Good morning. My name is Sabrina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Royal Caribbean Cruises Ltd. Second Quarter Conference Call. [Operator Instructions] Thank you. I would now like to turn the conference over to Brian Rice. You may begin, sir.

Thank you, Sabrina, and good morning. I'd like to thank you for joining us today for our second quarter earnings call. Joining me here in Miami are Richard Fain, our Chairman and Chief Executive Officer; Adam Goldstein, President and CEO of Royal Caribbean International; and Ian Bailey, our Vice President of Investor Relations. During this call, we will be referring to a few slides, which we have posted on our website, www.rclinvestor.com. Before we get started, I would like to refer you to our notice about forward-looking statements, which is on our first slide. During this call, we will be making comments that are forward looking. These statements do not guarantee future performance and do involve risks and uncertainties. Examples are described in our SEC filings and other disclosures. Additionally, we will be discussing certain financial measures, which are non-GAAP as defined, and a reconciliation of these items can be found on our website. Richard will start with his comments. I will follow with a brief recap of our results and give an update on the booking environment and our forward guidance. Adam will talk about our brands, and then we will open the call to your questions. Richard?

Thanks, Brian, and thank you all for joining us this morning. As always, I look forward to this opportunity to discuss our business. I'd like to start my comments, though, this morning by noting that for a very long time, we have always had exactly the same people in this room. But today, for the first time in about 6 years, there's a difference. As you know, Dan Hanrahan, President and CEO of our Celebrity Cruises line, is leaving us to assume the reigns at Regis Corporation as their CEO. We extend to him our best wishes, while at the same time knowing that his leadership will be missed. Fortunately, as is the trait of any strong leader, Dan has not only built a terrific brand, but he's built a strong bench of leadership that provides great depth of talent, one that will seamlessly continue to provide the exceptional experiences that our guests at Celebrity Cruises come to expect. We anticipate announcing a successor for Dan in the near future. Turning to the business environment, 2012 is certainly living up to its billing as an interesting year. We knew that the Concordia grounding would hurt us in the short run, and that expectation unfortunately has proven very accurate. Fortunately, our other expectation, that the -- i.e. that the impact would wane over time has also proven to be accurate. And also fortunately, most of our markets continue to perform well despite a very challenging economy. The Caribbean continues to perform nicely and in a very solid manner. Alaska is holding up reasonably well, even having as comparable the record yields that we enjoyed last year. In Asia, revenue yields are making us feel exceptionally good, despite the fact that we have an 80% capacity increase. In Asia, we are seeing…

Thank you, Richard. On the second slide, we have summarized our performance in the second quarter. We incurred a net loss of $3.6 million or $0.02 per share. This included a below-the-line mark-to-market loss on our WTI fuel options of $0.05 per share, for which we do not get hedge accounting. So on an adjusted basis, we had a net profit of $0.03 a share or slightly better than the midpoint of our previous guidance. Net yields improved 4.5% on a constant currency basis and 1.8% on an as reported basis. Approximately 280 basis points of the constant currency improvement came from the distribution and deployment changes we talked about back in February. So on a like-for-like basis, our yields were up 1.7% for the quarter. Overall, second quarter ticket revenue on a constant currency basis was slightly better than our forecast, driven by strong closed-in demand for our Asian products. Yields in the Caribbean were up just over 7%, and yields in Asia more than doubled from the depressed levels seen a year ago after the Japan earthquake. As we expected, yields were down year-over-year in Europe. Onboard revenue increased modestly in the second quarter, but not as much as we had seen in the first quarter and less than we had forecasted. On the cost side, excluding fuel, our net cruise costs were up 8.3% on a constant currency basis and up 5.8% on an as reported basis. Approximately 600 basis points of this increase was due to the structural changes I mentioned previously. Looking forward, with the notable exception of Europe, the overall demand environment has been relatively consistent with our earlier expectations. Over the past couple of months, bookings have been running slightly ahead of this time last year from both Europe and North America. We…

