David Bernstein - Chief Financial Officer, Senior Vice President, Chief Financial Officer of Carnival Plc and Senior Vice President of Carnival Plc Howard Frank - Vice Chairman, Chief Operating Officer and Member of Executive Committee Micky Arison - Chairman, Chief Executive Officer and Chairman of Executive Committee

Kevin Milota - JP Morgan Chase & Co Richard Lyall Felicia Hendrix - Barclays Capital Janet Brashear - Sanford C. Bernstein & Co., Inc. Nick Thomas - ABM Amro Assia Georgieva - Infinity Research Timothy Conder - Wells Fargo Securities, LLC Jamie Rollo - Morgan Stanley Rachael Rothman-Ould - Susquehanna Financial Group, LLLP Gregory Badishkanian - Citigroup Inc Harry Curtis - Nomura Securities Co. Ltd. Robin Farley - UBS Investment Bank Steven Kent - Goldman Sachs Group Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Carnival Corporation First Quarter Earnings Conference Call. [Operator Instructions] I would now like 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. With me this morning is Micky Arison, our Chairman and CEO; Beth Roberts, our Vice President of Investor Relations; and David Bernstein, our Senior Vice President and Chief Financial Officer. We're going to continue our normal presentation this morning, and I'm going to have David take you through the first quarter color and some details.

Thank you, Howard. Before I begin, please note that some of the remarks on 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 cost will be in local currency unless otherwise noted, as this is a much better indicator of business trend. For the first quarter, our earnings per share were $0.19. The first quarter came in at the high end of our December guidance, which was $0.15 to $0.19 per share. The $0.02 per share improvement versus the midpoint of our December guidance was driven primarily by $0.04 of favorability in a variety of cost areas, partially offset by higher-than-expected fuel prices which cost an additional $0.02. Now let's look at our first quarter operating results versus the prior year. Our capacity increased 5% for the first quarter, with substantially all of the increase coming from our European, Australian and Asian brands, or as we call them, our EAA brands. Our EAA brands grew 11% while our North American brands grew 2%. Our net revenue yields increased 2% in the first quarter, driven by a net ticket yield increase of 3%. Our EAA brands were up 9% as a result of yield improvements in South America. The South American market has rebounded nicely from last year's challenging season, which was impacted by significant increases in industry capacity. Our North American brands were down 1%, driven by lower yields in the Caribbean due to higher industry capacity, which we discussed on the last conference call, and is limited to winter deployment. In net onboard and other yields, we experienced a 1% decline. The decrease resulted from favorable items we recognized in the first quarter of last year related to minimum guarantee payments for calendar year 2009 and a litigation settlement. We mentioned these items during the first quarter conference call last year. If we normalize the prior year for these items, net onboard and other yields for the first quarter would have been up 3%. On the cost side, net cruise costs, excluding fuel, per available lower berth day were up 3% versus the prior year. However, if you exclude the gain on the sale of P&O Cruises' Artemis, which reduced net cruise costs last year by $44 million, the net cruise costs, excluding fuel, per ALBD would have been in line with the prior year. Fuel prices this quarter were up 9%, and that cost us about $0.05 per share. In summary, we were pleased with the first quarter EPS of $0.19, which is up from last year's adjusted EPS of $0.12 before the favorable impact of $0.10 of unusual items. Now turning to our 2011 outlook. I will skip -- the full year outlook. I'll skip the net revenue yields, as Howard will discuss that shortly. On the cost side, for the full year, net cruise costs, excluding fuel, per ALBD are forecasted to be flat to up 1%. This guidance is about 0.5 percentage point higher than we forecasted in December. We're seeing some more inflationary pressures than we thought in crew travel, food cost, freight and other areas. Most of these items are simply a function of rising fuel and commodity prices. However, our current guidance for interest expense, taxes and depreciation is lower, which balances out the additional inflationary pressures. One final note. I wanted to share with you our current rules of thumb about the impact that current fuel prices and currency can have on our results. To start with, a 10% change in the price of fuel for the remaining three quarters of 2011 represents a $0.22 per share impact. With respect to FX movement, a 10% change in all currencies relative to the U.S. dollar, also for the remaining three quarters of 2011, would also impact our P&L by $0.22 per share. At this point, I will turn the call back to Howard.

