David Bernstein - Chief Financial Officer, Senior Vice President, Chief Financial Officer of Carnival Corporation and Senior Vice President of Carnival Corporation Beth Roberts - Vice President of Investor Relations Micky Arison - Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of Carnival Corporation and Chief Executive Officer of Carnival Corporation Howard Frank - Vice Chairman, Chief Operating Officer and Member of Executive Committee

Sharon Zackfia - William Blair & Company L.L.C. Ian Rennardson - BofA Merrill Lynch Janet Brashear - Sanford C. Bernstein & Co., Inc. Felicia Hendrix - Barclays Capital Brian Egger - Harris Nesbitt Jamie Rollo - Morgan Stanley Timothy Conder - Wells Fargo Securities, LLC David Liebowitz - Harry Curtis - Nomura Securities Co. Ltd. Robin Farley - UBS Investment Bank Steven Wieczynski - Stifel, Nicolaus & Co., Inc. Gregory Badishkanian - Citigroup Inc Nicholas Thomas - Nomura Securities Co. Ltd.

Ladies and gentlemen, thank you for standing by. Welcome to the Carnival Corp.'s Second Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, Tuesday, June 21, 2011. It is now my pleasure to turn the conference over to Howard Frank, Vice Chairman and Chief Operating Officer. Please go ahead, sir.

Good morning, everyone. This is Howard Frank, and I'm here in Miami with David Bernstein, who is our Senior Vice President and Chief Financial Officer. On the line as well, but in London, are Micky Arison, our Chairman and CEO; and Beth Roberts is with Micky. Beth is our Vice President of Investor Relations. So we'll do the normal -- we will do the normal call. As questions come in after we finish -- David and I finish our presentations, I will kind of coordinate it. So if you get a little silence at some points in time, don't worry about it. It's just there's a little coordination activities, and I'll refer questions for Micky and Beth as needed. So with that, I'll turn it over to David, and he'll take you through color for the second quarter and the cost outlooks for the rest of the year.

Thank you, Howard. Before I begin, please note, as some of our remarks in this conference call will be forward-looking, I will refer you to the cautionary statements in today's press release. Also, all of my references to revenue and costs will be in local currency unless otherwise noted, as this is a much better indicator of business trends. For the second quarter, our earnings per share was $0.26. The second quarter came in $0.04 above the midpoint of our March guidance. The $0.04 per share improvement was driven by $0.02 from cruise operations as net revenue yields and net cruise costs were generally in line with expectations. We also picked up $0.02 from a few miscellaneous nonoperating items. Now let's look at our second quarter results versus the prior year. Our capacity increased 5% for the second quarter of 2011, with the majority of the increase coming from our European, Australian and Asian brands, or as we call them, our EAA brands. Our EAA brands grew 9%, while our North American brands grew only 3%. Our net revenue yields increased 2% in the second quarter, with similar increases in both net ticket and net onboard and other revenue yield. Net ticket yields increased 2%. The North American brands, however, were up 3%. Let me give you some color by itinerary for the North American brand. The Caribbean itineraries were flat for the second quarter, which was consistent with our expectation. However, this does represent some sequential improvement. As we talked in the first quarter, the Caribbean itineraries were down. We did expect that the Caribbean pricing pressure would ease as the year progressed, and so far, we are on track. All other itineraries for the North American brands were up except Europe, which was impacted by the conflicts in the Middle East and North Africa, commonly referred to as MENA. Our EAA brands were up 1% for the quarter. Their itineraries outside of Europe were up, particularly the Caribbean and other exotics. However, as previously announced, the European itineraries were down as they felt the impact of MENA. Net onboard and other yields also increased 2%. The increase here was also driven by our North American brands as our EAA brands were also impacted by MENA itinerary changes in the form of lower shore excursion revenue. On the cost side, net cruise costs, excluding fuel per available lower berth day, were up 3% versus the prior year. We saw inflationary pressures in food costs, crew travel and other hotel costs that were anticipated and discussed on our last conference call. In summary, the second quarter EPS was $0.26 per share versus the $0.32 we reported last year. However, fuel prices were up 35%, costing us an additional $0.19 per share. Therefore, excluding fuel prices, our EPS for the second quarter would have been up $0.13 versus the prior year. Turning to our 2011 outlook. I'll skip the net revenue yield outlook as Howard will discuss that shortly. On the cost side, for the full year, net cruise costs, excluding fuel per available lower berth day, are forecasted to be flat to up 1%, which is the same as our March guidance. One final note. I'll share with you our current rules of thumb about the impact of fuel prices and currency on our results for the remainder of the year. To start with, a 10% change in the price of fuel for the remaining half of 2011 represents a $0.14 per share impact. And with respect to FX, a 10% change in all currencies relative to the U.S. dollar for the remaining half of 2011 would impact our P&L by $0.16 per share. At this point, I'll turn the call back to Howard.

