Cautionary Note Concerning Factors That May Affect Future Results

Some of the statements, estimates or projections contained in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this joint Quarterly Report on Form 10-Q are "forward-looking statements" that involve risks, uncertainties and assumptions with respect to us, including some statements concerning future results, outlooks, plans, goals and other events which have not yet occurred. These statements are intended to qualify for the safe harbors from liability provided by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. We have tried, whenever possible, to identify these statements by using words like "will," "may," "could," "should," "would," "believe," "expect," "anticipate," "forecast," "future," "intend," "plan," "estimate" and similar expressions of future intent or the negative of such terms.

Because forward-looking statements involve risks and uncertainties, there are many factors that could cause our actual results, performance or achievements to differ materially from those expressed or implied in this joint Quarterly Report on Form 10-Q. Forward-looking statements include those statements which may impact the forecasting of our earnings per share, net revenue yields, booking levels, pricing, occupancy, operating, financing and/or tax costs, fuel expenses, costs per available lower berth day ("ALBD"), estimates of ship depreciable lives and residual values, liquidity, goodwill and trademark fair values, outlook or business prospects. These factors include, but are not limited to, the following:

- general economic and business conditions, including fuel price increases and declines in the securities, real estate and other markets, and perceptions of these conditions may adversely impact the levels of our potential vacationers' discretionary income and net worth and this group's confidence in their country's economy;

- fluctuations in foreign currency exchange rates, particularly the strengthening of the U.S. dollar against the euro and sterling;

- the international political climate, armed conflicts, terrorist and pirate attacks and threats thereof, and other world events affecting the safety and security of travel;

- conditions in the cruise and land-based vacation industries, including competition from other cruise ship operators and providers of other vacation alternatives and overcapacity offered by cruise ship and land-based vacation alternatives;

- accidents, adverse weather conditions or natural disasters, such as hurricanes and earthquakes and other incidents (including machinery and equipment failures or improper operation thereof) which could cause injury or death or the alteration of itineraries or cancellation of a cruise or series of cruises or tours, and the impact of the spread of contagious diseases;

- adverse publicity concerning the cruise industry in general, or us in particular;

- lack of acceptance of new itineraries, products and services by our guests;

- changing consumer preferences;

- changes in and compliance with laws and regulations relating to employment, environmental, health, safety, security, tax and other regulatory regimes under which we operate;

- increases in global fuel demand and pricing, fuel supply disruptions and/or other events on our fuel and other expenses, liquidity and credit ratings;

- increases in our future fuel expenses of implementing recently approved International Maritime Organization regulations, which require the use of higher priced low sulfur fuels in certain cruising areas;

- changes in operating and financing costs, including changes in interest rates, food, insurance, payroll and security costs;

- our ability to implement our shipbuilding programs and ship refurbishments and repairs, including ordering additional ships for our cruise brands from European shipyards on terms that are favorable or consistent with our expectations;

- whether our future operating cash flow will be sufficient to fund future obligations and whether we will be able to obtain financing, if necessary, in sufficient amounts and on terms that are favorable or consistent with our expectations;

- our ability to attract and retain qualified shipboard crew and maintain good relations with employee unions;

- continuing financial viability of our travel agent distribution system, air service providers and cruise shipyards;

- availability and pricing of air travel services, especially as a result of significant increases in air travel costs;

- changes in the global credit markets on our counterparty risks, including those associated with our cash equivalents, committed financing facilities, contingent obligations, derivative instruments, insurance contracts and new ship progress payment guarantees;

- our decisions to self-insure against various risks or our inability to obtain insurance for certain risks at reasonable rates;

- disruptions and other damages to our information technology networks;

- lack of continued availability of attractive port destinations; and

- risks associated with the DLC structure, including the uncertainty of its tax status.

