Good morning. My name is Andrea, 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 Earnings Call. [Operator Instructions] I would now like to turn the call over to our host, Mr. Brian Rice, CFO. Sir, you may begin.

Thank you, Andrea. Good morning. I would like to thank each of you for joining us this morning for our second quarter earnings call. With me here today are Richard Fain, our Chairman and Chief Executive Officer; Adam Goldstein, President and CEO of Royal Caribbean International; Dan Hanrahan, President and Chief Executive Officer of Celebrity Cruises; and Ian Bailey, our Vice President of Investor Relations. During this call, we will be referring to a few slides that we have posted on our Investor website, www.rclinvestor.com. Before we get started, I would like to refer you to our notice about forward-looking statements. 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. We have a lot to cover this morning and issued our press release last evening to try to give you an opportunity to review all the materials. As usual, we'll start with Richard's comments. I will follow with a brief recap of our results and update our forward guidance. Adam and Dan will then talk more about our brands, and then we'll open the call for your questions. Richard?

Thank you, Brian, and good morning, everyone. As always, I appreciate the opportunity to give a little more color and a reflection on how we've done and where we're heading. First, I must express how embarrassed we all are about the accounting revision. Fortunately, while the initial error was an internal one, it was that same internal team, which found it and reported it. They quickly notified us, our auditors and our audit committee. I will take their willingness to respond correctly and transparently as something to be encouraged. There isn't a soul here, most certainly including myself, who doesn't regret the error. But fortunately, none of this affects our business trajectory, which remains intact as we enter what appears to be a more stable commercial environment. Brian will provide more details on the revision in a moment. But in the meantime, I'll focus on the business environment. And it's certainly been a highly eventful year. At the beginning of the year, who would have imagined the earthquake and tsunami in Japan, the upheaval in the North Africa and the Middle East or more recently, the senseless and tragic events in Oslo? Despite all this, it still looks like this will be one of the best years in our history. Not quite as fantastic as we originally hoped, but a very good year, nonetheless. In fact, I'm more encouraged than ever about our near-term future, not our long-term future, our near-term future, which is what I'm looking at and happy about. I'll talk more in a moment about the challenges. But when I step back and think about the economic mess we're all reading about every day and then I look at our yield performance in the bulk of our markets like the Caribbean, Alaska and Northern Europe, et cetera,…

Thank you, Richard. Before I go into our results, I would like to provide insight into the revisions we announced to our interest expense in the press release. During a recent review, our finance team discovered an error in the way we were amortizing certain fees, mainly related to a few of our export credit agency guaranteed loans. We've all asked ourselves how this could have happened. We have completed many of these types of financings, and there was a change in the timing of the payment terms of certain fees related to a few recent loans, which required a different accounting treatment than our past financing. The revision in essence accelerates the amortization of these fees. It does not have any cash impact and does not increase the total expense over the life of the loans. Frankly, this was a human error. And while we are very confident this was an isolated event, we have further enhanced our controls in this area to prevent this risk of future inaccuracies. Once this error was discovered, we notified our auditors and worked with them to determine the correct accounting treatment. We determined that the error was not material to prior periods, did not require a restatement and that our previous financial disclosures were reliable. We did conclude, however, that a revision to our interest expense was appropriate, and we have included a reconciliation of these adjustments in our press release. The revision announced to a change in earnings per share of $0.05, $0.15 and $0.06 in 2009, 2010 and the first quarter of 2011 respectively. To be clear, 2009 was the first year of the mistake. Obviously, we are very embarrassed by this revision. But because these adjustments fall below the line, they do not impact our operating results, net yields…

Thank you, Brian, and good morning, everyone. As Brian and Richard have mentioned, we are pleased that many of our products have generated stronger revenues than we had expected and also that we have maintained strong cost control, and we are disappointed that our Mediterranean yields have turned out to be weaker than we had anticipated 3 months ago. We have been clear for some time about our strategic intention to build our presence in Europe to capture at least our fair share of the impressive growth of cruise vacations in the world's largest holiday market. The Royal Caribbean International brand has deployed half of our 22-ship fleet in Europe this summer. When we set our 2011 European deployment about 18 months ago, we placed our main emphasis on establishing homeports in our priority markets. This approach includes several ships that we have based in the U.K. and in the Nordic markets, which have performed well this summer. We placed most of our European capacity, however, in Italy and Spain. The geopolitical events of 2011 have had a disproportionate impact on these products, particularly the ships with itineraries in Greece, Egypt and Israel. Looking to our 2012 deployment. With the departure of Voyager of the Seas on the Mediterranean to China and Australia, and the arrival of Serenade of the Seas in the Baltic, we will somewhat shift the balance of our European presence from south to north. While we would have done this irrespective of this year's events, one implication of this set of moves will be to further diversify our product range and lessen our exposure to any ongoing geopolitical risks that might affect the Mediterranean. As the last comment in Europe, it is worth noting that while we have had to discount our pricing more than we…

