CCL RCL JPM Upgrade

North America Equity Research
16 December 2009
CCL, CCL US
Upgrade to: Overweight
Previous: Neutral
$33.88
Cruise Industry Price Target: $43.00
Assuming Coverage: Catching the Trade Winds of a RCL, RCL US

Upgrade to: Overweight
Recovery; Upgrading CCL and RCL to Overweight Previous: Neutral
$25.93
Price Target: $34.00
We are assuming lead coverage, updating our estimates, and upgrading our ratings on Cruise Lines
CCL and RCL to Overweight from Neutral. We believe both CCL and RCL will AC
Kevin Milota
continue to perform well through 2010 as cruise fundamentals begin to recover, with
(1-212) 622-0987
an improvement in consumer confidence as the sluggish macroeconomic environment kevin.milota@jpmorgan.com
begins to right itself. Both CCL and RCL have been strong performers since February
Joseph Greff
29, 2009, as the recession came to a head (when they hit trough valuation/stock
(1-212) 622-0548
levels); CCL is up 73% and RCL is up 332% versus the 51% return of the S&P 500. joseph.greff@jpmorgan.com
We believe the lion’s share of the stock performance to date has been driven by the
Daniel Yoon
recovery in 2010E EPS. Moving forward in 2010, we think given the recovery in (1-212) 622-1205
ROICs at CCL and RCL, investors will begin to refocus their sights on multiple daniel.yoon@jpmorgan.com
expansion, which to a large extent has not been the emphasis to date. Both CCL and
J.P. Morgan Securities Inc.
RCL have historically had significant second-derivative moves, as the stocks have
tended to outperform when net yield acceleration occurred on a year-over-year basis
(i.e., a positive swing rather than positive growth in net yields). We anticipate the
second-derivative change in net yields will turn positive in 2010 (even though we only
assume single-digit net yield increases for RCL and CCL, this is less negative than in
2009). Currently, CCL and RCL are trading below long-term average forward P/E
multiples of 16.4x and 14.8x, respectively.
• Some may ask whether we like either CCL or RCL more. The quick answer is
that we like both, and think CCL and RCL will work in tandem in 2010. Since
1993, the correlation coefficient for stock price performance between CCL and
RCL has been 0.87, as investors have believed a recovery in the overall operating
environment would benefit both industry participants. While we often point to the
overall revitalization of demand (and thereby pricing) in the industry, we think that
both CCL and RCL have unique investment facets that should be of interest to
large-cap investors (particularly CCL) and SMid-cap investors (particularly RCL).
• We are upgrading CCL to Overweight (from Neutral) and are establishing a
YE10 price target of $43. We are positive on the stock as we believe that:
1) recovering net yields and extended booking windows will drive EBITDA and
EPS growth in 2010 and 2011; 2) increasing ticket prices should highlight
operating leverage and increase flow-through during the recovery; 3) the company
should see continued success with its cost-containment efforts; and 4) we view
free cash flow as underappreciated and see potential dividend reinstatement in
2010.
• We are upgrading RCL to Overweight (from Neutral) and are establishing a
YE10 price target of $34. We are positive on the stock as we believe that:
1) RCL’s booking patterns and net yield performance will be stronger in FY10
(largely due to its higher-yielding new capacity); 2) its stock has historically been
a strong second-derivative performer as fundamentals improve; 3) its substantial
operating leverage (given its smaller scale) should incrementally benefit EBITDA
flow-through and EPS growth; and 4) its new capacity likely will bear fruit and
contribute to strong net yield performance.
See page 54 for analyst certification and important disclosures.

