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, among other things, 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, high unemployment rates, 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 movement 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, the spread of contagious diseases and threats thereof, adverse weather conditions or natural disasters, such as hurricanes and earthquakes, and other incidents (including, but not limited to, ship fires and machinery and equipment failures or improper operation thereof), which could cause, among other things, individual or multiple port closures, injury, death, alteration of cruise itineraries or cancellation of a cruise or series of cruises or tours;

- 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 the Americans with Disabilities Act and 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 from implementing approved International Maritime Organization regulations, which require the use of higher priced low sulfur fuels in certain cruising areas, including the proposed establishment of a U.S./Canadian Emissions Control Area ("ECA"), which will, if established, significantly affect the quality and price of fuel that ships will be required to burn within this ECA;

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

- our ability to implement our shipbuilding programs and ship maintenance, repairs and refurbishments, 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 and their subcontractors;

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

- increased credit risk of our counterparties, 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 continuing availability of attractive, convenient and safe 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 Fourth Quarter of 2009

As of September 22, 2009, we said that we expected our diluted earnings per share for the fourth quarter of 2009 would be in the range of $0.16 to $0.20. Our guidance was based on fuel prices per metric ton of $465 for the 2009 fourth quarter. In addition, this guidance was also based on currency exchange rates of $1.46 to the euro and $1.67 to sterling.

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 and business conditions, foreign currency exchange rates, fuel prices, adverse weather conditions, spread of contagious diseases, regulatory changes, geopolitical and other factors that could impact consumer demand, revenues 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

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

We performed our annual goodwill and trademark impairment reviews as of July 31, 2009. We determined that the estimated fair value of each of our cruise line reporting units, which include goodwill, exceeded their carrying value. In addition, we reviewed our trademarks for impairment using the relief-from-royalty method and the fair values of these intangible assets exceeded their carrying values. Accordingly, at July 31, 2009, neither our goodwill nor trademarks were impaired. 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

Finally, we do not believe there have been any events or circumstances subsequent to July 31, 2009 that would require us to perform interim goodwill or trademark impairment reviews. Since April 2009, our stock market capitalization has generally been greater than our shareholders' equity, which was typically not the case since early November 2008.

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 fourth quarter of 2009 is currently expected to be 7.7%. Our annual ALBD capacity increase for fiscal 2009, 2010, 2011 and 2012 is currently expected to be 5.4%, 7.7%, 5.1% and 3.5%, respectively. The above percentage increases result primarily from contracted new ships entering service and exclude any future ship orders, acquisitions, retirements or sales, however the scheduled withdrawal from service of Costa Europa in April 2010 and P&O Cruises' Artemis in May 2011 have been taken into account.

Selected Cruise and Other Information

Selected cruise and other information was as follows:



                                                       Three Months                 Nine Months
                                                     Ended August 31,             Ended August 31,
                                                    2009          2008           2009          2008
Passengers carried (in thousands)                    2,485         2,322          6,383         6,218

Occupancy percentage(a)                              111.4 %       110.9 %        106.4 %       106.8 %

Fuel consumption (metric tons in thousands)            807           795          2,359         2,383

Fuel cost per metric ton(b)                       $    405       $   666       $    330       $   565

Currency
U.S. dollar to €1                                 $   1.41       $  1.54       $   1.37       $  1.53

U.S. dollar to £1                                 $   1.64       $  1.95       $   1.53       $  1.97

(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.

Three Months Ended August 31, 2009 ("2009") Compared to the Three Months Ended August 31, 2008 ("2008")

Revenues

Our total revenues decreased $675 million, or 14.0%, from $4.8 billion in 2008 to $4.1 billion in 2009. This was caused by an $842 million revenue decrease that was primarily due to the adverse impact of the economic downturn on our cruise ticket pricing and onboard and other revenues, as well as a stronger U.S. dollar against the euro and sterling compared to 2008. In addition, the U.S. Centers for Disease Control and Prevention's ("CDC") recommendations against non-essential travel to Mexico as a result of the H1N1 flu virus also adversely impacted our revenues because we had to alter several of our cruise ships' itineraries. This revenue decrease was partially offset by our 5.5% capacity increase in ALBDs (see "Key Performance Non-GAAP Financial Indicators"). Our capacity increased 3.6% for our North American cruise brands and 7.5% 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 $277 million in 2009 and $292 million in 2008. Onboard and other revenues decreased $39 million in 2009 compared to 2008, primarily because of lower onboard spending for all of the major onboard revenue-producing activities, as well as the impact of the stronger U.S. dollar against the euro and sterling compared to 2008, partially offset by our 5.5% increase in ALBDs.

