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Carnival Corporation (NYSE:CCL)

Annual General Meeting

April 17, 2013 10:00 am ET

Executives

Micky M. Arison - Chairman, Chief Executive Officer, Chairman of Executive Committee, Chairman of Carnival Plc and Chief Executive Officer of Carnival Plc

Arnaldo Perez - Senior Vice President of legal, General Counsel and Secretary

Howard S. Frank - Vice Chairman, Chief Operating Officer and Member of Executive Committee

Pier Luigi Foschi - Director, Chairman of Costa Crociere SPA, Chairman of The Carnival Asia Unit and Chief Executive Officer of The Carnival Asia Unit

Jennifer De La Cruz - Head of the Public Relations Group and Senior Director

David Bernstein - Chief Financial Officer and Senior Vice President

Micky M. Arison

Good afternoon. I'd like to start off by apologizing for the size of the venue. I think we clearly underestimated the amount of interest we've had here in London. We have been having meetings in Southampton and crowds have been significantly smaller. So I'd like to apologize to all of you that you've been crowded into another room, very unfortunate. I will have to blame it on Sir John Parker, though. He chose the venue. Thank you, John.

I now declare the Annual General Meeting of Carnival plc open. On behalf of the Board of Directors of both Carnival Corporation and Carnival plc, I'm pleased to welcome you to the Royal Academy of Engineering for the Annual Meeting of the Shareholders of Carnival Corporation & plc. Since we have shareholders in both the United States and the United Kingdom, we plan to continue to rotate the location of the annual meetings between the United States and the United Kingdom each year in order to accommodate our shareholders on both sides of the Atlantic.

I would like to introduce our company Secretary, Arnie Perez, to proceed with the meeting.

Arnaldo Perez

Thank you, Mr. Chairman. Because under our DLC structure, both Carnival plc and Carnival Corporation are separate legal entities, they must both hold the separate shareholder meetings to consider the same matters. However, the DLC structure will, through the use of special voting shares issued by both companies, enable the shareholders of both Carnival Corporation and Carnival plc to vote on these matters as a joint voting electorate. This meeting will immediately be followed by the Carnival Corporation annual meeting and the shareholders of Carnival Corporation have been invited to attend this meeting. Likewise, Carnival plc shareholders may attend the Carnival Corporation meeting, which follows this meeting. The business portions of the meetings are being broadcast live via webcast for the benefit of our overseas shareholders unable to attend here in person. To avoid interruptions, would you please ensure that your mobile phones are switched off.

As there is a quorum present, we can start the Annual General Meeting of Carnival plc. Before we begin the formalities of the meeting, I would like to direct you to the agenda for the meeting and the rules of procedure provided to you upon arrival. As you all know, from the agenda, the first part of our proceedings will cover the formal business of the meeting. Once the formal business of the meeting has concluded, we would like to invite you to stay for a presentation by Mr. Frank regarding our recent operating performance in our business strategy. After that presentation, Mr. Arison will entertain questions from shareholders in relation to the Carnival group.

At this time, I would like to introduce Howard Frank, our Vice Chairman and Chief Operating Officer, who will introduce the Board.

Howard S. Frank

Thank you, Arnie, and good afternoon, everyone. Let me first start by introducing our Board of Directors. To my far right is Robert Dickinson; Next to Bob is Laura Weil; Next to Laura is Sir Jonathon Band; and Arnold Donald; Sir John Parker; Randall Weisenburger. Right in front of me, Stuart Subotnick; Richard Glasier; Debra Kelly-Ennis; and Pier Luigi Foschi. I'm also going to introduce some of the senior executives in the group and I'm not going to introduce all of our -- we have other executives here, so pardon me if I don't introduce everybody, and just their business responsibilities within the group and not their titles because their titles tend to run quite long and which is the way they like it.

So the first one is Gerry Cahill from Carnival Cruise Lines; David Bernstein, our Chief Financial Officer, David; David Dingle, Cruises and Carnival U.K.; Michael Thamm, our Costa group, including AIDA and Costa. And I think that covers it for me. So that's the introductions and I will go ahead and -- I'm sorry, Stein Kruse of Holland America Lines. That wasn't done on purpose, Stein. I don't want you to read anything subliminal message into what I -- okay, my apologies; and Ann Sherry from P&O Cruises in Australia. Well, I'm sure there are many other executives in the audience that I haven't introduced and I apologize for that.

So let me start with our presentation this morning.

Micky M. Arison

[indiscernible] I would like to [indiscernible] recognize Bob Dickinson and Peter Radcliffe and Mitch Maidique, who will be leaving our Board. Bob was instrumental in propelling Carnival Cruise Lines from a small unknown brand to the industry leader during his 41 years. He doesn't look old enough, but 41-year tenure with the company and helped shape the growth of the modern day cruise industry. Peter had a distinguished 35-year career in the cruise business as one of the most highly respected cruise executives. And we're fortunate to acquire Peter as part of the acquisition of P&O Princess plc in 2003, which created the largest cruise vacation group in the world. Mitch has been a member of our Board for 19 years and provided invaluable guidance and counsel during a period of unprecedented growth. His significant contributions during the nearly 2 decades of our Board -- on our Board are greatly appreciated. I personally want to thank these gentleman for their years of service.

I also want to go off-script a little bit and say a few words about Baroness Thatcher. Obviously, I know she was a controversial figure here, at least that's what I've seen the last couple of days, but she was very much a part of our company. She was the godmother of the Regal Princess and she and our company had close ties with P&O and [indiscernible] in the Falkland campaign. So I'd like to say, rest in peace.

Howard S. Frank

Now I'll start my presentation. And before I do, just everybody in this audience probably knows, 2012 was a -- started -- it was a very difficult period for us with the Costa Concordia tragedy. And I say this on behalf of the whole Carnival Corporation family that this is...

Arnaldo Perez

[indiscernible] first and then we'll get [indiscernible]

Howard S. Frank

Okay.

Arnaldo Perez

It will be quick. We will now consider the proposals submitted for consideration at this meeting. All the proposals being considered at this year's annual meetings are joint electorate actions, meaning that they will need to be passed by both the Carnival Corporation and Carnival plc shareholders voting together as a joint voting electorate. Proposals 18 and 19 will be proposed as special voting resolutions. For the special resolutions, the required vote is not less than 75% of the combined votes cast at this meeting and at the Carnival Corporation annual meeting. The notice of this meeting is set out in the notice of Annual General Meeting, starting on Page 4 of the proxy statement that was posted to you on or about March 7, 2013. Voting will be by way of a poll that will be conducted by our registrars, Equiniti Limited. I would like to remind you that the Board has recommended that you vote in favor of proposals 1 through 19.