Forward-looking statements should not be relied upon as a prediction of actual results. Subject to any continuing obligations under applicable law or any relevant listing rules, we expressly disclaim any obligation to disseminate, after the date of this joint Quarterly Report on Form 10-Q, any updates or revisions to any such forward-looking statements to reflect any change in expectations or events, conditions or circumstances on which any such statements are based.

Outlook for the Remainder of Fiscal 2009

As of March 24, 2009, we said that we expected our earnings per share for the second quarter and full year of 2009 would be in the range of $0.30 to $0.32 and $2.10 to $2.30, respectively. Our guidance was based on the assumptions in the table below.

As of March 31, 2009, updated only for the current assumptions in the table below, our earnings per share for the second quarter and full year of 2009 would decrease by $0.01 and $0.06, respectively.

                                     Second Quarter 2009          Full Year 2009
                                    March 24      March 31    March 24     March 31
        Fuel cost per metric ton   $      285    $      294   $     279   $      287

        Currency
        U.S. dollar to €1          $     1.36    $     1.33   $    1.35   $     1.33

        U.S. dollar to £1          $     1.44    $     1.43   $    1.45   $     1.44

The above forward-looking statements involve risks and uncertainties. Various factors could cause our actual results to differ materially from those expressed above including, but not limited to, economic conditions, foreign currency exchange rates, fuel expenses, weather, regulatory changes, geopolitical and other factors that could impact consumer demand or costs and expenses. You should read the above forward-looking statement together with the discussion of these and other risks under "Cautionary Note Concerning Factors That May Affect Future Results."

Critical Accounting Estimates

The impairment reviews of our ships and goodwill and trademarks, which have been allocated to our cruise line reporting units, require us to make significant estimates to determine the fair values of these assets or reporting units. The determination of these fair values includes numerous uncertainties.

However, due to the ongoing uncertainty in market conditions, which may negatively impact the performance of our reporting units, we will continue to monitor and evaluate the carrying values of our goodwill and trademarks. If market and economic conditions or our units' business performance deteriorates significantly then we would perform interim impairment reviews. Any such impairment reviews could result in recognition of a goodwill and/or trademark impairment charge in 2009 or thereafter.

For a further discussion of our critical accounting estimates, see "Management's Discussion and Analysis of Financial Condition and Results of Operations," which is included in Carnival Corporation & plc's 2008 joint Annual Report on Form 10-K.

Seasonality and Expected Capacity Growth

Our revenues from the sale of passenger tickets are seasonal. Historically, demand for cruises has been greatest during our third fiscal quarter, which includes the Northern Hemisphere summer months. This higher demand during the third quarter results in higher net revenue yields and, accordingly, the largest share of our net income is earned during this period. The seasonality of our results is increased due to ships being taken out of service for maintenance, which we typically schedule during non-peak demand periods. In addition, substantially all of Holland America Tours' and Princess Tours' revenues and net income are generated from May through September in conjunction with the Alaska cruise season.

The year-over-year percentage increase in our ALBD capacity for the second, third and fourth quarters of 2009 is currently expected to be 5.6%, 5.6% and 7.6%, respectively. Our annual ALBD capacity increase for fiscal 2009, 2010, 2011 and 2012 is currently expected to be 5.3%, 8.0%, 5.8% and 3.7%, respectively. The above percentage increases result primarily from new ships entering service and exclude any other future ship orders, acquisitions, retirements or sales.

Selected Cruise and Other Information

Selected cruise and other information was as follows:



                                                            Three Months
                                                       Ended February 28/29,
                                                        2009             2008
       Passengers carried (in thousands)                   1,869          1,910

       Occupancy percentage(a)                             103.9 %        104.3 %

       Fuel consumption (metric tons in thousands)           752            785

       Fuel cost per metric ton(b)                   $       276       $    499

       Currency
       U.S. dollar to €1                             $      1.32       $   1.47

       U.S. dollar to £1                             $      1.46       $   1.98

(a) In accordance with cruise industry practice, occupancy is calculated using a denominator of two passengers per cabin even though some cabins can accommodate three or more passengers. Percentages in excess of 100% indicate that on average more than two passengers occupied some cabins.