Thank you, David. Taking a look at the overall booking picture for the remainder of 2011. On a fleet-wide basis, occupancies are slightly lower than a year ago on a 5% increase in cruise capacity for the next three quarters. Ticket pricing for these bookings are nicely higher than last year. Looking at this picture by major markets, North American occupancy is slightly behind last year, with nicely higher pricing. Bookings for Europe, Asia or Australia, or EAA, are also slightly behind last year at higher prices. So that is the snapshot of the fleet-wide bookings status for 2011 as it stands today. Turning to booking patterns since the start of the year. On a fleet-wide basis, bookings have been running higher year-over-year at higher prices. In North America, wave bookings have paced the increased North America capacity with solid increases in year-over-year pricing. In EAA, bookings have also been higher during this wave period at approximately the same year-over-year prices, but the booking pace has lagged the 8.6% capacity increase for the period. EAA bookings and pricing during this period have been affected by the recent disruptions in the European brands, the Middle East and North African itineraries for the remainder of the year. As a result of political unrest in that area of the world, there was significant slowdown in demand for these itineraries with the related effect on booking volumes and pricing. Over 280 cruises had to be reset, and we estimate the cost of this disruption to our business will be approximately $44 million of lost revenue or about $0.05 a share for the year. So summarizing the booking pattern during the wave season so far, demand for our cruises continues to be strong. At this time, stronger in North America than in the EAA markets. The EAA brands, in particular Costa and Ibero Cruises, have felt the effects of the political unrest in the Middle East and North Africa and the related disruptions to their itineraries which visit these countries. In terms of our revised guidance for 2011, the effect of the increase in fuel prices has cost us $355 million or $0.45 per share. Currency exchange rates have benefited us by $0.09 per share, and the cost of disruption in the itineraries which call on the Middle East and North Africa is approximately $0.05 a share. These factors have caused us to take our earnings guidance down for 2011 to a range of $2.55 to $2.65 a share or a midpoint of $2.60. Now some color on each of the quarters. Fleet-wide capacity in the second quarter of 2011 will be 5% higher, 2.9% in North America, France and 8.6% for EAA brands. On a fleet-wide basis, occupancies are at approximately the same levels as last year, and local currency pricing is higher than a year ago. At this juncture, we have only a small amount of inventories left to sell in the second quarter. North American brands are 55% in the Caribbean, with the balance in various other itineraries. Currently, pricing for North American brands in the second quarter is higher than a year ago, with occupancies at the same levels. Caribbean pricing has shown improvement from the first quarter and is down only slightly from last year's second quarter Caribbean prices. Pricing for the various other North American brand itineraries, including shoulder Alaska and Europe seasons and most other itineraries, is higher than a year ago. For EAA brands, they are 54% in European itineraries, up slightly from a year ago, with the balance in various other itineraries. Local currency ticket pricing for EAA-brand cruises in Europe is slightly higher than a year ago. Pricing for EAA brands vary. Its other itineraries taken together is also slightly higher than last year. From an overall standpoint, to summarize the second quarter, we are forecasting that fleet-wide local currency revenue yields will be higher for both North America and EAA brands. Booking momentum and pricing, particularly for EAA brands, slowed somewhat during the wave season as a result of the political unrest that I previously discussed, notwithstanding the voyage disruptions resulting from the political unrest. We are forecasting European brand yields to be higher than a year ago, but not as high as we originally expected. Second quarter guidance is affected, as following. Fleet-wide revenue yields on a local currency basis for the second quarter are now expected to be 1.5% to 2.5% higher than a year ago. This is slightly lower than our early expectations, largely as a result of the itinerary disruptions I previously referred to. Fuel price increases are expected to result in $140 million, or $0.18 per share, of higher fuel cost compared to the second quarter of 2010. Costs other than fuel are forecasted to be higher in the 2% to 3% range for the quarter due to a variety of factors, some of which David previously discussed and described in the first quarter. Taking all of these factors together, second quarter 2011 earnings guidance will be in the range of $0.20 to $0.24, down from $0.32 per share in the second quarter of 2010. Now turning to the third quarter. Capacity in the third quarter is expected to increase by 4.8%, 3.4% in North America and 7.2% for EAA brands. Third quarter booking patterns are progressing quite well, with fleet-wide pricing well ahead of last year at lower occupancies. The North American brand capacity for the third quarter was 36% in the Caribbean, down slightly from 41% last year. 25% in Europe, an increase from 17% last year, which is almost a 50% increase, or about a 50% increase. And 23% in Alaska, which is about the same as last year. Pricing for all North American brand itineraries in the third quarter is well ahead of last year, with particularly higher occupancy than pricing in this year's Alaska season. Pricing for North American brands in Europe is also ahead of last year at lower occupancy, which was not surprising, given the approximate 50% increase in European capacity for our North American brands in the summer. Caribbean pricing for the third quarter is higher than a year ago, also on lower occupancies. This is a refreshing change for our Caribbean programs, given the challenges we've had during the first and second quarter. For EAA, brand capacity is 88% in European itineraries. The EAA pricing is nicely ahead of last year at slightly lower occupancies, notwithstanding the challenges resulting from the political unrest in the Middle East and North Africa. As mentioned earlier, the EAA bookings in the last five to six weeks have been challenging, with some booking momentum lost as a result of the itinerary issues in this region of the world. Now that itineraries for these cruises have been reestablished and are in the marketplace, we believe the booking momentum will start to pick up again. On overall basis, we are forecasting fleet-wide pricing for the third quarter to be up nicely for both North America and EAA business segments. For the fourth quarter, on a fleet-wide basis, capacity is up 5.9%, 3.3% for North America brands and 10.1% for EAA brands. Pricing on a fleet-wide basis is nicely higher year-over-year, with a similar pattern to the third quarter. Occupancies are lower than last year, which is also consistent with the pattern that we are experiencing in the third quarter. Fourth quarter booking picture is encouraging, but it's early in the booking cycle, so I caution not to read too much into the fourth quarter booking picture at this time. North American brands are 42%, and the Caribbean, down from 50% last year; 14% in Europe, up from 9% last year; and 10% in Orient and Pacific cruises, which is about the same as last year. Pricing across North American brand itineraries is running higher than last year at slightly lower occupancies across the fleet. EAA brands at 72% in Europe, up from 65% last year, with the balance in various other itineraries. Pricing for European cruises is nicely higher year-over-year, with pricing for the various other itineraries taken together also higher on a year-over-year basis. Occupancies are lower for European itineraries, which is not surprising, given the 20% increase in European brand deployment for the fourth quarter. While it's still early to have a more precise picture for fleet-wide fourth quarter pricing, on a fleet-wide basis, we are currently forecasting that local currency revenue yields will be nicely higher in the fourth quarter. And so that kind of summarizes what the yield outlook for the remainder of the year looks like at the current time. And with that, I'll turn it back to -- Kyle, I'll turn it back to you for questions from the people that have called in.