I would now like to explain the poll procedure to you. Please remain in your seats, while the poll is being conducted. The Carnival plc shareholders and their corporate representatives and proxy holders may participate in the poll. However, please note any Carnival Corporation shareholders present may not vote at this meeting. You will be given the chance to vote on these same proposals at the Carnival Corporation annual meeting to be held immediately after this meeting closes. Each Carnival plc shareholder should have been given a poll card when you registered this morning. If anyone thinks they do not have this poll card, please raise your hand and the registrar will either help identify this card or provide you with a new one.

On a poll, each holder of Carnival plc ordinary shares, who is present in person, by corporate representative or by proxy has 1 vote for every share held. If you have already lodged the form of proxy, you need to take no further action and it will speed up the poll if you do not vote again now. However, if you have lodged the proxy form and wish to change your vote, you should also now complete a poll card.

Before we turn formally to voting and questions on the proposals, please note that the shareholders will have an opportunity to ask questions generally in relation to the Carnival group after Mr. Frank's presentation, once of the formal business of the meeting is concluded.

Are there any questions regarding the proposals? As there are no questions, we will continue with the meeting. Completed poll cards...

Unknown Attendee

My name is [indiscernible] Toms. I'd like to ask all the auditors [indiscernible] rather [indiscernible].

Arnaldo Perez

[indiscernible] Thank you very much. Completed poll cards should be handed to representatives of the registrar. If you are unsure as to what to do, please raise your hand and someone will come and assist you as soon as possible. While this part of the poll should not take too long, the count of the poll is a more lengthy business. Details have to be checked against the registrar and compared with the proxy cards previously lodged and the results combined with those votes cast on the same proposals at the immediately following annual meeting of Carnival Corporation. It is expected that the results of the polls will be announced to the market tomorrow and will shortly thereafter be disclosed in a current report on Form 8-K filed with the U.S. Securities and Exchange Commission and posted on our website.

Have all the poll cards been turned in? Thank you, ladies and gentlemen. The registrar will now process your poll cards. The poll will technically remain open until the results of the immediately-following Carnival Corporation annual meeting are known and cast on the Carnival plc special voting share.

I would like to hand the meeting over to the Chairman to conclude the meeting.

Micky M. Arison

I declare the meeting of Carnival plc closed. Please remain in your seats while I formally open the Carnival Corporation annual meeting to enable the shareholders to vote on exactly the same manner. Shareholders of Carnival Corporation, members of Carnival Corporation Board of Directors and shareholders of Carnival plc here as our guests, the annual and general meeting of Carnival plc is closed and I now welcome you to the annual meeting of the shareholders of Carnival Corporation. I now call this annual meeting of the shareholders of Carnival Corporation to order. I am joined by the directors of Carnival Corporation, who were introduced to you earlier in their capacity as Director of Carnival plc. As you know, the composition of the 2 Boards are identical. Our Secretary will now report on the mailing of the notice of the annual meeting and the presence of a quorum and explain the procedures for the meeting and for voting by ballot.

Arnaldo Perez

Thank you, Mr. Chairman. The first order of business is presentation of the affidavit of the transfer agent attesting to the mailing of the notice of annual meeting and proxy statement to all holders of record of common stock of Carnival Corporation as of February 19, 2013. A list of all the Carnival Corporation shareholders entitled to vote at the meeting, reflecting the number of shares held of each on the date of record and certified by the transfer agent, is available for inspection at the table where the inspector of elections is sitting and will be filed with the records of Carnival Corporation. The affidavit of the mailing will also be filed with the records of Carnival Corporation. I can certify that holders of more than 1/3 of the total votes entitled to be cast are present in person or by proxy. The proxies from which the count was taken are located at the table where the inspector of elections is seated. Since holders of more than 1/3 of the total votes entitled to be cast at this annual meeting and the holder of the Carnival Corporation special voting share are represented here today, I hereby declare a quorum present at this meeting in accordance with the Carnival Corporation bylaws. The proxies will be filed with the records of Carnival Corporation. Sally Tolfrie [ph] of Computershare Investor Services, our transfer agent, has been appointed to act as inspector of elections for this meeting.

Ballots will now be distributed to any Carnival Corporation shareholders who have not voted and wish to vote at this time. If you have already voted by proxy, it will not be necessary to receive a ballot unless you wish to change your vote. Any shareholder who desires a ballot should now raise his or her hand.

As stated in the notice of meeting and further described in the proxy statement, there are 19 items of business on today's agenda, which are identical to those considered at the Carnival plc meeting. Since these items are set forth in the annual proxy statement, I will not read them at this time. The Board of Directors of Carnival Corporation has recommended that you vote your shares for proposals 1 through 19. Proposals 1 through 17 require the approval of a majority of the votes cast at this annual meeting to pass, while proposals 18 and 19 require the approval of 75% of the votes cast. Unless there is some objection, we will dispense with the formal reading of the notice of the annual meeting. I will now entertain motions regarding the proposals.

Unknown Attendee

Mr. Secretary, I move for the approval of proposals 1 through 19, as set forth in the notice to the shareholders. Do we have a second for the motion?

Micky M. Arison

I second the motion.

Arnaldo Perez

Thank you. The presentation of the proposals of the meeting is now completed. The polls are now open and your votes will be taken. Shareholders present in person who have not previously filed their proxy and who want to vote in person or shareholders who have already voted by proxy but who wish to change their earlier votes should mark their ballot as desired in relation to the proposals presented today at this meeting. You may vote for, against or abstain for each of the proposals. If you abstain, it has no effect on the outcome of the votes. After you have marked your ballot, please raise your hand in order that the ballot may be collected.

Have all the ballots been collected? I also ask that the inspector of elections tally the votes of shareholders present at the meeting, together with the votes of shareholders by proxy. It is expected that the final results of the votes will be announced at the market tomorrow and will shortly thereafter be disclosed in a current report on Form 8-K filed with the United States Securities and Exchange Commission and posted on our website. The polls for both Carnival plc and Carnival Corporation will be formally closed once the special voting shares of each company has been voted.

There will be no further business, the official meeting is adjourned.

Now that the formal business of the meetings have been concluded, I would like to reintroduce your Vice Chairman and Chief Operating Officer, Howard Frank, for his presentation.

Howard S. Frank

Thank you, again, Arnie. I guess I was so excited about giving this presentation, I went all off-script. Before I start the presentation, this presentation and these proceedings are on live webcast. After my presentation, there will be a short video, which will also be on the webcast and then we will end the webcast, so that everybody understands how the process will work.

As I mentioned, as I started before, in January of 2012, we had the tragic accident on the Costa Concordia. Everybody in the Carnival organization deeply felt sorrow for the lives of the -- families of the lives of the people that were lost. They've had a profound affect on the company, throughout the company and every part of the world. And I just I wanted to mention that to start with because many of the things that I'm going to be discussing after that are some of the learnings from the Costa Concordia event, as well as from the recent event on the Costa Triumph, on the Carnival Triumph in U.S.