Thank you, Brian, and good morning, everyone. As you have heard this morning, second quarter business conditions remained solid in the Caribbean and certainly were challenging in Europe. Asia, while still a small share of overall revenue, performed well. Voyager of the Seas' entry into China was well-received, and we are excited about the prospect of offering Voyager class cruising in Asia for the rest of this year and beyond. Yields were positive on most products, but this progress was partially offset by the decline in Europe yields. In general, we find we are able to source late business where needed. While we would prefer not to have to engage in the level of discounting we have had to do in Europe, we continue to demonstrate our ability to fill ships even in difficult market conditions. We are able to attract both first-time and repeat cruisers with tactical efforts, but our percentage of repeat cruisers is slightly elevated in comparison to prior years. It's not surprising that in more challenging times, experienced cruisers, who viscerally comprehend the value of our products, will gain share of our mix. It is premature for us to comment on 2013 bookings. However, I will note a couple of strategic aspects of the upcoming year. First, Royal Caribbean International will decrease in capacity by 4% in 2013. Our growth trajectory will not resume until we take delivery of the first Sunshine ship in late 2014. The overall year-over-year growth for the company in 2013 will be up by just over 1%. Second, since the last earnings call, we announced the redeployment of Mariner of the Seas to China next year. With Mariner's reassignment and other deployment changes, the result will be a large increase in our Asia and Australia capacity, a small increase in our Caribbean capacity and decreased capacity in Europe. Specifically, with respect to Europe, the company, overall, will have 10% less capacity in Europe in 2013. Moving to onboard revenue in the second quarter, the year-over-year spend was slightly up. A number of onboard areas contributed to the positive momentum, offset by a year-over-year decrease in gaming spend. In addition to Americans spending more on a year-over-year basis, we continue to improve our ability to generate higher onboard spend from guests than many of our priority markets. On the other hand, we saw a decreased year-over-year spend from guests from the major Southern European markets. Richard and Brian both noted that we have managed to offset some of the decrease in expected revenues with additional cost savings. We continue to focus on cost control even as we expand globally and generate our highest guest satisfaction ratings in recent years. Given a highly competitive environment, vis-à-vis other cruise competitors and myriad land vacations, we intend to strengthen our product offering even as we manage our cost slightly. Brian?

Thank you, Adam. We'd now like to open the call for your questions. [Operator Instructions] Sabrina, if we could open the call for questions, please.

[Operator Instructions] You have a question from Robin Farley with UBS.

Great. So I do have a few questions, one on bookings, but first, I guess, on capacity. It sounds as if you're likely to order another ship in the next 3 months or so or maybe by year-end in order to get something by 2016. So I wonder if you could give us a little color on what your thoughts are strategically about what that ship -- any sort of thoughts on the brand or size, that kind of thing.

Robin, Richard here. That's -- it's a broad question. I think we clearly are looking at that sort of thing. I don't think we're in a position to be specific about it. I think what we're looking at is, we see that even in this market, we could get some very attractive returns from some of our vessels that have performed well. And we do see both the better performance in terms of revenue, the lower cost and a better fuel consumption from some of our ships. And so, yes, we are looking at some possibilities. As I indicated though, in today's market, you couldn't get a ship before 2016 anyhow. So it's a ways off in the future. But we are looking at the kinds of ships that are, even in today's world, generating nice returns.

Okay. Great. And then the question on bookings. If I'm reading the charts right -- and thank you for the granularity, the detail you're giving in the booking charts. It's very helpful. Just looking at the sort of hole that still needs to be filled for Q3 in terms of load factor. I guess, how should we think about -- I assume -- I guess we think that there will be more discounting ahead then to fill that. Or -- has Q4, if I'm looking at the chart right, are you actually -- it's looks like you're ahead in load factor in Q4. I guess I'm just trying to get some color on how do we know that the promotional environment won't continue past Q3 if we've got more discounting ahead?