Thank you, David. So now, I'll go into a little bit of history, but talk more about how the history is going to affect our outlook for the second half of the year. As we've previously announced, second quarter business trends were more challenging than we expected, especially for our European brand companies. At the time of our March guidance, we clearly underestimated the impact that the political unrest in the Middle East and North Africa would have on our business for the remainder of the year. While we got the estimates right for the second quarter, which was close in, we significantly missed our estimates for the impact of the MENA events for the second half of the year. And to a lesser extent, our revenues were also affected by the unfortunate events in Japan, which had just occurred at the time of our March earnings call and it was too early to know how and to what extent these events would affect our business in that part of the world. Looking at the picture for the entire company, the fleet-wide reduction in forecasted revenue for the second half of this year cost us approximately $0.20 a share. In broad terms, of this amount, approximately $0.17 per share was related to MENA and other European brand softness. Approximately $0.02 was North American brand reduced pricing for European sailings and $0.01 per share for Japan. At Costa Cruise Lines, the establishing of new itineraries for 280 sailings in order to avoid calling at MENA ports was far more disruptive to their business than originally thought. Costa was a significant commitment to MENA ports of call in 2011, was by far the most affected of our companies. Other brands were also affected by MENA but to a much lesser degree. We had expected that once the new itineraries were announced, we would experience a period of cancellations and rebookings for the newly redesigned cruises, and that over time, pricing would stabilize. Reselling of these cruises was far more challenging than expected, and we were eventually forced to reduce pricing for the summer and fall season to stimulate demand. Although difficult to quantify, bookings for the non-MENA-affected European cruises were also affected by the lower prices offered for the redesigned MENA cruises. European brand bookings unrelated to MENA itineraries also appear to have been affected by the weak economies in France, Italy and Spain, the main markets in which they sell into. This, coupled with a significant increase in Mediterranean capacity this year by European and U.S. cruise companies, could also have been a factor in the deterioration of European pricing. However, the redesigning of the MENA cruises and offering them at greatly reduced prices was clearly the greatest contributor to reduced European revenue yields. Regarding the U.K. market, both P&O Cruises and Cunard experienced a slowdown in bookings during the winter and early spring. The U.K. government's austerity measures introduced during the period caused a major decline in consumer confidence. And we felt this in our U.K. bookings for several months over the winter and early spring, a critical time in our booking period. In order to stimulate demand, prices were reduced, as was the revenue forecast for the U.K. However, I'm pleased to say that more recently, consumer confidence has rebounded in the U.K., and our booking patterns in May and June have stabilized. For the North American brands in the second half of the year, we did experience some impact from MENA sailings, and to a lesser degree, sailings around Japan, especially for our premium-priced cruise lines, which have had a number of sailings in those parts of the world. Most of the reduced North American revenue forecast relates to MENA and Japan, with the balance attributable to lower-than-expected pricing for Mediterranean cruises. This was partially offset by better-than-expected pricing in Alaska and other cruise lines. Now turning to the current booking status and recent booking trends. Presently, fleet-wide local currency pricing for the second half bookings is nicely higher, year-over-year, more significantly so for North American brands and slightly higher for EAA brands. Occupancies for the second half of the year are lower, slightly lower for North American brands and lower for EAA brands. Looking at the booking window over the last 6 weeks, however, the picture is showing solid improvement on a fleet-wide basis, with booking volume significantly higher year-over-year for North America and EAA, and with stronger pricing for the North America brands and lower pricing for EAA brands. This is consistent with my previous comments and our current forecast for EAA brand revenue. We view the MENA disruptions in 2011 as a significant and unusual event in our business. While our business is global, with our fleets sailing around the world, we, of course, recognize that our business is subject to the risk of political unrest in those countries to which we sail, and we provide a factor for that in setting our revenue forecast and earnings guidance. However, the magnitude of the MENA events in 2011 on our business was unprecedented and could not have been anticipated. With regard to the European market, the European consumer has been quite resilient in the past, and we believe Europe continues to represent an excellent growth market for our business. Perhaps the silver lining in all this is our North American brands, which have continued to perform well despite the less-than-robust U.S. economy. We are greatly encouraged with the recent strength of our North American brand performances here, that is from a booking standpoint, which bodes well for our 2012 business outlook. Now turning to our full year earnings guidance for 2011. As we indicated in our press release, we are now guiding earnings to $2.40 to $2.50 a share or a midpoint of $2.45. This represents a $0.15 lower earnings guidance than that provided in our first quarter earnings guidance in March. The principal reasons for the change as we've previously indicated are reduced revenues in the second half of the year of approximately $0.20 per share, primarily from the impact of MENA. Some of the reduced revenue is offset by cost savings, as well as certain nonoperating items of approximately $0.05 a share. Given the recent reductions in fuel prices, we are now estimating that fuel cost, net of currency exchange benefit, is unchanged for the rest of the year. So the net of all this amounts to $0.15 a share reduction on our guidance to the midpoint of $2.45 from $2.60 previously. Now let me take you through some of the color for each of the next 3 quarters. Turning to the third quarter, capacity in the third quarter is expected to increase by 4.8%, 3.3% of that is in North America, 7.2% for EAA brands. On a fleet-wide basis, third quarter occupancies are running slightly behind last year, with fleet-wide local currency pricing nicely ahead year-over-year despite the challenges in Europe. That's the current picture. For North American brand, capacity in the third quarter was 36% in the Caribbean, which is down from 41% last year. 25% in Europe, an increase from 17% last year, and 23% in Alaska, which is about the same as last year. Pricing for North American brand business in the third quarter is well ahead of last year on the same year-over-year occupancies. And booking volumes for the last 6 weeks have been strong, with very little inventory left to sell. More specifically, pricing for Alaska itineraries is running significantly higher than last year. Pricing for Caribbean itineraries is slightly better than a year ago, which is a nice improvement from the first half of the year. And pricing for North American brand European itineraries is lower than a year ago for the reasons I've previously discussed. Taking this all together, we are forecasting that North American brand pricing for the third quarter will be nicely higher than a year ago. Moving over to the EAA brand, capacity is 83%. EAA brand capacity is 83% in European itineraries. At the present time, EAA local currency pricing is slightly ahead of last year on local -- on lower occupancies. EAA brand bookings over the last 6 weeks have been strong, with pricing running lower than a year ago. Despite all the challenges in Europe, we are currently forecasting that EAA revenues will come in only slightly lower than last year by the time the third quarter closes. Looking at this on a fleet-wide basis, we are forecasting third quarter local currency yields to be higher in the 1% to 2% range, driven by the stronger North American brand yields. Turning now to the fourth quarter. On a fleet-wide basis, capacity is up 5.8%, 3.2% in North America, 10% for EAA brands. Local currency pricing on a fleet-wide basis for the fourth quarter is nicely higher year-over-year, a similar pattern to the third quarter. Occupancies are lower than last year, slightly lower for North American brands and lower for EAA brands. North American brands are 42% in the Caribbean and down from 50% last year. 14% in Europe versus 9% last year, and 10% in Orient Pacific, which is about the same as last year, the balance of the itineraries in various other places. Pricing for North American brand itineraries in the fourth quarter is nicely higher than a year ago, and the booking volume for North American brands in the fourth quarter continues to be strong. By the time the fourth quarter closes, we expect North American brand pricing to be nicely higher. EAA brands is 71% in Europe versus 64% last year, with the balance in other itineraries. Fourth quarter local currency pricing for EAA brands at the current time is higher than a year ago, but given the current lower occupancy versus last year, we expect EAA pricing on a local currency basis for the fourth quarter to continue to decline. While booking momentum has picked up, it has been at the lower price points. So by the time the quarter closes, we expect EAA local currency pricing to be lower than a year ago. On an overall fleet-wide basis for the fourth quarter, similar to the third quarter, we are forecasting higher local currency revenue yield, driven by the stronger pricings from the North American brands. Now turning to the first quarter 2012. For the first quarter of 2012, capacity is 5.5% higher than last year, 4.5% in North America, 7.2% in EAA brands. At the present time, on a fleet-wide basis, local currency pricing is nicely higher, with occupancies running slightly behind last year. While the first quarter booking picture is encouraging, it is still early in the booking cycle, so I caution not to read too much into the first quarter booking picture at this time. For North American brands, we are 65% in the Caribbean, which is about where we were last year, with the balance in various other itineraries. Caribbean pricing is nicely higher than a year ago on slightly lower occupancies. Pricing for all other itineraries is also higher than a year ago, also at slightly lower occupancies. EAA brands are 22% in the Caribbean, but same as last year; 20% in Europe, down from 23% last year; 18% in South America, up slightly from 16% last year; and 40% in a variety of other itineraries around the world. For all EAA itineraries taken together, local currency pricing is slightly higher than a year ago at slightly lower occupancies. From an overall fleet-wide standpoint, booking volumes and pricings in the last 6 weeks for the first quarter of 2012 have been strong, and at this time, it appears that Q1 is off to a good start. However, please keep in mind, it's still early in the booking process, and we have a long way to go before the first quarter of 2012 is closed. So that sort of summarizes the booking status and the booking picture as we go through this period of time. And with that, Tina, I will turn it back over to you, and we'll take some questions.