(b) Fuel cost per metric ton is calculated by dividing the cost of our fuel by the number of metric tons consumed.

Revenues

Our total revenues decreased $288 million, or 9.1%, from $3.2 billion in 2008 to $2.9 billion in 2009. This was driven by a $360 million revenue decrease that was primarily due to the impact of a stronger U.S. dollar against the euro and sterling compared to 2008, as well as the adverse impact of the economic downturn on our cruise ticket pricing and onboard and other revenues. This revenue decrease was partially offset by our 2.3% capacity increase in ALBDs (see "Key Performance Non-GAAP Financial Indicators"). Our capacity increased 1.9% for our North American cruise brands and 6.2% for our European cruise brands in 2009 compared to 2008, as we continue to implement our strategy of expanding in the European cruise marketplace.

Onboard and other revenues included concessionaire revenues of $176 million in 2009 and $186 million in 2008. Onboard and other revenues decreased $68 million in 2009 compared to 2008, primarily because there was lower onboard spending for most of the major activities, as well as the impact of the stronger U.S. dollar against the euro and sterling compared to 2008, partially offset by our 2.3% increase in ALBDs.

Costs and Expenses

Operating costs decreased $264 million, or 12.5%, from $2.1 billion in 2008 to $1.9 billion in 2009. This decrease was primarily due to $167 million of lower fuel prices, in addition to the impact of the stronger U.S. dollar against the euro and sterling compared to 2008. This decrease was partially offset as a result of increased capacity driven by our 2.3% increase in ALBDs and a $26 million increase in dry-dock expenses.

Selling and administration expenses decreased $33 million, or 7.8%, from $425 million in 2008 to $392 million in 2009. The decrease was primarily currency driven, and was partially offset by our 2.3% increase in ALBDs.

Depreciation and amortization expense increased $10 million, or 3.3%, from $301 million in 2008 to $311 million in 2009, primarily due to the 2.3% increase in ALBDs through the addition of new ships and additional ship improvement expenditures.

Our total costs and expenses as a percentage of revenues declined from 90.1% in 2008 to 89.1% in 2009.

Operating Income

Our operating income was flat as the decreased revenues resulting primarily from both the stronger U.S. dollar against the euro and sterling compared to 2008 and the adverse impact of the economic downturn were offset by lower costs and expenses resulting primarily from both lower fuel prices and the stronger U.S. dollar against the euro and sterling compared to 2008.

Nonoperating (Expense) Income

Net interest expense, excluding capitalized interest, increased $1 million to $102 million in 2009 from $101 million in 2008. On a constant dollar basis, this increase was due to a $12 million increase in interest expense from a higher level of average borrowings and $6 million of lower interest income due to a lower average level of invested cash and lower average interest rates on invested balances, partially offset by a $13 million decrease from lower average interest rates on average borrowings. In addition, interest expense decreased by $4 million as a result of the stronger U.S. dollar against the euro and sterling compared to 2008.

Other income, net increased $17 million to $19 million in 2009 from $2 million in 2008, primarily because of the $15 million gain recognized upon the unwinding of one of our LILO transactions.

Income tax benefit increased $12 million to $22 million in 2009 from $10 million in 2008, primarily because of the reversal of uncertain income tax position liabilities, which were no longer required. During both the first quarters of 2009 and 2008, we have recorded tax benefits generated by the seasonal losses of our Alaska tour operation.

Key Performance Non-GAAP Financial Indicators

ALBDs is a standard measure of passenger capacity for the period, which we use to perform rate and capacity variance analyses to determine the main non-capacity driven factors that cause our cruise revenues and expenses to vary. ALBDs assume that each cabin we offer for sale accommodates two passengers and is computed by multiplying passenger capacity by revenue-producing ship operating days in the period.

