Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Carnival Corporation Second Quarter 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded on Friday, June 22, 2012. I would now like to turn the conference over to Howard Frank, Vice Chairman and Chief Operating Officer. Please go ahead.

Good morning, everyone. We are all here in Miami: David Bernstein, our Chief Financial Officer; Beth Roberts, VP of Investor Relations; and Micky Arison, Chairman and CEO of Carnival Corporation. Before we proceed with the formal comments this morning, I'm going to just turn it over to Micky.

Hi, everybody. I just want to warn you that -- many of you know we had quite an exciting evening last night and a very long evening last night. So if during the presentation you hear any snoring in the background, that's me, and I apologize if I'm not totally coherent this morning. But I'm going to do the best I can. David?

Thank you, Micky. Before I begin, please note that some of our remarks on this conference call will be forward-looking. I will refer you to the cautionary statement in today's press release. Also, all of my references to revenue and cost metrics will be in local currencies unless otherwise noted, as this is a more useful measure of business trends. Our non-GAAP EPS for the second quarter was $0.20. The second quarter came in $0.13 above the midpoint of our March guidance. The improvement was driven by better-than-expected pricing on close-in bookings and higher onboard and other revenue worth $0.05. Lower net cruise costs, excluding fuel, were worth $0.03. Lower fuel prices were worth $0.01; and 2 nonrecurring items, each worth $0.02. The first nonrecurring item relates to insurance proceeds received for the total loss of Costa Concordia in excess of its net book value and was forecasted to be received in the third quarter in our March guidance, while the second nonrecurring item is a litigation settlement we received relating to Queen Mary 2's propulsion pod. Now let's look at our second quarter operating results versus the prior year. Our capacity increased over 2%, roughly the same for both the North American brands and the Europe, Australia and Asian brands or, as we call them, our EAA brands. Our total net revenue yields increased -- sorry, decreased 1.4% in the second quarter. However, excluding Costa, total net revenue yields increased 1.1%, with net ticket revenue yields flat and net onboard and other revenue yields up 4%. With respect to net ticket yields, the North American brands were up 1.5%, driven by improved yields in the Caribbean and Alaska, partially offset by lower yields in European and other itineraries. During the second quarter, slightly more than half of the North…

Thank you, David. Before my formal comments, let me just mention that the Miami HEAT winning an NBA championship last night is a defining moment. It's broader than just basketball. It really is a defining moment for the community. It brings the community together, so there's quite a bit of an excitement down here. Most of us have lost sleep, Micky more than anybody else. But it's -- we'd like everybody to offer congratulations to the HEAT Organization, to Micky Arison and, of course, to LeBron James, who was absolutely spectacular. We were all involved, and we all either watched it on TV or at the arena, and so it was a great evening and a great week for us. Now to my formal commentary. As we indicated in the press release, during the second quarter, we experienced a significant improvement in booking volumes for all of our brands in North America and EAA. Over the last 7 weeks, booking volumes, this excludes Costa, have run 8% ahead on a year-over-year basis. The booking momentum percentages are approximately the same for both North America and EAA brands, the percentage improvements that I'm talking about. For Costa, the booking momentum for the 7-week period has even been more encouraging, running approximately 25% ahead year-on-year. Loss of booking momentum beginning this past January and continuing through the end of March resulted in our falling further behind in our year-over-year occupancies across all of North America and EAA brands. Toward the end of March, marketing programs were restarted, which included significant price initiatives to stimulate consumer demand, and we began to see a strong rebound in bookings beginning in early April. I think it's fair to say that the revenue yield impact from the pricing initiatives taken during this period was slightly greater…

[Operator Instructions] Our first question is from the line of Steven Kent from Goldman Sachs.

Could you just talk about -- when I'm looking at the way you're describing the balance of 2012, it sounds like the third quarter is going to be very weak, probably a little bit weaker than I would've expected or our team would've expected. But then the fourth quarter, using again your guidance, would suggest a very, very strong rebound in the fourth quarter to get to your full year numbers. Maybe I'm calculating that wrong, David, but I just want to make sure we're going that way. And if that's the case, what gives you the confidence on the fourth quarter that things are going to improve that dramatically from the second and third quarter?