So dealing with the financial numbers, this is for 2012, our revenues were down year-on-year, largely -- the large contribution of that and again to put some detail, that is largely because of the direct and indirect impact of the Concordia tragedy. And likewise, our earnings were down from $2.42 to $1.88. This is non-GAAP earnings. We also took a write-down on goodwill for the Ibero business in Spain and had up to 17% impact, below the $1.88.

Looking at 2012 results, revenues declined by the $410 million, largely as a result of the Concordia. Yields were down 2.5% and we call revenue yields are the amount of revenue we get per -- that we receive per passenger. That was down 2.5%, largely Concordia-driven. If we take Concordia and Costa business out of it, we're flat year-over-year from a revenue yield standpoint. Higher fuel prices continue to affect our business, but we're able to substantially offset a good portion of the fuel prices and I'll get into that later on in the presentation, by reduced fuel consumption. Clearly, we're managing our fuel -- a lot better -- our fuel consumption a lot better than we had been. In past years, we continue to drive consumption down to offset the dramatic rise of some fuel prices in the last number of years. And profit, we had produced, out of our profits, $3 billion of positive cash flow. So despite what was a very challenging year for your company, we certainly have been able to generate significant cash flow for an excess of our net capital cost of $1.8 billion, so we had free cash flow beyond that.

Free cash flow went towards payment of dividends. If you will, on the left side of the slide. And by the way, the slides are on the monitors on all sides of the room as well. We paid $780 million in dividends to shareholders on a quarterly dividend basis. And at the end of the year 2012, we paid an additional $390 million in the form of the special dividend to shareholders.

We also reestablished our share buyback program. We brought it back up to $1 billion. And last year, we bought back $90 million of Carnival shares. So that's how we're -- we have said in the past and we will continue to do this. Excess free cash flow will be returned to shareholders, either in the form of dividends, whether regular or special dividends or perhaps in the form of share buybacks.

There's been much discussion about safety in our organization and clearly, safety is our highest priority. We've learned much over the last several years. We continue to learn. But it is, I want to assure our shareholders, it is the central focus of this organization and its Board of Directors.

I think it's important to try -- because questions come up about, as a very large and global company, who regulates us and how we are regulated. So there are several layers of regulation, if you will. I'm looking at the top of this slide. IMO is our global regulator. International Maritime Organization, it's a unit of the UN, with all the countries of the world being members of this esteemed organization. They set overall regulations for the maritime industry and we all conform with these regulations and operating of our ships. Flag and port states, the states -- flags that we carry. We carry a number of flags from different countries from different parts of the world and the port states, with the coast guards of those port states also regulate the ships in our business as well. It's another layer below IMO of regulation. They inspect our ships throughout the course of the year. They do surprise inspections, so we are closely monitored, as is the rest of the cruise industry and the rest of the maritime community. And then there are class societies that whether it would be Lloyd's or DNV or RINA that also audit our ships and audit our safety, our own SMS, Safety Management Systems, on our ships and they come in frequently on a surprise basis to do that as well. So there are several layers of organization.

Then you come down into our own company, itself, and how do we manage our own safety. We have, of course, the operating companies, themselves, and their own organizations and their own SMS systems, their own Safety Management Systems, that are integral to the way they operate their ships. And our crew are trained on the use of all the safety management tools We have on the ships and it's a very effective program we have on a company-by-company basis. On top of that and I'll get into this in greater detail, at the corporate level, we have a corporate maritime organization that's responsible for the oversight and the setting of policies, unified policies for all of the operating companies in the group. And then, of course, on top of that, we have our HESS committee of the Board, Sir John Parker, our Chairman, and there are 4 independent members on our HESS committee. It is the only company that I know of that has its own independent directors who are totally focused on how we operate our ships, the safety in which we operate our ships. They meet, certainly meet quarterly, but certainly in the last couple of years, meeting far more frequently than that, as we've dealt with a multitude of issues in the last few years. And they have been very, very helpful to us, the HESS committee. And they play a vital role in how we manage our ships today. Four Independent Directors on our HESS committee that I've discussed and the various -- they help us set policies. They oversee the policies that we set and they ensure that the policies get implemented. And we have an ongoing program, as part of the -- of the corporate organization, that monitors the implementation of our policies.

Within our corporate organization, it breaks down into 3 groups. On the left-hand side, our risk advisory and assurance services group has responsibility for maritime audits. And then going down and further, if there's an incident that occurs at the operating level, it's this organization that will send in the investigation team together with whether it's coast guard or anybody else outside the group that does the investigations to try to keep it as objective and as independent as possible. We have a Corporate Maritime Policy group, and they're responsible for establishing as we move towards unified Safety Management System across all of our brands that we all operate from the same page. They're responsible for developing and implementing that. They also set corporate-wide, as I mentioned, our maritime standards, and they also have our enterprise risk management responsibilities in the maritime area of our business.

And then on the right-hand side is the quality assurance -- corporate Maritime Quality Assurance group. And that is -- that includes our CSMART operations, which I'll discuss in much greater detail later on when we do our -- we have bridge stimulators and engine room simulators that train our senior offices both from a deck and engine standpoint. And that's a new organization established perhaps 4 or 5 years ago that's been very effective for us in having consistent way in which we operate our bridge and engine rooms. The engine room simulator process has just started this year and will continue as you'll see later on in my comments.

Jim Hunn has been with us for a number of years, is a Senior Vice President of our Maritime Policy group. And there are 25 professionals in the corporate office that are fully dedicated to this process under Jim's supervision of maritime auditing, as I mentioned. There are 30 professionals under our Senior Vice President, Richard Brilliant, whose sole responsibility is to audit our ships each year for safety, security, all the issues that we deal with on our ships. So every ship in our group, every year, is subject to an audit.

Maritime Quality Assurance under our Senior Vice President, David Christie, has 30 professionals in that group. And it established the Carnival Center for Simulator Maritime Training in 2009 we called CSMART. It's in The Netherlands, it's Almere outside -- or in The Netherlands. And CSMART has provide uniform bridge management and engine room training, as I mentioned. And in 2013, we added a dimension to the quality control aspects of our training by having our best and most qualified officers work with the captains after they've gone through the training to make sure that as they implemented the bridge management systems on the ships, and we send these captains out, the captains come from across the fleet to work with these captains on the ships to provide the quality assurances, what they've learned in the management -- in the simulator programs that we've had, they're also applying as they're operating their ships.

CSMART today operates with -- these are 2 bridge stimulators and we now have 2 engine room simulators, 4,400 officers have been through the training and another 2,500 officers will go through the training in 2013. On the picture that you see on the left side is what a simulator training unit looks like. It is very real and very effective. And on the right-hand side is a -- well, it shows a water mist system, which would activate in the event of a fire in the engine room. And that's also in the simulator training process.