Thank you, Adam. Good morning, everyone. The momentum for Celebrity remains strong. As Richard mentioned, we just took delivery of Silhouette, our fourth in the series of 5 Solstice-class ships. We named her in Hamburg this past week, and she is as stunning as her 3 sisters. She set sail on our main voyage last week, and in just a few short months, Silhouette will offer 12-night Caribbean cruises on the Cape Liberty this fall and winter. We are extremely excited to be taking the Solstice-class ship to the greater New York market. New York has been a historically strong market for Celebrity, and the opportunity to put a Solstice-class ship there is a great way to tell the Celebrity story. Silhouette has another host of industry first venues in the Lawn Club, all designed to enhance onboard revenue, including the interactive Lawn Club Grill, the relaxing private WiFi-enabled cabanas called the Alcove, the Porch, a casual dining spot and with dining spots with sandwiches, coffees and views of the ocean and the ship's lawn and the art studio, where our vacationists can work with one of our art partners. The ship will also present a new twist on Celebrity's Michaels Club with a selection of more than 50 craft beers from around the world to broaden our appeal to a growing market segment. During the second quarter, we had healthy demand for many of our products with cruises in Alaska, Bermuda and Northern Europe performing particularly well for the brand. Pricing for these products was significantly higher year-over-year, and all products came in about where we thought they were going to on the previous earnings calls and are trending well for the remainder of the summer. As you have heard, our sailings and operating in the Holy Land region…

Thank you, Dan. We would now like to open the call for your questions. As a reminder, we ask that you limit your questions to no more than 2. If you have more, after, we'd be happy to address them after the call. Andrea?

[Operator Instructions] Your first question comes from the line of Steve Wieczynski of Stifel, Nicolaus. Steven Wieczynski - Stifel, Nicolaus & Co., Inc.: So you, basically, talked about the Med being down. It looks like it's going to be down about 4% this year. Really, what I'm trying to get at is what is essentially changed from the last time you gave guidance back in April to today? Have things materially gotten worse there? And I guess, what has been the change over the past couple weeks or maybe over the last month in terms of what you've seen in bookings come out of that market?

Sure, Steve. I think we gave our last guidance at the end of April. Frankly, bookings for the end of April, beginning of May held their own. We actually met our internal forecast for the months of April and May. Bookings began to slow down, I would say, kind of mid-May. We didn't have very strong bookings particularly for the Eastern Med. In May, we started taking some additional pricing actions, got price -- got the volumes back to equilibrium in June. We've actually seen higher year-over-year bookings in July than we did before, albeit at the new discounted rates that we implemented in late May and early June. I think the difference that we're seeing is initially, we saw this isolated predominantly to the itineraries that we had changed out of Tunisia and to a larger extent, Egypt. But as we began to see the protests in Greece, the additional hostilities in Syria, as I said before, if you draw that semicircle around Egypt, Syria and Greece to the north, you'll see Turkey and Israel are within those -- that circle. Those are the itineraries we'd like to refer to as the Holy Land area that we really began to see additional drop-off. And as we showed on our slide, we have about 18% of our capacity in that market during the third quarter. So just the continuation of that being a dominant influence in the headlines has caused further deterioration in our forecast. Steven Wieczynski - Stifel, Nicolaus & Co., Inc.: And then I guess this might be a little bit more difficult to answer, but when you look out to '12 and I know it's early on, I mean, is that a market, Southern Med I'm talking about, in terms of -- is pricing -- do you think there's still going to be pressure on pricing in that market? Or do you think you can get that more flattish over the next 12 months or so?