Steve, this is Howard. Actually, based on our current forecasting, we are estimating that Q3 and Q4 yields will be down in the same relative range of 3% to 4%. I said 3% to 4% down in Q3. My guess is it will be in that range in Q4 as well. So I'm not quite sure how you did your calculation, but that's the way our numbers work.

And that's excluding Costa in both quarters, what Howard just mentioned.

Yes.

Yes, but I mean, if you -- for the third quarter, you're negative 6 to 7 for the whole company, right? For constant dollar? And then in the -- for the full year, you're negative 3 to 4. So something has to happen pretty dramatically...

For the first quarter, it was up. The first quarter was up.

The first quarter -- yes, yields were up, close to 3%, I think, on a constant dollar basis. What I suggest is go -- I think Beth can take you through it, but I think that's just the way the numbers work right now. But Q3 and Q4 basically look like they're going to be in line. There's always more -- the further out you go right now, it's always more difficult to predict. But I think Q3 is -- they're not -- while we're behind, there's still not that much inventory left to sell so...

But it sounds like the assumption is wrong. So maybe after the call you can follow through with Beth and see where this -- yes.

Yes. The fourth quarter is -- I mean, 2.9% up on constant dollars in the first quarter, 1.4% down in the second.

In the back half. It's in about [ph] the same range that we guided to in the third.

Yes.

And we're still in the same range -- we're still in the same range that we were in March 5.

And we're going -- and by the way, these are only -- they're only modest changes, yield from -- in North America and Europe from previous -- I think it's important to put in context that when the incident occurred, it was the 2nd week of January, which is really the peak of the beginning of wave season. And when we reported, it was March 5, only a few weeks into that. So we estimated how deep the hole was and how much we'd have to incentivize to get that hole filled, and we missed by what appears to be a rounding error at this stage.

And on the close-in bookings, it sounds like you had to incentivize more as you got through Q2. Can you just talk about how you're thinking about the...

Q2 held up pretty well.

I'm sorry, Q2 was better, but you're incentivizing more going to Q3.

Correct.

So can you just talk about what kind of programs you're doing...

I think it's pretty well understood that Europe has been challenging this year. I think everybody understood that, particularly for the North American brands, and that continues to be the case although -- we're well into it now, and it's pretty much full. So we pretty much know where we are.

Our next question is from the line of Felicia Hendrix from Barclays.

Just to -- I was actually going to yell that you should wake up, but it sounds like you're pretty awake, even though you gave us that disclaimer.

The only thing is that I have -- I've got Queen like running in through my brain constantly.

So I think -- just to touch upon how you just answered the last question, if I remember correctly, normally, you're about 85% to 95% booked in the quarter that you're in. And then the next quarter out, you're about 55% to 75%. So just in terms of trying to think about your confidence in the guidance that you've provided, are you within those ranges?

We are.

We are towards the lower end of the ranges, which I think -- the comments that we're behind the prior year. But still...

But within the ranges.

Yes.

Okay. So within the ranges at the lower end for both the third quarter and the fourth quarter.

Correct.

Correct.

And the third quarter -- there's not that much left to sell. Even though we're behind maybe by a point or 2, there's not that much left to sell in Q3.

Okay. And then obviously -- the fourth quarter's range is wider, and that kind of gets to my next question because what we've been hearing is from the -- all cruise lines, not just you, your competitors, you've been holding price for as long as you can and then discounting kind of lower -- the closer you get to the cruise. So when we think about that, when we think about the fourth quarter kind of being usually -- historically a more difficult quarter and, in light of the guidance that you gave, I mean, how confident are you in that?

I'm confident in the guidance we gave right now. To be honest with you, I think we're going to -- the numbers aren't going to change dramatically, I think, for the second half of the year.

I mean, we always know [ph]. Obviously, we only give guidance that we're confident in. But we never know -- you never know, we never know about hurricanes. We never know about the election season. I mean, there's a lot of things that can happen between now and then. But based on everything we know today, we're very confident.

Yes.

Okay. And is it fair to assume that in your guidance, you kind of take into consideration these programs that you might be implementing to stimulate demand?

Oh, they've already been implemented.

