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

Felicia Hendrix – Barclays Capital Rick Lyall – John W. Bristol Steve Kent - Goldman Sachs Tim Conder – Wells Fargo Steve Wieczynski - Stifel Nicolaus Ian Rennardson – Banc of America/Merrill Lynch Assia Georgieva - Infinity Research David Leibowitz – Horizon Asset Management Janet Brashear – Sanford Bernstein Robin Farley - UBS Jamie Rollo – Morgan Stanley Greg Badishkanian - Citigroup Rosie Edwards – MF Global Edward [Catford] – No Company Listed

Welcome to the Carnival Corporation third quarter earnings conference call. (Operator Instructions) I would like now to turn the conference over to Mr. Howard Frank, Vice Chairman and Chief Operating Officer. Please go ahead, sir.

Good morning everyone. This is Howard Frank speaking. In Miami with me are David Bernstein, Senior VP of Finance and Chief Financial Officer of Carnival Corporation and Beth Roberts, Vice President of Investor Relations. Micky Arison has called in. Micky Arison is in Italy fresh from the delivery of the new Carnival Dream which will spend the next several weeks sailing in Europe and then returns to New York in November for a couple of days and then will come back down to Port Canaveral for its sailings. I will comment later on the booking picture and the outlook bookings wise and I will turn it over to David Bernstein right now to give you the color on the third quarter. David?

Thank you, Howard. I will begin the call by reading the forward-looking statement. During this conference call we will make certain forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and assumptions which may cause the actual results, performances or achievements of Carnival to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. For further information, please see Carnival’s earnings press release and its filings with the Securities and Exchange Commission. For the third quarter our earnings per share were $1.33 versus $1.65 in the prior year. During the third quarter our earnings came in above the midpoint of our June guidance by $0.16. This was driven by better than expected net revenue yield which benefited us to the tune of $0.12, better pricing on close-in bookings worldwide during the seasonally strong summer period was worth $0.10 while onboard and other revenue contributed $0.02. Overall yields were only down 12.3%, almost three points better than the midpoint of our June guidance. In addition, a variety of cost savings measures benefited us to the tune of $0.03 and resulted in net cruise cost excluding fuel being 1.6 points better than guidance. Looking at our third quarter operating results versus the prior year, our capacity increased 5.5% for the third quarter of 2009 with a majority of the increase once again going to our European brands. Our European brands grew 7.5% while our North American brands grew 3.6%. Also during the third quarter Costa Asia more than doubled in size as Costa Classica joined Costa Allegra in Asia. As I previously mentioned, overall net revenue yield in local currency declined 12% in the third quarter versus the prior year. Now let’s look at the two components of net revenue yield. For net ticket revenue, we saw a yield decline of 14% in local currency. Our North American brands were down 20% driven by declines in all itineraries. Our European brands held up very well as they experienced only 6% lower local currency ticket yields on higher capacity. For net onboard and other yields we reported a yield decline of 6.5% in local currency. We saw declines in most of our brands around the world, a trend which we anticipated. Net onboard and other yields in our European brands were down less than our North American brands similar to our experience in net ticket revenue yields. Net onboard yields for all of the major categories were once again down on the third quarter versus the prior year but they were down less than they were in the second quarter. In summary, given the economic environment and the impact of the flu virus which was worth about 1.4 points on third quarter yields, we were very pleased with our yield performance this quarter. On the cost side, our cruise costs for available lower berth days, excluding fuel and in local currency, was down 0.7%. However, it should be noted that during the third quarter last year we received a $26 million insurance settlement. Excluding the settlement, net cruise costs were actually down 2.4%. However, the best measure of cruise cost changes are on an annualized basis which I will touch on in a moment. Fuel prices this quarter were 39% lower saving us $211 million or $0.26 per share. While currency movements reduced our costs for the third quarter overall currency was a negative drag on earnings of approximately $80 million or $0.10 per share as the dollar strengthened versus the Euro and the Sterling. Before I turn to the outlook let me say a few words about liquidity. At the end of the third quarter our liquidity was $6.2 billion. This includes $2.6 billion available on our revolvers, almost $700 million of cash excluding cash on hand and $3 billion of committed financing. Since the June conference call we have completed three financings worth approximately $800 million. Back in March we laid out a financing plan for the remainder of 2009 and fiscal 2010 which I indicated would take us six months to complete. I am happy to report that we fully executed our plan and we are well positioned through the end of 2010. However, we may still opportunistically increase our liquidity over the next year. Turning to our 2009 outlook, I will skip the net revenue yield outlook as Howard will discuss that in a few moments. Cruise costs per available lower berth day for the full year excluding fuel and in local currency are projected to be flat with the prior year. Our operating companies continue to do an excellent job managing their costs. Year-to-date since the December guidance our cost savings now total $160 million. Based on the current spot price for fuel, fuel prices for the full year are projected to be $365 per metric ton for 2009 versus $558 per metric ton in 2008 saving us $616 million. In addition, we are projecting a $90 million savings in 2009 for reduced fuel consumption. Fuel consumption per ALBD is expected to decline almost 5% this year. As a result of numerous fuel conservation measures we have been seeing 2-3% fuel efficiencies per year for a number of years. The stepped up focus in this area has benefited us this year and with larger declines in fuel consumption. Furthermore, the dollar has strengthened versus the Euro and the Sterling so in the end fuel and currency are driving our costs down and therefore in current dollars including fuel our costs are expected to be down 12%. At this point I will turn the call back over to Howard.

