Good morning, my name is Lou Ann,and I will be your conference operator today. At this time, I would like towelcome everyone to the Royal Caribbean Cruises Limited Third Quarter EarningsCall. All lines have been placed on mute to prevent any background noise. (OperatorInstructions). Thank you. I will now turn the call over to Mr. Brian Rice. Sir,you may begin your conference.

Thank you, Lou Ann and goodmorning, everyone. I would like to thank you for joining us this morning forour third quarter earnings call. With me here today are Richard Fain, ourChairman and Chief Executive Officer; Adam Goldstein, President of RoyalCaribbean International; Dan Hanrahan, President of Celebrity Cruises; and GregJohnson, our Associate Vice President of Investor Relations. We have posted slides on ourinvestor website, www.rclinvestor.com, which we will be using during this calland should help facilitate our discussion. Before we get into our resultsand business overview, I would like to remind you of our forward-lookingstatements, which you will see on the first slide. During this call, we will bemaking comments which are forward-looking statements that are subject to changebased on the items listed on our website and disclosures in our SEC filings.Additionally, we will be discussing certain financial measures, which arenon-GAAP defined by Regulation G and a reconciliation of these items can befound on our website. To start, I would like to takeyou through some of the details of our financial results, discuss the currentbooking environment and provide you with our most recent forward guidance. Adamand Dan will then discuss their brands and Richard will have some commentsbefore we open the call for your questions. As we mentioned in our pressrelease, you will see on the second slide, revenues for the third quarter of2007 increased $2 billion from $1.6 billion in 2006. Net income for the secondquarter increased to $395 million or $1.84 per share compared to our previousguidance of $1.75 to $1.80 per share. For the third quarter of 2006, wereported net income of $345.4 million or $1.63 per share. Now I would like to go throughthe comparable results that is, excluding Pullmantur. I will review both therevenue and cost sides of the business for Royal Caribbean International, CelebrityCruises and…

: : Meanwhile, Liberty of the Seashas settled in beautifully along side Freedom of the Seas, offering seven nightcruises from Miami. These two ships are preeminent in the industry and aredelivering the highest level of guest satisfaction in the Royal CaribbeanInternational fleet. Our third freedom class ship, Independence of the Seas,is scheduled for delivery in April 2008. We recently announced the Sovereign ofthe Seas will leave the Royal Caribbean International fleet in November 2008and join the Pullmantur fleet. Monarch of the Seas willleave her current itineraries out of Los Angeles and assumes Sovereign’s itineraries outof Port Canaveral one week after Sovereign departs. While Sovereign still has one year of valuable service left in our fleet, giventhat her introduction was to the late 1980’s, what Voyager of the Seas introductionwas to the late 1990’s. We regard this announcement as a milestone in ourevolution as a brand and a prize for our colleagues at Pullmantur. Dan?

Thank you,Adam and good morning everyone. As you have heard from the rest of the team, weare very pleased with our third quarter results. Celebrity had a solid book ofbusiness in Europe and Alaskagoing into the third quarter and we were very pleased with the quality of theclose-in bookings for both markets. We are equallypleased with where we are booked for the fourth quarter. Brian mentioned we arevery focused on cost containment. I am pleased to report that we have completedthe diesel installation on two ships, Millennium andConstellation, and they are fully commissioned. We are in the process offinishing the installation on Jewel of the Seas and will complete all eight gasturbine ships in the Celebrity Cruises and Royal Caribbean International fleetsby the end of 2008. In both casesthe diesel engines are carrying the full hotel load and are being used tooffset the gas turbine usage for propulsion. These diesel engines are moreenergy efficient, burning less fuel and at today's fuel rates the savings willbe approximately $7 million per ship per year versus what our fuel expenseswould have been if we had not made the change with the diesel. I am alsopleased to report that we have finished the revitalization of the second Azamaraship. We will be hosting travel agents and press on a two-nightfamiliarization cruise on Azamara Quest beginningtonight. She then goes into full revenue service this Wednesday and will bedoing exotic Caribbean cruises through the winter before repositioningto Europe next spring. We remain excited about this newbrand and the potential it has. Finally, we launched a new marketing campaignwith the tag line, Starring You. Although it is early in the campaign, the feedbackfrom the travel trade community has been very positive. Our focus on adifferentiated marketing position for Celebrity is working and we are seeing itin the revenue results. Richard?