We have established in a program now to build a Carnival Corporation global training center in Almere, at least I think it's going to be in Almere. We've selected a site for doing it. We're going to build our own facility and it's scheduled for completion in 2016. We need to ramp up the training as the fleet gets larger, we add more ships to the fleet, as I'll mention later. We'll have many, many more officers and crew to train. So we'll move from 2,700 officers being trained this year to up to 7,000 officers in this facility by 2016. So we are very serious about the training of our officers, both deck and engine officers. And we'll have 5 bridge stimulators and 4 engine room simulators. And then it will also use that as a educational and training facility for shoreside and shipboard staff throughout the corporation and we will expand it as we grow this. But it's a very large footprint that we've outlined and it's going to be a world-class center of excellence for operating of cruise ships.

We often get questions about our record in operating our ships, a number of incidents we have relative to the rest of the cruise industry. And one of the, clearly, the positives is that your company is the largest cruise company in the world, operating 101 ships today throughout the world. Sometimes the negative of that, if an incident occurs, we do get a lot of attention because we are the largest. But looking at this -- and this is not meant to say that any -- any incident we have is unacceptable and our operating people know that. And we strive for excellence. But in those instances, sometimes you do have these exceptions. And I just wanted to put into context for you and this is -- by the way, this is work that was done -- we didn't ask for this survey to be developed, it was done by GP Wild independently, we didn't ask for it, they sent it to us. And to give you the context, on the horizontal blue line is our percentage of industry capacity, how many -- which is just between 40% and 50%. And you can see the number of incidents that we've had all is below our share of capacity. Sounds a little bit defensive, but on the other hand, that's what goes with the territory. When you're the largest, you will tend to get people taking more shots at you. And they're right to the extent that we shouldn't have any incidents, and we strive to do that and we'll continue to do that. But I want to assure our shareholders that we are operating our ships as safely as -- or more safely than anybody else in the industry, any other company in the industry.

We are -- and there was a press release that went out this morning, some of you may have seen it, which has announced a new program for us which will be a program to enhance our ship safety on our ships, which will include a multitude of areas. This is a brief summary of it. One of the issues we've had is, when we had the Carnival Triumph incident, is we didn't have sufficient power to the guests on the ship to provide them with the appropriate level of comfort that they deserve to have. So all of our ships will have expanded emergency generation power that will be installed as quickly as we possibly can and this will occur throughout the fleet. Clearly, Carnival Cruise Lines is focused on that today, but this will be extended throughout the entire corporate fleet of 101 ships.

We will do -- we will also enhance the fire prevention detection and suppression systems. We have water mist systems on most virtually -- well, a good percentage of our ships, if not, we have other sprinkler systems in the engine rooms to put out fires, should they happen. This will be the latest and newest technology water mist systems that will be installed on our ships throughout the fleet. And that will also start immediately and we'll hope to have that in place as soon as we possibly can, but it may take a little bit more time. But understand, these are very safe ships to begin with. So this is really the next level, sort of a redundancy, if you will, of making sure, it's a double, it's a sort of a belt and suspenders program to make sure our ships are doubly safe. We're going to improve operating redundancy in our engine rooms across the fleet, focusing on electrical systems and engine rooms and placements of things and try to get as much, much greater redundancy on certain ships. This is not true for all ships but on certain ships that we currently have and that work will be carried out also shortly. And the cost of this is going to be, over the next couple of years, will be in the neighborhood of $600 million to $700 million of investments we will make in this area of our business. But we think it's important to do that and to demonstrate to the 10 million people that cruise with us every year that our ships are safe and that safety is our highest priority.

In recent years, our investment return, our return on investments have declined, principally, for 2 reasons. One, is that our revenue yields since this financial crisis occurred in 2007, 2008 have gone down about 7%, 8% since that point in time. At the same time, our fuel prices have substantial increased as all of our cost of fuel have increased. Combination of the 2 compressed our operating margins and reduced our return on invested capital. Shareholders have challenged us on how we are going to change this around and how are you going to get back to higher returns on invested capital. And I think it's a fair question and I think we all recognize this. So the next section of my discussion we'll talk about the processes we will be taking and the strategies that we have employed over the next several years to do this.

One thing that I think is important to see on these 2 pie charts is how large -- to give you a sense of how large our business is. In 2006, on the left-hand side, we sailed with 7 million passengers on a worldwide basis. In 2012, we sailed with an excess of 10 million passengers on a worldwide basis. What's interesting is that repeat cruises in the left-hand side, in 2006, were 54%, that is people who come back and cruise with us. We've increased that to 68%. Why is that important to our business? Because repeat cruises are our best customers. They understand cruising, how to have fun on a ship, how to enjoy it and they pay the best prices for our cabins and they spend the most on board. So having this enumerator of 68% of your 10 million passengers that are repeat cruisers, is an ongoing revenue stream for us. It's very important. And as we've grown this in that 6-year period, that endures to our benefit. At the same time, you can see our first time cruisers have come down from 46% to 32%. But in reality, they haven't come down at all because it's still 3 million passengers of -- 3 million passengers in 2006 were new cruisers. It's the same 3 million passengers on an absolute basis in 2010. So what is good, is you need to get cruisers to your ship the first time so they come back and repeat, so we need to continue to drive new business for us, new cruisers, introducing new people to cruising. So this has been a very successful strategy for us, it is an ongoing revenue stream. And we believe if we can -- as we improve and strengthen our customer relationship management systems, our CRM systems, we should be able to drive more and more repeat cruisers. And for the number of ships, we have several more ships coming in I will discuss in a few minutes, that's very important to growing our business profitably in the future.

Looking at the same pie charts in a different way and that's where do our passengers come from. On the left-hand side, you can see in 2006, 74% of our passengers were sourced or came from North America. And now in 2012, 61%. So we've reduced our reliance on North America. At the same time, we've increased our sourcing of passengers, which was part of our strategy here in Europe, as well as in emerging markets, including Asia and Australia. So that's worked for us. Little did we know at the time we established the strategy that Europe would be going through a very difficult time from an economic standpoint, but we are here in Europe for the long term. These are investments and ship assets that are 30-year investments. We think Europe is a tremendous market for us, indeed we get tremendous return on our European brands today on an absolute basis, so it's still is a very good investment. And when Europe starts to come back, I think we're going to start to see the benefit of having the largest presence in Europe of any company in the cruise industry and we're here to stay whether it's here in the U.K., whether it's in Germany, whether it's in France or Italy or Spain, we're not going anyplace. We're going to be here and we're going to serve this. The penetration level of the population in Europe is much lower than it is in North America. The opportunity to continue to build our business is phenomenal, still phenomenal in Europe.