[Operator Instructions] Our first question comes from Felicia Hendrix of Barclays Capital. Felicia Hendrix - Barclays Capital: Howard, as always, you gave us great color for the next several quarters. I'm going to push a little bit. I'm wondering -- I know it's early, but I'm also -- I've been really wondering what the current turmoil in the MENA region and throughout is doing to your forward Med and European bookings for next year. I know that's beyond what you can see for the first quarter, but I was wondering if you could give some color on that. And just wondering, you talked a little bit about what your capacity changes were, at least in the first quarter. But I was wondering, industry-wide, do you have an idea of what the capacity is increasing in Europe and in the Med for next year?

Yes, let me take the first question, and I'm going to have Beth, I'm not sure if she can answer the second question, but I'm going to send it over to her to respond to it. She's got the industry data. I'm not sure we have it by markets yet. Look, I think in Q1, I think that cost repositioned Q1 of 2012, and I know you want to go beyond Q1. But for Q1, they repositioned a number of cruises away from the Med. They repositioned an additional ship down to South America for this winter in the first quarter, another ship into the Caribbean, all sorts from the European market by the way. And they made a few other itineraries -- and those ships came out -- the knock-on effect is those ships came out of the Middle East or North Africa, so there is less dependence in the first quarter on those itineraries. Going into the second and third quarters, it's still early. I had a conversation with the Costa people this morning about it. They're still watching it. Those itineraries are still tending to be a little bit soft so that further out, they may have to do some other things. But right now, they feel pretty confident that if things don't get any worse in that area of the world, that they will stay with the current plan. If they see booking momentum falling off, they will have to consider making some changes. But the benefit -- what happened this year, as I think a lot of the changes that were made were made during wave season, or towards the end of -- mid and end of wave season, which was strong booking periods for us. And as you get into the weaker booking periods of April, May and June, it became more difficult for them to catch up. I think if they have -- they have the ability now to make these decisions and be a little bit more agile knowing what they're up against, and so it's possible they may make some other changes. But I think it will be -- give them sufficient time, once they make those changes, to get those itineraries out. So I think they feel much more comfortable in terms of at least having a better sense as to what their revenue yield picture is going to look like from those programs in 2012. But it's still very, very early for second quarter and summer. We don't -- I don't have any picture of the summer at all right now, to be honest with you. So I don't even see that. Felicia Hendrix - Barclays Capital: And is that normal for this time of the year?

Yes, yes. And we don't -- we basically are -- they're still in the process. While they've got their itineraries all done for next year, they're still in the process of formulating their budgets or revenue budgets and so on. So I have no feel for it.

I do not have...

Yes, go ahead. Go ahead, Beth. Yes, I'm sorry.