J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
Kevin Milota North America Equity Research
(1-212) 622-0987 16 December 2009
kevin.milota@jpmorgan.com
• We think CCL and RCL are attractively valued versus each company’s respective
long-term trading ranges coming out of this downturn. Currently, CCL and RCL are
trading at 11.9x and 10.7x our 2011 EPS estimates, versus long-term average forward
P/E multiples of 16.4x and 14.8x, respectively. In the two years following the
reemergence of positive net yields (2004 and 2005), CCL traded at 17.2x and 18.9x
forward-year EPS estimates, while RCL traded at and 14.6x and 15.5x.
• Looking at historical results (since ’99 for RCL and ’03 for CCL), we have found
a high positive correlation between cruise net yields and domestic lodging
RevPAR on a quarterly basis (0.82 correlation coefficient, and 0.67 R2). We find this
strong correlation encouraging for net yield performance as we look to 2010 as the
recovery year for lodging RevPAR. In particular, transient lodging demand has been
up +7.3% in 4Q09 (vs. +5.0% in 3Q09, and +1.1% in 2Q09), which in part has been
driven by the leisure traveler, which bodes well for increased cruise demand.
• The next catalyst for the group will be this Friday, December 18th, as CCL is set
to announce 4Q09 earnings. In the release CCL will provide its first take on formal
guidance for 2010, in which it will provide net yield, net cruise cost, and fuel
guidance (price per metric ton and consumption). We believe CCL will indicate that
it continues to see the booking window elongate and pricing on its itineraries
strengthen. We believe that positive commentary coming out of CCL’s call on Friday
would benefit RCL as well, as the company’s net yields and ticket pricing appear to
be very strong on its recently launched Oasis of the Seas, and its newer Solstice and
Freedom class ships.
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(1-212) 622-0987 16 December 2009
Table of Contents
Carnival Corp. ...........................................................................4
Key Investment Points .................................................................................................4
Investment Risks..........................................................................................................6
4Q09 and 2010 Earnings Estimates ...........................................................................11
Forward Demand Commentary..................................................................................11
Company Guidance....................................................................................................12
Valuation & Price Target Summary...........................................................................14
Royal Caribbean Cruises Ltd. ...............................................22
Key Investment Points ...............................................................................................22
Investment Risks........................................................................................................24
4Q09 and 2010 Earnings Outlook..............................................................................26
Forward Demand Commentary..................................................................................26
Company Guidance....................................................................................................28
Valuation & Price Target Summary...........................................................................29
Cruise Industry Summary......................................................37
Cruise Industry Stock Drivers ...............................................43
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(1-212) 622-0987 16 December 2009
Carnival Corp.
Carnival Corporation (CCL;CCL US)
Company Data 2008A 2009E 2009E 2010E 2010E 2011E
Price ($) 33.88 (Old) (New) (Old) (New)
Date Of Price 15 Dec 09 EPS Reported ($)
52-week Range ($) 34.95 - Q1 (Feb) 0.30 0.33A 0.33A 0.15
16.80 Q2 (May) 0.48 0.31A 0.33A 0.28
Mkt Cap ($ bn) 27.41 Q3 (Aug) 1.65 1.37A 1.33A 1.51
Fiscal Year End Nov Q4 (Nov) 0.47 0.20A 0.20A 0.39
Shares O/S (mn) 809 FY 2.90 2.21A 2.19A 2.25 2.33 2.84
Price Target ($) 43.00 Bloomberg EPS FY ($) 2.83 2.19A 2.32 2.71
Price Target End 31 Dec 10 Source: Company data, Bloomberg, J.P. Morgan estimates. 'Bloomberg' above denotes Bloomberg
consensus estimates.
Date
Key Investment Points