Thank you David. Now I will give you an update on the bookings picture. Throughout the summer booking volumes have continued to be quite strong which has enabled us to achieve higher last minute prices on cost of sailings throughout the fleet and we actually saw the impact of that in the third quarter as well. Yields are better than we had anticipated as David indicated. As we indicated in the press release, during the last 12 weeks bookings for the next three quarters have been running 19% ahead year-over-year. More importantly, as a result of the strong volumes and adjusting for increased capacity we are now only moderately behind last year’s booking levels for the next [three] quarters so the gap in occupancy has significantly closed and the booking curve continues to lengthen. [Inaudible] on an overall basis continues to be stable and for an overall number of itineraries where the booking window has pushed further out we have been able to move prices up. Trying to crystal ball yields for 2010 with any degree of decision is quite difficult at this time as there are many factors at play including the degree we are able to move prices more broadly as the booking curve extends. It was mid-September last year that began the meltdown in the financial markets and at the same time caused our cruise bookings to come to a virtual standstill. So booking volume comparisons will become even more easier in this quarter and if the current booking trends continue we should be able to quickly close the remaining occupancy gap and pricing comparisons should also become easier. Because a large part of our first quarter 2010 business has already been sold at lower prices, at this point it will be difficult to gain enough pricing momentum to catch up with the first quarter yields we experienced in 2009. As a consequence, we expect local currency revenue yields for the first quarter of 2010 to be lower than 2009. Having said that, based on current currency exchange rates we do expect current dollar revenue yield to be neutral to slightly higher during the first quarter. As the remainder of year 2010 plays out if the strong booking volumes continue at this pace, we should start to see a positive local currency yield impact and a gradual year-over-year revenue yield improvement. Now turning to new ship deliveries in 2010. We are currently projecting a 7.7% fleet wide increase; 3.6% in North America and 12% in Europe. We have a record six ships scheduled for delivery in 2010. The Costa Deliciosa will be delivered in mid-January, the AIDAblue in early February, the P&A Azura in late March, the Seabourn Sojourn in late May, Holland America’s New Amsterdam in late June and Cunnard’s Queen Elizabeth the replacement ship for the QE2 in late September. So of the six new ships, four ships are for our European brands which is a continuation of our strategy to expand our business in the less penetrated European market. As part of this strategy they are also moving out all the ships from the European fleet. The Costa Europa has been chartered out to a European tour operator and will leave the fleet in April 2010 and just recently P&O’s Artemis has been sold to another European tour operator for delivery in Spring 2011. Now a little bit of color by quarter. I will start with the current quarter we are in, the fourth quarter of 2009. Capacity increase for the fourth quarter will be 7.7%; 5.7% in North America and 9.6% in Europe. Overall at this point in time occupancy in North America and Europe brands are approximately at the same levels as Q4 of last year so we have caught up considerably and pricing is lower but given the strength of late bookings we do not expect further price deterioration for the quarter. There is very little inventory left to be sold. In North America for the North American brands they will have 45% of their capacity in the Caribbean, up from 42% last year. Ten percent of their capacity is in Europe, just slightly down from 11% last year and 10% of the capacity will be in the Mexican Riviera cruises out of Southern California and the balance in Alaska and long and exotic cruises all of which are individually under 10%. Pricing for the North American brands in the fourth quarter is lower in all itineraries with moderately lower pricing in the Caribbean and Europe and more significantly lower pricing for Alaska, the Mexican Riviera and long and exotic cruises. This follows a similar pattern we have had throughout the year with higher price cruise products suffering more significant declines and yields versus our lower priced products. Mexican Riviera pricing has also been challenged because of the significant economic slowdown in Southern California, the largest market for these cruises. We expect North American brand pricing to be down in the mid teen’s range for the fourth quarter which is a slight improvement from third quarter yield deterioration. Let me comment about the situation in Alaska. While the cruise industry has held off filing suit to allow the government of Alaska to reconsider the imposition of the Alaska head tax the industry has now actually filed suit. It appears that the proponents of the head tax had been able to convince the political leaders in Alaska that the global economic crisis is the reason for declining passenger numbers in 2009. This is obviously an incorrect conclusion. Despite the global economic crisis virtually all cruises, the Caribbean, Europe, Asia, Australia and South America will see increases in passenger volumes in 2010. The reason for the rapidly declining numbers in Alaska is the cost of operating cruise ships in Alaska which have been dramatically risen. Together with the higher price our customers pay from the imposition of the head tax resulting from the original initiative. When we compare Alaska to other premium cruise markets during the peak summer months it is now far less profitable than it has been in the past. Despite significant decreases in Alaska capacity in 2010, early booking trends are still not positive and our brands are now starting to see further decreases beyond 2010. This downward spiral is likely to continue