I do not have the deployment by market for 2012. I can tell you that our North American brands capacity is up 3.5%, and our European brands capacity for next year is up closer to 8%. From an industry perspective, we are showing North America less than 3%, and Europe, up 6%. But that is again brand sourcing European passengers, not necessarily the deployment. Felicia Hendrix - Barclays Capital: Okay, hopefully, I can get some more granularity on that from you later, Beth?

We'll try.

Our next question comes from Janet Brashear of Sanford C. Bernstein. Janet Brashear - Sanford C. Bernstein & Co., Inc.: As we're thinking about the Middle East and the disruption there, I'm wondering what you're thinking if things get worse in Athens? How many of the ships would be affected and how many of the brands will be affected by that since that's obviously a very significant port in the Mediterranean, and to some extent, may be a good port now, particularly with the ships coming out of Middle East and North Africa? So [indiscernible]

Yes, I mean, look, I think that -- yes, I'm sure, Janet. I think Athens has been a challenge for us for several months now. I mean, there's been quite a bit of turmoil in Athens. But it seems to be in Athens, and it seems to be a much more localized. While we do call in Athens and we do turnarounds in Athens, most of our calls are in the Greek Islands, which have been unaffected by all this. Indeed, Athens is really unaffected by it as well. So we haven't -- I haven't heard that Athens has been any significant problem yet, and we hope that things just start to in the next couple of weeks -- there’s some clarity on what's going to happen in Greece so that things will calm down such. But we'll see, we'll see it out. I think it is an important area though for us to sell in, Greece.

The majority of our turns in Athens are done by Seabourn. I was aboard Seabourn Quest yesterday for the naming ceremony and talked to Rick Meadows, who’s the President of Seabourn, about this issue. And he said, as of right now, they have not had any visible impact to their Athens turns, their Piraeus turns.

With respect to our exposure to Greece, it looks like roughly 8% or 9% of our capacity touches Greece in the back half of the year.

As Howard said, most of that is Greek Islands, which is unimpacted, not impacted.

And most of that's already booked, too.

Our next question comes from Greg Badishkanian of Citigroup. Gregory Badishkanian - Citigroup Inc: I just wanted to follow up on the first quarter trends. It seems like they're relatively strong, and you said not to take too much weight into it, though. But historically, this time of year, when you're looking at the first quarter bookings, is it a decent indicator if things are strong, that assuming no change in the macro environment, they'll continue to be so?

It's hard to know. I mean, certainly, it's a positive indicator. But I hate to -- since it is early in the booking process, as ships start to come back to the Caribbean, and if -- you're almost subject, while we're booking nicely, to what your competitors are doing as well and from a last minute standpoint. And if they're not filling as quickly as we are, you just don't know. It's probably less now of an economic issue. I think that we would have -- if it was an economic issue, we probably would have seen it by now. So I think as the economy kind of moves along and it's not a great, robust economy, we are seeing people taking cruise vacations, and we're getting positive pricing trends right now. So we're -- and the booking volumes are good for Q1 right now. So we're feeling -- we're a little bit buoyed by it. On the other hand, we don't want to -- there's a long way to go before the quarter closes, and we don't want to make any promises right now that may not become real -- we can't realize by the end of the quarter. So we'll have a better sense of it in the next quarter, I think. And if over the summer bookings continue to be strong, I think we probably will be able to give out some better guidance on what Q1 yields are going to look like.

Our next question comes from Assia Georgieva of Infinity Research.

Howard, I had one question. Maybe your conversations with the different brand heads, you may have been able to gauge this. Do you think there might be an additional risk related to the MENA events at this point? Or do you think it's been captured, given that we're into Q3, and Q4 has less exposure to that geography in general?

Yes. I mean, with respect to 2011, no. I think we're certainly close enough in on the third quarter to get it right. And while I think we have a little bit more exposure in Q4, I think we brought our yield forecast down enough so that we're fully covered for the second half of the year. I don't see any significant exposure. And I'm encouraged by the fact that in other markets, we're seeing some strong volumes, strong booking volumes, which is a very positive indicator. So I'm hopeful it could be better than what we're saying. But you don't know until the quarter ends, and we'll see what happens.

We had a lot more time to look at -- go ahead, sorry.

I'm sorry, David. Go ahead.

No, I was just going to say, we had a lot more time to look at this and study it for this quarter than we did last quarter. There was a lot of things that occurred last quarter that happened right before the conference call, which made it very difficult for us to predict the future at that point.

I think people forget that the Japan event occurred a few days before the call, and the actual bombing of Libya occurred just a couple of days before the call. So the impact of those 2 events, we hadn't felt yet. And while the ongoing conflict in Libya has not been a major issue in the media in the U.S. like it is in Southern Europe, I mean, if you can imagine, in the southern part of the United States if there was constant bombing of Cuba, what kind of media there would be? And that's kind of the geography we're dealing with. Libya is very close to Southern Europe, and so it was a very big ongoing story. It continues to be in a big ongoing story of that. It only started a couple of days before our last guidance. So now, as David said, we've had 3 months to really study what impact it's had. And hopefully, we've done a better job now of estimating the full impact for this year.

And it sounds like you're being very conservative on Q4, right? From what both you, Micky, and what Howard said?

We hope so.

Exactly.

Okay. And the second question, Alaska has been exceptional this year. Do you think that this might be sort of pent-up demand after several years of very high head taxes? Or might it be something that does not continue into 2012? I know it's very speculative at this point, but I just wondered what your thinking was in Alaska.

I would say a couple of things. First of all, capacity was reduced after the referendum passed. It took a number of years for that reduced capacity actually to roll through, and I think that has helped. And second, historically, when Europe weakens, those people that are looking for kind of sightseeing destinations, Alaska becomes a very positive alternative. And so Alaska winds up benefiting from the negative issues that occur when North Americans travel into Europe. And you've got the combination of that plus higher airfares to Europe, which are not quite the case to Seattle and Vancouver. And you put all that together and they wound up to be a very, very strong Alaska season.