[Operator Instructions] And our first question comes from the line of Janet Brashear with Sanford Bernstein. Janet Brashear - Sanford C. Bernstein & Co., Inc.: I wonder if you could talk a little bit about the commission structure that you're debuting in the U.K. And to the extent that the purpose is to get a little bit of control back over pricing and discounting and things like that, can you talk about why that wouldn't work in the U.S. as well?

The U.K. policy has been put together by the U.K. brands to compensate for the heavy rebating that had become institutionalized in the U.K., and the belief was with lower pricing by the brands and the lower commission level, they could turn the tide of the rebating. It's something that, I think, is not an issue in the U.S. the way it used to be and has been dealt with in the U.S. in different ways. So I think you have to look at the U.K. as a unique market where the brands felt that they had to get control of their pricing and took this kind of action. I think in the long run, they believe, and I think the major retail travel agents that they've negotiated and talked to believe, that this will be in the best interest of everybody. But you shouldn't look beyond the U.K. It's not a model that we'll be looking at anywhere else Janet Brashear - Sanford C. Bernstein & Co., Inc.: Could you also talk just a little bit more about the charges in the Middle East and North Africa relative to what markets you had to pull itineraries out of and maybe where you're putting those ships in new itineraries?

I mean, we pulled out of just all North African stops, in Tunisia and Morocco and Egypt, and we've pulled out of -- actually, in some cases, we've had to pull out of Israel because we got a lot of resistance. We haven't done it in all cases. But people are just concerned about going to that part of the world, and we've kind of -- I don't know all the details, over 280 different cruises that were redone, but a lot of the calls are now calls going into that part of the Eastern Mediterranean, but they're going to ports in Turkey and perhaps Cyprus and the Greek islands and things along those lines.

What Howard just said was primarily the European brands, primarily Costa and Iberocruceros. The reaction of the North American brands has been more muted, and they have a lot less calls in those countries as well. Canceling Tunisia was a relatively small change in the itineraries, but canceling -- obviously, canceling Egypt and some other areas near Egypt created total itinerary changes, again, primarily for Costa and Iberocruceros. This really didn't affect North America anywhere near as much as it affected Europe.

And our next question comes from the line of Steve Kent with Goldman Sachs. Steven Kent - Goldman Sachs Group Inc.: Could you just talk a little bit about the customer reaction to these itinerary changes? It seems like that they're just holding back because they didn't know what your itinerary was going to be, but now that the itineraries have been set, you should be able to more effectively sell them. Is that the impression that you are getting too? And then, secondly, the pricing seems to be very good, seems to continue to be very good, although you mentioned a couple times that your occupancy might be a little light. Is this just a strategic move, given the pent-up demand for travel amongst consumers that you're better off holding these prices here and then filling them in as you get closer to booking?