As I've mentioned in my opening comments, the order book right now where we feel good about, but it's still extremely early. We're talking about many people who are going to be taking vacation next summer. And it really is going to be subject upon what happens over there. I think there was -- our initial research has indicated that people still have a very strong desire to go to the region, but it was -- this is not the best year to go there. Hopefully, if we see some stability in the region, there will be pent-up demand from 2011. But it's just too early to say at this point.

Your next question comes from the line of Janet Brashear of Sanford Bernstein. Janet Brashear - Sanford C. Bernstein & Co., Inc.: As you look at your deployment for next year and especially as you think about the Mediterranean, does it look more like where you thought you'd be this year? Or does it look more like where you ended up next year? Maybe if you could sort of look to Slide 4 that you showed us earlier and give us an idea of how that might look in 2012, that would be great.

It's Adam. Well, obviously, we can't give you the right side of the slide because it talks about different levels of yield performance. But in terms of the deployment changes or the company were essentially flat in Europe on a year-over-year basis in overall deployment and with some increase in the Baltic and a minor decrease in the Mediterranean area. Janet Brashear - Sanford C. Bernstein & Co., Inc.: So flat versus where you're ending up 2011 on Page 4, is that what you're saying?

In terms of market share by region, yes.

Janet, this year was a huge capacity increase, which obviously put a lot of pressure on yields. And so we're clear, what we're saying is no capacity increase over the region next year. And while -- so this year we had more than 30% increase. Obviously, that made it a challenging year in the best of times. Obviously, this wasn't the best of times. But next year, we will be looking at 0 capacity increase and hopefully, a clearer position looking forward. At least our current forward bookings are actually better than they were last year at this time. Janet Brashear - Sanford C. Bernstein & Co., Inc.: Could you also give us an idea of what you expect from capital expenditures to revitalize ships over the next few years?

Janet, I don't have specific breakdowns in front of me of the CapEx related to the revitalizations, but we do have in the press release the total capital, and I will tell you that with the exception of an additional Solstice-class vessel next year, we have no new vessels in 2013. We have Sunshine in 2014, and we tend to put a placeholder in the range of around 2 to 250 for what we would call maintenance CapEx and IT expenditures. So by differential, you could back in to what we'd be looking at for the revitalizations.

Your next question comes from the line of Kevin Milota of JPMorgan. Kevin Milota - JP Morgan Chase & Co: I was hoping to talk a little about pricing in the Med. And before the events happened, I'm trying to get a sense for what the declines are just in magnitude in terms of pricing for the region and kind of your initial thoughts on potentially how long it could take to regain pricing kind of pre-turmoil in the region.

Kevin, it's Dan. I want to stress that at Eastern Med where we had the difficulty, we've actually seen some pricing improvement year-on-year for the Western Med. And then in terms of how long it will take to get it back, that's difficult to say right now. As Brian just mentioned earlier, it's a little difficult to say what's going to happen in 2012. We have seen good reaction to the price declines that we've taken. Indications are that, Richard mentioned, next year that the pricing looks better, but we're still very, very early days when it comes to 2012 at this point. But I do want to stress that the Western Med has held up nicely, and we've actually seen some price increases. It's just that area that Brian described in the Eastern. Kevin Milota - JP Morgan Chase & Co: Okay, and just in terms of the percent declines, any kind of color magnitude you'd give us on that front?

Yes, we haven't broken up specifically where we are. I think it was Slide 4 that showed where our different products were up and down for the year, but we haven't broken up specifically in the Eastern Med or any of the markets to that level of detail.

Kevin, if I could just add, one of the great things about our industry is we do have the flexibility of moving, if you will, our hotels. I think the fact that we have not done wholesale redeployment out of the region is a testimony that we feel that this is a very important itinerary. There's a lot of consumer interest in it. And for now, we're committed to that region. And I think we'll continue to measure it. But as of this time, we feel pretty good about where it could go. Kevin Milota - JP Morgan Chase & Co: Okay, and just in terms of changing capacity in the Eastern med, if it does come to that, when would you have to do that by?

Kevin, it's Dan again. The beauty of that is we do have a lot of flexibility and it would be a few months from now before we would even have to worry about that.