until these cost issues are addressed. Now let me return to Europe in the fourth quarter of 2009. Europe brands have 78% of their capacity in Europe in the fourth quarter, about the same as last year. The balance of their capacity is in various other itineraries including transatlantic and the Caribbean. Pricing for Europe brand itineraries is moderately lower across most itineraries and we expect a modest decline on local currency pricing for Europe brands in the fourth quarter. As we indicated in the press release, we expect overall fourth quarter local currency yields to be lower in the 11-13% range year-over-year and earnings to come in at a range of $0.16 to $0.20, which is slightly lower than the implied fourth quarter earnings guidance we gave at the last call which is a result of simply forecasting higher fuel costs for the quarter than of currency. Now looking to 2010, first a little bit of color on the first quarter. Fleet wide capacity for our business is expected to be higher by 9.9%. 5.3% of that will be for North American brands and 15% for our European brands. Occupancy on an overall basis at this time are moderately lower year-over-year for both North America and European brands. However, the strong booking patterns over the last several months have significantly closed the first quarter occupancy gap. Looking now at the North American brands in the first quarter, the North American brands are 62% in the Caribbean which is about the same as it was last year. 11% in Mexican Riviera cruises which is down from 13% last year and the balance in various other itineraries including the long and exotic cruises which we do quite a bit of in the late fall and winter months. Currently pricing for Caribbean cruises is moderately lower than last year. The pricing for Mexican Riviera cruises is down more significantly. Pricing for long and more exotic cruises is also lower. As booking volumes continue to strengthen we have been able to increase pricing for certain itineraries in the first quarter. Although current pricing is lower versus pricing at the same time last year, pricing is still higher than where 2009 first quarter pricing ended. However, as mentioned above and as I have mentioned before, with such a large part of the inventory already sold for the first quarter we expect North American brand yields to be moderately lower than last year although the yield deterioration will be significantly less than in the fourth quarter of 2009. Now turning to Europe in the first quarter of 2010, Europe brands are 29% in the Caribbean, down from 32% last year. 27% in Europe up from 25% last year. 11% in South America which is about the same year-over-year and 11% in Asia versus 12% in the prior year with the balance in various other itineraries. Pricing for European itineraries at the present time is holding up well versus 2009 with pricing in most other itineraries moderately down versus last year. However, yields are more significantly lower in South America because of the challenging economic environment in Brazil and the significant increase in Brazilian cruise capacity this winter. While overall European brand pricing at the present time is modestly lower as in North America pricing is still ahead of where Europe pricing closed in the first quarter of last year. By the time the first quarter closes we expect that European first quarter local currency pricing will be down slightly compared to last year and the yield deterioration is significantly less than the fourth quarter of 2009 which is the same pattern as in North America. From an overall fleet wide standpoint for the first quarter we expect local currency yield to be moderately lower than a year ago and based on the latest currency exchange rates current yields are expected to be neutral to slightly higher. This is our best estimate for the first quarter yield direction at the present time. However, given the very different bookings patterns we are experiencing this year versus last we caution this is just an estimate on yield and it could change on the next update which we will give you in mid-December. Turning to the second quarter of 2010, we have much less booking information available. Capacity for the second quarter is expected to increase by 9%. Four percent of that will be for our North American brands and 15.2% for our European brands. Second quarter data is still in its early stages so I caution not to read too much into this information. Having said that, overall occupancies are moderately down year-over-year in North America and Europe. In terms of the North American brand capacity, it is 57% in the Caribbean in the second quarter versus 52% last year. 10% in the Mexican Riviera, down from 11% last year with the balance in various other itineraries including Alaska, the [Europe] shoulder seasons, Asia and the Panama Canal. Pricing at the current time for North American brands is lower than this time last year but slightly better than the pricing comparison in Q1. However, current second quarter pricing is well ahead of where the second quarter closed last year. Given the strength of current bookings we expect the current pricing gap to significantly close and last year’s second quarter yield to dramatically decline beginning with the September meltdown of the financial markets. Now turning to Europe, Europe brands in the second quarter are 57% in Europe which is about the same as last year, 10% in transatlantic which is also about the same with the balance in various other itineraries all under 10%. At the present time, European local currency pricing is lower versus last year but the pricing is still significantly higher than where the second quarter closed last year. Also because of the strength of the European booking volume we expect the current pricing gap to close in a similar pattern to our North American brands. So that is your early picture for 2010’s second quarter. We will be able to provide you with more color on the first and second quarter 2010 revenue picture on our next call in December. So with that, operator I will turn it back to you so we can open up the lines for questions. :

