Ladies and gentlemen, thank you for standing by. Welcome to the first quarter earnings conference call. (Operator Instructions) I would like now to turn the conference over to Howard Frank, Vice Chairman and Chief Operating Officer. Please go ahead, sir.

Good morning, everyone. With me this morning is Micky Arison, Chairman and CEO of Carnival Corporation; David Bernstein, Senior Vice President and Chief Financial Officer; and Beth Roberts, our Vice President of Investor Relations. We are going to start the program off with David taking you through the first quarter and then I will try to give you some color on what the rest of the year looks like.

Thank you, Howard. I will begin the conference call by reading the forward-looking statements. During this conference call, we will make certain forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties or other factors which may cause the actual results, performances or achievements of Carnival to be materially different from any future results, performances or achievements expressed or implied by such forward-looking statements. For further information, please see Carnival’s earnings press release, and its filings with the Securities and Exchange Commission. For the first quarter 2008 our EPS is $0.30 per share which is above the midpoint of our latest guidance in the 10-K by $0.03 per share. The 10-K guidance was $0.26 to $0.28 diluted EPS. This resulted from lower than expected fuel prices worth about a penny per share; the positive impact of currency worth about a half of penny per share; various other cruise costs which in total were worth almost $0.02 per share; and all of this was partially offset by the fact that we excluded the fuel supplement on existing bookings from first quarter revenue which cost almost a penny per share. Let me elaborate a little on the status of the fuel supplement program which we announced last November. As you know, the Florida Attorney General is conducting a review of our fuel supplement program as well as programs at other cruise lines. We believe that our fuel supplement complies with all applicable laws and we have been fully cooperating with this review. Last week, Royal Caribbean announced an agreement with the Florida Attorney General that expressly permits a fuel supplement but provides onboard credits for the fuel supplement on bookings existing as of the date of their announcement of the fuel supplement program. We continued to discuss our fuel supplement program…

Thank you David. Let me start by talking about the booking environment since the beginning of the year. As we began 2008, cumulative bookings and revenue yields across all brands as we indicated in our previous call were nicely ahead of last year. While bookings during the 2008 wave season have been slightly lower than in 2007, that was to be expected as our cumulative bookings at the beginning of the year were well ahead and there was less cabin inventory left to sell. Another contributing factor to the slightly lower volume of bookings during wave season is ticket pricing; during wave season bookings were set at higher levels and of course it’s also likely that the slowing economy, particularly in North America but perhaps in Europe as well, was also a factor in the slowdown in booking volumes. Because bookings were strong coming into wave season and wave seasons bookings were only modestly lower than last year our booking picture at the present time is still quite strong with bookings and pricing still running nicely ahead year-on-year. What we didn’t anticipate in our revenue yield forecast as David discussed for 2008 was a slowdown in onboard revenues, which was a principal factor in our reduced first quarter revenue yields and which we have now factored into our yield guidance for the remainder of 2008. As David mentioned, 2008 revenue yield guidance was also lowered because of the deferral of the fuel supplement revenue related to the bookings we had at the time the supplement was introduced as result of the Florida Attorney General’s review of this whole issue. We do believe we have experienced a soft economy during the first quarter of 2008 and whether it’s recession or just a flat economy it’s not critical to our analysis. It…

Your first question comes from Robin Farley - UBS.

I have two questions. The first is just on the comments about onboard spend. It sounds like you’re saying it continues to be just the broader market brands and you haven’t see it in the other brands yet. I don’t know if you can give anymore color on is it across all the items of onboard spend or is it sort of more one area versus the other? Just trying to get a little more insight into that. The second question is just about the proposed regulations for CBT changes. It sounds like the decisions can end up being kind of reasonable and favorable, but just wondering what your expectations are there in terms of timing now?