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

Brian, my first question is to you. I'm not a believer in the accounting constructs, so let's ignore the interest expense revision. But I wanted to do a quick reconciliation of what your prior yield guidance or EPS guidance rather was for the year. I think it was $3.10 to $3.30, and we had a $0.04 Q to beat if we ignore again the accounting idea. So it seems that it should have gone up to $3.14, $3.34. And then with a $0.10 reduction, the new guidance should have been $3.04 to $3.24. It seems the high-end of the range though has been reduced by $0.09, $0.10 to $3.15. Could you explain that?

I can try to give you a directional. I think our revenue declines were in the mid-$0.40 range, if you included those -- the yield change for the Eastern Med as well as currency impact. We were able to offset about half of that with cost savings. We have a little bit of improvement in fuel, and we've had a little bit of improvement in some of our equity pickups below the line. And I think if you took all that into consideration, we'd be getting back to about $3.10 as the midpoint. And unfortunately, the interest expense is a reality. And if you take that $0.20 off, you should be getting back to $2.90, which is the midpoint of our current guidance.

Well, let's ignore the interest expense. It seems that the high-end before the interest expense revision has been reduced by $0.10.

From a business perspective, all in, we're down about $0.10, you're correct.

Okay, it seems there is an additional $0.10 from the top end of that, but maybe I'll ask Brian after the call ends. And my second question, maybe Richard you can help me out on this. Given what has happened with sovereign debt in Europe and the threats in the U.S., how wise was it to reinstate a dividend at this point? You're also facing some significant business risk in the Eastern Med that we have discussed so far at quite some length. Was this the right time to do it?

Well, Assia, obviously, we think so. I think our situation is in any respects the opposite of what you're seeing with the sovereign credits that you're talking about. Our position is strengthening, and our capital requirements are lowering. If anything, I think that in light of the very dramatic changes that are going on in the region, for us to have held as close as we have to our original guidance really shows how strong our industry is and how strong the company is. We've had in our strategic plan and operating plans for some time now that this was about the time that we wanted to reinstate the dividend. We clearly wanted to have the revolver extension in place, and we not only have the revolver extension in place, but we now have it with staggered maturities. And so we thought this was -- in our financing, the revolver was done relatively easily. You're seeing good receptivity to our credit in the capital markets. So no, we really felt this was a good time to be doing it, and we felt comfortable with doing so.

Assia, if I could just add also, because as the Med is getting a lot of, obviously, for good reason because it affected our guidance, it's getting a lot of discussion on this call. I do think it's important to recognize that the combination of the Eastern Med and Asia, which are the 2 markets that are down, that represents 13% of our inventory. The other 87% is actually doing quite well despite all the chatter that you're hearing in the marketplace about the sovereign debt crisis and debt ceilings and whatnot. I think it's important to recognize that a lot of our products are actually up double digits, and the people are taking vacations, and they really are enjoying our brand.

Brian, I thank you for this clarification and as you know, can see the results in the Caribbean and Alaska quite clearly. They are spectacular, but still we are talking about the $0.40 revision to earnings per share and a quarterly dividend of $0.10, which amounts to $0.40 of cash outflow a year. So my concern is that at almost 50% net debt-to-capital, this might not have been the optimal time to reinstate the dividend.

Well, again, we are talking about less than -- at this level, we're talking about less than $100 million. We do view this as conservative. As Richard alluded to, our CapEx is slowing. Our EBITDA is improving. Our credit metrics in our forecast continue to prove -- improve. We're delevering. We still are very excited about returning to an investment grade credit. So I think on balance, we felt this was the right thing to do for our investors.

And you do not think that this may delay the investment grade rating?

No. This should have no impact on it whatsoever.

Okay, and one please. Can you break out the tour division going forward just as Carnival does? Because your onboard yield seemed down almost one percentage point, and I think it plays havoc with the numbers especially given Pullmantur.

Okay, Assia, I will tell you that I know our onboard revenues are essentially flat from our last forecast. I don't think the Pullmantur tour division had any material changes. I think this is really a story about Eastern Mediterranean, the changes for Eastern Mediterranean right now.

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

Brian, I just want ask a follow-up question on your other point, which is that most of the other regions you're doing well. And North America, certainly, was very strong despite the lackluster U.S. macro environment. I'm just wondering what do you think led to that strength.

Actually, I think that's a good question for our brands.