They've been implemented, and our volumes are up substantially, as we said in the press release. So they've been implemented, and they're working. And they're working very significantly, obviously at Costa and well in the other brands as well.

Our next question is from the line of Robin Farley from UBS.

Actually, I don't have a question about the yield guidance. It basically sounds like it's kind of just narrowed, I guess, in the same range. It's narrowed within it. I did have a question on your free cash flow. You talked about next year having more free cash flow and less CapEx. Can you give us some color on your thoughts about share repurchase? Because I think you have $350 million authorization still outstanding and -- just some thoughts on that?

Yes, we did resume the share repurchase during the last quarter, but we only wound up purchasing about 150,000 shares. Our share repurchase program is designed to be opportunistic, and we are being patient given the market volatility. And at the moment, it's actually $330 million that remains on the program.

Okay, so -- but any sort of thoughts about -- just strategically whether you feel like -- looking ahead, free cash flow will be greater next year versus this year, but are you not comfortable sort of spending that in advance of getting it? Or I guess, just trying to think about what your expectations are over the next 12 months, understanding that day to day is opportunistic.

I don't think we're comfortable preempting the board. That's a board decision, and I think our position is basically what it has historically been. We're going to return free cash flow to shareholders in a combination of ways: dividends and stock buyback, depending on what the board decides.

And our free cash flow this year, given our new guidance, we would expect it to be in the range of $300 million to $400 million, using the midpoint of the guidance.

And I think we explained -- I'm not sure if it was on the prior call, but we suspended the repurchasing for a while for -- but the reasons...

Yes, to be sensitive...

Sensitive to the issues regarding the incident. But as David said, we're now back and prepared to continue.

Our next question is from the line of Rick Lyall from John W. Bristol. Richard Ellis Lyall - John W. Bristol & Co., Inc.: Promotional activity in North America and Europe, it's not reflected in the ticket yield. Can you talk about both the depth and the impact of those promotions? And I've got a follow-up.

The impact is what it is. It's what we anticipated back in March. It's just -- like I said, a rounding error because it's just a little bit more extensive than we thought. But overall, it's pretty much what we thought after missing such a significant part of wave season. So I'm not sure I understand what you mean by the depth in your question. But... Richard Ellis Lyall - John W. Bristol & Co., Inc.: If you've had to offer more free flights, more onboard credits, et cetera, than you thought back then.

Yes. Correct.

Yes. What I said is we had to do more promotions, especially for the European programs, or where there was other programs where there was a major air component.

The range we had was 2 to 4, and now it's 3 to 4. So again, it's a fraction of a point that we're talking about. So yes, we gave -- we did do a little bit more than we had anticipated in March. But again, in March, we're only a few weeks into the situation. So I think we did a pretty good job of guesstimating what would need to be done to fill that hole. But we didn't get it 100% right, but we still got it within the range. So... Richard Ellis Lyall - John W. Bristol & Co., Inc.: Right. Okay. And then I've got a question about the fuel hedging. So when I look at the schedule in the release out through '14 to '15, you're kind of holding in the 70 to 80 floor range, and you're keeping the upper range 125, 130. How do you think about migrating the band? Are you going to march the band down? Or are you going to kind of consistently stay in the 80 to 125, 130 range?

It depends what the band is at the time that we meet. I mean, we meet on a regular basis and discuss this. Again, we look at this -- or I look at this anyway as insurance. It was, at the time, cheap insurance. It's now become a little bit more expensive insurance. But that's what it is. It's insurance, and we keep looking at -- we meet on this on a regular basis, and if opportunistically we can get lower bands, we obviously would take advantage of that at the time.

Our next question is from the line of Steven Wieczynski from Stifel, Nicolaus. Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: One of the brands you guys haven't talked about is AIDA, and I know that was a brand that had been -- seen some pressure from the Costa event. So could you just update us on what you're seeing there?

Yes. I mean, AIDA's -- there was that period, I think, subsequent to mid-January, where business was quite soft. But their business has come back quite nicely. And as I mentioned, their yields are slightly down. I'm not -- what I think -- I don't think they're dramatically different than when we -- how we originally budgeted the year for AIDA. So they're holding quite nicely, and they picked up a lot of booking momentum. It took a while to come back, but it's a very, very powerful brand in the German-speaking markets, and it's doing quite well. It just -- it seems to be -- has normalized quite nicely.