And looking at emerging markets where we've doubled our share, that's been part of our strategy to move further East into Asia. And that has worked, so we've doubled our share for Asia in emerging markets passengers and that's worked for us. And that, in some measure, is the future growth of the business, if you will, as we move East. So that is part of our strategy.

Looking at China, in 2012 -- well, looking at the market itself and looking at Asia, in China there are 150 million people just in the greatest surrounding areas of Beijing, Shanghai and Guangdong. As travel restrictions continue to ease for outbound travel for China and mainland Chinese, that has really helped our business there. And we established this foothold in China back, I think, in 2006 with Costa and it is starting to pay dividends now as the China business will become profitable.

In Japan, we've just entering the market this year in a major way. It is the third largest economy in the world, it's really been neglected from the standpoint of opening up the cruise industry, opening up the cruise business. It's the 10th largest population and 24% of Japanese are in their retirement, which is a great demographic for us in terms of selling cruises. And as you can see, Asia passengers sourcing in 2012 was 145,000, we're going to double of that in 2013. So we're in a very aggressive growth pattern for our business in Asia.

In China, the cost of China business, which was established as I said in 2006, achieved profitability for the first time in 2012, which is greatly encouraging. We added a second ship to Costa Atlantica to the Asian fleet, doubling the size, more than doubling the size of Costa Victoria has already been there. And we will source, we expect to source 185,000 Chinese passengers in 2013 on the Costa fleet. In Japan, where we are just beginning at the end of this month to open up cruising to the Japanese market. We have a sort of a step ahead of other operators. We are really the only major -- Princess will be the only major operator in Japan. And we built 2 ships at Mitsubishi in Japan, the Diamond Princess. So we have -- and the Sapphire Princess a number of years ago, so we've already have a brand name recognition in Japan that other companies don't have and we're going to take advantage of that. And the plan is that in 2014, we will add a second ship to the Sun Princess, which will be the Diamond Princess. And we are looking to source up to 100,000 passengers, Japanese passengers in 2014. You can see -- you continue to see the strategy is to move our business further East.

We have slowed the building of new ships to 2 to 3 a year, that's been our plan. It's more focused growth and targeted growth and we're focusing on those brands that are giving us the best returns on our investments today. So this slide is meant to show you that in 2000, to go on the Carnival, it's a compounded growth rate of our capacity for the 5 years 2007 to 2011, we were growing capacity at 6.5%. For the next 4 years from 2012, which include last year, into 2016, we're down to 3.5%. And that's similar to what's happened in the rest of the industry. So there has been a growth in the industry. What does this mean? It means that if we slow growth down, we slow capacity, we should be able to create as we source more passengers, demand continues, supply will catch up with demand, we should start to see some good growth in yields. Talk about the 8% yield deterioration, we should start to see that reverse in the ensuing years.

This is maybe perhaps a challenging slide to follow, but I think we often get questions about why do we continue to order new ships when our return on invested capital goes down. Well, the reality is that new ships give us much better returns on investment than our existing fleet does today and this is the reason why. So this is the new ships we have scheduled to come into our business between 2013, we have the Royal Princess scheduled at the end of May to be introduced here in Southampton and then '14, '15 and '16. And you can see the number of -- these ships are much larger than the ships -- the average size ships in the existing fleet of these brands. So if you look at the percentage increase in the right-hand column, that's the average increase of this particular ship over the average size ship in the fleet ranging from 55% up to 75%. Why is that important? Well, bigger ships give us better returns. The newer ships have much better technologies, so that they use much less fuel per passenger, per bed, and they have a richer mix of cabins, if you will, than on the existing fleets. So they drive more revenue and that's the reason why. So the average return on these new ships will be far higher than the existing returns we have on the rest of the fleet, which will help, again, to increase our ROI.

And to give you an example of how this works, this is a P&O ship that we are currently building. The fuel consumption on that ship is 35% more efficient that on the existing fleet, which is a huge cost benefit for us, operating cost, because of the size of the ship is lower, because it's a metric cost that we're kind of per passenger, per bed day cost, it's much lower, that drives down, further drives down cost. 25% more berths, which I mentioned, more balcony cabins, a richer mix of ships of -- richer mix of these ships that I referred to which get better prices from customers. And the returns on these ships are in the middle teens and we think that's actually conservative.

So we're very excited about building these new ships. It will be targeted to those fleets of those brands that are giving us better returns today. So we do think this would also help to improve our return on capital. And then as we go to managing fuel costs, you can see is this -- between 2007 and 2013, each year through better fuel management, more focus, more retrofits of existing ships and new ships as we've added to the fleet continue to be more fuel efficient over the last several years. We've been able to drive down our consumption costs on a metrics basis each year from the range is 3% to 5%, 5% last year and we're scheduled -- 4% last year, which gives us a new 5% this year. So that's also going to drive down our cost. Unfortunately, if we get a break on fuel per se, actual fuel prices per se, that will certainly enhance our bottom line as we go forward. And there has been some softness recently in the fuel markets as more fuel is being produced, more oil is being produced and that's a real positive for us as a business. 21% cumulative reduction in consumption, unit consumption, since 2007, quite remarkable.

So we do think we are -- we have a very -- we're very excited about our future. We have a very bright future ahead of us. This is a good story about growing profits and trying to get back to a trajectory of growing our return on investments. We have in all of our brands, the strongest, the best known brands in each of their markets. We represent close to 50% of the world market and we're all over the world today. Sometime -- most of the time it's a good thing.

Significant new market opportunities as we move towards the East, we move towards into Japan in a larger way, we move into China, we're there at the beginning and we're establishing some very, very strong roots there. So we think that's a great potential to continue to grow our business. We are clearly slowing down the introduction of new ships and we're targeting those brands that give us our best returns on investment. And lastly, we continue to make modifications to the existing fleet and new technologies, new HVAC systems, new propeller systems in order to reduce our fuel consumption and that will continue to drive more profit for the business.

So with that, we feel very good about our business. I'm not going to read this slide to you, but I'm going to test you on it later on. And with that I think -- Arnie, do I turn it back to you? Thank you very much.

Arnaldo Perez

Thank you, Howard. We would like to invite any questions at this -- at this time that you may have in relation to the Carnival group.

[Presentation]

Question-and-Answer Session

Micky M. Arison

A little strange doing this live and on video, but I'm here to entertain your questions. So if anybody would like to ask a question. Captain?

Unknown Shareholder

[indiscernible]

Micky M. Arison

I can hear you.