Well, we've been saying for quite some time that we think that the brands that we're offering, their propositions are resonating in the marketplace. And as we've emerged from the recessionary environment of 2 and 3 years ago, they seem to have an impact in the marketplace. The Caribbean has developed nicely. We have, obviously, fantastic products and services arrayed there now. We talked about the changes that have been made in Alaska in the last couple of years. The state has taken a much more active interest in supporting the cruise industry's development there than what have seen prior to that. The Northeast of the United States seems to recover at least somewhat from the bump that it was in before. And it's nice that the positive developments are emerging at a time that helps us offset some of the impact of what we've mostly been talking about with this call with the Eastern Mediterranean.

Greg, if I can pile on a little bit. The other thing that has really worked well for us has been the new hardware and in particular for Celebrity has been the Solstice-class ships that have really helped us drive strong revenues. And I think you knew Richard mentioned in his talk at the very beginning that we're seeing very, very strong customer satisfaction ratings. And as a company, we took a position that during the economic downturn, we wouldn't cut the product and in the fact, we worked very hard. All our brands worked very hard to improve the product that we were offering our guests. I think all that, we're starting to see pay off.

Great. And just my second question is on 2012. And I believe you mentioned that the key -- all major regions were up in terms of pricing. Did I get that right? Maybe the Eastern Med was up as well. And then I think you mentioned that it was -- the bookings were about 25%, or your less than 25% booked for 2012. Is that kind of typical for this time of the year or would it be more or would it be less than around that level?

Well, Greg, we are, I believe in my comments I said we had less than 25%. It is running ahead of where it was a year ago. All the brands seem to be doing well. All 4 quarters are up on load factors and APDs. I didn't give any specific product, but I did mention that Europe is also up in terms of load factors and APDs. But we're talking about very small numbers when we start particularly for Europe and the Eastern Med, when we start getting out to the second and third quarter. I think it's just too early to read into those numbers at this point. But we are encouraged. But again, we're going to keep a close eye on it.

Your next question comes from the line of Sharon Zackfia of William Blair. Sharon Zackfia - William Blair & Company L.L.C.: A couple of quick questions. I appreciate all the color on the Mediterranean this morning. I guess I'm curious with the Western Mediterranean, whether that's up where you expected to see? I might have assumed coming into the year that, perhaps, it would have been a stronger section as well. And I'm just curious if that is a little bit weaker than original plan, how you get comfort that it isn't something else happening in Europe that's causing this weakness?

Sharon, I think, frankly, the Western Med has not performed quite to our expectations. Is not nearly the impact that we saw in the Eastern Med, but it will be -- the yields actually will be up modestly this year. I think in hindsight, there was a tremendous capacity increase in that region, and I think it's a testimony to the efforts that our sales groups, particularly in Europe, had been able to step up and fill that at higher prices given that impact. I think one of the things we look at very carefully, in addition to itineraries, is how were the various source markets doing. And when we exclude Mediterranean sailings to get a sense of how the broader, if you will, economic demand is throughout Europe, we were very encouraged in the second quarter. Virtually, all of Europe with the exception of Spain showed very high -- healthy price increases. And as we look more broadly, our bigger markets particularly the U.K., again, excluding the Med, where we've had some noise, the demand has actually been quite strong. So when we look at it that way, we try to differentiate between, if you will, event demand and economic demand and we felt pretty good about where the economic stand was.

Yes, Sharon, sorry, if I could just a little more color to that. I think one of the phenomenon that we have experienced regularly is that although we talk about them as though they're totally discreet animals, regions -- there's some impact between regions. People who are a little nervous, for example, about the Eastern Med, that has a knock-on effect on close-by itineraries such as the Western Med. So we think part of what has resulted in some reduction and where we expect it to be in the Western Med is the very strong reaction to what happened in the East and the further afield you go, the less that impact is. And as Brian says, when you start looking towards Great Britain, you start going north of Germany and the Baltic. They've actually been extremely strong. But is not unusual that we feel some cross-pollination to nearby regions like -- so when we've talked about some of these things, we haven't been as specific sometimes. We're talking about the Eastern Med sometimes as a whole, because you really have to look at these things as not black and white but shades of gray. Sharon Zackfia - William Blair & Company L.L.C.: Okay, and then my second question, you're obviously doing a very good job on net cruise costs. I'm just curious if there's anything about coming in below plan this year that would create some sort of catch up in spending in 2012.