Robin, I'll comment; I don't know if Adam wants to add anything from his perspective. But clearly, Europe has required more discounting, I think as you saw in the slide, than we had projected. We knew that we were going to have to stimulate the market to some degree and had assumed that we'd have some pricing deterioration in Europe for the third quarter, but it was more pronounced than we expected. Alaska, we've seen a little more discounting in the market than we expected. But as I mentioned in my comments, we're very close to matching the record yields that we had a year ago. I think we feel as though we have a pretty good handle now on Europe for what it's going to take in the third quarter. As we get to the fourth quarter, Europe becomes much less important to us, and we shift more of our capacity share to the Caribbean that, we had seen in the second, third and fourth quarter, the Caribbean pricing has held up pretty well. We are running for Q4, we are ahead on both load factor and APD today. I think if you extrapolate from our guidance that we are looking at modest yield improvement in the fourth quarter on a constant currency basis, it would be low single digits. And we think that the order book that we have in place and what we've seen from an elasticity perspective, that those are good numbers.

Your next question comes from Felicia Hendrix with Barclays.

So just kind of along those lines, if we just try to think about -- you have your load factors year-over-year on the charts, and that's pretty clear. But if we look at historical booking trends, third quarter, you're usually 85% to 95% booked, fourth quarter, 50% to 75% booked. How are you -- how was your business in each of those quarters relative to those historical guidelines?

We would be within the ranges that you're mentioning. For Q3, we're obviously behind where we would normally be at this time, and for Q4, we're doing a little bit better than we would have expected. It's interesting we -- what we're seeing from a load factor perspective is somewhat consistent with what we experienced during the WAVE period and through the second quarter, where most of the gap that was created in booking activity in the post-Concordia environment really related to the second and third quarter. As we mentioned back in February, we really weren't seeing much of an impact on the longer-term bookings. I believe we even commented that Q4 and Q1, albeit at very small volumes, they were maintaining their pace quite well. And I think as you can see from the graph that we provided, Q4 has held up that way since the April call.

And then, I meant to throw in there Q1. Are you -- did you -- I don't think you gave any color on Q1 yet.

No, we were purposely being somewhat evasive about 2013 at this point, just not getting ahead of ourselves. But our order book is solid at this point, our load factors are running ahead of a year ago.

Okay. If I'd wrapped that into that other question, that would have been one. So can I ask one more quick one?

Sure.

Okay. Just -- you guys talked about the cost reductions that are going to help offset some of the revenue declines. So I'm just wondering if you could just give us some examples of what you're doing.

I don't know that there's -- this is Adam, Felicia. I don't know if there's anything, any one thing that's so notable that it jumps out. We have noted over the last several years where there has been sort of ongoing macroeconomic challenge that our constant intent is to make efficiency gains that do not affect the quality of the product that the guests experience. And also, we, of course, have been expanding our global footprint from a sales and marketing and deployment standpoint. So it really is a lot of attention to small changes in cost of the margin and which would affect net cruise costs, x fuel, and then at the same time, doing everything within our power to try to minimize fuel costs, which, of course, have no benefit for the guests.

[Operator Instructions] Your next question comes from Steve Wieczynski with Stifel, Nicolaus. Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: So Brian, you talked about the booking window in Europe, and you said that is contracting some. Is there any way to break that out versus kind of Northern Europe versus Southern Europe? Or is that too hard to do?

I think what we would say is that we've seen more contraction in the booking window in Southern Europe than we have in Northern. Northern has held up better. I think the closer -- the Southern European economies are clearly the ones that are on the radar, and I think we're seeing a little more of a lingering impact from the incident back in January, the closer you get to the epicenter. Steven M. Wieczynski - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Got you. And then a bigger-type question, I guess maybe it might be more for Adam. But the decrease in capacity in Europe in '13, I mean, clearly, you guys are trying to move out of that market. Is it more, you think the market is going to be impaired for a couple of years? Or is it something where you think there's better opportunities in other parts of the world?