As far as onboard revenue, yes. It stayed within the context of the contemporary brands as we disclosed in the K. We haven’t seen it in the premium brands. It’s pretty much across the board. I would say if you look specifically at certain areas it would be kind of what you would expect; if people aren’t buying homes or looking for homes and decorating homes they are likely to buy less art than they would if they were buying homes and decorating their homes. So, the art revenue may be down more than average. On the other hand, people are taking vacations and going to places for the first time and are continuing to buy shore excursions so shore excursions would be down less or not down at all. So, while there are anomalies within generally its pretty much across the board in the contemporary brands. As far as the CBT decision, we don’t know what that’s going to be; we are hopeful that it will not be impactful to our business as you said.

Your next question comes from Felicia Hendrix - Lehman Brothers.

Howard, I just wanted to understand some of your comments relative to the detail you give last quarter and understand the phenomenon behind the change in terms of the discrepancy. In this quarter you said that North American occupancy in the second quarter and the third quarter were up about 1.5 points and 1.6 points respectively right?

Yes.

That compares to what you said last quarter of up 6 and up 7. So, I am just trying to understand the change there?

Well in Q2, I think it’s clear that it’s a zero sum game, so at point your occupancy, well way ahead three months ago, your occupancy the amount you can be ahead as you close out the quarter is going to substantially reduce. I think Q3 is evidence of some slowdown that we’ve seen in the booking patterns that I discussed and as a result of that I think that is what we are factoring into our yield outlook. But fortunately for us Q3 was well booked and the patterns in Q3 continues and pricing continues to be very good. So, we feel pretty confident that we will close out the quarter with up yields as I indicated.

I think you have to remember if you’re looking at a graph of where occupancy is and where you are going to end up, it ends up at zero. So, the reality is that graph has to narrow as you get closer and also the reality is when you look at second quarter, we are almost at the end of the graph and for third quarter we are also very far along the graph. So, it has to narrow substantially.

That is what I wanted to check. Just a housekeeping question, your share count this quarter was 814 million; lower than I had thought it would have been. Did you buy back any shares in the quarter?

It would be anti-dilution. The convertibles in the first quarter [inaudible] was dilutive, which reduced the share count in the first quarter.

I am going to have to talk to you about that after because we go through that anti-dilution math and we still had -- okay, I will just get you offline.

And our next question comes from the line of Timothy Conder - Wachovia.

Regarding the fuel, David, just to clarify again, $40 million you pulled out of your assumption for the balance of the year, or is that for the full year encompassing the first quarter?

The $40 million is for the full year encompassing the first quarter. Q1 was $5 million in the balance of the year. Remember Q1 was just the month of February and then the $35 million is the balance of the year.

You would anticipate that being spread according to historical revenue spreads in the quarter?

Of course it was related to existing bookings on November 7th, when we announced the program so it may not be spread between the second, third and fourth quarter in accordance with all revenues because the second quarter would have been more booked than the third and the fourth at that time.

Okay, and again that was the 30 basis points of yield that reduced your yield a nickel for the full year, correct?

Correct.

Second question is related to funding; you have some debt coming due; obviously you have got new builds of ships and you are always rolling over some of the debt. Historically you have been able to tap some export/import credit facilities. Given the state of the global credit markets, can you give us an update or some thoughts as to what you guys are working on from that perspective?

Sure. Basically we’ve completed in total ten Italian export credits, five of which are drawn and five are yet to be drawn. We had done two German, one has been drawn and one is yet to be drawn. In total for 2008 basically we have enough committed credit to make it through the balance of the year for the ship commitments and also the refunding. It doesn’t mean we are not potentially going to do some more opportunistic financing but we don’t necessarily need to do anything for the balance of the year.

What was the total of that and any terms on that type of debt, I mean your maturity range, interest rates?

This is clearly where our A minus rating is of great benefit to us. We are hearing obviously from banks and others that makes it much, much easier to continue to do deals with us at very, very favorable rates. So these are the times were our stubbornness about maintaining ratings really has helped us.

As far as your maturities and rates, typically the export credits as you can see in the financials have been 12 year amortizing loans and some of the ones that we have drawn have actually all started with a four in terms of the interest rate; something between like 450 and 475. The future ones are in the same general region; some a little higher, some a little lower but all starting with the four.