We use net cruise revenues per ALBD ("net revenue yields") and net cruise costs per ALBD as significant non-GAAP financial measures of our cruise segment financial performance. These measures enable us to separate the impact of predictable capacity changes from the more unpredictable rate changes that affect our business. We believe these non-GAAP measures provide a better gauge to measure our revenue and cost performance instead of the standard U.S. GAAP-based financial measures. There are no specific rules for determining our non-GAAP financial measures and, accordingly, it is possible that they may not be exactly comparable to the like-kind information presented by other cruise companies, which is a potential risk associated with using them to compare us to other cruise companies.

Net revenue yields are commonly used in the cruise industry to measure a company's cruise segment revenue performance and for revenue management purposes. We use "net cruise revenues" rather than "gross cruise revenues" to calculate net revenue yields. We believe that net cruise revenues is a more meaningful measure in determining revenue yield than gross cruise revenues because it reflects the cruise revenues earned net of our most significant variable costs, which are travel agent commissions, cost of air transportation and certain other variable direct costs associated with onboard and other revenues. Substantially all of our remaining cruise costs are largely fixed, except for the impact of changing prices, once our ship capacity levels have been determined.

Net cruise costs per ALBD is the most significant measure we use to monitor our ability to control our cruise segment costs rather than gross cruise costs per ALBD. We exclude the same variable costs that are included in the calculation of net cruise revenues to calculate net cruise costs to avoid duplicating these variable costs in these two non-GAAP financial measures.

In addition, because a significant portion of our operations utilize the euro or sterling to measure their results and financial condition, the translation of those operations to our U.S. dollar reporting currency results in decreases in reported U.S. dollar revenues and expenses if the U.S. dollar strengthens against these foreign currencies, and increases in reported U.S. dollar revenues and expenses if the U.S. dollar weakens against these foreign currencies. Accordingly, we also monitor and report our two non-GAAP financial measures assuming the current period currency exchange rates have remained constant with the prior year's comparable period rates, or on a "constant dollar basis," in order to remove the impact of changes in exchange rates on our non-U.S. dollar cruise operations. We believe that this is a useful measure since it facilitates a comparative view of the growth of our business in a fluctuating currency exchange rate environment.

                                               Three Months Ended February 28/29,
                                                               2009
                                                             Constant
                                             2009             Dollar            2008
                                             (in millions, except ALBDs and yields)
 Cruise revenues
 Passenger tickets                       $       2,219     $      2,400     $      2,438
 Onboard and other                                 634              667              702

 Gross cruise revenues                           2,853            3,067            3,140
 Less cruise costs
 Commissions, transportation and other            (514 )           (574 )           (558 )
 Onboard and other                                (104 )           (110 )           (125 )

 Net cruise revenues                     $       2,235     $      2,383     $      2,457

 ALBDs                                      14,492,250       14,492,250       14,161,289

 Gross revenue yields                    $      196.84     $     211.60     $     221.71

 Net revenue yields                      $      154.25     $     164.42     $     173.45

Gross and net cruise costs per ALBD were computed by dividing the gross or net cruise costs, without rounding, by ALBDs as follows:

                                                            Three Months Ended February 28/29,
                                                                              2009
                                                                            Constant
                                                      2009                   Dollar                2008
                                                      (in millions, except ALBDs and costs per ALBD)
Cruise operating expenses                       $          1,834        $          1,973       $      2,096
Cruise selling and administrative expenses                   384                     411                417

Gross cruise costs                                         2,218                   2,384              2,513
Less cruise costs included in net cruise
revenues
Commissions, transportation and other                       (514 )                  (574 )             (558 )
Onboard and other                                           (104 )                  (110 )             (125 )

Net cruise costs                                $          1,600        $          1,700       $      1,830

ALBDs                                                 14,492,250              14,492,250         14,161,289

Gross cruise costs per ALBD                     $         153.02        $         164.51       $     177.48