Well, clearly, we feel that there are opportunities in the Asia Pacific region that are emerging for our company and certainly the Royal Caribbean International brand. That is an effort that we've had in place for several years that's beginning to bear fruit; would have borne fruit in 2011, but for the situation that unfolded in Japan. And the China market is beginning to catch on to cruising as a preferred vacation type. I believe a number of people in China refer to Voyager of the Seas, which is there now, as the "Asia super boat". And so we are moving, in a measured manner, capacity there. Next year, that takes place in the form of Mariner of the Seas going there replacing Legend of the Seas, which is, of course, an uptick in capacity, and will leave us with 2 Voyager class ships in the region. We pointed out during this call in a number of different ways that the Caribbean remains solid for us. And we've made certain adjustments, for example, Royal Caribbean International would be back to offering a year-round San Juan-based product, which has been successful for us over time. And we'll resume that. But I want to make sure that people understand that even with a 10% decrease in the company's capacity in Europe next year, that still keeps Europe as an important, strategic element in our deployment program and in our company's assessment of market opportunities. Even with Europe's difficulties, it's this tremendous size of vacation market and a lot of opportunities to go on cruises nearby. So we are changing things at the margin in the direction of Asia Pacific and to some degree, in the direction of North America. But it's still our intent to do profitable business in Europe as well.

Your next question comes from Steve Kent with Goldman Sachs.

Richard, you mentioned earlier that you're running at 3% sort of long-term supply growth, but it now looks increasingly likely that GDP, especially in Western economies, are going to be maybe even 1 to 2 percentage points lower than that. So maybe supply should be even lower than that 3%, especially as you've now noted that low supply does create some pricing power. So I just wanted to know sort of what you're -- is that 3% going to 1%, 1.5% over a longer-term view? Or is that 3% where you want to keep it?

Yes. Steven, what I actually mentioned was our -- specifically, our growth rate over that period was a little under 3%. I think -- of course, one of the things that happens with cruise capacity is, it's not a continual curve. You don't say, "I want 2.38%", because the ships come in large increments. And so getting it smooth and getting it precise within a percent or so -- it frankly isn't the way we look at it. The other thing I would emphasize is, in terms of the market, we're not dealing with an existing market that is growing, although that is happening in, for example, United States or in Europe. A lot of what we are doing with our capacity is shifting it to new markets, and in essence, opening up new demand. So, for example, this year, Adam talked about moving the Voyager of the Seas from Europe to Asia, and particularly, China. That was -- that actually brought down our capacity in the existing markets. And the Voyager this year and the Mariner next year, those are going into entirely different markets that essentially didn't exist before. So to relate to your comparison, which I think is an interesting one, I would actually say you ought to look at what we're doing with, in effect, the existing market, which is growing -- which is either pretty flat or only slightly growing, as opposed to taking capacity out of those markets and moving them into what's proving to be a very exciting Asian market. So I think that's the way we are looking at it. But I also would emphasize, we're not just focusing -- we're not going to get it accurate within 1% or 2%.

Yes, I guess the only reason I want to come back to you on that is because just recently, Carnival noted that New Zealand and Australia were showing some weakness because of oversupply. And Europe, just a few years ago, was viewed as the big, hot new market and then it got overbuilt. So I'm just concerned that as you move some of the supply into Asia, we just sort of repeat that pattern, and that's maybe why that supply growth overall needs to calm down.

Well, I think there is no question that we, like any other industry -- you do have cycles and you have times when you do too much into an area. And we have said that we think the lower capacity growth will be a driver of demand -- sorry, a driver of increased rates. So we think that's a good trend to go in. But, for example, you talk about Europe. It wasn't that we overwhelmed Europe. Frankly, it was that Europe suffered 2 calamities that we really didn't anticipate. We did not anticipate the unfortunate tragedy in Italy. We didn't anticipate the financial and capital markets meltdown in Europe, and we didn't anticipate the Arab Spring. And so I think in those cases, it is a question that the market actually changed, and I'm not sure we'll ever be able to anticipate those things. We do have -- you mentioned Australia and New Zealand, and that's true, because those markets have been so robust that we probably, as an industry, put too much into them. And I'll actually come back to something Adam said. It's not doing -- it's not growing as quickly as it did and it's not getting the kind of rate increases, but it's still getting very robust rates. So I don't regret having more capacity in a market that is getting very robust rates, but those rates may be stable instead of going up. So I think that's the overall way we're looking at it.