Thank you, Dan. And thanks to allof you for joining us on this call. I have just a few things to say before weopen it up to the questions. And first, I would like to commend the managementteam and in fact, all of our staff for these record financial results. I amvery proud of their achievements both in building a portfolio of industryleading brands and for their commitment to our improving financial performance.Particularly, important aspect of this success is our continuing focus, costmanagement, and efficiencies. Brian mentioned, so did Adam andDan, the progress we have made in fuel consumption, but fuel is by no means theonly area we are focused on. This really is an enterprise-wide effort involvingall of our operating units, both shore side and shipboard. We have made realprogress here and we will continue to push forward on this. Now shifting gears a bit, I wouldlike to address the potential impact of the credit crunch that’s going on inthe country today on our company. And the implications for financing are $7billion new order in this choppy financial environment. Fortunately, as we havedisclosed on previous occasions, all of our ships on order have guaranteedfinancing in place. That’s always been our practice and it gives us the comfortof knowing that we are not dependent on market conditions and that happened tobe in place at the time of delivery. These financings are unsecuredand generally, they are on terms comparable to what we have done historically.So, if the markets are turbulent at the time to delivery, we simply use the financingguarantees. If the markets are more favorable we will look on an opportunisticbasis to see if we can do even better. Now moving on, you know we arevery excited about our new French brand, CDF Croisieresde France. This new venture builds very nicely on our commitment to continuedEuropean expansion. The newly named vessel Bleu de France completely renovatedand customized for the French market will begin sailing next spring. In fact, all aspects of thisbrand will be tailored exclusively for French tastes, cuisine, entertainment,language décor, etc. All will be exclusively French. We anticipate a strongdemand for this product and we have assembled a very talented team that'sleading the effort. Finally, this afternoon, Dan andI will be boarding the Azamara Quest for her first inaugural cruise. Danalready pointed out the new brand is off to a terrific start and adding thiswonderful new ship is an important step forward. With that, we would like to openup the call for your questions. In order to make sure that we get to as manypeople as possible, I'd like to ask you to limit yourself to not more than twoquestions at a time. Operator?

(Operator Instructions). Thefirst question comes from Michael Savner with Banc ofAmerica Securities.

Hi, good morning, thanks. Twoquestions, and first can you give us a little bit of color of what you areseeing in bookings related to the weakening US dollar, both from the perspectiveof how you might be able to be take share from land-based vacations for Americantraveling abroad and conversely, has it helped your ability to draw Europeanshere to the Caribbean? And when I say the improvement, I mean, is it somethingas material or really incidental? And then I've a follow-up? Thanks.

Hi, Michael, this is Adam. Iwould say at this point, we’ve realized the double benefit along the lines thatyour questions suggest. For the American segment, they see the ability to takecruises, particularly in Europe and especially late in this year, as the valuedriven way to continue to satisfy their appetite to experience Europe. And that’s been favorable to the cruise sector ingeneral, I believe. We’ve also seen considerable latebooking strength from the European point of sale, which is of course, an areathat strategically, we’ve raised our investment in a variety of ways lately.And in the current weeks and months, we’ve definitely seen the benefit of whatcruise pricing they may experience it in their currency. But it’s given thatit’s computed over from dollars originally, it’s a very attractive message forthem. So, we’re definitely benefiting both ways.

Thanks Adam. And then, tofollow-up on your comment, and I know, Brian mentioned it as well, you talkedabout improving trends for close-in pricing actually was getting better notjust year-over-year, but you’re seeing sequential improvement as the quarters,as the months went on in the third quarter? Can you comment a little bit aboutwhat you are seeing even more recently and whether there has been any slowdownin that improvement related to the tick-up in oil or the kind of settling in ofconsumer’s sentiment?

Michael, it’s Brian. As we’vetalked about, we haven’t really seen too tight of a correlation or consumerdemand, and what’s been happening in the broader markets in terms of fuel orthe sub-prime mortgage. There seems to be very strong resilience right now withour customer segments. Throughout the third quarter, wesaw progressive improvement. In September, the year-over-year pricing to theclose-in bookings were very strong. It's something we’re struggling quitefrankly to find a true pattern to, but it has been very healthy really for the lastfive or six months.