They had a naming ceremony in Hamburg for their new ship, and to give you a sense of the power -- the viewership on the river were -- was 1.4 million people. Actually, more people showed up to see the naming ceremony of that ship than the Diamond Jubilee, [indiscernible] a pretty powerful brand. Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: And then the second question, I guess, will be a little bit more for David on the expense side. I mean, the expense control seems to be -- you guys seem to be doing a phenomenal job there. I guess in the other expense category, I mean, that was down significantly, even if you exclude, I guess, the $34 million there from the litigation and the insurance proceeds. So what was being pushed out of that line item?

You also have some cost related to the Costa Concordia incident -- oh, you're talking about the second quarter...

[indiscernible].

Yes, the second quarter, the 494 versus the 556? Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: Right.

Yes, I'll have to get -- I don't have the detail with me here. I'll have to -- we'll get back to you on that.

We'll take a look.

I don't [indiscernible].

Our next question is from the line of Assia Georgieva from Infiniti Research.

I had a couple of quick questions. First of all, Costa's second quarter occupancy was probably up significantly after the end of March pricing program. How did it compare relative to your expectations? Could you give us -- let's say, if it was a 10% change in occupancy or higher?

Relative to which expectations?

Your March 5 expectation.

The expectation changes every week.

You're talking about how we [indiscernible] the guidance of March?

In March, we really were unsure whether we could move occupancy at all. And we discussed that a lot, that we were going to do continuous surveys to see whether -- if we put stimulus in the market, if it would work. We didn't want to put pricing stimulus just to put it in there without having the response. And what we found is, relatively quickly, that with pricing stimulus, we could generate significant demand because of the strength of the brand in its key markets. And so the occupancy levels versus where we thought we were in March are significantly higher, but the pricing offset virtually all of that. But we're far more pleased with this kind of result than what we were talking about in March, because it is accelerating, in my mind and I think the mind of management, the comeback of the brand, to have full ships or relatively close to full ships, with happy passengers coming back, enjoying the brand and saying what a wonderful time they had. It generates a whole different ambience onboard, creates onboard revenue. There's lots and lots of positive elements of having higher occupancies than we had anticipated. So compared to March, the occupancies are significantly better. The response is significantly better to the incentives that were put in place than we thought in March.

And still you expect the loss to be in the $100 million range, which was the original expectation. So it's pretty much a trade-off between price and occupancy at this point?

Correct, correct.

Yes.

Okay, okay. My second question. In the past, it seems that onboard spend has been almost a leading indicator to higher ticket pricing. Do you think we may be seeing some of that, especially on the onboard part?

Well, we are seeing some increases in onboard. We were very pleased. In fact, we took the guidance up almost 1 point on onboard from March to the June guidance. So the trend is very favorable, and I hope it is a leading indicator.

It's too early to say. But I don't know that we've ever necessarily seen it that way. It certainly indicates that consumer spend is up, but there are a lot of elements to that 1% improvement.

I mean, I do think that all of our brands have put a lot greater emphasis on being creative on ways, whether it's Fun Ship 2.0 or other programs out there, that will generate more onboard revenue. So it's really hard to say whether -- how much of it is -- if you talk to the marketing, the onboard marketing guys, they'll tell you it's all them. So it's hard to tell how much is that and how much is just consumers willing to spend more.

Our next question is from Tim Conder from Wells Fargo Securities.

If you could -- we could just stay on the onboard topic here, it sounded like, again, from your preamble comments, that, that was -- remains skewed to the North American brands. But also, Micky, you alluded to, in part of your answer there, that you're seeing that nice recovery in Costa. Just a little bit more color, I would guess, on the rest of the European brands as it relates to onboard?

Yes, well the onboard is actually -- I said it was flat on the European brands, despite the lower occupancy. So you're actually seeing some additional spending on a per diem basis. So the onboard spend per person is going up. It was just we had a couple of points less occupancy on the brand. So flat on a yield basis.