Your next question comes from the line of Tim Conder with Wells Fargo Securities.

Just as it relates to somehow trying to put some quantification on what would be go-forward next year in Europe. Brian, you very, very distinctly called out, and so does Carnival, that the majority of the impact has been in the second and the third quarters, and then you're seeing that in the charts that you guys have. And by the way, thank you for those also and for the additional verbal color on everything. But if you look at those and you look at the adjustments, can you -- and I know it's a very difficult question. Can you somehow say, "Okay, we believe we're starting to get some normalization, post-Concordia" from that aspect alone? Anything you can give along that line, Brian.

Tim, I think it's very premature to try to speculate how Europe is going to recover. I can -- I'll give you a couple of statistics we have. For 2013, I'll give you the percentage of our capacity that is in Europe by quarter. It's 1% in Q1; it's 31% in Q2; it's 49% in Q3; 24% in Q4; and the overall is 27%, which is down from 30% this year. I think we are seeing in Europe a gradual healing, I think, from the incident in Italy. The economy is still -- depending on what day you listen to the news reports, we're going into a depression in Europe. In other days, they're feeling very good. Like today, the euro had a nice pop this morning because they think that they're going to support the euro. I can tell you that we do a lot of price shopping, as I know all of you do. I think on average, we're seeing the pricing above the current levels for next year but lower than they were back in the beginning of January. I think -- the base of business is -- we're -- on a load factor perspective, we're doing a little bit better in Europe right now than we were a year ago with tough comparables. [Indiscernible], a good part of that is probably driven by the capacity reductions, but I think it's just way too early to speculate. I think it's really going to probably be until we get into the WAVE season that we're going to have a pretty good handle on what we're going to see in Europe next year.

Okay, great. That's definitely helpful. And then, I guess, just a little bit specific color on Pullmantur. How is that going? I know that's part of the itinerary in overall deployment-related changes there. But how is that, specifically, within the context of a very challenged European environment?

Very challenged. You're absolutely right. Spain, of course -- we've talked about 2 things that are impacting Europe, Tim; we've talked about the impact of the tragedy in Italy, and we've talked about the impact on the economy. And both impact Spain, and particularly, it's probably bigger on the economic side. Spain is clearly one of the most challenged economies in Spain. And that is the euphemism, I think, we all use because it is really a very difficult economic environment. And so it is one of the biggest sufferers within our fleet. Having said that, I think the management of Pullmantur has done an outstanding job of dealing with a very difficult situation, and they have done that both by positioning themselves better within Spain but also by shifting a lot of their capacity out. So Pullmantur, for example, has gone from -- I think it was 87% Spanish customer base to now closer to 40% Spanish customer base, as they shift demand to places like South America and Brazil. But unfortunately, if there's one particularly painful area and one that looks like it's -- may be with us for a while, I would have to say the Spanish economy fits that bill.

Your next question comes from the line of Greg Badishkanian with Citigroup.

For North American source passengers, just over the last month or so, kind of any color on the change in trend of those passengers going to Europe and maybe if there's any airfare impact on those bookings.

Greg, it's Adam. We certainly have heard a fair amount anecdotally and from certain travel agents, and to some degree, from the packaged tour sector about higher European airfares being an impediment to American travelers going to Europe. I think on the last call, I mentioned that one of the options that we have, because we're marketing at a high level in both North America and Europe, is that to the extent that European customers might not buy our cruise products in Europe as aggressively, then we could market more to North Americans and to some degree, fill in. And so notwithstanding the anecdotal stories about high airfares as an impediment, in fact, the percentage of our customers on our European cruises in 2012 that are coming from North America will be a few percentage points higher than what they were last year or what we had originally expected them to be. It's not a seismic shift, but it is slightly higher, which means that notwithstanding whatever the airfare impediments have been, we have, in fact, been able to get some additional help from North America with the various challenges that we face in Europe.