Okay, great. Hopefully, next year, it will continue.

Yes.

Our next question comes from Steven Wieczynski of Stifel, Nicolaus. Steven Wieczynski - Stifel, Nicolaus & Co., Inc.: Howard, I guess for the people that canceled the cruises in the Middle East due to the Middle East stuff and the ones that have not rebooked, what is the theory as to why they have not rebooked? Is it that they have their heart set on that itinerary, or are they waiting for a better economic environment? Can you give a little color there?

I'm not sure they haven't rebooked. I think there may have been some delays in their rebooking, or they just rebooked at lower prices or booked other itineraries. What happened is when we brought prices down for the MENA-affected cruises, because we're starting from 0 again, so to speak, that prices for all other Med itineraries had to compete with that. And so pricing came down all over. And I think that I'm not -- while I don't know for sure what percentage of people who canceled didn't rebook, I think probably, my guess is most people rebooked their cruises but they booked them to other itineraries. But they booked them at lower prices. And I think what we're feeling is really the lower pricing across all Mediterranean cruises, also [indiscernible] and not directly MENA-affected cruises.

When you have that many itineraries being changed and that many guests being impacted, you wind up with a huge amount of churn, and you're not always able to link the cancel with the new booking. Because a person cancels one day and maybe rebooks with a different line, or that line but different itinerary a week or 2 later, and there's no, necessarily, system linkage to the 2 events. So much of that was happening over such a short period of time that it's very hard to know what the actual movement was. And it's possible, when it's all said and done and the brands do a postmortem, we'd have a better understanding of how that happened. But we're still in the middle of it. I mean, a lot of these itinerary changes happened in the second, third and beginning of fourth quarters. So we're still right in the middle of all of this movement, although I would say it's settled down now. And as Howard said, the booking pace has now picked up again. Steven Wieczynski - Stifel, Nicolaus & Co., Inc.: Okay, got you. And the last question, David, the $0.05 cost savings that are coming out on the back half of the year, can you just give a little more color as to where those are coming from?

Yes, what we're referring to is we've got some improvement in fuel consumption in the back half of the year, as well as a number of nonoperating items, most of which, by the way, showed up and were realized in the second quarter. So that was what made up the $0.05.

Remember, we came in $0.04 better in the second quarter, so we took down the guidance by $0.15 to incorporate that as well. So we got the benefit of that.

Our next question comes from Tim Conder of Wells Fargo. Timothy Conder - Wells Fargo Securities, LLC: Howard, could you comment a little bit on the cadence that you've seen in onboard spending throughout the second quarter, and then what you've seen so far in June here?

I'll let David do that. David?

Yes, Tim. We're seeing a couple of percentage points improvement in onboard spending. We're expecting, on a normalized basis, a couple of percent for the year. And really, I think I said this on the last call, it's across all categories of onboard, except for the casinos. And we've talked about the challenges that we have with the casinos, so nothing's changed much from March guidance for the June guidance in terms of onboard.

We're expecting we're 2% higher this year.

Higher, yes. 2% improvement in yields...

Which is about what we ran at in the first half of the year.

Correct, yes, on a normalized basis. Because we talked about the first quarter in the prior year, where you had some unusual items. So the first quarter looked lower, but on a normalized basis, excluding those guarantee payments last year, we were up about 2%. Timothy Conder - Wells Fargo Securities, LLC: So despite the fluctuations in bookings, what you've seen out of Europe and so forth, there's been no broad fluctuation in onboard spending? Is that a fair statement?

No broad fluctuation. But that's historically the way -- we have seen far more volatility in ticket prices than onboard, generally speaking. We did get hurt on the shore excursions because of the itinerary changes, and we took that into account. But generally speaking, the onboard spend is down [ph]. Timothy Conder - Wells Fargo Securities, LLC: Okay, and then could you give us a little bit more detail on the nonoperating items, some kind of from a modeling perspective next year? It sounds like nonrecurring, nonoperating items?

Yes. We had a 2 lie-lows left, which is leases on some ships. We were able to get out of actually half of one of them, which we picked up a couple of cents there. And we also had some FX gains. So these are all one-time items that occur. Every year, there seems to be 1 or 2 here or there. We still have a lease and a half left to go, and we're working to get out of that. So maybe we'll pick up another $0.01 or $0.02 from that next year. It's very unpredictable. Timothy Conder - Wells Fargo Securities, LLC: Okay, and finally, just to clarify, it doesn't sound like there's any impact, but the Chilean volcano causing some flight disruptions in Australia. Any issues with Australia and New Zealand cruises at this point?

I haven't heard anything. I didn't even know about it.

Our next question comes from Robin Farley, UBS. Robin Farley - UBS Investment Bank: Two questions. One is just to clarify, you were talking about repositioning some things away from the Med for next year. But, in 2012, you are not returning at all to any Middle Eastern, North African ports, is that correct? That's not at all in your plans for 2012 now?

No, no, no. What we did -- we did some repositioning in Q1, Robin, away from some of those ports of call. Q2 and beyond, we still have pretty much the same programs in effect for the various MENA ports. We haven't changed. I mean, things have really settled down in Egypt, for example. And in Israel, we started to go back to Israel. Even though Israel was not part of it, we had to stop calling in Israel because people were nervous about even going to Israel. We start Israeli calls later on this year, actually in the fall. But we still have those calls, and beginning next spring and summer, we still have Middle East, North Africa calls. But it's still early in the game for that, and if they have to be changed, they'll be changed. But right now, we still have that same risk exposure, I would say.