Unknown Shareholder

I have 2 questions or 2 comments. One of course, we were greatly disturbed by the sinking of the Costa Concordia. And of course, the media told us all kinds of stories of what and why. But my experience with the media is take everything they say with a pinch of salt. But could we, with our correspondence for next year's annual general meeting, have a brief summary of the court of inquiry as to exactly what went wrong and why? Not a great deal, but 2 or 3 pages of ordinary paper. So the second, on a lighter note, I have been endeavoring to persuade ITV to make a period drama series on the saga of The Mauretania. The Mauretania was one of the most distinguished passenger liners in history. She was, in the 20th century, the only British ship to be both the largest ship in the world at the time and the fastest merchant ship. She was a great success and I think telling her story and the people who manned her, with the lighthearted aspect of the passengers, would do us a great deal of good. Can I ask the board that Carnival would give all support that they could for such a venture? I'll shortly be going to the Annual General Meeting of ITV, it would be great for me to say Carnival Cruises were behind this.

Micky M. Arison

First of all, you can absolutely count on our support for that. I would tell you and I don't know if you're aware or not, but I emigrated to the United States on The Mauretania. So I would be delighted to support that. As far as the Concordia, the events -- although the media has played in a variety of different ways, the events on the bridge of the Concordia are clear, well known, they were recorded on the BDR. How much we can talk about it is questionable because we are subject to a number of litigations with it right now. So we have to be extremely careful on what we can and can't say. But there's no question about what happened and what happened on the bridge. So I don't want to say what happened, but it's very clear. Yes, sir?

Unknown Shareholder

Good afternoon, Mr. Chairman. My name is Luke. Sir, I'd like to ask you why is it that there is an apparent lack of political will for a dedicated IT department to integrate fully the cruises, the flights, the hotels, the tours and so forth? And why is it only now that you say that you're beginning to integrate them with aggressive online advertising and marketing? Could it be because in the first instance, our company, Carnival, is comprised of 3 brands. First, the Princess, which is the British side of things, which includes P&O Cruises, Seabourn and so forth; and the middle class is composed primarily of North American Carnival; and perhaps, the third class of luxury cruises is Costa. In addition, right, is that why is it that you have made Costa the third division class of luxury cruise liners to test the Chinese waters and that now you have decided to have Princess, the upper class, to cater for the Japanese? Would the lower risk Chinese community, right, be not intelligent enough to see through as to why you are doing this and that you could be losing a lot of money in this way. My other question is that Mr. Howard Frank, our wise Chairman who is going to be 73 this year and I salute him for his youthful...

Howard S. Frank

I'm 72.

Unknown Shareholder

Okay. But you still look very youthful and I would welcome your elixir of youth. Nevertheless, as a great company, do you have any succession plans for Mr. Howard Frank and I ask this with greatest of respect. And last but not least, I may be wrong, but I don't see Mr. Pier Luigi Foschi who is the head of the Costa franchise. Am I wrong in saying this?

Micky M. Arison

Pier is right there.

Unknown Shareholder

Okay. I apologize. I didn't see you initially.

Micky M. Arison

By the way, Pier is heading up our corporate office in Singapore for all our Asian operation. And if you don't like the way we're moving brands around in Asia, he's the guy to talk to.

Unknown Shareholder

Okay. Maybe I could ask Mr. Pier Luigi Foschi, right? Sir, how do you think you are doing in competition with Star Cruises which belongs to the Genting Group? Maybe I could ask you that, sir.

Micky M. Arison

Can I say something on the -- Genting's primary focus is a gaming company. As you know, they operate the Genting Highlands in Malaysia. They operate the Singapore -- the very large Singapore property. And their focus has historically been gaming. We're a family cruise operation and so it's quite a different issue. We are pleased, as Howard said, with the Costa growth in China. We're doubling the fleet there. We also are very pleased with the initial reaction to the Princess Cruise operation in Japan. All of that was done with extensive research. Princess is very well known in Japan because they built 2 of their ships, Sapphire and Diamond -- sorry, the Sapphire and Diamond Princess in Nagasaki. And so a lot of publicity had been building about the Princess brand and they carry a lot of Japanese passengers already because of that. So there were very good reasons why we chose those brands in those locations. But you should not assume that we're finished expanding in Asia or that our brands are finished. We are aggressively expanding. Just last week, I believe -- where's Jan? Last week I believe -- you're all the way back -- we just announced a deployment in Singapore for Princess and there's more to come. So you can expect before this year is out, to be hearing a lot more about Princess deployment in the region. Is that fair, Jen? Anything to add, Pier?

Pier Luigi Foschi

[indiscernible]

Unknown Shareholder

Sorry. Why is there no cross-selling of the brands, right, between like for example, Costa controls the AIDA in Germany, Ibero of Spain. Why is there no cross-selling, or maybe I'm wrong on this call again.

Pier Luigi Foschi

I didn't understand...

Unknown Shareholder

Why is there no cross-selling between Costa, Carnival, Princess, right? Is it because of the class division or...

Micky M. Arison

That's why Pier is in Singapore so that -- Pier has spent building the Costa brand in China. Prior to joining our company, he was based in Singapore and for many, many years, ran Otis Elevator with 20,000 employees all over the region and had China as part of his responsibility. So he's very familiar with the region. And he's there to help our other brands, Princess and other brands, jump the learning curve so they don't all have to go through that same learning curve. Because each one of those countries have different customs, obviously, different bureaucracies, different government philosophies and rather than having each brand learn the processes, Pier is there to assist them and work them through that learning curve. So there's going to be lot of synergies. In fact, even the office in Japan, the office Singapore, are all shared between Costa and Princess.

Unknown Shareholder

[indiscernible]

Micky M. Arison

I'm not sure. What was your other -- you have so many questions.

Unknown Shareholder

One is the succession plan for Mr. Howard Frank, I say that with respect. And the other one is the IT system, why is there no political will in integrating the systems in all the cruises, the flights, the hotels?

Micky M. Arison

We still have a 20-year contract with Howard, so, and he's in great shape. No, seriously, I meet with the nonexecutive directors every quarter. We have dinner together. We discuss succession plans, not just for Howard but myself and kind of everybody. So they all know how I feel and what we should be doing next if I get hit by a truck or something happens to one of our executives, I mean, they're all very aware. But that's not something that we publicly announce. But believe me, we take it and the Board takes it very seriously. I'm not sure I understood your air/sea comments because we have sold air/sea packages in various ways for various years. I mean, the first air/sea package owned was the air/sea package we operated was in 1970 -- Bob, '76 with National Airlines, '74? Howard's in reservations, I was taking reservations with a berthing book. And blue pencil was cruise only and green was air/sea and I knew every city code of every airport in the United States. And if there was a cancellation, I had my masking tape and I'd tape over and I'd write down the new booking. And since then, we have discovered computers and so we do have a number of our brands integrated in the computer system. POLAR, which has historically been the Princess reservation system, it's now installed in Holland America, in Seabourn, in Carnival U.K., in Australia and our Australian brands. Costa has its own reservation system that is installed in their 3 brands and Carnival Cruise Line has its own. Going beyond -- when we first merged, we had 10 different systems, now we have 3. Going from 3 to 1 is a little bit trickier with the size and the magnitude of these brands. Yes, sir?