(Operator Instructions) The first question comes from the line of Felicia Hendrix – Barclays Capital. Felicia Hendrix – Barclays Capital: You gave as usual very good overview and actually an encouraging outlook. It seems based on what you said the data is actually getting incrementally more positive. I am just looking back to the data in the last downturn where it took about three years to get back to prior peak. I know this is purely hypothetical and you don’t have a whole lot of visibility but based on what you know and based on your experience I am wondering if you think that the recovery is going to be at a steeper slope or a similar slope to what you have seen before. Clearly the downturn is more significant but the supply situation is better so I just wanted to hear your view on that.

This is my personal view. I think the experience we are having here in North America right now is very different than the experiences we have had in the past in terms of the economy. We haven’t experienced a downturn as dramatic as this in our yields. I would say given the economic data I read and the fact that unemployment is closing in on 10% and probably will go over 10% I would view the recovery as being slower. I think it is clear that we have kind of stabilized here and we have been able to boost pricing up at a price point that people find very attractive and we have been able to create tremendous volume and tremendous demand for various spots but I do think we are not going to see dramatic increases. I think it will be a slow, emerging yield environment for us and it will take several years, I think in my mind, to recover. Now I could be wrong and sometime in mid 2010 all of a sudden the world changes and the 2011 picture will look much better but right now the 2010 picture I would say is stable and should get better as the year unfolds but there is so many factors out there in the economy. There is still a housing issue. There is unemployment. I just think it is going to be a fairly stable environment, maybe slightly improving but nothing more than that.

In addition just so you understand in the last recovery it took us two years to recover what we lost during the downturn. Felicia Hendrix – Barclays Capital: Now that WTI is above that magical 70 [R] mark I am wondering if there is any updated talks on June supplements?

We continue to look at it but at this point in time we have indicated it is just something we continue to look at and is an option we have but we haven’t implemented anything to date.

We put out a public statement on our position on that and we haven’t changed that position.

The next question comes from the line of Rick Lyall – John W. Bristol. Rick Lyall – John W. Bristol: You made comments in the release about the extension of the booking window. I wonder if you can quantify that at all.

The booking window is sort of nine different brands and it will vary by brand. Some brands have really pushed it out further than other brands but I think overall I think it is a 15-30 day range. Something like that. I think it will vary. We don’t do a combined overall forecast. We don’t look at it overall. We look at it brand by brand and each brand seems to have been able to extend out their window in varying degrees but somewhere around 15-30 days. You are really now just starting to see it happen. Rick Lyall – John W. Bristol: Have you seen an underlying improvement in group booking trends yet?

It is a mixed picture and I don’t think we can see. It really is very brand dependent. Some up and some not. It is a mixed bag at this point.

The next question comes from the line of Steve Kent - Goldman Sachs. Steve Kent - Goldman Sachs: Could you talk a little bit about your focus on or desire to build new ships given commodities, FX, shipyards maybe adding some discounts and just your appetite for maybe putting in some orders in the next couple of months for the out years?

I think I said on the last call that pricing in Euro’s has come back down to reality and are pretty much in that 2003/2004 level where we did order before. Unfortunately in the last 30-60 days the dollar has weakened dramatically which has again made it tougher for the U.S. brands. I did probably say we would like to build some Princess but the situation right now I would venture to say it is unlikely that a contract could be signed before the end of the year which would make deliveries by 2012 less likely which will leave us with pretty significant free cash flow to 2012. We do intend over time to continue to grow our brands but with what has happened over the last 12 months clearly we are being cautious. Steve Kent - Goldman Sachs: Which brands then would you, if not the U.S. brands I am assuming it is the European brands you would be the most focused on?

As I said three months ago, clearly we would like to build for Princess. We have a lot already in the pipeline for our European brands so we have no urgency to do anything with the European brands right now. We can wait a couple of years for the European brands. They have a lot in the pipeline. Princess I think would be our first priority, but again with the weaker dollar we are going to proceed cautiously.

The next question comes from the line of Tim Conder – Wells Fargo. Tim Conder – Wells Fargo: Maybe a different way to ask two of the prior questions, how would you compare what you are seeing right now of a re-trade up effect from the lower value brands and people returning to trading up the ladder within your brand pyramid? I guess another way maybe to look at that is also are you seeing the higher end brands’ booking window extending faster than they are at the more entry level brands?

I think we are seeing more.

They are contracting more and expanding more so anecdotally what you just described is correct.

The higher end brands are extending the window out. I’m not sure more or less but they are performing better right now from a volume and bookings standpoint. Yes. We are seeing that come back. Tim Conder – Wells Fargo: Is that recovery, is the trade up recovery would you term that as a similar pace to what we saw in the last downturn or coming out of the last downturn or slower?

Everybody is trying to focus on the last downturn. We were two brands in the last downturn and a very different company and we weren’t global. We weren’t getting business from everywhere in the world so it is very hard to compare to the last downturn. We are encouraged with what we are seeing. We have now reported two quarters of very, very strong booking volumes. We are now reporting for the first time the booking curve is extending. To continue to compare it to the last downturn when the industry was quite different, we are far more global and our brand portfolio is so different with very different booking curves it is very hard for us to do. Tim Conder – Wells Fargo: You had said when the board very astutely suspended the dividend that would be reassessed basically coming up here towards year-end or early in calendar 2010. What is your thinking at this point? Again your comment looking out even into 2012 you should generate substantial free cash flow by then but obviously 2010 is not 2012.