I think on the changes for the Middle East itineraries, I think there's too much noise right now for us to tell. Obviously, as itineraries change, passengers decide whether they want to go on the new itinerary or not or want to change their mind and go on a different itinerary. And so there's a lot of booking canceling going on, so it's very hard to really judge exactly the total impact. But we're hopeful that once -- now that all the itineraries are out there and people understand it, that, that will settle down and we'll go back to a normal booking pattern. As far as pricing for the summer, yes. I think because we've been able to achieve higher prices, we have been holding out for those higher prices, and that's why you're seeing a little bit lower occupancies to compensate for those higher prices. But that's versus last year. We obviously filled last year, and the feeling is that we can hold out for the prices and still fill this year. Steven Kent - Goldman Sachs Group Inc.: And then just one final quick question, which is dividend, share buyback, cash flows are going to be very significant over the next couple of years. Could you just give us your latest thoughts, acknowledging that you just did raise your dividend a few months ago?

Yes, well, you're right. We do anticipate good cash flows over the next couple of years. For 2011, we expect to have free cash flow of about $1 billion. And given that we raised the dividend in January, the dividend in this year would be $700 million. So there isn't that much significant extra cash flow this year. Only $300 million. And going forward in '12 and beyond, as we said before, it is a board decision. And as we move forward, we will discuss that with the board, whether it be share buybacks, more dividends or anything else.

And our next question comes from the line of Felicia Hendrix with Barclays Capital. Felicia Hendrix - Barclays Capital: Micky, I'll direct this one to you. In this fuel environment, have you been rethinking the fuel hedging philosophy at all for the company?

I'll defer that one to Howard.

Well, obviously, we've had a good deal of discussions internally about it, and what we decided to do is take another fresh look at hedging strategies and whether we really think it makes sense for the business on a long-term basis. With the significant hit we're taking for 2011, we thought it incumbent upon us to take another look at it. As you know, in the past, we've stated that we don't think it has any real long-term benefit to the business. There's a cost associated with doing an accounting hedge type of program of some consequence. The cost, we'd like to avoid. Nonetheless, we've kind of huddled and just said, okay, let's take another look at it again, just to see how things -- whether our views have changed and whether there are other factors which would suggest that we should change our view. Felicia Hendrix - Barclays Capital: So you're in the process of doing that now?

Yes, we're starting that now. Right after this earnings call. No, we've had the discussion. We're doing -- it takes quite a bit of work, so we've asked our treasury department to go ahead and start to gather data and look at empirical evidence and forward-looking fuel curves and see whether anything makes sense for us.

I will add that this is not the first review. We've done this many times, and you know the conclusions that we came to. So I wouldn't prejudge what conclusions we will come to again. But you shouldn't take for granted that we haven't done this many times. Felicia Hendrix - Barclays Capital: Well, that's good. And then Howard, so you gave us a lot of color about how the political unrest in the Middle East is affecting the momentum in the EAA business. Wondering if -- is there any of the EAA itineraries that aren't in that region? Maybe you could just give it -- because I thought you said that 54% of the capacity was actually in Europe. I don't know if you were including that as the itinerary. I was just wondering if you are seeing a slowing in momentum in the EAA brands for the non-Middle Eastern-type of itineraries? And then similarly, I'm just wondering what the momentum has been on the North America demand for Europe? And then have you seen any change in demand trends for the North American consumer in general?

Yes. On the EAA cruises, a lot of those itineraries get -- are either one, in some cases, maybe two calls, in Mediterranean ports and then they go further south to North African ports. We haven't been able to -- there's so much noise in the booking patterns for these brands right now for their Mediterranean and Eastern Mediterranean cruises. And we haven't dissected the information in a way that -- what didn't call there, what did call there, and how are the bookings for those particular itineraries that didn't call there? We really haven't done that work, but our view is that a large part of what we're seeing is relating to that kind of noise. I also think, and I can't speak for the European consumer, but places like Libya and Egypt and Tunisia are a lot closer to Southern Europe, and I think, perhaps in the minds of Europeans, that there may be some caution in what they're doing. But I don't think there's very much of that, but I think there may be something entering. But we haven't really done the work to know, to be honest with you. Felicia Hendrix - Barclays Capital: And what about the momentum for the North American consumer? Have you seen that change at all?

No, not really. Demand in North America has been pretty solid since wave season, both for European cruises, Alaska cruises and other kinds of itineraries. So demand seems to be pretty solid. I would say, if you look at it from premium brands versus contemporary brands, we're seeing, I think, pretty good strength in those premium brands, where, for longer cruises, European programs, Alaska programs and for Caribbean programs, it's good. But I think that we'll see a lot of the yield improvement that we're expecting to come from those areas where we received good historical demand for those types of cruises from the North American market. Felicia Hendrix - Barclays Capital: Okay. Because there's some concern that higher fuel costs are affecting the North American consumer to -- airline ticket prices to be affecting the demand, and you're not seeing that?