What’s the total David of the five drawn and five undrawn?

I don’t remember the exact figure but most them are roughly around 350 million per loan on average.

Micky, again, the A minus credit rating is sweet. Thank you.

Your next question comes from Hakan Ipecki - Merrill Lynch.

Thank you. With growing capacity in Europe it seems that there is some concern from the agents on the availability and pricing of airfares or air fare lists from U.S. to Europe. Do you share that concern and is there anything you can do to offset any negative impact?

Yes, we do share that concern; on the other hand we do have committed on our air seat programs committed air seats and committed air prices on our air seat program and we are fine in that area. Where we are a little bit concerned is people historically have purchased their own air and whether they would be able to get them at reasonable prices. We are not as concerned about availability as we are cost, and hopefully it just doesn’t take too many people out of the marketplace. As Howard reported, as of right now our booking situation is pretty good and so while it’s a concern it hasn’t seemed to have impacted us very much.

I see. As a follow on to the pricing trends, it seems that of all the regions Caribbean seems to be doing the best, obviously there are some easy comps there, but does it change the way you think about your seat allocations for the next few years? Could we see some capacity moving back to the Caribbean or are you better off to moving it into Europe or other emerging markets?

While the Caribbean has rebounded, I think it’s clear that yields are much higher in Europe and Alaska than they are in the Caribbean. I doubt that you will see movement any differently than you have seen for the last year or so.

And understand that that a lot of those decisions are done on a brand-by-brand basis and those executives look at the yield and their different itineraries and try to combo what they think is the right mix between Caribbean, Alaska, Europe and other.

Your next question comes from Tim Ramskill - Dresdner.

Obviously there is some uncertainty surrounding the fuel surcharges you have discussed today, but can you just give us some indication whether you would consider extending the size of the fuel surcharge given where the oil price is? Secondly just to be clear in terms of your reduction in net yield guidance by 1 percentage point, how much of that is due to retail onboards and how much is due to not being able to recognize currently the fuel supplement?

Because of the sensitivity of our discussions with the Attorney General’s Office, we’d rather not talk too much about the issue of what we’re going to do going forward until we’ve concluded those discussions. As far as the impact, I’ll turn it over to David.

We reduced overall guidance by 1%. I had said before 0.3 percentage points was due to the fuel supplement and the other 0.7 points was due to the changes we made as Howard indicated in ticket, revenue yields, as well as onboard revenue yield.

But, the large piece of it was onboard.

Also important to reiterate that we’ve increased yield guidance on an actual basis so when analysts are comparing our constant dollars to someone else’s actuals if they increase it, it’s probably because of currency as well.

Your next question comes from [inaudible] Conde Asset Management.

Can you just reiterate- did you purchase any shares in the quarter or no?

We did purchase early in the quarter about $82 million worth of shares.

Has the economic environment changed enough to make you rethink any of your ship delivery schedules or potential timeframe for additional orders?

No, we’re continuously talking to the yards about delivery times and depending on the needs of the various brands so you may see minor tweaks, a month here or a month there but overall I’d answer that no.

Your next question comes from David Leibowitz - Burmingham.

Firstly, what about retirement of vessels that are within the fleets, or moving them to joint ventures or things of that nature, is there anything we can talk to, to that point?

There are no plans at the current time to retire any ships or put them into a joint venture. As you know, David, we acquired 75% of Ibero Cruises last year and we have moved one of the older Carnival ships into that venture, The Celebration, and there will be a second ship to go into that business in 2009. Some of the older, smaller ships if we can find good buyers for them because it’s really de minimus actually in terms of what we are talking about in terms of our own capacity.

There are only about five or six ships that were built prior to 1988 in our fleet. It’s a small number.

When the new Panama Canal is hopefully completed in either in 2011 or 2012, is that going to change your itineraries as a consequence?

Well, they will clearly give more flexibility to the post-Panamax ships particularly the ones that are on the West Coast. I don’t think it will be a major issue for us, but it will give us greater flexibility to move post-Panamax, what is presently post-Panamax ships from one coast to the other the way we do Panamax ships now.