There is a number of issues that the board, I don’t want to pre-empt the board but there is a number of issues. One is our liquidity situation and as David reported it is extremely good which was not the case 12 months ago. Second is that the overall business tone is improving and that obviously is the case. The third is we wanted to protect our rating which we have notched down with one agency during this period. So we would like to get that rating to A-. Based on those three things, principally those three things, we will make recommendations to the board and the board will make a decision but clearly we are headed in the right direction.

The next question comes from the line of Steve Wieczynski - Stifel Nicolaus. Steve Wieczynski - Stifel Nicolaus: When you look at the cost structure and you guys have done a great job in terms of removing costs, I don’t know Howard if you could use a baseball analogy in terms of what inning you think you guys are or how much more there is to be removed at this point and which areas do you think there are more chances to remove costs, etc.?

What inning would that be? It is hard to say. We have been very successful in getting our operating guys to focus on their costs and they have taken out a lot of costs on the short side area and have really re-examined processes and the way we function as an organization. We have consolidated some things. We have consolidated a large part of our Alaska operation between Princess and Holland America, taking a considerable amount of costs out. I think there is a lot of costs that I think we have already taken out and I would say we are probably…I still think there is plenty of opportunity. To use the analogy, we are probably in the fifth inning or sixth inning. I think between the fifth inning and the ninth inning though I think some of the remaining costs to be taken out could involve some more restructuring of certain aspects of the business. That is tougher to do. I do think there are opportunities there to do it and take some more costs out.

The only thing I would like to add to that is that our operating companies are working more closely together today than they ever have before and that in and of itself has created a lot of opportunity for us and we will continue to do so as we move forward.

I also think that one of the continuing big opportunities is fuel conservation. I think we are only in the middle innings on fuel conservation both between technology and investments that we are ongoing making to reduce consumption and reduce our footprint we have a long way to go. This year is a good example. Last year people were saying how much more can you do and this year we have done a lot more and we will be projecting more next year as well. So there are still opportunities. Steve Wieczynski - Stifel Nicolaus: All the press right now is all over Oasis in terms of how well that is booking but when you look at Dream that is obviously your largest ship at this point. Maybe give an indication of how bookings look for that so far.

Bookings for Dream are terrific. It is getting a very significant premium. I should say the same is true for Seabourn Odyssey. Bookings are terrific and it is getting a very significant yield premium. Both are. As far as Oasis, the more successful Oasis is the better it is for us. The higher prices they can get, the more demand they can get the better it is for the industry in total. The more exposure they bring to the industry will be positive as well so more power to them.

The next question comes from the line of Ian Rennardson – Banc of America/Merrill Lynch. Ian Rennardson – Banc of America/Merrill Lynch: Touching on those three things again, I mean you talk about significant CapEx and free cash flow in 2012 but you are not paying a dividend yet and you have not ordered any ships past 2012. What are the alternatives for that cash if you don’t start building ships? Secondly, I think David referred earlier to recovering the pricing in the last downturn over two years. Now I think the point is it is a different industry and different company. Do you think a three year cycle this time could be reasonable to recover the pricing you have lost this year?

To answer part of your question, obviously we are going to try to recuperate as quickly as we can. That is the job of our marketing and our yield managing people and we would expect them to do their job and recuperate it as quickly as possible. As far as capital expenditures, as I said I do expect eventually we will be building more ships in the future for our various plans. We do intend to build them. If we have significant cash flow then the alternatives are basically stock buybacks and dividends. We would like to be in that position again as we were a few years back but we will see.

The next question comes from the line of Assia Georgieva - Infinity Research. Assia Georgieva - Infinity Research: I had a question on Q4 and Q1, those were obviously difficult quarters seasonally and that is the nature of the industry. Ignoring year-over-year comparisons because they are so different when you look at the year-ago periods what would be a normal curve from here on out for Q4 and especially Q1? If we took today’s pricing should we expect that to remain pretty stable for the rest of the booking period especially for Q1 or is it difficult to call?

I think we are saying that pricing essentially now is stable. In terms of where the actual yield comes in it is a little bit harder to predict but you need to know brand by brand and itinerary by itinerary and cabin by cabin what kind of inventory we actually are selling because the price will vary based on that. We don’t have that data. I would say from an overall standpoint pricing is stable and as we are able to catch up on occupancy, because the yield curve is moving further out, we have been able to tweak pricing up on certain itineraries where we have seen the stronger demand. I would think it is probably stable to slightly up and that is how we would characterize both the fourth quarter and the first quarter. Having said that, that assumes the continuation of the very, very strong booking volumes. You can very clearly see when we chart it out that as we take pricing down volumes go up and as we take pricing up volumes will start to come off a little bit. So it is a little bit of a balancing game as you go forward in terms of yield managing us.