Unknown Shareholder

I have a question. I hope everybody can hear me because I don't have a microphone. [indiscernible] Corporation, and I'm also one of your frequent cruisers. [indiscernible] Seabourn. However, I have found that your sequence through the programs [indiscernible] So I lose my benefits [indiscernible] this means that I will tend to stick to one of the companies when Carnival could get full business by integrating their frequent cruiser program. [indiscernible] and I've got one final comment which is not quite relevant to that, but could you have a word with your bean counters [indiscernible] regarding the food, the quality of the beans [indiscernible]

Micky M. Arison

Since you've been sailing Seabourn. When I'm on Seabourn, they have some pretty damn good beans. What can I say? Anybody familiar with the study we did about -- we studied very carefully the Starwood model and other models. We went through a whole analysis with consultants about doing this and we concluded that we just cannot generate enough incremental revenue to make it work. Jen, you've -- who's -- I think Jen's familiar with that study.

Jennifer De La Cruz

[indiscernible] we do have programs [indiscernible] so each of the brands have their own loyalty programs. As well in North America, we have what's called a VIP program that provides recognition of your travel on other brands but not the full extent of the benefits. And when it was reviewed in terms of the overlap, it was -- it became both very expensive to honor the past guest history of all -- across all the cruise lines as, collectively, were 50% of the industry. And it also would have resulted in execution issues. So as an example, we have priority boarding for our past guests. And when 50% or 70% of the passengers are requiring preferred boarding, it becomes less preferred. And so there are major operational implications of doing it. So we have had numerous conversations regarding how we might better address and honor the loyalty within the group but there are numerous issues to address.

Micky M. Arison

Honestly, we spent a lot of time and consultant money trying to find a solution to this, but the best we could do was the present VIP program that we have. Sorry about that, but...

Unknown Shareholder

[indiscernible] VIP program in the UK?

Micky M. Arison

That's a good question. David?

David Bernstein

We have no plans.

Unknown Shareholder

[indiscernible]

David Bernstein

Because I think from what you've heard already, we've worked out with the economic benefit of running a team which is that, with all its complexities, just doesn't seem to make sense versus what it's going to be able to -- more benefit upgrade.

Unknown Shareholder

[indiscernible] you don't have the airlines where they now have their groups when benefits fell across the airlines; United booked their renewals, Greek Airways, American, et cetera...

Micky M. Arison

We've looked it up. We've looked at all that. We've looked at the Starwood program. We have taken all that into account. I suggest you talk to David later because if I were you, I wouldn't accept his answer. But I would say that part of the difference between the hotel industry, airline industry and the cruise industry is that they operate traditionally at 70%, 80% occupancy and we're operating at 100% occupancy. And so whatever benefit we're giving you is displacing a passenger who didn't get that benefit but would have been on the ship because we're operating 100% occupancy. So the economics are different. I'm not saying what you're saying isn't right from a customer loyalty point of view and -- but we found it extremely hard, one, for execution; and two, for economic reasons. But again, the VIP program, I think you should push harder on David. Yes?

Unknown Shareholder

This is John Stanligo [ph], a small shareholder. Is it company policy to set the volume level on your piped music on the ships?

Micky M. Arison

Any particular ship?

Unknown Shareholder

Well, I just -- I went on a cruise with Celebrity last year and I found it intolerable. I couldn't get away from the loud pipe -- well, it wasn't music and a colleague of mine...

Micky M. Arison

I absolutely agree with you.

Unknown Shareholder

However, a colleague of mine had the same complaint on the Carnival ship, I forget the name. He was told it's company policy.

Micky M. Arison

This is -- I don't know, the production shows, generally, we do get the occasional complaint on the production show. I don't know that we get it for piped-in music so much, Jerry, I don't -- I'm not aware of getting it for piped-in music, but...

Unknown Executive

We are going to quickly go beyond my depth, but each space on the ship, we program the music and we have different types of music for different types of spaces. And depending upon the time of day and the clientele we have in the space during that time, we will have the volume at different levels. So if you're talking about the night club, the night club will attract a very young audience. They like a hard beat and you will get a louder decibel level from that. Well, we have other client spaces. So I mean, you try and program the space to the guests you're attracting. You never get it 100% right because you can never satisfy everybody because we carry, just on Carnival, we carry 4.5 million people, but we try and actually target what we're providing to the particular audience in that venue.

Micky M. Arison

I'm sensitive to your point because although I don't go to nightclubs that often anymore, when I do, I find it extremely deafening, so...

Unknown Executive

You also are not 25.

Unknown Shareholder

Well, I used to be a rock-and-roller myself many years ago. However, I wouldn't expect loud music when you're sitting down to the evening meal in the restaurant. I found that intolerable on Celebrity and, apparently, my colleague found that the same on the Carnival ship.

Unknown Executive

Actually, on a typical Carnival Cruise Line ship, the only music we have generally in the dining room is going to be the staff will get up and entertain at the end of the meal, all right? That is where they do -- actually, the staff and many of our guests participate. You'll see them actually dancing around the dining room together, but that is actually part of the entertainment. Some guests, I agree, they may not like it. But I would tell you, the vast majority of the guests in Carnival Cruise Lines really appreciate it and they participate in it.

Micky M. Arison

And that may be loud but it's loud for 3 minutes. I mean, it's not -- we don't play loud music in the dining rooms during the meal. It's just that ending entertainment feature for 3 or 4 minutes. Question from the back?

Unknown Shareholder

My name is Mary Freckle [ph] I'm a small shareholder. In the past, I enjoy many cruises with my husband. Since I became a widow, I've fallen foul of the single supplement. There are many single people who would love to go cruising but the cost is becoming prohibited. Have you got any thoughts on this?

Micky M. Arison

Well, I think P&O and Cunard have both been installing single occupancy cabins on their ships. So I don't think they have it on all ships yet, but you have it quite a few, right, David?

David Bernstein

Yes, certainly. On the P&O ships, we're moving to a point where apart from one ship, we will have single cabins available on all our ships and we're looking at ways of also introducing those in Cunard ships. Furthermore, I mean, we are very, very sensitive to the fact that single people need to be fierce if they aren't being treated fairly. And what we do is, although we can't necessarily sell a twin or double cabin for a single person at exactly the same price, particularly at certain times of the year, the single supplements will be very, very low indeed. It does vary according to season because we do have to vary that according to the levels of overall demand. I mean, that is a sensible commercial decision that we have to make. But with our single cabins and with some very low single supplements in addition to that for twin or double cabins, we really are trying to do much more to satisfy the needs of the single traveler.