Well, we do hear about the high ticket prices, but -- and it could be that the strong Alaska season is really quite strong. Maybe people saying, well, instead of going to Europe this summer, I'll go to Alaska because the air cost is lower. But really, we don't know that. All we know is European business is good. Now we'll be running behind in occupancies, but we've had this huge increase in capacity in Europe, and our competitors have had huge capacity increases. Our North American competitors have had huge increases in capacity in Europe. But the absolute numbers of bookings are quite good for Europe.

And decline to occupancy is modest compared to increase in capacity, so we're still very bullish on this summer in both Europe and Alaska.

Our next question comes from the line of Rick Lyall with John W. Bristol.

So I believe David said that you've got offsets in lower D&A taxes and interest expense for the year? Could you walk through why that is?

Sure. So this is, again, versus our December guidance and -- for instance, in D&A, some of the brands were a little bit aggressive about when they would put some of those maintenance CapEx items into service. And so we saw some favorability in the first quarter, and we reevaluated that, and we flowed that through for the year. It's just the timing of when things go into service. As far as the interest expense is concerned, again, we saw favorability in the first quarter, and we flowed that and some more through the year. For things like -- we went back to a few banks. We asked them to lower the interest rate on some of our loans because, quite honestly, margins have come in over the last year or so. We're using the CP market more aggressively, which is cheaper than our revolver. And so we took that in. And we also reevaluated our income taxes. We had a pretty substantial increase in our income tax expense from 2010 to 2011 in our December guidance. And now that we've got a little bit more experience during the first quarter and have a better picture of the year, we just evaluated that. We took it down, but we still are up versus the prior year in terms of income taxes. So all of that, as I said before, kind of offset some of the inflationary pressures in cruise costs.

Okay, that's helpful. A couple of, I guess, itinerary questions. Are you seeing stronger demand in Alaska and maybe Northern Europe as a result of the dislocations in Northern Africa? And then kind of a related question. Caribbean improving for the first time in really quite some time. Do you think you really turned a corner there in terms of supply and demand?

First, your comments on Alaska. Alaska has been strong already for a while for this year, prior. I think I could say bookings were strong well before the issues in the Middle East came up. So while the situation -- uncertainty in the Middle East could, in effect, help Alaska, I think the trend was in place well before, so I don't -- it's not one created the issue for the other. I think Alaska, based on the agreements we reached with the governor last year, lower head taxes and much higher marketing spend by the state of Alaska has really helped. Plus, obviously, capacity's down versus the peak. So the combination of those things, I think, really helped Alaska. So Northern Europe, I don't know. I think we're doing well, but I don't think it's any different than the rest of Europe.

Well, I think we're doing well in Northern Europe. I don't know that we know -- it's hard to know why. We don't do any polling on it and know what our customers are thinking. But we know they're booking -- it is booking well.

But we know that trend was in effect before the Middle East situation.

Yes, it's been going on for a while. On the Caribbean side, I mean, typically, there is a lot less Caribbean capacity in the summer. And we have a little bit less, so -- I mean, I think that the Caribbean pricing is holding up a lot better.

And our next question comes from the line of Robin Farley with UBS. Robin Farley - UBS Investment Bank: Most of my questions have been answered. I guess just to sort of parse one answer a little more finely. When you talked about the slowdown that you've seen in recent weeks, would you say, particularly the EAA brands, would you say that, that is sort of continuing to deteriorate, or has that fairly stabilized now, in other words, versus what it might have been kind of two weeks ago?

The problem with answering the question is that what happens when you change 200 itineraries is you have a lot of people changing that. I'm referring to primarily Costa and Ibero, so you don't think this is a global issue. You get a lot of churn. So you get a lot more bookings, but they're coming off people who'll change their mind and cancel one itinerary to get on another itinerary. So it creates a difficult -- until it settles down, it's difficult to gauge what's going on. I can say this much is, historically, we’ve found that Europeans believe their vacations are very important to them. And if they have chosen to take a cruise to the Holy Land and have now canceled because of these issues, we believe that eventually, they’ll get rebooked on Costa and Iberocruceros if they're from places like Italy, France and Spain because these people will take their vacation. So right now, there's a lot of churn going on. It's difficult to tell exactly what the bottom line effect -- we tried to estimate it. We estimated it at $44 million, we'll see. But for the next few weeks -- because these itineraries changes only were announced...

Monday. Robin Farley - UBS Investment Bank: If you look at maybe just your U.K. brands and AIDA as maybe more representative of demand outside of just...