Just to clarify, the itinerary changes Howard talked about was for the first quarter, was pulling ships out of the Med entirely and then moving to South America, a couple of ships. But no, there hasn't been changes beyond that. Robin Farley - UBS Investment Bank: Okay. Okay, great. And then the other question is on fuel hedging. Can you just give us any color on kind of your current thinking there, whether that's something you think about more than you have previously?

Yes, we have been thinking about it a lot. We've had a lot of discussions, including with the board. We're looking at a program that's probably more like fuel insurance than fuel hedging. I think we talked about this a little bit on the last call where we would like to protect ourselves against large fuel spikes as opposed to locking in prices. So we'll be -- we haven't done anything to date, but we are talking and looking at it. And we will be opportunistic in our decisions.

I think one of the big issues we have is trying to get, for the kind of program we have in mind, trying to get correlations right. Because based on what we've experienced this year, the difference between WTI and what we pay for fuel has been enormous in terms of the movement of those fuels. So part of those studies we've been doing, working with consultants on this, is trying to get to an answer that will -- so that if fuel does move, one way or another, so will our fuel costs move. So we need to make sure we got it right. And that's why it's taking so much work.

Our next question comes from Harry Curtis of Nomura. Harry Curtis - Nomura Securities Co. Ltd.: A quick question on the cost side. Through the first 3 quarters of 2011, your constant dollar cost per ALBD will average in the high 2s, and your guidance for the year is flat to up 1%. If you could just walk us through the cost savings that are going to drive that annual number down to flat to 1% for the year?

Sure. There were a couple of one-time items in the fourth quarter of 2010, which hopefully won't repeat themselves, which result in some overall cost reduction in the fourth quarter versus the prior year. And the other thing, and we’ve said this before, that the quarters aren't necessarily a good picture of the whole year, that the whole year is a much better picture. Because you do see [indiscernible] across the quarters that's different from year to year, particularly in advertising expense and some other areas. So the full year is a much better measure of our cost control.

Remember, we have had a very significant cost in the fourth quarter last year from the fire on the Carnival Splendor. Harry Curtis - Nomura Securities Co. Ltd.: So looking ahead to 2012, what should be the difference between the kind of high 2% cost per ALBD over the last several quarters? Going forward, particularly given or in light of your comments, that there are some inflationary costs, should it be kind of comparable to the first 3 quarters that we've seen so far this year?

What we've been telling everybody is while historically, we've been able to keep our costs flat on a unit basis excluding fuel, going forward, we're looking at something more like flat to half of inflation, because it is getting more difficult. As we slow down the growth of the fleet, we get less benefit from economies of scale. So it will be more difficult. I keep saying this, and Micky keeps proving me wrong.

There’s also all sorts of things happening all the time. I mean, the reality is that we made a move to merge the back office of Seabourn into Holland America, for example, and create significant cost synergies that we disclosed earlier. But the costs of all that was in the first half of this year, where all the redundancy payments and everything was done in the first half of this year, and all the synergies will flow through the second half of next year. So a similar thing we're working on in Australia, between Princess Australia and P&O Australia. Similarly, we merged our 2 different hotel businesses in Alaska, and that happened this spring. And the synergies, hopefully, will flow through next year. So you've got these kinds of things happening that can give you a bump in a quarter or 2, but hopefully, over the long term, keep us closer to 0 than 0 to half of inflation. Harry Curtis - Nomura Securities Co. Ltd.: Okay, that's helpful. And then one question that's probably a little harder to answer and that is, in Northern Europe, given the capacity increases, I am sure you are sensitive to the issue of saturation points. Do you have any sense of whether or not some of the recent lack of pricing is related to saturation as opposed to consumer confidence?

Our Northern Europe business is performing very well across virtually all brands, at least compared to Southern Europe, where we're dealing with all the MENA situations. Harry Curtis - Nomura Securities Co. Ltd.: And in the U.K. then?

With all the noise in there, Harry, it's really hard to know. As we went into the summer booking season for Europe, it was very strong. And it looked like we were going to have, really, some very strong yield improvements in our European sailings, both on North America brands and European brands. And indeed, even some of the numbers today are showing improvements. I mean, despite all the things that we've seen. So our feeling is that it's really much less a capacity issue and much more a geopolitical issue.

And just to be clear, my answer was itinerary, not necessarily source markets. But itineraries in Northern Europe, Norway and the Baltic are performing better than obviously the Mediterranean because of MENA. I wasn't talking about source markets per se. Harry Curtis - Nomura Securities Co. Ltd.: Okay, and then just one last. If you could address that same question relative to the U.K.?

I think Howard just did.

Yes. I mean, I think U.K. seems to -- look, I mean there are so many -- I mean, there's continuing austerity measures and things going on in the U.K. I think what happened is in the winter and spring, there's been the introduction of a lot of these measures. I think it was a major shock to consumer confidence. And as they've settled in, I think business, as I indicated to you, has started to come back in the U.K. We've taken on all of our U.K. capacity. So from our standpoint, I don't think -- Micky, you can correct me -- that we've got any -- I can't recall, Beth, you may have the data, any significant capacity increases in the U.K. other than for annualization of ships that we already put in.

Actually, our U.K. brand capacity is down slightly, because we have the Artemis that went out. And the Adonia that came in is slightly smaller. I think where U.K. capacity gets hurt is when you have something like MENA and you've got competitors who view the U.K. as not a primary source market but a dump market, that they come in and they dump very, very low prices to fill up ships that are having problems because of something like MENA. So we have some competitive dynamics happening in the U.K. and some other markets as well, where these last-minute itinerary changes needed to be filled, not just by our brands but by some of our competitors.