Recovering net yields and extended booking windows should be positive growth
drivers in FY2010
We believe elongating booking windows (~30 days) and an accelerating booking
pace at present will stem the tide of negative net yield results exhibited in the cruise
industry since 4Q08. We are currently forecasting a 2009 net yield decline of 14.1%
year-over-year. We expect the aforementioned positives to generate higher rates
(100% flow-through) and subsequently higher revenues, which will in turn drive
positive net yields year-over-year. We forecast year-over-year growth of +3.2% in
2010 net yields. We believe this will be a distinct positive for Carnival shares as our
research indicates that Carnival shares have outperformed the S&P 500 by roughly
340 bps in years when net yields turned from negative to positive. As of 3Q09,
Carnival’s forward bookings through the 2Q10 increased 19% year-over-year for the
nine-month period. After adjusting for new capacity coming online in 2010, which is
up 7.7% year-over-year, management noted that the shortfall in the bookings is
modest. With that said, we believe the extended booking windows will allow
Carnival to fill the remaining capacity with more profitable, higher-rated business, as
the longer lead times will reduce Carnival’s reliance on drastic discounting for close-
in bookings. Our channel checks indicate that 2010 has begun to stabilize and should
continue to improve given the extended windows, which should drive premium year-
over-year rates. We believe Carnival’s ability to increase rates for 2010 will result
from the continued strengthening of customer demand, which should eventually
begin to re-establish the consumer psyche of booking further out and wean the
consumer off the heavy discounting/promotional activity that has characterized 2009.
Carnival to benefit from strong operating leverage and flow-through in a

recovering environment
In the cruise industry, ships always leave port with 100% or higher occupancy—
therefore, passenger ticket prices are critical. Given our view that recovering net
yields and extended booking windows will drive passenger ticket prices higher, we
estimate passenger ticket per passenger cruise day will expand to ~$157 in 2010
(+3.0%), and ~$162 in 2011 (+3.0%), versus a decline of -15.2% in 2009. Note that
we expect average ticket price growth despite our forecasts of 7.7% growth and 5.1%
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(1-212) 622-0987 16 December 2009
growth in available lower berth days in 2010 and 2011, respectively. Given the
reliance on rates, for which every incremental dollar above the breakeven rate
generates 100% flow-through to EBITDA, we believe CCL will be able to drop 22%
and 56% of incremental net revenue to the EBITDA line in 2010 and 2011,
respectively. While not necessarily inspiring, we note that elevated fuel costs per
ALBD, with expected growth of +37% year-over-year in 2010, erode much of the
operating leverage. That said, if we exclude fuel costs, flow-through improves to
59% and 64% in 2010 and 2011, respectively.
Keen eye on cost containment should set the stage for EBITDA and EPS growth
We believe Carnival will remain vigilant in maintaining its net cruise costs per
ALBD. We project net cruise costs per ALBD (excluding fuel) will increase +0.4%
in both 2010 and 2011, in line with management’s cost containment goal of
managing net cruise cost per ALBD (excluding fuel) within a range of flat to half the
rate of inflation. Much of the heavy lifting was done in 2009 as the company
successfully used its substantial economies of scale to negotiate price with many of
its vendors, and aggressively worked to reduce its fuel expense (through more fuel-
efficient capacity and aggressively managing its fuel consumption through proactive
itinerary-related efforts). While we note that much of the upside from these
initiatives should continue to be overshadowed by increases in fuel prices, we are
comfortable that our 2010 estimates take into account growth in fuel costs
sufficiently healthy to allow for potential EPS upside should the cost of fuel temper
(presently modeled at $475 per metric ton). Net-net, our sense is that the cost-
containment efforts could translate to meaningful bottom-line growth should one of
two things occur, neither of which is currently incorporated in our model: 1) a
meaningful upswing in demand or 2) a slowdown in the escalation of fuel prices.
Improving fundamentals and reduced capital investments related to new builds