Both brands are booking quite well. Very little issue. Almost no issue at all. Robin Farley - UBS Investment Bank: And so even in the last few weeks, that hasn't -- the slowdown was really specific to the Costa and Ibero?

That's why I tried to -- Ibero and Costa, with heavy emphasis on Northern Africa and Middle East itineraries. Even AIDA and U.K. and North America that had those in the itineraries don't seem to be anywhere near its impact.

And our next question comes from the line of Harry Curtis with Nomura. Harry Curtis - Nomura Securities Co. Ltd.: A couple of quick questions. I wanted to dig a little bit deeper into the sequential increase from the first quarter to the second quarter in your cost. And I'm trying to get a sense of whether or not the rebooking costs are really driving most of that increase. Because it would appear that for the balance of the year, the cost increases aren't quite as severe.

Yes. When you take a look overall at the cost structure, we talked about costs being flat to up 1% for the year. But keep in mind that it does vary by quarter. There are seasonality differences. Advertising is a great example of seasonality differences. And one of the reasons why the second quarter is a bit higher is because they're projecting perhaps some more advertising expense over and above last year. And there are other things in repair and maintenance and drydock and crew travel which do have an impact by quarter. So we were flat for the first quarter on a normalized basis. As Howard indicated, we're up 2% to 3% for the second quarter. We were expecting the third quarter to be up and the fourth quarter to be down, and that's how we got flat to up 1% for the year. Again, there's lots of seasonalized differences between the quarters.

This information that we pulled together here in Miami results from 10 different companies giving us their estimates of what their costs are going to be and, invariably, sometimes there are variances in terms of how it actually turns out in the past, and sometimes it's conservative. They tend to be, if anything, more on the conservative side and making sure they've covered their costs, so we'll see what happens.

And I think -- and David has said this many times, is costs really can't be judged on a quarter-to-quarter basis. It really, because of timing differences and other things, you really have to look at it in a longer term, and annual basis is clearly better than quarter-to-quarter.

But it has nothing to do with -- we don't think it has anything to do with rebooking of cruises.

No. Harry Curtis - Nomura Securities Co. Ltd.: Okay. Then let me move on to my second question, which is related to the topic of fuel surcharges. I'm trying to get a sense of what level you believe surcharges warranted and could be acceptable to passengers?

I don't think we can give you that. I think our position right now in North America is basically the same as the statements we've put out in the past. It's something that we always are looking at. But as of right now, we don't feel it appropriate.

And our next question comes from the line of Rachael Rothman from Susquehanna. Rachael Rothman-Ould - Susquehanna Financial Group, LLLP: Sorry, you gave out so many numbers so quickly, I may get this slightly wrong. But I guess if you could talk sequentially about the trends in net yield growth from the first quarter to the second quarter, I guess I would've expected a greater pick-up in the net yield growth, given the capacity growth in the Caribbean in the first quarter as the kind of motivation behind the 2% constant currency forecast. And then it sounded to me like in the second quarter, maybe you were saying it's because of supply growth in Europe and the North American brands. Am I understanding that correctly? Is it a supply shop...

Rachael, I’m talk even more slower the next time. Rachael Rothman-Ould - Susquehanna Financial Group, LLLP: Sorry. It's like so much data at once. I really apologize.

I fully understand. It can get a little bit confusing. Now what's happened -- what I did say about the second quarter is that we had expectations that yields would be higher for our EAA brands, and that has been impacted by these disruptions in itineraries in the second quarter. We had to actually move some ships out of Egypt that were two ships actually home [ph] doing turnarounds in Egypt, and we had to move them out to different itineraries. And that disruption caused some deterioration in yield for the second quarter. Maybe one point of yield for the company. One point of yield, so we're arranging -- we probably would've forecasted, without these disruptions, about a point higher than the 2% midpoint that you're seeing.

It's also a little bit of an apples-and-oranges comparison, because the one benefit that we had in the first quarter that was substantial, that I talked about, was the South American market for our EAA brands, which was up quite a bit. So it's hard to compare. We went from -- it looks flat, but as Howard said, we would have been up in the second quarter.

But that explains it. Rachael Rothman-Ould - Susquehanna Financial Group, LLLP: So I guess if you guys are saying that the second quarter would've been roughly about one percentage point higher, and you're taking the full year net yield guidance down by about half a percentage point, it seems like it becomes more dependent on the third quarter actually executing in order for you to hit even the revised net yield guidance? And when I combine that with your commentary surrounding higher prices yet lower occupancy, can you kind of clarify for us what gives you comfort that, that will actually come through, given that it's a market with, I guess, right now, pretty substantial geopolitical risk and a choppy booking window?

First of all, you have to realize that a substantial amount of the business is already on the books at higher prices. So that gives us a great deal of comfort.