Other non-cruise revenues decreased $83 million, or 28.4%, to $209 million in 2009 from $292 million in 2008 due to lower cruise/tour prices and fewer cruise/tours sold.

Costs and Expenses

Operating costs decreased $408 million, or 15.5%, from $2.6 billion in 2008 to $2.2 billion in 2009. This decrease was primarily due to $211 million of lower fuel prices, the impact of the stronger U.S. dollar against the euro and sterling and decreased commissions primarily as a result of our lower ticket revenues compared to 2008. This decrease was partially offset as a result of increased capacity driven by our 5.5% increase in ALBDs.

Other non-cruise operating expenses decreased $49 million, or 25.3%, to $145 million from $194 million in 2008 primarily due to the impact of cost containment initiatives and fewer cruise/tours sold.

Depreciation and amortization expense increased $13 million, or 4.0%, from $323 million in 2008 to $336 million in 2009, caused by the 5.5% increase in ALBDs through the addition of new ships and additional ship improvement expenditures, partially offset by the impact of the stronger U.S. dollar against the euro and sterling.

Our total costs and expenses as a percentage of revenues increased from 69.2% in 2008 to 71.1% in 2009.

Operating Income

Our operating income decreased $289 million from $1.5 billion in 2008 to $1.2 billion in 2009 primarily because of the reasons discussed above.

Nonoperating (Expense) Income

Net interest expense, excluding capitalized interest, decreased $12 million to $100 million in 2009 from $112 million in 2008. On a constant dollar basis, this decrease was due to a $22 million decrease in interest expense from lower average interest rates on average borrowings, partially offset by a $10 million increase from a higher level of average borrowings and a $4 million decrease in interest income due to lower average interest rates on lower invested balances. In addition, net interest expense decreased by $4 million as a result of the stronger U.S. dollar against the euro and sterling compared to 2008.

Income Taxes

Income tax expense decreased $28 million to $24 million in 2009 from $52 million in 2008, primarily because of a $10 million income tax benefit in 2009 and a $6 million income tax expense in 2008 related to changes in uncertain income tax position liabilities and the nonrecurrence in 2009 of the $7 million Mexican deferred income tax expense related to our hurricane insurance settlement that was recognized in 2008. During 2009 and 2008 we have recorded income tax expenses resulting from the seasonal income 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

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.

Gross and net revenue yields were computed by dividing the gross or net revenues, without rounding, by ALBDs as follows:

                                                 Three Months Ended August 31,
                                                              2009
                                                            Constant
                                            2009             Dollar             2008
                                             (in millions, except ALBDs and yields)
Cruise revenues
Passenger tickets                       $      3,105      $      3,280      $      3,658
Onboard and other                                825               857               864

Gross cruise revenues                          3,930             4,137             4,522
Less cruise costs
Commissions, transportation and other           (515 )            (547 )            (660 )
Onboard and other                               (131 )            (137 )            (134 )

Net cruise revenues                     $      3,284      $      3,453      $      3,728

ALBDs                                     16,241,798        16,241,798        15,392,070

Gross revenue yields                    $     241.99      $     254.69      $     293.82

Net revenue yields                      $     202.21      $     212.56      $     242.27

                                                              Three Months Ended August 31,
                                                                            2009
                                                                          Constant
                                                    2009                   Dollar                 2008
                                                     (in millions, except ALBDs and costs per ALBD)
Cruise operating expenses                      $         2,081         $         2,172        $      2,440
Cruise selling and administrative expenses                 372                     391                 364