Any data on October that you can shareyet?

It’s a bit early for that rightnow. We have been pleased with our bookings over the last several weeks, but Ithink it’s a little too early to really be able to pronounce what will happen inthe fourth quarter. Fortunately, our pricing structure is very adaptable as wesee changes in demand patterns, and we believe that we are doing a lot to beable to leverage the close-in demand that we’ve seen.

Fair enough. Thanks very much.

Your first question comes fromRobin Farley with UBS.

Thanks. Few questions, it looks likeMexico is pretty close toimplementing a head tax, I guess following what Alaska did. Can you talk about that and also,do you see risk of this elsewhere if Mexico does it, will other places [follow]and do it in terms of what percents that you have on that? And then my secondquestion is on fuel consumption, so I'll wait for it there.

Hi, Robin. This is Adam. On yourquestion about Mexico, first of all, the decision by the Mexicans as to what todo is still hanging in the balance. I believe it’s in between their Chamber ofDeputies and their Senate. So, there still is an effort to minimize, either thepassage of that tax or how much it is or when it applies. That's literallygoing on at the moment. We believe that there is a lot ofsupport for our position in Mexico that this is an industry that has broughtenormous benefits to that country and that the best way to continue to havethose benefits flow to the country is through more cruise costs by more cruiseships bringing more guests to spend more money there, as opposed to raisingrevenue through taxes at any level of government. And that is the message that weare conveying in every which way that we can, not only within Mexico, but around the worldactually. This is a growing industry, and we think this industry can bringenormous benefits to many countries around the world. But it should come in theform of consumer and cruise spending rather than in the form of taxation.

Do you expect that it would besigned by the President if it passes?

It’s very hard to tell. We arenot experts in Mexican politics or government. It’s part of a bigger package aswell as being a debate on its own terms and we just have to see what occurs.

And then in terms of othercountries?

Well, as I say, the message thatwe’re trying to deliver to many countries around the world is that thisindustry can best benefit their country, if they allow the growth to occur andthe spending to follow as opposed to looking at ships calling on their country,as a taxation revenue raising opportunity.

Thanks. And then in terms of fuelconsumption, this is like a bigger difference reduction in consumption per unitsthan what have done in previous years. And I wonder if you could give a littlecolor, is it itinerary changes that have allowed for lower consumptions or Imean, the diesel engines are relatively new, but it seems like it’s got to bemore than just the diesel engines driving the consumption reduction?

Robin, this is Dan. It’s afunction of a number of different things. We’re seeing very, very positiveconsumption numbers because of the diesel engines. They just burn less, fuel,and in fact, we are doing better with those diesel engines than we’ve thoughtthey were -- than we've thought we would. We’ve also taken steps across theboard with all ships in both fleets to reduce consumption. So, more of our ships have thenew SigmaGlide paint on the bottom. So, that creates more efficiency for fuel.More of our ships have the 3M window veneers on, so that’s helping us withfuel. The hotel group now is very, very focused on fuel and is helping us quitea bit. And we are very, very careful with itineraries. So, I don’t think you can pointto any single thing. It’s really across the board and it’s a real focus acrossthe company. And it’s not just the Marine Department that focuses on it, it's hotelon the ship, and it’s everybody here in Miamiwho wakes up and thinks about fuel in the morning as well.

Okay. Great. Thank you.

Your next question comes fromHakan Ipecki with Merrill Lynch.

Thank you. Going back to thefuel, looking into next year. I mean, where are you expecting to use and kindof looking at some of the items that you’ve spoken in on the mixed shifthedges, what's driving the biggest benefit there?

Well, next year the biggestbenefit is going to be – again, it's across the board. But the diesel enginesare going to provide a big benefit for us next year because they just burn lessfuel. So, we'll get a bigger benefit. And by the end of next year, we’ll havethe diesel engines installed on all eight. The pleasant surprise we’ve got onthe diesel engines is that when we first put them in, we thought they would runjust the hotel load. But we’ve in fact, we’ve found that at lower speeds, wedon’t even have to turn the gas turbine engines on, and so the diesel enginesare not only running the full hotel load, but they are moving the ship throughthe water, and burning less fuel at the same time. So, there is a real nice benefitto that. And then we continue all the other things that I just mentioned, whenI answered Robin’s question that they just continue to come in to effect. We’vea fuel team that meets weekly, a steering committee team that meets weekly. Andwhen I look at that list, there is dozens and dozens of ideas that remain onthat list that we are still betting and looking to put into service next year. So, there is a lot of good thingsgoing on, and I think what you have seen there is also itineraries. We are justbeing very careful with our deployment as well. So, it’s that whole mixturethat’s driving the force.