The thing is you mentioned the one point in the second quarter. The Middle East and North Africa also was probably about a half a point in the third quarter. When you really average it out, I know it turns out to be a half a point for the year, because when Beth puts together the press release, she rounds everything to the nearest half a point, but it's really more of a third of a point for the full year. And so it just rounds to...

Rachael, let me just say this. We do the best job we can in trying to forecast. But it is not an exact science, and it is subject to the vagaries of the marketplace and what can happen around the world. So when we give you guidance, it is really our best estimate based on what our brands tell us and how we see it, as we look at the numbers here in Miami, to make sure that we give guidance that we think is reasonable and what we normally are able to achieve. But it could be -- yes, can it be wrong? Sure. Rachael Rothman-Ould - Susquehanna Financial Group, LLLP: You guys do an actual excellent job with the guidance for sure. I guess maybe -- has your third quarter implied guidance changed at all? Maybe that's a better question to ask.

Came down half a point primarily because of the Middle East -- entirely because of the Middle East. I should say also there's been some itinerary changes relating to Japan that we've tried to include in our numbers as well, but they were really small.

And our next question comes from the line of Greg Badishkanian from Citigroup. Gregory Badishkanian - Citigroup Inc: Just wondering if you're still comfortable with kind of that two to three new ships a year, and if you're hearing anything as you talk to other shipyards, just of maybe other cruise lines potentially accelerating capacity growth or kind of maintaining from here?

Yes, we're comfortable with the two to three. That hasn't changed. Are we hearing stuff from other cruise lines?

You hear a lot of noise, but you're never quite sure.

Yes, we're hearing some noise. Gregory Badishkanian - Citigroup Inc: Good. That's good to hear. And just in terms of some of your other brands and just kind of looking at sort of the higher-end versus the lower-end consumer, are you seeing some maybe trading up or vice versa right now as you kind of look across your fleet?

Yes. I think I mentioned that in North America, I think the strength in the pricing seems to be more for the premium brands, less so, although improved pricing, for the contemporary brands and the contemporary products. So it looks like the higher-end consumer appears to be driving a lot of the strength from a pricing standpoint today. Gregory Badishkanian - Citigroup Inc: You don't think it's trading up, it's just the higher-end consumer -- more of them coming to book cruises, right?

It's probably both, but I don't think we really know the answer to that question.

And our next question comes from the line of Kevin Milota with JPMorgan. Kevin Milota - JP Morgan Chase & Co: Just had a quick one. Not to beat a dead horse here on demand, but as you look at the North American passenger base, I was just wondering if you could give us a sense of if you know how the booking window is looking for the second and third quarter. And then, also, I know you spoke of pricing, but is it more solid pricing on the premium stuff and less solid on the contemporary? Just go into a little more detail there.

I think we've responded to that. Booking pattern is as we anticipated it a quarter ago. I mean, basically, the only adjustment we've made in yield is for the Middle East situation. So I would say it was more predictable than almost ever. We're basically exactly where we were three months ago as far as booking pattern. The expectation was for a good wave, and that's what we got. And so we continue to be very bullish about the third quarter and beyond.

And our next question comes from the line of Assia Georgieva from Infinity Capital. Assia Georgieva - Infinity Research: Just a follow-up, Micky. You just said Q3 and beyond. It looks that you have good visibility. Do you expect the same type of yield improvement in Q4 as you do in Q3? And I know it's still early on.

This is Howard. We expect a strong yield improvement in -- based on everything we see right now, and what I commented on is that we still have a way to go in the booking pattern. It's still early in the booking pattern, but the pricing is strong for both North America and Europe right now for the fourth quarter. And probably we're hopeful of seeing similar yield improvement in the fourth quarter. That's really it. Even with these early patterns, I mean, even if you look out beyond 2011, and we have really early booking data and not all cruises are being sold and it's more long cruises and so on, if you look at Q1 2012, the booking data is encouraging as well from a pricing standpoint. Assia Georgieva - Infinity Research: And for Q4, Caribbean pricing continues to be doing as nicely as it is in Q3 at this point?

I will get -- Beth is scrambling right now, so we'll get back to you on that one.

Our next question comes from the line of Jamie Rollo with Morgan Stanley. Jamie Rollo - Morgan Stanley: I was just wondering if you could talk a bit about your pricing model, maybe in relation to fuel. It's just an observation that fuel historically wasn't much of an issue for you or the industry. It's clearly a much more material component now of the cost base, and you didn't seem to be recovering this spike in price increases. So part [ph] of the question is, as industry leader, have you considered adopting maybe a more aggressive pricing strategy to immediately parse [ph] on the fuel prices, like maybe the airlines do, or maybe not pricing to fill as you have done historically?