Gross cruise costs                                       2,453                   2,563               2,804
Less cruise costs included in net cruise
revenues
Commissions, transportation and other                     (515 )                  (547 )              (660 )
Onboard and other                                         (131 )                  (137 )              (134 )

Net cruise costs                               $         1,807         $         1,879        $      2,010

ALBDs                                               16,241,798              16,241,798          15,392,070

Gross cruise costs per ALBD                    $        151.07         $        157.80        $     182.17

Net cruise costs per ALBD                      $        111.29         $        115.67        $     130.62

Net cruise revenues decreased $444 million, or 11.9%, to $3.3 billion in 2009 from $3.7 billion in 2008. This was caused by a $650 million, or 16.5%, decrease in net revenue yields in 2009 compared to 2008 (gross revenue yields decreased by 17.6%). This decrease was partially offset by a 5.5% increase in ALBDs between 2009 and 2008 that accounted for $206 million. The net revenue yield decrease in 2009 was primarily due to the adverse impact of the economic downturn on our cruise ticket pricing and onboard and other revenues, as well as the impact of a stronger U.S. dollar against the euro and sterling compared to 2008. In addition, the CDC's recommendations against non-essential travel to Mexico as a result of the H1N1 flu virus also adversely impacted our net revenue yields as previously discussed. Net revenue yields as measured on a constant dollar basis decreased 12.3% in 2009 compared to 2008, which was comprised of a 13.7% decrease in passenger ticket yields and a 6.5% decrease in onboard and other revenue yields. Gross cruise revenues decreased $592 million, or 13.1%, to $3.9 billion in 2009 from $4.5 billion in 2008 for largely the same reasons as discussed above for net cruise revenues, as well as the reduction in travel agent commissions as a result of lower cruise ticket prices.

Net cruise costs decreased $203 million, or 10.1%, to $1.8 billion in 2009 from $2.0 billion in 2008. This was caused by a $314 million decrease in net cruise costs per ALBD, which decreased 14.8% in 2009 compared to 2008 (gross cruise costs per ALBD decreased 17.1%). This decrease was partially offset by the 5.5% increase in ALBDs between 2009 and 2008 that accounted for $111 million. The 14.8% decrease in net cruise costs per ALBD was primarily the result of a 39.2% decrease in fuel price to $405 per metric ton in 2009, which resulted in a decrease in fuel expense of $211 million, the stronger U.S. dollar against the euro and sterling and $21 million of fuel consumption savings compared to 2008. This decrease was partially offset by the nonrecurrence in 2009 of the 2008 $26 million gain that was recognized from the hurricane insurance settlement for damages to our Cozumel, Mexico port facilities. Net cruise costs per ALBD as measured on a constant dollar basis decreased 11.4% in 2009 compared to 2008. On a constant dollar basis, net cruise costs per ALBD excluding fuel decreased 0.7% compared to 2008 primarily due to the impact of cost containment initiatives. Gross cruise costs decreased $351 million, or 12.5%, in 2009 to $2.5 billion from $2.8 billion in 2008 for largely the same reasons as discussed above for net cruise costs, as well as the reduction in travel agent commissions as discussed above.

Revenues

Our total revenues decreased $1.4 billion, or 12.3%, from $11.3 billion in 2008 to $10.0 billion in 2009. This was caused by a $1.8 billion revenue decrease that was primarily due to the adverse impact of the economic downturn on our cruise ticket pricing and onboard and other revenues, as well as the impact of a stronger U.S. dollar against the euro and sterling compared to 2008. This revenue decrease was partially offset by our 4.6% capacity increase in ALBDs (see "Key Performance Non-GAAP Financial Indicators"). Our capacity increased 3.2% for our North American cruise brands and 7.2% 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 $651 million in 2009 and $698 million in 2008. Onboard and other revenues decreased $177 million in 2009 compared to 2008, primarily because of lower onboard spending for all of the major onboard revenue-producing activities, as well as the impact of the stronger U.S. dollar against the euro and sterling compared to 2008, partially offset by our 4.6% increase in ALBDs.

Costs and Expenses

Operating costs decreased $946 million, or 13.7%, from $6.9 billion in 2008 to . . .