I see. And does that decrease thechance of a fuel surcharge even though oil is around $90 per barrel, does thatchange the way you think about the surcharge or chance of it being implemented.

I think -- it's Richard speakingand I think we’ve said in the prior calls that is something we tend to look at.But, clearly we've been remarkably successful across the board in keeping thecosts. I think if you actually look in the '08 based on even at today's fuelprice, not only be comparable to '07, but actually will be lower than, '06 andgiven what's happened to fuel costs, that's remarkable. So, yes, clearly thatmaybe makes less likely a fuel surcharge. We keep looking at it and I've tojust say, it's been -- everybody is looking at exactly what is has done, Ithink, it is a thousand things (inaudible).

Okay, great. Thank you very much.

Your next question comes from [Aja Jordiava] with InfinityResearch.

Good morning.Congratulations on a great quarter. I had a couple of questions, they relate toyour expansion into European markets. First of all, maybe Brian, you can help mewith this. Can you give us the percentage of revenues in Q3, which were generatedin non-dollar currencies? And my secondquestion is a larger one, I guess. Now that you have successfully addressed theSpanish and French markets on a national basis, do you expect to add maybe onebrand or two brands a year for specific nationalities such as Germany orfurther emphasis on the UK?

Aja, we don’tbreakout our revenues by quarter geographically or in currency. I can tell youthat about 83% of our revenues this year will be generated out of the NorthAmerican marketplace. I think it’s fair to assume that a much higher proportionof that would occur in the third quarter. But we don’t break out that level ofdetail on a quarterly basis.

And withrespect to your second question, I don’t think, we have a specific planthat it's X number of nationalities, nationalistic products that we would pullout on an annual basis. I think we do this very much on an opportunistic basis.Does a new market offer an opportunity to generate a high return on investedcapital? We look at those as individual decisions and we continue to look atthem opportunistic.

Would you consider some of thelarger European countries as suitable for further expansion and maybe Germanyan example?

I think we look at all the places.There are more countries in Europe that havepotential opportunities. It also, it was seen that we have raise into Pacificarena and Asia. So I think there are plenty ofopportunities out there and we just have to keep looking at them and seewhether given what's happening in those markets, they're likely to generate thekinds of returns.

Okay, great. Thank you, so muchRichard.

Your next question comes fromSteve Kent with Goldman Sachs.

Hi, good morning. Could you justgive us a little bit more detail on Pullmantur and how it’s going? You're now afew more months into ownership and whether you feel that the upside might begreater and I guess, I’m very interested in the earlier comments about maybe deadheading a couple of the ships moving things in and out of the market and whetherthat, to enhance revenues or to reduce expenses, I didn’t quite understand themotivation for all of that.

Steve, yes, I think we’re veryexcited about Pullmantur, and beyond just verbal commentswe’ve made the fact that we’ve taken now one of our very finest ships, theSovereign of the Seas and moving it to Pullmantur. On top of the two ships, it'sprobably the most tangible demonstration that and I think, you will see more ofthose will continue that brand because we are very optimistic about it. I think Brian’scomment on the dead-heading is mainly to really explain some of the changes innumbers. That's something we do with all of our brands, sort of looking at theitineraries, is it for a better return for us to do a repositioning voyage,which maybe gets a lower per diem but gets some revenue to offset the costs oris it better to bite the bullet and have a shorter period, where we get norevenue, but then more quickly get to a higher revenue destination. And frankly,those are sort of marginal type decisions. It’s not fundamental, although, therewere enough of those kinds of things, Pullmantur and elsewhere that theyimpacted sort of the incremental change in the number of APCDs. So, I thinkthe answer to your question, that's not any indication of any change instrategy. We’ve always made those kinds of decisions on an on/off basis. It’sjust that, this particular comparison, it cause some anomalies innumbers.