Great. No, that's helpful. And I'm just wondering if over the last month or 2, there was any change in that trend.

I don't think that there has been a notable change in that trend. We mentioned earlier that we've been able to drive late business in Europe, albeit at discounted rates. And that is primarily a function of European sourcing. So that's probably more where the action is at the moment.

Yes. And my second question, just from European-source business, just -- and again, if you look over the last month or 2, the change in trend, is it Southern Europe that softened a little bit or is it also Northern Europe or is it broad-based?

The only trend that I would note -- I don't even know if it's fair to call it a trend. It was a big question as to whether we would see significant late booking business in Europe from the European countries as we headed into July, August for the sailings that are occurring in August, September, October. And what we see is that we are in fact able to drive the late business at good volume. Clearly, not at the rates we would like to be commanding for these products, but we are able to drive the business. So that is coming from actually all European-source markets.

Your next question comes from the line of Jamie Katz with MorningStar.

Maybe you can talk just a little bit about how you guys think about your hedging strategy. And has it changed at all, with respect to at least currency and the volatility in oil prices in recent months?

Sure, Jamie, it's Brian. In terms of the fuel strategy, we disclosed in our press release our hedging, and it's pretty thorough, frankly, going out. We are in the money for the balance of 2012 and for 2013. The hedges are effectively neutral beyond that point. We're pretty methodical in the way that we hedge our oil. We have certain targets that we'd like to hit on a quarterly basis. So we'll be rolling in some minor hedges. We're not trying to speculate with fuel prices, we're really trying to just protect ourselves. Interestingly, the good news this year is, we tend to have the exposure generally in the 50% range of fuel prices, and we're pleased to see that this year, that the inverse correlation between the dollar and fuel has returned. And as you can see on our bridge slide, bunker prices in FX were somewhat neutral to our latest guidance. So we have that natural hedge. We don't really do any hedging on FX on an operating basis. We have traditionally had a higher portion of our newbuild cost hedged. We've been a little bit more bearish on the euro, so we've not had quite as much exposure there. Then we tend to have a little natural hedge on our P&L for that. So I think we've been less aggressive hedging our newbuilds. And as a consequence, if we were to hedge those today, we'd have a benefit from when we originally entered the contract, specifically for Sunshine.

Okay. And then thinking back, I can't recall another time where there has been this many years in a row of weak consumer spending. Is there -- has there ever been a time like this in the past where you really thought about capital deployment and changing it because maybe there's something more structural rather than cyclical happening? Or has the way that you are thinking about capital spending going forward changed at all recently?

Well, I think, obviously, the biggest portion of our CapEx is newbuilds. And as Richard alluded to, if you go back to the 1990s, you were looking at 10% growth. If you look at the early 2000, you had high single-digit growth. And we're now targeting more load to the top end, mid single-digit growth within a given year. We have been investing in CapEx in our existing fleet rather than a whole lot of new capacity. As Richard mentioned in his comments, we don't have a newbuild in 2013, and we have only 1 in '14 and '15. But we are taking the best practices of both, say, the Oasis-class and Solstice-class vessels that have been extremely successful for us. And we're taking the best practices and retrofitting those. And it's a way of keeping the product fresh and keeping our customers excited about our brands, the product that we offer without adding a tremendous amount of capacity to the market to help our pricing performance. The only other area I'd mentioned that we are investing in right now is within the information technology area. But again, we think that the returns on those investments are going to be tremendous.

Your next question comes from the line of Assia Georgieva with Infinity Research.

One question that's more focused on North American source passenger. The Caribbean has been strong for at least 4 quarters now. How would you characterize North American demand? Are we -- we're probably not close to 2008 levels, but where do you see it relative to the history?

