent to cover a portion of our estimated fuel consumption as follows:

Maturities (a)	Transaction Dates	Barrels (in  thousands)	Weighted-Average Floor  Prices		Weighted-Average Ceiling  Prices		Percent of Estimated Fuel  Consumption Covered
Fiscal 2014 (Q2-Q4)
	November 2011	1,584	$	85	$	114
	February 2012	1,584	$	88	$	125
	June 2012	1,782	$	71	$	116
	May 2013	1,296	$	85	$	108
		6,246					46%
Fiscal 2015
	November 2011	2,160	$	80	$	114
	February 2012	2,160	$	80	$	125
	June 2012	1,236	$	74	$	110
	April 2013	1,044	$	80	$	111
	May 2013	1,884	$	80	$	110
		8,484					46%
Fiscal 2016
	June 2012	3,564	$	75	$	108
	February 2013	2,160	$	80	$	120
	April 2013	3,000	$	75	$	115
		8,724					47%
Fiscal 2017
	February 2013	3,276	$	80	$	115
	April 2013	2,028	$	75	$	110
	January 2014	1,800	$	75	$	114
		7,104					38%
Fiscal 2018
	January 2014	2,700	$	75	$	110	15%

(a) Fuel derivatives mature evenly over each month within the above fiscal periods.