And does this mean that thisacquisition is now, do you think, is more accretive than when you started thisprocess a while ago?

.:

Thanks.

Your next question comes from BobSimonson with William Blair.

Good morning. Looking at thecapacity page 10, I think there is enough time. Might you add another ship forthe out period of 2011? And Richard, do you have in your mind or is that theboard have in their mind, a sustainable growth rate for capacity on a longerterm basis?

i: But in terms of growth, I don’tthink we have said that we think there is a particular figure for any one year.And I don’t think we could say that today. I think, what we do look at is oneof the markets we serve and is there an opportunity to buy in something new,add capacity at a price and on terms that give you a good return. I just find it ironic that herewe are looking at a fleet that’s much larger than anything we had in the past andwe still don’t have enough ships to satisfy all the itineraries that we would liketo serve. And to some extent, that comes back to the earlier question of whatabout other markets out there? There are so many new markets that are openingup that offers opportunity. But the other thing, I wouldcomment on is we are now seeing a lower growth rate than we saw perhaps fiveyears ago and most of us were concentrating on creating a critical mass of scale,but we think, we have that today. So, there isn’t that same pressure in gettingthe higher growth rate that they might have implied here.

Second question. Brian, do youhave a number that you can share as to what percent of your capacity wassourced from the USin ’06. What it might be this year and what it might be next year?

I don’t have the numbers right infront of me, Bob. I can tell you 83% is North American this year. We would lookto that number to continue to comedown. Our Europe growth is growing quitenicely and next year with Independence of theSeas debuting at the Southampton and we’ll have the two voyager-class ships in Europe as well. I think you will continue to see growthin Europe and also Latin America. We have somereally exciting new itineraries targeted toward Latin American that will helpthat market grow as well and continue to improve our diversification in sourcing.

Thank you very much.

If you want to follow-up withGreg this afternoon, I think we can get the statistics that you are looking for.

Very good, thanks.

Your next question comes from TimConder with Wachovia.

Thank you. ‘08Brain, where are you percentage hedged for ‘08 at this point, and if you wouldso much as embellish at what levels? And then the second question is given theperformance that you and the industry are seeing here in what’s typically aweaker booking period for the industry on a seasonal basis, is there -- are youslowing down maybe a little bit, maybe trying to take a little bit more pricenow running the risk of selling out too fast, I guess is that the end ofquestion there?

It’s a greatquestion to have to answer. How things have changed in the last six months. In2008, right now, I think we disclosed this in our press release, we're about38% hedged. I don’t have the average hedge rate in there, although we did say,even though we have seen a real big run up in fuel prices over the last coupleof months. Our fuelsavings initiatives and our hedge position in '08, right now with prices remainthe same we think we could almost mitigate all those price increases that we’veseen thus far. In terms of our pricing strategy it really -- it’s not as macro ananswer as I think you are looking for. We are looking at seasons, we arelooking at products, we are looking at the demand dynamics. When it comes topeak season itineraries and ships that you have a conviction or a star, you areprobably more apt to try to go for the pricing leverage earlier on in the lifecycle. I think, this year has been ayear that both ourselves and our competitors have benefited from a strong orderbook which has given us that pricing leverage close in. But I don’t thinkthat’s always the magical formula. It really - it’s based on the environmentthat we are seeing and the product that we are trying to revenue-manage.

Okay.

Though right now, I think thelong and short of it is, we are very happy with where we are. And I think weare making the right pricing decisions to really optimize our performance inthe current environment.

And along that line since 9/11using that as a reference point, would you say that given what you justdescribed that’s your booking window is maybe at its longest point?

Overall, I think probably, myspeculation is probably more like ’04. We might have been a little bit morebooked, but we are certainly in a much better fill percentage today for '08 thanwe were for '07. And I think, probably about on par to slightly better than wewere in '06.

Okay.

It really - I believe a lot of itis being driven more by us in our itinerary mix and our source markets than itis in any changes that we are seeing in the consumer behavior.

Okay. So, at this point again, absentwhat you described with some of the maybe more seasonal markets here, you don’tfeel you're quite at that point, where you are really trying to ratchet up priceto maybe slowdown the fill rate?