Well, we're, of course, Assia, bigger than we were in 2008. And so the number of guests that we're attracting on these cruises is higher, and the yields are also commensurate with the 2008 levels at this point. So we're not going to sit here and celebrate where we are in terms of our Caribbean yields. We have referred to the business, I think, on a couple of occasions today as being solid. It is up year-over-year, it's commensurate with the best year that we had in 2008. And so it gives us a good foundation on which to think forward about the region and how we operate in it. And with the resurgence of Asia following what happened in Japan last year and the solid positioning in the Caribbean, it allows us to sort of really focus on what we need to be doing in Europe to maximize the opportunity that we have there and deal with the challenges. Hopefully, all of that adds up to a proper foundation for the next few years.

And my second question is a much more of a closer in issue, I guess. You mentioned that European volumes, closed-in volumes, are up at rates down year-on-year. Could we see some further upside over the next couple of months? You did specifically mention July, August volumes for September, October voyages.

Well, the volumes essentially will be, need to be higher on a year-over-year basis to closed-in volume because we have a larger capacity hold to fill in Europe because of the way that the market developed this year. So what I have suggested earlier in my comments is that there was a natural question about whether we could, in fact, find that volume for the August, September, October sailings. And at this point, I can say that we are finding that. So the comparatives to last year are really going to be a function of how much capacity there was at this point last year, how much there is at this point this year. But our focus is on making sure that we put the right discounting programs into the market to realize the remaining volume that we need.

Your next question comes from the line of James Hardiman with Longbow Research.

I guess, first, I was hoping you could talk at least some, to the degree that you have any decent data on this, that the market share developments in Europe -- it seems to me you guys have 2 benefits in Europe. The first is that your brands are not really the focus of a lot of the ire stemming from the Concordia disaster. Second is the fact that you have the flexibility to adjust the deployment out of Europe. So -- and obviously, Europe has been historically maybe a little bit of a tough nut to crack from a market share perspective. Obviously, the entire region is challenged. But it would seem that maybe you guys are a potential beneficiary from a market share perspective, maybe realize a little bit of a price premium. So just this year, can you talk about sort of what you're seeing from a market share perspective? And certainly given the 10% capacity reduction there, how do you think about strategically going after market share in Europe next year?

James, it's Adam again. I should note first that in the U.K. market, which is, I believe, still the second largest market in cruising today, we have had a significant market share and have been a major player in that market for over 10 years, and we'll continue to be a major player there. It's really been on the continent of Europe and especially in Southern Europe where we have ratcheted up our presence and our sales and marketing efforts. It doesn't influence market share that much in the short to medium term, to be honest, because our competitors are also investing in Europe and growing and putting ships there. But we have seen the opportunities that emanate from a very large vacation market that's catching on to cruising, and we expect to be a long-term player there. I did mention before when I was talking about the fact that the company will be down 10% in capacity next year over this year in Europe that we've made certain adjustments at the margins, some of which have to do with increasing our presence in Asia. And what we can see is that the industry overall is making some changes, which will probably result in Europe having a slightly less share of the overall cruise industry in 2013 than it had in 2012. But just to be clear, I'm talking about something like about 33% this year to maybe somewhere between 31% and 32% next year. So again, it's not a seismic change, but it does reflect the fact that the industry and our company's assets are mobile. And over a 2- to 3-year period, especially when we do our deployment cycles, we're able to make changes that are reflective of the market opportunities and challenges that we see. And so some of that is going on with us next year in Europe. So we will continue to be a significant player there.

Very helpful. And then second question, sort of moving our attention to -- beyond Europe. I'd like to echo the comments on the really helpful increased disclosure here. I was hoping you could just bottom line some of the trends, x Europe. It looks like pricing came down a little bit in the Caribbean and Alaska, but you're obviously helped in Asia. Was the net result of those 3 items essentially in line with how you felt the year would play out as of April? And I think you gave us ticket yields, ticket yield expectations for the year, up 5% to 6%, x Europe. What did that look like 3 months ago or even heading into the year when you thought about excluding Europe trends for 2012?