Unknown Shareholder

Can I just come back on that one because, perhaps, you need to inform the people who are selling the cruises. Because I recently inquired about a cruise and she said, yes, Mr. and Mrs.; and I said, just Mrs. She said, oh, well, in that case, the price is double.

Micky M. Arison

If you're going in a double cabin, it is double. And the reality is because hotels are priced differently, they do the same thing in a hotel. When you pay GBP 50 a night for a hotel, they don't care if it's 1 person or 2 people, you're paying GBP 50 for the room. Effectively, that's the same thing. So to deal with that issue, we have created, at least in the P&O and Cunard suite, single cabins that aren't double. But the double cabins, again, we're dealing with a business that runs on full occupancy. So if you're not paying double, we're losing the revenue of the other berth. So again, P&O was sensitive to that issue and decided while from on a square foot basis, it's not the most economical thing to do, they have been sensitive to it and have installed single cabins. But again, if you're in a double cabin, it's not always double, sometimes it's 150%, sometimes it's 175%, but it's significantly a premium.

Unknown Shareholder

My name is Ruth Kershel [ph]. I'm a shareholder and also a very, very faithful Cunard cruise traveler. I'm now up to 1,000 nights so that shows that [indiscernible]. I am -- I honestly feel that spending the winter dancing around the world with Cunard keeps me looking 10 years younger and feeling 10 years younger, dancing around the world. I really, really mean that. And one of the faults I'm finding on the last 2 cruises, usually, I have been doing the full world cruise, but last year and this year, so far, I've done smaller cruises. And what I'm finding is that this last cruise, there was 250 single ladies. Well, quite a lot of them come on the ship to dance and we haven't got the dance hosts. There were 6. One was ill and if I tell you whereas on the Queen Mary in past years, I've had some arguing with me, the host who has promised that they'll tango with me all the -- but now, we haven't got that. For me to have only 3 dancers in the evening and not go to the show, it's just disastrous. It's not making it fun for me whereas I've always loved the ships. And it doesn't cost that much extra to have 2 extra hosts, at least 2 extra hosts. 250 ladies. Can you imagine? When I go to the singles meeting, I'm just horrified with all these ladies and no men. No men. I mean, where are the men?

Micky M. Arison

Can I suggest that you and this gentleman get together with David after the meeting?

Unknown Shareholder

Anyway, I should say, I've been on all the Queen ships in the past years, every one. I've been on Vistafjord, the Sagafjord, you name it. I've been very, very faithful. And I want you to seriously look after passengers like me that have done so many nights with Cunard. And faithfully with you, I don't go on P&O because they don't have dance hosts. [indiscernible] someone wrote to me and said, please, Ruth, come on P&O; and I wrote back and said, sorry, though I love meeting you on the Queen Mary and all the other ships, I do not go on P&O because there's no dance hosts. But the shows of the last cruise was very good, I will say that the shows were very good.

Micky M. Arison

I would say that all the brands have this issue on the very long cruises, it's not just Cunard. They all have this problem. You just can't supply enough of these guys. And unfortunately, Jack Lemmon and Walter Matthau are gone. A few of you got that joke.

Unknown Shareholder

My name is Matt Prescott, I'm a shareholder. My question is actually for Ruth. I want to know more about that ship with the 250 single women on it. I don't...

Unknown Shareholder

[indiscernible]

Unknown Shareholder

I don't actually have a question. I wanted to pay a compliment. I hope that's okay. I'll refrain if you don't have a compliment section, though.

Unknown Shareholder

[indiscernible]

Micky M. Arison

I want you to know, if you go another 1,000 days, you can talk as long as you like.

Unknown Shareholder

[indiscernible]

Unknown Shareholder

I'll be happy to, next time I'm on one with you. The compliment that I wanted to pay to the company was about, actually, about your food production. I know that a lot of guests come on board for entertainment other than food, but the food is exceptional. I'm with the Humane Society of the United States. We are a shareholder and when it comes to food, we've been working with some of your folks on sustainability and animal welfare programs within the supply chain. And I've had just great experiences working with Jim Van Langen, who I know is in the room; and Elaine Heldewier, who I don't think is here. Particularly last year, we were very happy to see Carnival implement some policies regarding the way it purchases pork products and improving conditions for pigs in the supply chain. So I know that some of the events over the last year have overshadowed some of the corporate responsibility initiatives and I just wanted to come here and pay a compliment and say that we appreciate all the great work you're doing. I know it takes more than 2 people like Jim and Elaine to make those types of improvements happen. So I wanted to give the company a round of applause for everybody.

Micky M. Arison

Thank you. Thank you very much. One of our future dance hosts. Yes, sir?

Unknown Shareholder

It may be apocryphal, there was a cruise I believe from Rome, majority Italian passengers, of course. During a meal session, we had British customers at a table nearby. The Italian mother changed her nappy and the manager on the complaint said, well, this is how Italians do it. Should there be a standard international for hygiene aspects?

Micky M. Arison

I find it very hard to understand what you said, but I can tell you, a number of years ago, I sailed on the Costa Fortuna for a few days in the Mediterranean and got off in Barcelona and got on to The Aurora. And unbelievable, the difference in how people have fun from different countries in Europe. The Italian, I won't get into it, but the Italian had one way of having fun. After the dinner, they're all at the bar drinking their espressos and you go in The Aurora and the bar is lined up with their lagers. And I mean, it's just night and day. So when you're on a ship that's an Italian-oriented ship, you're going to just have a different experience than the British experience that you'd have on P&O. I apologize, but I didn't actually hear your question, so any other questions?

Unknown Shareholder

[indiscernible] I'm a small shareholder [indiscernible] Firstly, a simple question and then a positive statement. The rhetorical question is addressed to Micky. How have you so well welded together your team, shoulder-to-shoulder, to achieve during difficult and challenging times to build up and so strongly successfully and still solidly improving Carnival? How have you done it? Don't answer that. Then the positive statement, team, continue to give exciting provision of excellent services to Carnival's cruise passengers and at the same time, continue to really look after your shareholders. You're achieving the virtually impossible. Thanks.

Micky M. Arison

Thank you very much. I think I can speak for the entire Board that we are very proud of our team. We've got an outstanding group of executives who've done an outstanding job and in quite difficult circumstances. So we are very proud of them and we appreciate what you said. I would say, I spent the last 3 days being run around by Beth Roberts to every major shareholder in London. And I have to say, despite the difficulties that we've experienced in the last couple of years, I was treated in a remarkably well manner and received tremendous support. So I want to thank our U.K. shareholders for that. Thank you.

Unknown Executive

So with that, our business is concluded. Thank you all for coming.

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