In some products we are and insome quarters. If you look at the slide that we -- I think it was page eight,that we showed our current order book. You can see our pricing tends tosomewhat correlate with the order books. So for example, in Q1 right now, wherewe have real nice loads, we are getting higher revenue premiums than would beover say Q2 for example. Where it's still too early we are not going to go out andget real aggressive on price yet until we have seen a real conviction aboutthat demand..

Okay, great. Thank you.

Your next question comes fromDean Gianoukos with J.P. Morgan.

I’m all set. Thanks.

Your next question is a follow-upfrom Michael Savner with Banc of America Securities.

Hi, thanks for the quickfollow-up. Brian, there has been some talk over the last few months about potentiallyrevisiting the accounting treatment of the useful life for your ships and maybethe accounting treatment today is not properly reflecting the length of theships being in services. And whether you are considering maybe, extending thatuseful life, which would obviously lower the annual amort rate. Is that somethingthat from a business sense, you’re thinking about and is being debated?

Michael, I think the currentsituation with resales and the value of the ships are, certainly implies thatour accounting treatment of 30 years with a 15% residual value is what I’d callconservative. I think as with any policy of that nature, we would want to getvery comfortable before we would close any changes to our audit committee andto our auditors. But I think it’s an intriguing question given what we haveseen in terms of the resale values in the market that's out there. But we havenothing at this point in time that we’re definitively going to comment on.

But it’s something that you arestudying?

We look at - it’s something welook at and we are somewhat intrigued by but we want to have ample time toreally review it. We don’t want to be making quarter-to-quarter accountingchanges. But, if there is something that we believe it’s significant andstrategic and a pattern that it’s very consistent. I think we would want to discussit with our audit committee and our accountants.

Thanks, Brian.

Your next question comes from JoeHovorka with Raymond James.

Hi, thanks guys. A couple ofthings, one, on your 10-K for ’06 discloses 18%, non-US revenue, so let'sassume that your, ’07 numbers down from ’06 ?

Actually Joe, you may have betterdata points than I do. I thought we were at about 17%, it could be 18%. Itshould be moving in ’07 slightly more skewed towards the European. We’ve seenmore European growth. And actually, I believe the 18, we are probably closer to19% this year will be my estimate for ’07 and should continue to see thatincrease in ’08.

Okay. And then could you give thequarterly capacity numbers for ’08 and maybe just the costs for these dieselengines and that's it?

Right. If you could follow-upwith Greg on the quarterly numbers for ’08.

Sure.

And we haven’t that real specificabout the diesel engines. But we’ve given direction in the $16 to $18 millionrange per ship.

Great. Thank you.

Your next question comes fromFelicia Hendrix with Lehman Brothers.

Hi guys. Just a follow-up on fueland in response to another question earlier, you had said that if prices remainthe same you could mitigate out of price increases where you are hedged now,but if we were to assume that the rising fuel environment persists throughoutthe next year. I’m wondering if there is a way of this some kind of parameterthat you could give us as to what the cost would be of increasing your hedges.

Felicia, we look at the cost ofthe forward curve continuously to try to make the best decisions, but we've hada very consistent pattern, where we like to be hedged between 40% and 60%. Wereally don’t want to be fuel speculators. We are trying to manage that expenseand the bar that we are comfortable with really is being about 50% hedged. Ican tell you that a 10% change in fuel price for '08 given our current positionwould equal about $35 million in terms of sensitivity.

Right. So, you're 38% hedged fornext year. Fuel is going up in and you said you like it to be between 40 and 60that's just where on my question, was coming from?

Well, we are still 15 months outfrom the year. We tend to be 40% to 60% hedged over to 12 month period.

Okay.

And I just like to add becauseyou mentioned our fuel hedging being one of the mitigators or being mitigatorfor '08. A large portion of our fuel savings also are on the efficiencyinitiatives. Dan talked about the diesel engine project; we have much more fuelefficient ships with Independence coming in atfull year of Liberty.Those are all initiatives that are helping our fuel, quite a bit.

Felicia, if I could just add - ifwe went out to hedge now, we increased it to get to the 40% to 60% becausenumbers that we’ve given are based on today's price. And as you well know, theforward curve is at a premium that would increase our costs. But it would bemuch less than the 10%, which sort of assumes it instantly that price went up10%, as opposed to the curve growing over a year’s time. So, if we were tocertainly going to market and hedge it all, it would increase the fuel costs, abit, but probably not that dramatic.