Jim, this is Brian. I would say that, particularly over the last 3 months, excluding Europe, we're pretty much exactly where we thought we would be. I would say Caribbean is spot on. I would say Asia is probably a little bit better than we expected, and Alaska, we would just be an eyelash lower than we would have anticipated. When you ask about the beginning of the year, I think that the 5% to 6% on the balance of the non-Europe would have been a little bit higher, and I say that mainly because of the impacts that we saw on Concordia. We have been able to recover a lot of the gap that we saw in Q2 and Q3 on the non-European products, but clearly, there's been much more pronounced impact on Europe.

Your next question comes from the line of Brian Egger with Topeka Capital Markets.

You may have already asked this question. I was off the line for a second. But I wanted to know if you could parse a little bit between a level of impact of the Eurozone-related demand weakness in terms of Northern Europe versus Southern Europe. And to the degree that there's been discounting that you can identify with the Eurozone crisis, could you maybe give us a little better sense of -- as in past disturbances related to the Concordia accident, whether or not this seems to be more Mediterranean market-centric and less related to your Northern European source customers?

Brian, this is Adam. First, I think it's worth reinforcing that the Mediterranean market is just a bigger market. Because there's more volume, there's more happening there than Northern Europe. So they're not equal size. So bearing that in mind, we've also indicated during the course of the call that we -- in relation to our original expectations, we've faced more pricing pressure and have had to do a higher level of discounting and I guess you could say, work harder for the business in the Mediterranean than we have had to do in Northern Europe. All of it is a challenge, but since you asked about the relative degree of challenge, it's been greater in the Med than in the North.

Your next question comes from the line of Michael Kass with BlueMountain Capital.

I was wondering if you could provide a little bit of color with regard to the deployment-related endeavors, the impact on net cruise costs kind of going into 2013. Should some of that constitute a tailwind? Will some of that be onetime costs versus what you expect to be kind of ongoing, whether it's distribution, spending-related, et cetera? How should we think about the -- as you referred to the full year impact this year of that, how that will translate into next year?

Well, every year, Michael, there are a series of deployment changes which take place throughout the brands and, therefore, the fleet. Some of them drive higher net cruise costs, some of them lower. I don't see anything particularly special about 2013 as it relates to deployment-driven cost changes at the margins of the business. I would say, in that respect, it's a fairly stable outlook. But there, of course, will be many different variables that affect the overall cost development. I just don't see that one as being particularly notable.

Sorry, I meant the lapping of the deployment initiatives that you've announced and are putting in place this year, which you've broken out the costs and the revenue impact of those. On the cost side, will you, on a comparable year-over-year basis, benefit next year? Are these onetime costs or are these costs that will reoccur in 2013?

We see next year -- and as a respect to what you're talking about, we see next year as being more or less neutral in comparison to this year on those factors.

Okay. And then just lastly, I was wondering, could you provide any breakdown of what your capacity is going to be by region for the remainder of the year and for 2013? In other words, just to refreshen, I'm just trying to get a sense for what the overall capacity increase is likely to be, for example, in Asian next year, year-over-year.

We're looking for that, if you can just give me one second. Let's see, I don't have it for the balance of the year, I have it for the full year.

Oh, sure.

We -- for 2012, the Caribbean is about 42%, 43%. Europe is about 30%. Asia is about -- if we take Asia and the South Pacific, we're looking at about 8% there. Alaska is about 4%, and then I would just put the others in an All Other category. I'm sorry, Michael, we don't seem to have '13 at that level. If you could give Ian Bailey a call, he can provide that to you.

Okay. And then just -- if I could just tie it in with the European waiting. Are you -- you mentioned the 10%-or-so decline in Europe overall. Is there a sizable shift next year in terms of Southern versus Northern?

There is a slight shift in market sourcing towards the U.K. but not a big shift in the deployment of ships. That was between North and Med.

We just want to thank everyone for joining us today. We realize today's a very busy earnings call day, so we do appreciate you dialing in. If you have any further questions, Ian will be available throughout the day. Have a good one.

This concludes today's conference call. You may now disconnect.