And source a lot of business. Harry Curtis - Nomura Securities Co. Ltd.: That helps me understand it, though. That's helpful.

Our next question comes from Jamie Rollo of Morgan Stanley. Jamie Rollo - Morgan Stanley: Just a few more questions on the MENA hit, please. I'm just trying to get a feeling for -- just to quantify the lower revenues on the ships you've repositioned and what might happen next year in more normal itineraries. So you said that MENA has taken off 1.5% off group net revenue yields for the year, and those 300 repositioned cruises look to be around 6% of group capacity growth? I mean, I know it's very simple, but is it fair to say that you've lost broadly a quarter of the revenue of those ships? And if that's the case, in a more normal environment, would you expect some or all of that to come back next year?

That kind of analysis, I can't do that quickly.

I'm going to work on that one. Why don't we go on, and I'll come back to that one.

Okay, we will get back to you on that, yes.

One of the problems we have is, you're right, that we have isolated MENA to the itinerary changes. But there is a domino impact of MENA that we are treating separately. And I just described one of the domino impacts earlier when dumping in certain markets. But we're unable to quantify that. So the way we quantify MENA is just those itineraries and those ships that were impacted by those itineraries. Jamie Rollo - Morgan Stanley: Okay, well, that sort of answers the question then. And then the other question was is there any more color you can give us on trading in the last 6 weeks? I see all customer deposits at the period end were up pretty sharply year-on-year, but are there any other trends in the last 6 weeks or just solid demand across the board?

It's been strong across-the-board, stronger at better pricing at higher prices in our North American brands and stronger at lower prices for certain of our European brands that are trying to fill their ships, especially the Southern Europe brands. But overall, the volumes have been strong, which is very encouraging.

When you're talking deposits, are you comparing May to November? Jamie Rollo - Morgan Stanley: No, May to May.

May to May. Okay, we don't have that in front of us.

Yes, it's probably up about $400 million May to May.

It is strong, yes, but that's always a nice indicator.

Our next question comes from Ian Rennardson of Jefferies. Ian Rennardson - BofA Merrill Lynch: A couple of questions. Have the events in MENA altered your thinking regarding the dividend and possibly any share repurchases? And if so, in what way? That's the first question. The second question is that can we get the Mediterranean into context? You mentioned Israel as being a place that people didn't want to go to. I am assuming you didn't do anything in Libya? What other ports did people have an aversion to? And that's it.

If I can just add one thing to Jamie's question, part of that customer deposit issue is currency.

And FX.

You have currency benefit that affects the advanced ticket deposit balance sheet account. I don't know if -- you guys want to respond to that? I think Libya was different in that Egypt was a key port of call. Libya became a marketing issue because of the adverse publicity of the amount of military activity occurring extremely close. When I say military, I'm talking naval ships, missile carriers, helicopters in the vicinity of South of France and Italy. And whether that is a pleasant area to cruise around when you have that kind of activity on the front page of every Italian newspaper, every French newspaper, every Spanish newspaper. So it's quite different than calling in Alexandria. You're right, we had very few calls in Libya. We did have some, by the way, prior to this event, but very few. But it was that impact that we hadn't taken into account in March because the bombing had just started to occur a few days before, and the impact of the publicity hadn't been felt yet.

Yes, I mean, the other country affected is Tunisia. We have quite a few calls in Tunisia, and we had to stop doing that as well. Ian Rennardson - BofA Merrill Lynch: Okay, and on the balance sheet and the dividend here?

Yes, dividend and share repurchase, I don't think MENA has any real long-term impact when we're thinking about the dividend and share repurchase. That's a long-term strategy. We're still committed to returning the excess free cash flow to shareholders. As a result to MENA, maybe we have a few dollars left to return. But it doesn't change the long-term strategy and our thought process.

Your next question comes from Brian Egger of Forecastle Research. Brian Egger - Harris Nesbitt: Just as a point of clarification relative to your preannouncement on June 13, because I think you had identified $0.15 from the operating itinerary changes and $0.05 from fuel and FX, and it would appear that in the last week, with fuel having backed up a little bit, that maybe you got a little bit of that effect in terms of fuel costs back. So I just wanted to know if, just a point of clarification, if your guidance today reflects any of that change in the last 10 days or so?

Yes, it was just basically we updated for fuel and currency, and so that $0.05 went away. Everything else pretty much stayed the same.

Yes, our announcement would have had a $0.20 drop in our forward guidance, and in effect -- in fact, we wound up with a $0.15, and the only difference was the update in fuel and currency.

[Operator Instructions] Our next question comes from David Liebowitz of Horizon Kinetics. David Liebowitz -: Briefly, what is the impact of the Mexican situation? I noticed that Princess is moving out of at least one of their ports in Mexico?

Yes, that's just happened -- go ahead, Howard. Yes, you can go ahead, Howard.

I mean, Mexico, there are some problems spots. But generally, Mexico seems to be okay. Certainly, east coast of Mexico doesn't seem to be a problem at all right now. West coast seems -- occasionally, something comes up, but our sailings are doing okay so far. So we've got -- I think there has been some reduced capacity in the Southern California market, so that's been helpful. So we seem to be okay in Mexico.

Princess announced yesterday a cancellation of Puerto Vallarta. That just happened yesterday. As I said, I was in Barcelona, so I don't have the details of what happened. But in reality, while we have had cancellations primarily in Mazatlan, we have not had any issue with any passenger in that location. So hopefully, if we can get the State Department to clarify their warnings, since ports have not really been impacted -- but I think Princess was reacting more to the State Department. But again, it just happened yesterday, and I really can't give you a whole lot of color on it right now. David Liebowitz -: And the second question, if the earnings come in, in that $2.40 to $2.50 range that you gave guidance on today, what number should we be using as our baseline starting 2012 if we add all the one-off items back into the number?