Thank you very much.

Our next question comes from the line of Assia Georgieva - Infinity Research.

Congratulations on very good results in a tough environment. Can you give us some more color as to the booking trends by European passengers? Obviously a big percentage of your source markets and it is my understanding that they don’t fall as neatly into wave season and the trends that we see in North America. And again you mentioned that some of the weakness from the U.S. economy is spreading into Europe. Have you seen any specific evidence or you are just being cautious?

Assia, let me handle the last question. We had seen some evidence but it is very recent of the slowdown a little bit similar to what we have seen in North America and Europe. Whether it’s economic driven or otherwise is not clear. Having said that, to respond to your first question, our booking in Europe has been very, very strong and are significantly up year-on-year. We have several new ships entering service as I indicated, booking are strong for those ships. I think we are in quite good shape in Europe but in kind of forecasting out yields as I indicated, even though we are ahead in some cases on European yields right now or European pricing, our brands are suggesting, given the patterns that we are seeing in Europe that we will be coming relatively flat on yields in Europe by the time these quarters are closed.

Alaska doesn’t seem to be doing so well this year and if I recall last year wasn’t that strong. Any specific reason or just cyclicality there?

Alaska is doing fine, it was doing fine last year. I think part of the issue is that summer demand has skewed more towards Europe and I think it has been an issue. The $50 head tax I think has been an issue. Clearly Alaska is not growing the way other markets are growing and I think it has been impacted by the $50 head tax. I suspect that it will continue not to grow at the pace of other premium markets like Europe based on that and other factors. Obviously you do have to position the ships through the Panama Canal to Alaska and I think the companies have been conservative in doing that based on what happened with the referendum. But overall it’s fine, I mean it continues to be a very, very good premium market for us.

Your next question comes from Mark Reid - Land Bank.

Can you say anything about your bookings visibility? Are you finding that people are booking later in now perhaps in the last couple of months as there is greater uncertainty in their lives and what does that mean for Q4 going into 2009? The second question is source markets within the U.S. economy, are you seeing any regional imbalances for instance, is Florida much weaker than California?

First of all, our booking curve is as far out as it has ever been historically and that has been the case since about the middle of last year. And it hasn’t come in at all as far we can tell. Anecdotally we are ahead in the fourth quarter, anecdotally we are ahead in the first quarter of ‘09, so the booking curve is as far out as it has ever been. A lot of what we are saying unfortunately relates to reading the Wall Street Journal and other newspapers. Clearly we are more concerned about Florida than California because of that. The housing situation in those markets is far worse than anywhere else in the country, I think. So, we are impacted by all of this; we are impacted by what happens in the market; we are impacted by Bear Stearns and you call tell based on what we are talking about. The reality is the bottom line our booking pattern is as Howard described it and our booking is as good as it has ever been. So, we will continue to truck along here.

By the way, Southern California housing is also in a pretty significant decline right now following Florida and we haven’t seen in terms of our California sailings any significant issue at this point.

On Cosomo, what the update is, when that port will be reopened?

Last I heard is we are about a month or two ahead of schedule. We predicted a fall of ‘08 opening and I think right now it looks like early fall. That will give us a nice boost in the Caribbean, actually.

Our next question comes from the line of Bob Simonson - William Blair.

Good morning. Just a couple of numbers questions. Do you have an update or any change in your expectations for interest and deprecation this year?

Interest should be towards the lower end of our original guidance range which was 360 to 380. D&A is also towards the low end of our previous guidance range of $1.290 billion to $1.310 billion.

How about CapEx for this year and next?

CapEx is $3.2 billion for ‘08 and $3.5 billion for ‘09.

Very good. Thanks.

Your next question comes from Rick Lyall - John W. Bristol.

First of all, can you talk to the elements of controllable costs that provide a favorable outlook for the balance of the year? It looks like you front loaded your dry-dock costs, is that contributing to it? The second speaks to Micky’s comment about the conservatism. Is it time given your valuation in dividend yield which is not too far off from your financing costs to consider a more aggressive repo? Thank you.