It's Adam. Obviously, we've been in an environment for the last several years, where we've been challenged to demonstrate very good cost control, and we have, in fact, done that. And as each year has transitioned towards the next and we have faced the requirements to manage our costs well in line year after year. So we are firmly cognizant of that challenge presenting itself, but I think we've shown in recent years that we can manage the next year and the next year and the next year. And that's our intention, to do it again in 2012.

Your next question comes from the line of Felicia Hendrix of Barclays Capital.

So the first question I have is regarding the additional 150-basis-point cut to yields based on everything that you've laid our pretty clearly in the release and talked here in the call. I'm just wondering, is this it? This year has been pretty challenging in terms of forecasting, and I'm just wondering if that captures -- if you feel comfortable if that captures any of the risks that you might not have seen, particularly because the difference between the 100 and now the incremental 150, a lot of that came from close in bookings. So just wanted to get some color on kind of what you're seeing for the rest of the year and your confidence that this is it.

Felicia, it's Adam. Obviously, it's our responsibility on these calls to call it the way we see it based on the evidence that's available to us. So in making our guidance for today, we are giving you our best projections as to what we believe will happen. We've explained on this call how certain changes that occur in the marketplace after we formulated our guidance in April have subsequently affected our guidance in July. We are not going to project things speculatively that we think might or might not happen in the next 3 months that could affect our October guidance. We're giving you the best we have at the end of July.

I think, Felicia, I think it's a fair question. I think it's always hard to look back and remember what it was like 3 months ago. And one of the points that I try to make in my comments was it's not just the number of countries that were undergoing change or the violence of that change but the sense of this is going to carry on for a while and that it's quite serious. The length of time that Syria has gone on -- I mean, sorry, Libya has gone on, the fairly significant political change and attitude towards what's happening in Syria, all these things accumulated to reach a tipping point I think. And so we were fairly cautious to give our very best estimates at the end of the first quarter. We felt comfortable with those estimates. I think we really saw a quite significant deterioration. We gave our best estimates today with respect to the Far East, which we haven't really talked about. I think those estimates, nothing worse happened. The situation stabilized, so we feel that the estimates we gave in March, that remain accurate. We just feel there's been quite a sea change since March with respect to what's happened in the Middle East and North Africa. And we feel that this really is the best estimate of where we are. And obviously, we're hoping that we don't have any more surprises and in fact, that the situation stabilizes and it could be better, but these really are our best estimates then and today.

And then, now I'm also trying to just reconcile your outlook and results with Carnival's because you always talked before about the hardware premium that you enjoy. And I believe that's still intact. But if you look at your guidance, it's kind of roughly in line with where they are. If you look at the second quarter, it actually was less than what they did on a constant-dollar basis. I know there are some timing in terms of their quarter end and your quarter end. But if I believe that your hardware premium is in place, then that just implies that your underlying business is actually performing weaker than theirs and maybe that's a flawed outlook so I was just hoping you could address that.

Yes, Felicia, obviously, we're aware of how our competitors are performing, and we hold ourselves accountable to a higher yield performance, particularly given the superior hardware we have. I think what we are looking at as the primary driver and it really is the second and third quarter issue is our overweighting in the Med. If you look at the capacity allocations that the different companies have, as I mentioned in my script, 45% of our inventory is going to be in the Mediterranean this year. And I think we're -- maybe we had a disconnect with expectations out there is people looked at I believe are -- what we had talked about before was that 53% of our capacity was going to be in Europe this summer or at least in the third quarter. I think what people didn't understand is how overweighted toward the Med that was. And I believe our competition has closer to a 50-50 ratio between the Baltic and the Med where we're more like 90-10. And I think that's the significant difference that you would see in the performance. But we'd feel comfortable that on an itinerary basis, that we're performing quite well in the market.

Okay, and look, I just need a clarification on fuel because there's something that confused me. In 2012, you went to $72 a barrel from $86, but the same amount was hedged. So I was wondering if you could clarify that and if you could just let us know at current prices what your 2012 fuel expense outlook is.

I don't have 2012 fuel in front of me. If I could ask, if you wouldn't mind following up with Ian, he'd be happy to help you with that. I apologize I don't have that in front of me.

Sure. But can you just -- I mean, this was in the release. For 2012, you said that 55% hedged at $72. Under your last press release, it was 55% hedged at $86, so I was just wondering what the change was there?