We price to maximize revenue and maximize profitability and not based on the price of fuel on any given day. So while obviously fuel is an issue, we have to price based on demand. And that's what we do, and we try to maximize yields. To go back to the prior question, Caribbean pricing is strong in the fourth quarter.

As much as the third.

As much as the third, yes.

And your next question comes from the line of Tim Conder with Wells Fargo. Timothy Conder - Wells Fargo Securities, LLC: Two things, and this maybe -- I don't know if you have the data, given it’s so tight here to answer it or not, but given the military action that started with the UN here over the weekend, have you seen any data in the bookings from the brands, especially the EAA brands that would indicate that there is maybe some additional caution or shift with Costa or Ibero in particular?

We definitely don't have any bookings to Libya.

Tim, we have no information on that, honestly. It's just we get it weekly at the end of the weekend. Timothy Conder - Wells Fargo Securities, LLC: Okay. That's what I thought you mean. There maybe two from that in the current set [ph] to have it. And then on the fuel supplement question, you do have some fuel supplements as you said before in the U.K. and in Germany. Are you looking at evaluating those and any of the other international itineraries, potentially South America, the Australia area, or do you have those already on in those markets?

The laws and regulation in every country is different. Our brands individually make decisions based on geographical locations and based on the laws that are in those locations. As we've said, we have some brands in some countries doing fuel supplements. If we're not doing them, it's because the brand has decided either not to do them or they can't do them because of those laws or regulations. And rather than try to go country by country, just leave it at that. It's a very complicated set of issues. There's some countries where it's absolutely illegal. Some countries, it depends on the price at a given time versus the typed price that's printed on the brochure, et cetera, et cetera. So I'll just leave it that we're doing whatever we can to maximize revenue wherever we can. Timothy Conder - Wells Fargo Securities, LLC: Okay. And that's the underlying driver, maximize revenue and profitability first and foremost?

Absolutely.

And our next question comes from the line of Nick Thomas with Nomura. Nick Thomas - ABM Amro: You've made it very clear that, I think, by far the biggest part of the Middle East/North Africa situation is relating to your European brands, such as Costa. Are you at all surprised that there maybe hasn't been more impact on the booking behavior from your U.S. clientele, given the proximity of those geographies to the Mediterranean?

Actually, our North American brands have very few calls in that area. They don't have the kind -- you have to remember, Costa had four ships based in the Middle East, two in Dubai and two in the Red Sea. So it was clear that they had a -- plus weekly commitment to itineraries to the Eastern Med, including the Holy Land and Egypt. So it was a far greater problem for them. These North American brands only have occasional calls in the area, and so the impact was relatively small and the itinerary changes relatively easy to accomplish. Nick Thomas - ABM Amro: But you're not seeing any impact on the sort of -- the propensity for American customers to cruise in the sort of wider Mediterranean area given its proximity?

No, we haven't seen that all.

And our next question is a follow-up question from the line of Janet Brashear with Sanford Bernstein. Janet Brashear - Sanford C. Bernstein & Co., Inc.: Starting with one quick one, you talked in the last call about breaking results out in four different categories, and I don't see that in this report. Is that coming later in the year?

That comes in the Qs and Ks. So next week when we file our 10-Q, you'll see the segment information in the footnotes. Janet Brashear - Sanford C. Bernstein & Co., Inc.: Terrific. And then a quick question about the differences you're seeing in customers from the luxury lines to the more mid-priced lines. Are you seeing differences in spending patterns in luxury versus mid-price? And are you seeing differences in spending patterns between North American and European brands to the extent you can separate the European brands from the confusion going on?

I think we've said that the pricing on our premium brand is stronger than our contemporary brand.

You're talking about spending onboard or ticket pricing? Janet Brashear - Sanford C. Bernstein & Co., Inc.: I was talking about onboard spend.

Yes. I mean, in general, onboard spend is up across the board in all the brands. There really hasn't been significant changes in the different marketplaces. By category, most of the categories are up. We're still struggling a little bit in the casino and art, which is something we talked about over the last couple of years. But all the brands are up, and I don't -- there aren't any discernible differences by brand or by region.

There are, but not year-over-year. Because, as we've said before, certain brands, certain geographies have far less onboard spend than others. But that's -- what David's saying is we're up across the board, but they are different by brand and demographic and...

And the product itself.

Yes.

And Mr. Frank, we have no further questions at this time. I'll now turn the conference back to you.

Okay, great, Todd. Thank you all for calling in. And Beth is around, and she's looking forward to getting calls from those who have an interest in talking to her and getting more information than what we may have imparted to you on this call. Have a great day, everybody. Goodbye.

And 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 great rest of the day, everyone.