I thought that's what you're supposed to do? David Liebowitz -: Well, once you've given guidance, Howard, we're not embarrassed to ask for further guidance.

I don’t know, I mean, there are so many -- there are several one-offs here, and we have to take a look at it. Look, when you look at the whole year, what happened in 2011, fuel has been the major driver to the reduced guidance, and it depends on where you price fuel. But if you price fuel where it is today and we're off to a relatively good start in 2012, I think you have to look at -- 2012, I think you need a base here. I think you look at 2012 as a fresh start, so to speak. But you note the yield guidance we took down as a result of MENA. You can factor some of that in and then some of the one-offs, but that's it.

The biggest item is the 1.5 points of yield guidance relating to MENA.

But then you're going to have to be the economist to tell us what GDP will be in Europe and what GDP will be in the United States, and maybe we'll give you some more guidance.

I mean, we're greatly encouraged by what's happening in North America despite what everybody says is a struggling economy. Our business seems to be pretty good right now, which is a major, major positive and somewhat surprising. I think people may have delayed their vacation decisions, and we're starting to see that now during wave season. We're starting to see people coming back into the market, both here and in Europe. I think a lot of that is going on. The people will take their vacations though.

And we'll go through that whole process, David, and we'll give you our guidance in December, taking all those events into account.

What was interesting is that at -- who knows what will be happening in the Middle East over the next 6 months? But the reality is, prior to the demonstrations in Tunisia and in Cairo, despite a huge industry capacity increase in Europe, our advanced bookings prior to all that happening were very, very strong and very encouraging on all brands. So you would hope that we would go back to that kind of booking level. But of course, it's all subject that things, at some point, settle down and these governments either get changed or whatever, that there’s some sort of resolution to these issues.

Just taking -- I mean, this is more anecdotal than anything else, but Seabourn, which has struggled the last couple of years as it expanded capacity, now just took on a third ship 2 weeks ago, and Micky was there for the naming ceremony last night. And their business has really come back nicely. And that's at the really luxury end of the market. So we're very encouraged by what we're seeing even at the luxury end. So the premium luxury cruises and even the contemporary products in North America, the demand is very strong right now. So we're very encouraged.

Our next question comes from the line of Nick Thomas of Nomura. Nicholas Thomas - Nomura Securities Co. Ltd.: I think the impression that I think you’re going to be giving is very much that the MENA impact that you’re seeing this year is very much down to the short notice at which you had to make redeployments across your fleet. In that regard, I wonder whether you could just sort of talk a little bit about planning for next year? Obviously, you have already indicated that you've made some redeployments into the first quarter of next year, but probably not beyond that. Is that sort of how you're going to look at this, a sort of maybe a 6 to 9 months ahead of sailings, you’ll look to make decisions based on the environment that you can see at that point in time? And maybe sort of 3 months from now, you’ll probably have an update for us on how you might be thinking about the second quarter for next year?

Well, we'd love to be able to make these decisions prior to getting into the peak booking curves for these periods, and that didn't happen this year. On the other hand, events have an impact on our decisions as well. As you know, Egypt has called for elections in September, and the impact of those elections will either be very positive or not, and that could obviously affect the decisions. So you have the combination of trying to make your decisions far enough out so you're outside the peak booking curve so you don't have the disruption from a booking point of view. On the other hand, you do have to deal with events as they occur and try to understand what's happening on the ground.

The next question comes from Sharon Zackfia of William Blair. Sharon Zackfia - William Blair & Company L.L.C.: A couple of quick questions, I think most everything has been answered. But I know you are encouraged by North America relative to what's happening for the European and Asian and Australian brands. But I'm just curious, given how concerned people are on the street, is North America as good as you had expected when you entered the year?

I think so. I mean, we had a period, a low, I think, earlier. And then we've picked up nicely. I think the only area that I think that is a little bit disappointing, but it's also the MENA effect, is the European business for the North American brands, which started off very, very strong and then seemed to have tapered off during this period of the political unrest. And so we lost a little bit of momentum. But the impact of that, to be honest with you, is not all that significant in the overall numbers. Alaska is much better than thought, Caribbean's coming in just fine as David indicated. I mean, bookings have been strong. Exotic bookings, world cruises, all of that seems to be quite good, yes. Sharon Zackfia - William Blair & Company L.L.C.: Okay, and then just one follow-up question. There were a lot of questions on potentially redeploying some of the Mediterranean cruises next year. Even though the Med's down, I'm just wondering, is this still higher yielding than other potential regions that you would redeploy to if the issues persist in the Middle East and North Africa?

Well, those decisions are -- those are revenue management decisions based on what the people who are studying the various itineraries and what they can -- what kind of revenues and yields they can bring to the total revenue picture. And so I don't think we're in a position to tell you specifically where revenue is better in one trade versus another trade. They make those decisions whether they go to North Europe, whether they go to the Caribbean, whether they go Eastern Med, whether they go Western Med, whether they go to South America. It is very complicated, and it's not -- there's no easy answer to that other than they look to optimize their revenue by going into those itineraries and those trades that will give them the best possible revenue yield. I should also say this though, that often, the decision on revenue yield, it's not just solely a revenue yield decision, it's an operating income decision for that particular program so that they look at fuel costs as well in terms of coming down to an operating margin that makes the most sense. So they tend to look at the operating margin first and then revenue yield as a function of that more. So that's what's more focused on.

Yes, I think we can wrap it up now, Tina.

Thank you. Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect all lines. Thank you and have a good day.

Thanks, everybody.

Thanks, everybody.

Goodbye.