What we're trying to do when we put it out in the press release, we're trying to give you a WTI equivalent. And when you have that decoupling between the WTI and the fuels that we're using, we have to go back and restate what that equivalent is. I will mention, as you'll see in the release, we have been doing more hedging, but that's further out hedging.

So basically you're underlying bunker maybe it hasn't really changed?

Correct. Exactly.

Your next question comes from the line of Robin Farley of UBS.

I have 2 questions. First is on the 150-basis-point reduction and I guess since the start of the year, it's a 300-basis-point reduction. Can you quantify just kind of roughly what of that change is direct impact from ships that you had to reroute from the Middle East and Japan, which I think is about 4% of your capacity where there's a direct impact, you had those ships' folks, they had to move, versus just sort of the more indirect like other ships where there may be an impact because of more capacity or maybe demand or could be ships that were indirectly impacted that could be due to any number of reasons? But can you quantify what of the either of the 300 basis points since the start of the year or just the 150 basis points year incremental since April is directly impacted, rerouted, the 4% of your capacity that's rerouted versus just anything that may be coming in a little bit less than you had expected?

Robin, just for clarity, the constant currency has changed by 200 basis points. The actual business has changed -- it would change by 50 basis points from the beginning of the year to the April call and 150 basis points from April to today. And then we have the currency impact, but I'll leverage your talk a little bit about the specific changes that have occurred.

Yes, just to be clear, Robin, in the 150 basis points, none of that relates to -- essentially, none of that relates to specific itinerary changes. All of those specific itinerary changes were -- almost all of them were held at the end -- at the time of our March call. And so everything that's happened since then has been due to demand generation for the region. In terms of how much of the change from the beginning of the year to the end of the first quarter, reason that I don't have those numbers right in front of us today, we did give them out at the time of the first quarter call, and Ian can provide you that reference offline later on.

Okay, wait, and the 300 basis points I was referring to was a constant currency ex Pullmantur what originally was plus 45 for the year, now being 1 to 2. That was just to clarify what stronger basis points I was referring to. My second question is I guess, just a follow-up on just the hedging where you -- in April, you were hedged at $72 and now the same amount as being $86 and $91 a barrel. I guess I just want to understand how much of your hedging for this year was kind of due to perfectly timing. The hedging, when WTI was at those levels versus maybe paying a premium to be hedged at $72. In other words, even just since April, just to understand how much is -- where your hedge...

Robin, on the close in stuff, we have done no additional hedges. Any change that is in the pricing, that we're putting out there is a result of trying to take the fuels that we burn and give you a WTI equivalent. In 2011, we have done no additional hedges. And as I mentioned before, we've done them in the out years. And as much as I'd love to give our team, who I think is brilliant, credit for perfect timing, it's really got nothing to do with that. But again, Ian has all those details, and in terms of the yield, we try to put a lot more out in the marketplace today to help you to be able to model this. And I think Ian would be more than happy to sit down with the facts that we've laid out and try to help you reconcile it.

And you have a question from the line of Tim Conder of Wells Fargo Securities.

Just back on the Med, a little bit of mixed understanding on my part. Are you saying that as you see things currently, you have -- you feel you have things stabilized or you still -- do you still believe that, that is a fluid situation?

Tim, this is Dan. What we have said is that pricing actions that we've taken have stimulated demand. And as the guidance that we're putting out today is our best estimates of what's going to happen in the market as we go forward. But we have seen a nice pickup in demand as a result of the pricing that we have there today. We don't particularly care for the pricing, but we have seen a nice pickup in demand.

Okay, so both from a demand and a pricing perspective, you're seeing demands picking up, so that's not that the pricing you feel is appears stabilized for the, primarily the Eastern Med itineraries?

Yes.

Okay, and then secondly, back to the onboard spending. Brian, could you -- just any comment there. Or are you saying that debt was down slightly? If you could just look at the calculations that you guys had given for the second quarter, is there anything in there that we should -- should we just look at that at face value? Or is there anything in there that we should maybe make some adjustments? So is underlying onboard spending broadly flattish to slightly down or is there something else clouding that number?

Tim, it's Adam. Broadly flattish would be an accurate depiction. I would not say broadly flattish to slightly down.

Thanks, everyone, for joining us today. As usual, Ian will be available throughout the day to help with your follow-ups and your modeling. Again, we appreciate you dialing in today, and we hope you have a great day. Thank you.

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