And then, let’s just say, we arein this situation, where all of the sudden fuel prices start coming down, howeasy is it to unwind the hedges?

We certainly could unwind them.But at this point, it’s interesting because I think we’ve had a veryconsistent, predictable and useful hedging strategy. I mean, if we go back toour first quarter call, there were a lot of questions about why we arerehedging. And again, we’re not trying to speculate, we’re trying to manage ourcosts. The forward curves are baking in a lot of the thinking that’s in themarketplace in terms of the cost of the fuel. We don’t protest to know anythingmore than those curves could be, and we’re trying to manage between that 40%and 60% number.

Okay. And then just switchinggears for one moment. I might have missed this, if I did, I apologize. Did yousay, how booked you were for the fourth quarter?

We didn’t give a specific numberbut, we did say that we are booked further long in the fourth quarter of thisyear than we were for the fourth quarter of last year at significantly higherprices. We have given yield guidance of around 2% on a comparable basis. We areat the end of the October here, we still have inventory available, but we arevery healthy booked at this point in time.

Okay great. Thank you.

Your next question comes fromSteve Searl with Conning Asset Management.

Yes, good morning. You had talkedabout the credit crunch and how you would handle financing issues there. Canyou talk about signs of stress potentially on your customer base if you areseeing anything in your booking patterns or cancellations or just other datayou might look at?

Actually, we are very pleasedwith the current demand. I think throughout the call we’ve talked about thehealth of our bookings. We haven’t seen any pronounced cancellation, even if wewent back to 9/11, the after shocks of 9/11. We really didn’t see any materialamount of cancellation. What we saw at that point in time was a slowdown in newdemand. But we have seen that ascustomers make a commitment to taking a cruise, they really do stick with theirplans. I think our forward guidance particularly, as you look out in to thefirst quarter and the stabilization and the return of healthy demand in theCaribbean, really is indicative that, at this point in time, our brands seem tobe doing very well in this economy.

Great. And just in terms ofinfrastructure in the Caribbean, is there any that still need a major repair fromany of the past hurricanes or is it pretty much [bad cushion up]?

Hi, Steve this is Adam. Overall,the Caribbean clearly has been the beneficiaryfrom what so far has been a second relatively quiet season. The big impact ofcourse this year has been on Costa Maya and that port will be out of serviceuntil next fall. And we certainly wish them well with their reconstructionefforts, which seem to have gotten off to a good start. The rest of the Caribbean is fully in gear and we are offering a verypositive experience throughout all the other ports across.

Thanks.

Lou Ann, I think we have time forone more question please.

Your final question comes fromTim Conder with Wachovia.

Thank you. Yes, two follow-ups,Brian. Number one, you are alluding to the financing on the ships and that youdo have some flexibility. You’ve got locked into certain financing ability, butif rates would drop, you would be able to go elsewhere. Are you talking aboutimport/export credit financing? And if so, how many of your ships would fallunder that umbrella? And then secondly, along the same line, do you still seeat this point, your debt-to-cap modestly increasing, given the new buildschedule that you have out through ‘011?

Tim, this is Richard. On thefinancing, the export/import financing used to be a fairly defined term andvery specific. Now different countries have slightly different methodologies.But it’s all financing that was arranged in connection with the ship orders.And so, I guess in that sense, they all have the export/import type structure.But it’s consistent. It’s exactly what we’ve done in the past. Nothing we cando about that. With respect to the secondquestion based on your financings are going today and the financial structureand orders that we have, in fact our debt-to-capital continues to improve andso it is going lower, not higher. Even though, we have this large capitalprogram, the cash flows of the company continue to be so strong that we’re ableto do that and still reduce the debt-to-cap.

So you’re saying Richard, at thispoint, given the trajectory of business, you are anticipating your debt-to-capby 10 or 11 being lower in absolute terms, as a percent I’m sorry, as it is atthe end of ‘07?

That’s correct.

Okay.

Okay, well. We would like tothank you again for joining us this morning. We appreciate your interest inquestions. Greg will be available throughout the day to answer any follow-upquestions you may have. And we wish you all a very good day. Thank you.

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