Okay. And then just any color, commentary. We've touched on North America. We've touched on Europe. But given a little bit of weakening in the Australian economy, a little bit, and then just overall related to Asia, what are you seeing out of Asia, Australia collectively?

I think they're really very different markets. I think in Australia we're seeing -- we are being challenged. There's a lot more capacity coming into the Australian market, including our own capacity. So yields are -- on a year-over-year basis, pricing has been down. But it's still a very, very profitable market for us, and our pricing seems to be -- we're able to get a whole lot of better [ph] pricing with our brands in Australia than we see our competitors getting right now. So we're very pleased with Australia. And = it's likely that we may be through the worst part of it in terms of the additional capacity. Next year, Carnival brings a ship down to Australia, and it's performing quite nicely right now. So we're very pleased with Australia. In Asia, it's a pretty positive situation. We moved the larger ship into the China market, the Costa Victoria, and it's doing quite well. And we expected that we would be breakeven this year in Asia, or maybe make a little bit of positive cash flow, and that looks like it's going to be the case so far. So bookings -- pricing in Asia or in Southeast Asia or in China is quite good right now.

And we're adding another 2,000-passenger ship in Costa Atlantica.

Yes. As a result of that. Mickey's right on. Next -- beginning next spring, we're bringing a second Costa ship to Asia, the Costa Atlantica. The situation is really developing nicely.

And we're entering the Japanese market with Princess. So we're aggressively starting to size up in Asia, and we're very, very, very optimistic that we're starting to see that opportunity come to fruition.

And gentlemen, if I may, if you could just round out that whole discussion then with color, a little color on South America? And Micky, I'll offer my congratulations, too.

Well, South America business for us is mostly -- mostly begins this coming winter, but it's shaping up nicely. As I mentioned, Costa's pricing at this point for Q1 is up year-over-year. A large -- a good part of their itinerary is -- they have 4 ships in South America this winter, and so those ships are doing nicely. Ibero, to be honest with you, I don't -- I'll get back and I -- I don't know the Ibero pricing in South America for this winter yet.

It’s still early. Still early, because South America season is basically mid-December to mid-March, so it's a very short season. It’s still quite early. But early indications are positive.

Our next question is from the line of Sharon Zackfia from William Blair. Sharon Zackfia - William Blair & Company L.L.C., Research Division: I just wanted to go through the yield guidance for the rest of the year. I guess, different than Steve, I was a little surprised that there wasn't going to be an improvement, perhaps in the fourth quarter, sequentially on yields. And I know it's a less predictable quarter, but I would've thought, with the timing of the Concordia incident, kind of the booking curves there impacting the summer as well as the preponderance of ships in the Mediterranean in the summer, that maybe you’d get some release as you move more towards the Caribbean and so on as we moved into the fall. If you could help us think about if you're seeing just general signs of more economic weakness that may be exacerbating some of the other ancillary effects on the business.

Sharon, the way the demand profiles work is your Q3, your summer quarter, is your quarter of your strongest demand in your business. And so when you get into Q4, it's a little bit more of a struggle in terms of demand. Ships are coming back from Europe or coming through -- going back from Alaska. So it's always -- fourth quarter is always more of a challenge in terms of demand stimulation, and all we're saying right now is that Q4 will be like Q3 in terms of yields.

In terms of the capacity mix, it's not as different as you would think. The Caribbean is about 24% of our exposure in the third quarter as opposed to 28% in the fourth. And the Med is actually 25% in the third quarter, going up to 29% in the fourth. So we do have a heavy Med exposure in the fourth quarter. Europe, the northern part of Europe, is a little less. 25% going down to 7%.

And that includes Costa's...

That’s all-in [ph].

What you have to remember is our fourth quarter includes September. September through October is still very heavy Med period, but you've lost the Baltic, which is your highest-yielding European business because it's the end of the season, and those ships move back into the Mediterranean. So your capacity in the Mediterranean for half the fourth quarter is actually higher, as Beth pointed out.