You also have to remember that we are always talking of comparison versus the prior year quarter and sometimes there are issues in that prior year quarter that aren’t obvious. A quick question is why aren’t we seeing sequential improvement fourth quarter versus third like we are in first and second? The reason is that last year we had the ending cruise of the QE2 and believe it or not that had a very, very significant positive impact on our yields last year that won’t be repeated this fall. So you get these kinds of anomalies when you just look at quarters. Assia Georgieva - Infinity Research: I agree. That is why I am trying to ignore for a moment the year-ago period and just gauge a little bit more what your guidance is expecting to happen from current pricing on and I think Howard helped answer that by saying that basically an expectation of flat to slightly up.

As long as volumes are significantly above our capacity increases then the only variable then becomes yield and pricing increases to bring the volume down because at the end we can only sail forward. Assia Georgieva - Infinity Research: There seemed to be about $0.05 tax benefit in the quarter. Would you be able to be more specific as to what that is related to?

It was two things. The prior year we had about $0.01 per share which was related to that insurance settlement I talked about. The remaining portion really essentially has to do with the accounting and FIN 48 and the prior year as we footnoted in the press release. In the prior year we had put up some reserves and this year we had the reversal of the tax benefit from taking down a couple of reserves. Remember these are very small numbers and because on both sides there is zero points it looks like a big swing but it was really I think about a $16 million swing in the reserve overall. Assia Georgieva - Infinity Research: I know on an annual basis it seems like a small number but when it hits in a specific quarter it can seem a little bit chunkier.

The next question comes from the line of David Leibowitz – Horizon Asset Management. David Leibowitz – Horizon Asset Management: Two items. One, there was very little said about your onboard spend during the call or in the press release. Can you update us there?

I did mention that in the third quarter we saw a decline in most of the categories and I had also indicated that the declines in the third quarter were not as great as the declines in the second quarter. I think I said it was about 6.5 percentage point decline in the third quarter. David Leibowitz – Horizon Asset Management: 825 to 864.

Versus probably like 9.5% in the second quarter. So there has been some improvement in that area. David Leibowitz – Horizon Asset Management: Also, staying with the income statement for a moment, your passenger ticket number is down roughly 15.12%. Your commission, transportation and other expense is down almost 22%. Where did that huge differential come from?

We will have to look into that in more detail and get back to you.

Customer deposits, a large part of the decline is pricing related. Also depending on what you are measuring from, which period to which period because there is also seasonal declines. David Leibowitz – Horizon Asset Management: I was using the third quarter numbers where commissions, transportation and other which is the first expense item and I compared that which was a 22% decline to the passenger ticket line for the same quarter which showed only a 15.12% decline.

We will get back to you on that one. David Leibowitz – Horizon Asset Management: Lastly, you mentioned you will have two ships out on lease. How is the accounting treatment for leases done? Does that imply you might have higher earnings for those two vessels if they are out on lease than when you own and operate them?

One was leased and one was a purchase.

Let me just clarify. The charter is a long-term charter essentially that should cover the remaining life of that ship which is the Costa Europa. The other transaction is an outright sale of the ship that gets delivered on the Artemis which is in the P&O fleet which will continue in the P&O fleet until it is re-delivered in the spring of 2011. So we sell it. We get the proceeds. The proceeds will be in the form of cash and seller financing but a very, very major piece of it is in cash. Then we charter it back until it is actually re-delivered to the buyer until Spring of 2011. So essentially both transactions, neither of those transactions result in a loss. In fact on the sale of the Artemis it will be a profit on that.

I think it is fair to say that both purchases, the term lease is just the way the purchase is financed in a sense. David Leibowitz – Horizon Asset Management: So then there will not really be a comparative number there. What we are looking at is one that is going to be straight to the top line versus last year’s numbers that had to flow through the entire income statement? Or going to the pre-tax line, excuse me, versus when you own and operate going to the whole income statement?

Once the ships are delivered to the third party tour operator they will come out of the fleet. Now remember that both of those companies, P&O and Costa, P&O has the reserve coming in this year and Costa has 3 more ships scheduled for delivery so they will be replacement tonnage for these ships. David Leibowitz – Horizon Asset Management: I am not concerned about that. I was just wondering how much of an incremental one-time profit we might see in the respective quarters when the two ships leave the fleets.

These are not terribly material.

Nothing terribly material.

I am going to just comment briefly on your question about commission, transportation and other, the reduction is coming from a combination of lower air [payments] in that there are less passengers that booked air through us in the quarter in addition to lower average airfare costs per passenger.

The next question comes from the line of Janet Brashear – Sanford Bernstein. Janet Brashear – Sanford Bernstein: I wonder if you could comment on pricing relative to Carnival and Seabourn particularly as you add Carnival Dream and Seabourn Odyssey you are getting significant premiums as we might expect from these great new ships. What is going on with the rest of the Carnival brand and the Seabourn brand and the older ships relative to pricing?