Net cruise costs per ALBD                       $         110.43        $         117.32       $     129.22

Net cruise revenues decreased $222 million, or 9.0%, to $2.2 billion in 2009 from $2.5 billion in 2008. This was driven by a $279 million, or 11.1%, decrease in net revenue yields in 2009 compared to 2008 (gross revenue yields decreased by 11.2%). This decrease was partially offset by a 2.3% increase in ALBDs between 2009 and 2008 that accounted for $57 million. The net revenue yield decrease in 2009 was primarily due to the impact of a stronger U.S. dollar against the euro and sterling compared to 2008, as well as the adverse impact of the economic downturn on our cruise ticket pricing and onboard and other revenues. Net revenue yields as measured on a constant dollar basis decreased 5.2% in 2009 compared to 2008, which was comprised of a 5.0% decrease in passenger ticket yields and a 5.8% decrease in onboard and other revenue yields. Gross cruise revenues decreased $287 million, or 9.1%, to $2.9 billion in 2009 from $3.1 billion in 2008 for largely the same reasons as discussed above for net cruise revenues.

Net cruise costs decreased $230 million, or 12.6%, to $1.6 billion in 2009 from $1.8 billion in 2008. This was driven by a $273 million decrease in net cruise costs per ALBD, which decreased 14.5% in 2009 compared to 2008 (gross cruise costs per ALBD decreased 13.8%). This decrease was partially offset by the 2.3% increase in ALBDs between 2009 and 2008 that accounted for $43

Liquidity and Capital Resources

As discussed under Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2008 joint Annual Report on Form 10-K, we believe preserving cash and liquidity at this time is a prudent step which will further strengthen our balance sheet and enhance our financial flexibility. Accordingly in October 2008, the Board of Directors voted to suspend our quarterly dividend beginning March 2009. We intend to maintain the dividend suspension throughout 2009. Our cash from operations and committed financing facilities for 2009 along with our available cash and cash equivalent balances are forecasted to be sufficient to fund our expected 2009 cash requirements. Therefore, we believe we will not be required to obtain new debt during 2009; however, we may do so opportunistically to enhance our liquidity. Our immediate objective is to ensure we have sufficient liquidity available with a high degree of certainty throughout 2009 despite current market conditions.

Our overall strategy is to maintain an acceptable level of liquidity with our available cash and cash equivalents and committed credit facilities for immediate and future liquidity needs and a reasonable debt maturity profile that is spread out over a number of years. To date, although our costs of borrowing have increased in certain cases and the availability of funding is not as widespread as it has been in the past, we continue to opportunistically put in place committed credit facilities. Given the decision by our Board of Directors to suspend the quarterly dividend and our current financial position, we do not expect the current highly volatile state of the financial markets will have a significant adverse impact on our ability to maintain an acceptable level of liquidity during the remainder of 2009.

Sources and Uses of Cash

Our business provided $305 million of net cash from operations during the three months ended February 28, 2009, a decrease of $68 million, or 18.2%, compared to fiscal 2008. This decrease was primarily driven by a $221 million quarter-over-quarter decrease in the change in our customer deposit balances between the year-end and the end of the first quarter, partially offset by changes in other working capital expenditures. The decrease in customer deposits resulted primarily from guests booking cruises and paying their deposits closer to the sailing dates and cruises being purchased for lower ticket prices compared to the comparable prior period when guests booked their cruises and paid their deposits further in advance of the sailing dates and cruises were purchased for higher ticket prices.

At February 28/29, 2009 and 2008, we had working capital deficits of $3.8 billion and $5.4 billion, respectively. Our February 28, 2009 deficit included $2.3 billion of customer deposits, which represent the passenger revenues we collect in advance of sailing dates and, accordingly, is substantially more of a deferred revenue item rather than an actual current cash liability. We use our long-term ship assets to realize a portion of this deferred revenue in addition to consuming current assets. In addition, our February 28, 2009 working capital . . .