Well, as far as the costs are concerned, the dry-docks it’s not that we are front loading it has to just do with scheduling of the dry-dock and there generally isn’t much scheduling in the third quarter because that is of course the strongest season for us. So you’ve got a lot more dry-dock scheduled in the first quarter and it was up $21 million. That’s one of the reasons. Basically, if you actually look over the year we had indicated the controllable costs in the first quarter were relatively flat and in the second quarter the same thing and for the full year. So the controllable costs are relatively flat for all four quarters of the year.

Rick, to some degree we benefit from the fleet expansion as well as the larger ships coming into the fleet which have better cost metrics.

Particularly in Europe where the scale effect is bigger because the brand is smaller, it has a bigger scale effect for us.

And we’ve got all of the operating units out there looking at costs saving measures in every respect whether it would be in food or other areas where they can without any noticeable service change, reduce costs on an ongoing basis. As far as the buyback program is concerned, we have said publicly before that we are going to be opportunistic in buying back shares but within our current credit rating. As you can see in today’s credit market with the way the world is going today having a strong credit rating as Micky indicated before is a top priority given our financing needs. We have been able to utilize that strong credit rating to complete all the financing we need for this year. So in today’s world our A- is even more important to us than it was ever before and so we will continue to look at a buyback program. We’re going to focus and make sure we maintain that credit rating and continue to evaluate that over time.

Otherwise Rick you are 100% right.

Our next question comes from the line of David Leibowitz with Burmingham.

Quickly, the shore excursion part of the cruise – not shore excursion, but the short part of the cruise tours where the passengers are spending a few days pre or post are they improving for you as a source of revenue? Or are you finding that the tightening in the overall economy is affecting that part of the business?

I am not aware of an issue on cruise shore bookings. It’s obviously early to tell because we don’t get into that business in anyway until the end of May, but advanced bookings, as far as I know, are basically on par with expectations and we were good last year. I really can’t comment on that. We may be in a better position to talk about that at the end of the third quarter but right now we don’t see anything.

Also the premium, the luxury end of the business. Is there more you could be doing beyond just having one new ship coming in for Seaborne?

it’s important to understand that the luxury market is a very small market. I mean a lot of times you get analysts who kind of compare luxury cruise product to what is perceived to be luxury hotel product like Four Seasons and Ritz-Carlton. It’s really not. I mean the luxury cruise market is up there with [Hotel du Comp] and the very upper end of boutique hotels that cost $1,000 plus per day. Of course even Ritz-Carlton has conventions, meetings which doesn’t exist in the luxury cruise product. St’s a very small market, so growing it by one ship per year for Seaborne, for example, is a pretty aggressive growth rate and if a lot of the luxury competitors jump into that and grow it, we’ll find ourselves struggling. The reality is when we made that decision, no one in the luxury market had announced a new build for a very long period of time and in fact ships were withdrawn; Radisson Seven Seas at the time withdrew a ship, Crystal withdrew a ship. So, the reality is it’s a market that has in my opinion great potential for a very, very small segment and we have to grow it cautiously and the industry has to grow it cautiously.

And if you think about it, because the new Seaborne ships are more than twice as large in terms of capacity as the older ships we are tripling the size of the fleet in three years, which is pretty aggressive.

Thank you very much.

I should say though that early booking indications are really excellent. We are really very pleased with the early indications for Seaborne Odyssey, she is booking beautifully.

Your next question comes from Edward Stanford - Cazenove.

On the accounting treatment of the $40 million, if and when the Florida Court makes a decision do you just write it back in the quarter in which the decision was made? Secondly I think you alluded to perhaps the first signs of weakness in some of the European brands. Is that more present in volume of bookings or is it in onboard spend? If you could give us a little more color on that please.

As far as the $40 million is concerned, first of all there is no court involved. The discussions have been with the Florida Attorney General and they are ongoing. If there was a decision that would allow us to continue with the bookings we would recognize those that we did not recognize in February at the time we reached an agreement with the Florida Attorney General.