Basically what I will tell you about Carnival and I will tell you about each of them separately because they are very different stories, but Carnival throughout this period I think has probably performed quite well as a brand and it does have more of a mass market appeal. Price points are lower. Ships are closer to home ports in which people live. So throughout this period Carnival has performed quite well as a brand. I think we have been very pleased with the pricing on the Dream and occupancy that has been very strong on the Dream. Because it is positioned in a very different market than the rest of the ships it shouldn’t have much of an impact on other Carnival ship pricing. The Seabourn Odyssey has performed extremely well. There has been tremendous demand for the ship. The other three ships are much smaller ships and they have been positioned in more exotic locations. We have another Seabourn ship, the Sojourn, which gets delivered next May. Those ships are considerably at much higher price points than the existing three ships. We try to position then differently. Janet Brashear – Sanford Bernstein: In Alaska you talked a little bit about your frustrations and challenges there. At the same point, Disney is talking about opening new cruises in that area. Does the fact that they are going into the market as you have reduced capacity mean it will be hard to get any of your slots back?

No. Not at all. Disney has only announced one year and Disney has historically, by the way Crystal has done the same thing, historically cherry picked markets. So they have the two ships at Port Canaveral and have occasionally moved them like one to LA and to Europe and now they are going back to Europe. So they tend to cherry pick their passenger base. So they may do this one year and not come back for 3-5 years. The basic Canada business, the Alaska business will be declining. You will get this occasional either Crystal or Disney or maybe even a Seabourn doing Alaska but the overall trend in Alaska will be down and as far as I know Disney has only booked the one year so they haven’t taken any berths beyond the one year.

As has Crystal.

When you have a large passenger base when you do a new itinerary it is relatively easy to sell for a year. That is what Crystal is doing and that is what Disney is doing.

They were there six years ago and as Micky said they are returning once again.

Crystal there has been a six year gap between the two times. I mean the basic companies that are the backbone of the Alaska cruises are Holland America and Princess are one and two then Royal Caribbean, Celebrity and C&O. All of those companies are reducing capacity.

The next question comes from the line of Robin Farley – UBS. Robin Farley - UBS: You covered a lot already on the issue of new ship holders and your free cash flow. Just curious to hear a little bit more, you mentioned by year end you don’t think you will order a new ship. I guess it is surprising that you have not ordered in so long and you seem to be more flexible about your plans and maybe being able to take an order in dollars and have the yard take the currency hit. It has been a lot of years since [inaudible] but I wonder if you could talk about why…I am assuming they don’t want to do that. Are they closing yards down temporarily instead of taking orders? If it does change if you come to some agreement to order a new ship, I don’t think you have said this explicitly but is it fair to assume that you would feel comfortable in terms of your free cash flow that you could still reinstate the dividend at some level and order new ships? Is there nothing mutually exclusive there like ordering something for Princess for next year and still reinstate part of your dividend?

I talked about three things as far as reinstating the dividend. New ships wasn’t one of the three. The three things were liquidity, turn in business and maintaining our rating. I think we can do those three things and build new ships. The reality is in the past yards have done what you have described. Whether they will do that now or not we will see. Generally speaking, yards are hard pressed to build below their cost. They are not really in a position to do that. I think for the most part as I said from a Euro point of view they have come down to reasonable prices but because of the recent weakness of the dollar it has just made it tougher. That is not to say deals won’t eventually get done as time moves on. I was just guessing that the likelihood, we are in September already and we are not writing specifications so the likelihood is the contract won’t get done before the end of the year which would make it difficult for 2012. Not impossible but quite difficult. We have only got I believe, David correct me if I am wrong, two ships for 2012.

That is correct.

So regardless of what happens we will likely have significant free cash flow in 2012 and beyond. We have two for 2012 right Dave?

That is correct. One for Costa and one for AIDA.

The next question comes from the line of Jamie Rollo – Morgan Stanley. Jamie Rollo – Morgan Stanley: Just a couple of questions on yield. On the third quarter yield which is down 12.3% your guidance for Q2 stated down 14% to down 16%. Normally at that stage you sold pretty well most of the quarter you are in, 90% or so. So mathematically that would imply the prices for the bookings that haven’t been sold yet must have been up pretty substantially, 20% or so if my math is correct. Were you surprised by that last minute strength or were you just conservative with your guidance or was my math wrong?

Your math is not wrong. It was just that these were as we said, the pricing came in better than we had expected during that period of time. We typically start the quarter as we have always indicated with 85-95% of the next quarter’s bookings on the books and the remaining bookings that came in like we had previously taken better than we had expected as a result of the volumes.

And onboard revenues also came in $0.02 better than we had anticipated as well.

I think July and August are pretty unique in that our brands we are looking at the booking pattern and anticipating having to discount a certain amount to get it done. July and August is where people are just going to take their vacations and demand wound up much stronger and virtually right across the board in all brands than they anticipated.

I think it is fair to say that the demand pattern was so different than the last couple of years that these guys weren’t able to anticipate the strength of the last minute strength of this.