And getting back to Steve's question on other ship operating expenses, the 2 reasons for the decline year-over-year in the second quarter, one was dry dock. We had significantly less dry-dock days in the second quarter this year than the prior year. One of the things we mentioned was, in the first quarter call, we had significantly more dry-dock days in the first quarter of 2012 than '11. So that was just a seasonality on dry dock. And the other thing was currency. The euro was 1.43 last year in the second quarter on average. And this year, it was 1.31. So currency has driven the number down as well.

Our next question is from the line of Greg Badishkanian from Citigroup.

First question is just on European source business and maybe getting a little bit of color by geography. I know you mentioned Spain was soft, U.K. and Germany held up. So I'm just wondering, did U.K. and Germany actually get incrementally better over the last 7 weeks? And then did any other major market stand out as maybe bucking the trend one way or the other?

The U.K. wasn't really impacted as much as anywhere else. I mean, the U.K. held up pretty well throughout the year, throughout the process. Germany had to have bounced back.

Germany bounced back.

Yes. It had to have bounced back. We're hesitant on Italy and France, only because Costa is our primary brand in those markets. Obviously, the volumes now are very, very strong at significantly lower prices. So the one -- the areas that we're very clear on is that Spain is terrible, U.K. has been fine and Germany has bounced back and, I think, is fine.

And second question, just on the new versus the seasoned cruiser, any change in trend there over the last month or two?

Yes. I think we said at the time of the incident that it's likely that first-time cruisers would be more impacted than experienced cruisers as experienced cruisers understand both the value and the safety of the product, while first-timers may not. At the time of our March call, we said that while it's kind of intuitive that, that may happen, we have no empirical evidence that it did happen. I can say now that we have empirical evidence that it did happen and that first-time cruisers did decline and were impacted. Our surveys clearly show that they were impacted by the events. And hopefully, the further we get away from those events, the more likely it will -- they will bounce back.

We also saw, after the global financial crisis and we reduced prices, we also saw an uptick in repeat passengers as well at that time. As Micky said, the people saw the value much quicker and jumped on the bandwagon and started booking.

Right. But we see it in actual -- we now see it in actual bookings, and we now see it in actual surveys that demand from first-time cruisers has declined since the incident. We're hopeful, as we get further along, that, that will start to rebound.

Right. So maybe next year, a little bit easier comparisons from the Concordia when you lap that, right?

Hopefully.

Our next question is from the line of Jamie Katz from Morningstar.

I have a question actually on the booking curve. And can you guys talk a little bit about how many people are booking closer in versus further out? And has that shortened even more this summer than you guys had anticipated? And then the second question is, well, Costa has done obviously very well over the last few weeks. Can you elaborate a little bit more on the pricing that you've sacrificed to get there?

Well, as we've said, we basically gave up pricing for occupancy, and it was awash. So on the booking curve, it's a function -- it's purely a function of the hole that was created during wave and the need to fill that hole, which meant that there was a requirement by the brands for closer-in business. So I don't know if that is a booking curve issue or an issue that you had this hole that was created, starting in the 2nd week in January. I mean -- so it's a very unique set of circumstances that -- we really haven't experienced before anything quite like it. And I don't see any reason why, over time, and I mean relatively short time, as we catch up on occupancy, and we're getting there, that the booking curve won't go back to where it was traditionally. But we needed to be more close in because we have some space to sell.

I think we're encouraged by the fact that we're still within historical ranges despite all the -- the event and the incidences that occurred.

Good point.

And as to the Costa, what they gave up on pricing, they're selling to 20% to 30% below the prior year in order to get the volumes and the occupancy.

I think we indicated for the full year we'd be down in the mid-teens, right? On a yield basis?

Yes.

Correct.

Our next question is from the line of Lena Thakkar from HSBC.

A couple of quick questions. Firstly, on Costa. Hypothetically speaking, if you were to get back yields and occupancy rates in line with pre the incident, where would that negative $100 million profit go to in 2013 do you think, bearing in mind all the capacity changes? And then the second -- sure, go ahead.

Let me -- before you ask the second question. I think there's an underlying assumption that we'd get it all back in 1 year, which I don't think is, to be honest with you, is realistic. What I would say is this: that we forecasted that the swing in Costa's earnings for this year is at about $500 million dollars.

And about $100 million of that was the loss of the ship itself, which is not coming back.

Right.