What is in question is only those bookings that were on our books prior to November 6. There is now no question about all the bookings after November 7. So the $40 million refers to the bookings that were on our books prior to November 6 and we will either be able to take that into income or not; we’re taking the conservative approach at this point and not until there is a final determination from our discussions with the AG’s office.

And then on the issue with weakness in Europe or some signs of weakness it’s really very early and it’s very inconsistent and it can vary significantly by each of the major markets. Some market continues to be quite strong, others seem to be moderating, and week in and week out because we are so close to it you do not want to be overly influenced in terms of what you see in terms of the current booking pattern, because it may not hold up for a while. So you may find that it could strengthen. During this pre-Easter period it’s very difficult to determine whether some of this is as a result of the early Easter and people focusing on the holiday which does happen as opposed to any real weakness that is going on. So, I think we will have a better sense of it but I think our business managers in each of the European businesses basically are forecasting out good yields based on what they think is going to happen. That is the best information we have right now.

You have to put this context that our occupancy right now is about flat, our yields are about flat and we have a huge increase in capacity; 20 plus percent increase and the industry has a 20 plus increase in capacity here. So I’d venture to say that Europe is performing beautifully but again we are really impacted I think by everything we read. I would say that we are a little bit aware of a slight pressure on cost which is in effect our contemporary European brand has had a little bit of weakness in onboard, similar to contemporary North American brands. But again, the booking pattern in Europe has been extremely strong when you consider the amount of capacity that’s been added this year.

Bookings are substantially up year-on-year, on an absolute basis.

Yeah, and they are even on a capacity adjusted.

Thank you.

Your next question comes from Steve Wieczynski - Stifel Nicolaus.

I might be over analyzing this, but when you look at the onboard spending and some of the weakness there, is it across the board in terms of all categories, or do you have the data to see that it’s more of the high end stuff, the spas, that kind of stuff? Can you just comment on that?

The reality is that it’s pretty much across the board as I said before. We have seen more deterioration in something like art auctions, as I said and less with shore excursion, but we are talking percentage points. I mean, it is just 1% very, very small movements in all of these things. I guess we were spoiled by this inflation plus a little bit consistency year over year over year and now that we’re not getting it in some brands we thought we should alert everybody, but it’s pretty much across the board.

But understand it’s more focused, it’s more of an issue in the contemporary products, on products other than the premium.

Your next question comes from Steve Searl - Conning Asset Management.

From a capital planning perspective, are you assuming that these convertible bonds that are puttable this year are going to be put back to you?

We have been prepared if they are put. We actually have two of them that are puttable to us in April, the 2% puttable on April 15th. The hypers are puttable on April 29th, and if you looked at our 10-K filing, we signed up a $1.5 billion revolver so that if they are put we have the available liquidity to pay the put, and so we are ready. But the assumption or actually the put right is in the hands of the holders and we will leave it up to them.

Your next question comes from Tim Conder - Wachovia.

Once you pass those puts, those two primary put provisions I think you have another one in October. But once you pass those and say there is no put occurring, would you potentially be more aggressive at that point assuming no change in everything else in your stock price and repurchasing stock?

At that point in time I would still have to reiterate what I said before relative to the stock buyback program is that our rating is incredibly important to us and allows us the access to the banks and the capital markets. We will buyback within the context to the rating and that we continually look at that and evaluate it over time.

What’s your anticipated fuel usage? Can I have an update for 2008 as a whole? In the quarter it’s not that much, but your tax of benefit was a little bit larger; anything going on there on a year-over-year basis?

As far as the tax is concerned, typically in the first quarter we do have a benefit from the tour operations because of course those are very seasonal and pretty much shutdown in the wintertime. So, you get a benefit from there. But in addition to that, on top of that, with some of our Italian subsidiaries, we had a merger and we were able to recognize some tax benefits as a result of that so that’s the increase in the quarter. We will take one more question, one more caller.

And the fuel usage was 3.260 million metric ton for the year.

There are no further questions at this time.

Thank you all very much. We look forward to seeing you all soon. Thank you.