Based on what happened in the prior nine months they were to some degree gun shy too. Jamie Rollo – Morgan Stanley: On 2010 yields, just from the guidance there in Q1 you are saying modestly lower coming from FX which is pretty clear. Going to that directly, did you say that you expect Q2 to be positive with momentum building from there? Is that correct?

What I think I said was that for the remainder of the year we expect the yield picture to continue to improve from yield one. I didn’t give any specific guidance on the second quarter other than the data points that we had. We expect the situation to sequentially each quarter get better in 2010. Jamie Rollo – Morgan Stanley: Would you go so far as saying you would expect yields to turn positive as early as the second quarter knowing what you know?

I didn’t say that. All I said was that we expect it to get sequentially better quarter-over-quarter.

As you rightly pointed out we didn’t do a very good job in the third quarter which we were quite on top of. So, it is harder to predict now than it has been.

To be fair, I said that this is such a different demand pattern that this could change. When we get to the December update when we have the fourth quarter earnings call we will be in a much better position to have a sense of what the yield is going to be for the first half of the year and for the full year but we haven’t even started the budget review process yet. So things do change as we go through the fall. We will be in a much better position. Clearly the signs are positive. Volumes are strong and we have been able to start to tweak prices up here which is a good picture.

There is no doubt the comparisons do get easier as the year progresses quarter by quarter as well.

Clearly trying to send signals for people as they have gotten used to these low prices they had better book quickly because with these kinds of volumes our brands are going to be able to take pricing.

The next question comes from the line of Greg Badishkanian – Citigroup. Greg Badishkanian - Citigroup: Just as a follow up on that question given that you had mentioned end pricing versus the current pricing in the second quarter did I hear you right on that in your prepared statement?

What I said was the current pricing where it stands today both in North America and Europe are well ahead of where the second quarter closed last year and what happened is that the second quarter pricing dramatically moved down last year when the credit markets froze and we had the beginning of September. So as bookings just dropped dramatically. So we are still quite a bit ahead of where the second quarter bookings were. Greg Badishkanian - Citigroup: Onboard spend saw some improvements there. How discretionary are you finding that to be versus ticket prices and then also just have you noticed any types of purchases on board that have changed since maybe before the downturn versus at the downturn and kind of currently right now?

I think there have been different behaviors in the various categories of onboard revenue. For instance, auto options and the casino areas are down more so than many of the other areas. To that extent you might say that perhaps those are more discretionary than things like shore excursions and bar revenues. So we have seen a small change in the overall mix of our total onboard spend at this point in time.

The next question comes from the line of Rosie Edwards – MF Global. Rosie Edwards – MF Global: Can you remind us of your guidance on earning sensitivity to a 1% move in fuel currency and net revenue yields please?

Sure. I actually have done the calculation as a 10% change so let me give you that. A 10% change in fuel represents about $116 million or $0.15. Of course keep in mind as the overall price of fuel changes that relationship changes. Also, a 10% movement in the U.S. dollar against all currencies that is about $140 million or $0.17 per share.

The next question comes from the line of Edward [Catford] – No Company Listed. Edward [Catford] – No Company Listed: You mentioned very clearly the conditions under which the board might consider reviewing the dividend. I seem to remember that one of the considerations when you suspended it was you didn’t want to borrow money to pay the dividend. Has that consideration changed?

It hasn’t changed only from the context of our credit rating. We have always said we strategically believe that a strong A- credit rating was an important part of our business strategy and so if you have to borrow money to the point that it affects the credit rating then it hasn’t changed. But it is only in that context. It is not the issue of money but the issue of borrowing money to the point of negatively impacting your credit rating.

The next question comes from the line of Rick Lyall – John W. Bristol. Rick Lyall – John W. Bristol: I suspect you look at returns on a brand basis. When you look at returns on a geographic basis how do you think about Alaska on a longer-term basis? Historically it has been a premium market with Holland and Princess primarily exposed there. Even if you adjust capacity and restructure your costs can that return to the levels of profitability or return on capital it has achieved historically?

We don’t look at our itineraries based on that. The way we look at an itinerary is if the ship is in Alaska how much money is she going to make. If she is in Europe during that peak summer how much money is she going to make. If she is in the Caribbean or Australia, etc. The brand will decide to put the ship where there is the best return and the most profitable return. In the context they already have seven ships in Europe or they already have two ships in Australia, they have got to understand those but they will model it out and if it pays to pull a ship from Alaska and put it in Europe or pull a ship from Alaska and put it in the Far East they will do that. That is exactly what they did in 2010 and we are going through those reviews right now and it is likely we are going to do more of it in 2011 because you are talking the peak July and August period where we can make a lot of money on a lot of different itineraries and you can’t make a lot of money in Alaska because of this initiative. [Multiple speakers simultaneously] it is environmental. It is the ranges. The amount of cost they have put onto the industry during this short season is astronomical and it will continue to negatively impact Alaska.

There are no further questions.

Thank you all very much for listening in. If you have follow-up questions Beth is available later on this afternoon. Thank you so much. Everybody have a great day.

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