Right. It's not coming back.

So I wouldn't want to get into a hypothetical about if you get back all your revenue yield losses in 2013, what it would look like. I think that, that could be -- I don't want to mislead anybody, because I don't think that's going to happen. It's going to take a couple of years for this to come back.

Yes. And remember also, we have taken both the Concordia and the Allegra out of Costa's, and they sold the Marina. So compared to where we were a year ago, looking forward, they are 3 ships -- they're down 3 ships. So clearly, their earnings can't be what it would have been had they had those 3 ships.

Yes. No, and that's sort of what I was getting at, I guess, even if it did take 2 or 3 years, where is the new base, I guess. Okay. And then just on the second question, slightly -- on a slightly different topic in terms of direct bookings. I was just wondering where you are in terms of direct bookings versus third party across the fleet and where aspirations are in that department.

Yes. Direct bookings in last year were 19% of our total business. That has moved up year-over-year. We don't have any specific aspirations. I do expect the number will continue to creep up over time.

As people become more and more comfortable booking directly, it's easier for them to just do the bookings. It's such a natural occurrence almost.

With the passing of generations and the improvement of technology, we would expect it to creep up.

And do you have any plans at all to reduce commission rates, like you did in the U.K., elsewhere?

Well, first of all, the answer to that is no. But I think it's important to understand that we don't believe we've effectively reduced commission rates from the standpoint of the travel agencies' community, because there was so significant discounting and rebating going on, that their in-pocket commission was far less than what they have now. And so I think the clear indication, based on what we've said about the U.K. market and how it has held up through this whole period, is that our team in the U.K. made a very, very good decision. Travel agents, in effect, are getting, overall, better compensated, because they are not rebating, and pricing stability has been brought to the marketplace. So I think it was an overall strong decision for the U.K., but it was a unique issue in the U.K. that doesn't really exist quite the same anywhere else. So no, there's no plans to reduce compensation. It's still the North American, and I should say Italy, France, Germany. The travel agency distribution is still a very, very critical part of our overall distribution strategy. They've been supportive of us, and we continue to be supportive of them.

Our next question is from the line of David Leibowitz from Horizon Kinetics.

Two quick questions. One, with the drop in the price of fuel, do you still have surcharges in Europe?

Yes, there are currently surcharges on a couple of the European brands in Germany and the U.K., yes. Fuel supplements.

And secondly, when the dividend was reinstituted, the comment was we had a lot of catching up to do. Obviously, this year, we couldn't do any catching up. On a priority list, and at least 2 members of the board are on the call right now, the board would rather do catch up or buyback?

I'm not quite sure what you mean by catch up.

Yes, I don't think we use the word -- term catch up. And...

I apologize for the wrong term.

Yes, we generally use that on hamburgers.

Not in Brooklyn, we don’t.

Brooklyn, we put the mustard on the hotdog. All I can say is that -- we said that the free cash flow will be distributed to shareholders. Clearly, we have board members who prefer dividends. Remember, we have a mixture of board members who are more U.K.-centric, and we have board members who are more U.S.-centric. So we have both views. We have views that are aggressive toward buyback, and we have views that are aggressive toward dividend, and we try to find a happy balance. And we will continue to try to do that.

Our next question is from the line of Kevin Milota from JPMorgan. Kevin Milota - JP Morgan Chase & Co, Research Division: Was hoping you could give us a sense for the revitalized marketing effort and how big of a driver that was behind what you've seen over the last 7 weeks in terms of the increased bookings that you've seen. And also, secondly, on the Costa brand strategy, from the first quarter, it sounded like you were trying to hold price at the mercy of occupancy levels. Just wondering how -- shortly thereafter, the May -- or excuse me, March 5 call, you effectively flipped that strategy to take occupancy at the mercy of price.

I mean, Kevin, in terms of the marketing efforts, I indicated that -- how we were booking over the last 7 weeks. And the volumes are up significantly during this period. So clearly, the marketing -- I'm talking broadly now. I'm not just talking about one particular brand. So the marketing efforts have worked to recapture some of the lost business, albeit it's been at lower prices than we would've liked.

But let me add that we haven't increased the marketing budgets of any of our brands beyond Costa. Costa right now is pumping a lot of marketing dollars, again, not just to create volume but to rebuild the brand and so on. So other than Costa, all the others are working within what we would have anticipated as their normal marketing budgets at the beginning of the year.

Yes. And on the Costa brand strategy, I think you're right. I think, initially, the thinking was, based on advice they were getting from marketing consultants in Europe, was that to -- and it was very early in the process, that the strategy would be just to maintain price and that you -- regards to how you price the product would be difficult to start to generate a lot of bookings. I think that changed over time as they got further and further away from the incident. And the marketing people came back and said, no, no, no, let's -- after they did a lot of market tests and decided that let's go ahead and start to use price and see if we can stimulate the market and regenerate the bookings, and that happened.

And I think we said that on the March 5 call. We said that right now, it appears from the surveys we've done, from the marketing consultant information we're getting, that price stimulus would not work because of the extent of the event but that we would continue to do weekly surveys to judge if that was moving in a different direction and, at the point that we were comfortable, based on those surveys, that we can stimulate demand and we can get Costa back into the kind of occupancies it traditionally had, that we would make that move. And a few weeks later -- I mean, they stayed out of the market completely for, I don't know, 8 weeks?

Last week in March, first week in April.

[indiscernible] the earnings.

From the second week of January to the last week in March, they totally stayed out of the marketplace. And beginning of April, when we felt comfortable that the market perception were clearly that Costa brand is a great vacation value, one that is highly thought of in their key markets and those numbers stabilized to pre-incident level, we went heavy, and it worked.

And the advertising they were doing was price-driven. They had a very simple message. I think, if I remember correctly, it was like EUR 75 per person per day for May, EUR 85 for June, EUR 95 for July, and that drove bookings.

Our next question is from the line of Jamie Rollo from Morgan Stanley.

Just one question, please. It's really a question on the comps, on the yield comps in 2013. You sort of referred to this. But just thinking about it, H1 this year, your yields were up around 1%. In the second half, you're guiding to down about 7 including Costa and, as you say, Q4 showing no improvements over Q3. So I'm just wondering whether your comment is really asking us to think about H1 yields next year to maybe re-base, to sort of drop mid-single digits? Or are things recovering fast enough to sort of hold them flat next year?

I think it's too early to say. I think in Q1, I think our yields were up close to 3% on an overall basis for the first quarter of 2012. So what I said is that comps would be more challenging. And also, as you roll out of these -- eventually, as you roll out of these price incentives, you're still booking business in Q1 that will probably have some impact of some of this lower pricing in Q1. But so far, if you look at the overall pricing picture, although I think we're still behind on occupancies in Europe, the pricing picture so far was positive in Europe, including Costa. So I think a lot depends on how quickly the bookings will come back and how quickly we get the volumes back to backfill the space that we lost.

And you also have to keep in mind, despite where we are deployment-wise in Q3 and 4, Q1 deployment is totally different. And so that has a huge impact on this as well. I mean, like we said, we're very happy in the Med in Q4 -- Q3 and 4, but we're clearly not in Q1. Our Med is what percentage?

5% in Q1.

Yes, it goes from 28% in Q4 to 5% in Q1. So that has a major impact, too, Jamie.

We had 50% in the Caribbean, and then there's a big component in Brazil, the Latin Americas.

So you're not guiding to any yields decline in Q1 at this stage then?

We're not guiding anything.

We're not doing any guidance. Yes, I think it's too early for 2013 to do anything quite yet.

Our last question is from the line of Edward Stanford from Oriel Securities.

It's a quick question. You've again demonstrated some good progress in adjusting your fuel consumption. Is there much more than you can do there? That's been running for a number of years now. I mean, how do you see that going forward?

We continue to work extremely hard on it. We have a lot of R&Ds going on, a lot of investment going on, and we'd anticipate this type of continued reduction in fuel consumption for the foreseeable future.

I'm showing that there are no further questions at this time.

All right, that works out just fine, Jennifer. Okay. Well, thank you all for listening in. And any follow-up questions, Beth will be around to take care of that. She enjoys that.

Thanks, everybody.

All the best, everybody. Have a good weekend.

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