make CCL a solid FCF story
We project EBITDA growth of 15% and 12% in 2011 and 2012, respectively.
Furthermore, we project total capital expenditures to step down from $3.7 billion in
2010 to $2.7 billion and $2.4 billion in 2011 and 2012, respectively. At present, we
anticipate Carnival using the $841 million and $1.66 billion in net free cash flow in
2011 and 2012 to pay down debt, which we expect to peak in 2Q10 at $11.7 billion.
Management has stated its intention to operate within the “edicts” laid down by
Moody’s Investors Service; thus, management remains dedicated to maintaining its
investment grade credit rating (A3/negative outlook at Moody’s and BBB+/Negative
Outlook at S&P). With that said, given Carnival’s free cash flow profile in 2011, we
believe it is very likely that Carnival could reinstate its dividend in 2010. In
evaluating when it will reinstate the quarterly dividend, the Board intends to assess:
1) the company’s liquidity position; 2) current operating conditions/tone of business;
and 3) the potential impact on the A3 credit rating. Given reasonable net debt-to-
trailing twelve month EBITDA sub-3.0x at present, CCL appears well positioned to
reinstate the dividend, in our view. We currently project the reinstatement of a $0.30
annual dividend beginning in 2010. This level represents an estimated payout ratio of
~13%, well below the company’s long-term average of 28%. We believe this should
be a positive catalyst for the stock. We also expect that this dividend level would
keep CCL solidly within its Moody’s A3 credit rating which requires: 1) EBIT/
Interest of more than 5x (we project a 2Q10 trough of 5.2x) and 2) retained cash
flow/net debt of at least 25%. After assuming dividend distributions of ~$236 million
per year in 2010, 2011, and 2012, we estimate CCL will still generate FCF of $841
million and $1.663 billion in 2011 and 2012, respectively, which could be used for:
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(1-212) 622-0987 16 December 2009
1) a substantial increase in the common dividend; 2) share buybacks (although we

think this is a less likely use of cash); and 3) future shipbuilding orders (CCL’s goal
is to add 2-3 new ships per year). We estimate free cash flow yields in 2011 and 2012
of 3.2% and 6.2%, respectively, and note that free cash flow yields should be positive
in 2011 for the first time since 2005.
Compelling valuation versus long-term average

We establish a calendar year-end 2010 price target of $43 (replaces prior calendar
year-end 2009 price target of $22), which assumes Carnival can trade at 15x our
2011 EPS estimate. Our target multiple is below the forward-year P/E multiple at
which Carnival traded as the industry emerged from the negative net yield
environment in 2003, and is roughly 1.4x below its long-term average forward-year
multiple of 16.4x. In the two years following the turn to positive yields (2004 and
2005), Carnival traded at 17.2x and 18.9x forward-year EPS estimates. Given
Carnival’s improving fundamentals and ROICs with value spreads set to recover in
2010 through 2012, we think this valuation multiple is reasonable. At current levels,
Carnival trades at 14.6x, 11.9x, and 10.2x our 2010, 2011, and 2012 EPS estimates,
respectively. Since 1993, shares have traded at an average forward-year P/E multiple
of 16.4x, with a high of 30.3x (in January 1999) and a low of 6.8x (in January 2009).
Next catalyst for the group—Carnival’s earnings announcement on December

18th
Carnival is set to announce 4Q09 earnings on December 18th. In the release Carnival
will provide its first take on formal guidance for 2010, in which it will provide net
yield, net cruise cost, and fuel guidance (price per metric ton and consumption).
Investment Risks
Potential downside risks to our rating and price target include: 1) investor sentiment
towards consumer discretionary stocks could erode further and valuation multiples
contract; 2) fuel costs, which accounted for 23.3% of operating expenses in 2008,
could escalate more meaningfully than we are currently forecasting; 3) overcapacity
in the cruise industry stemming from new competitive supply could negatively affect
pricing should demand not outstrip supply growth; 4) risks associated with one large
shareholder group controlling ~38% of the outstanding stock; 5) regulatory and
generic investment risks such as a weakening economy or unfavorable legislative
changes both domestically or internationally.
Fuel-price volatility
As Carnival does not hedge, it is directly affected by swings in fuel prices. Rising
IFO-380 costs increase Carnival’s operating expense. While the company has made
strides to reduce its level of consumption through technological innovations, as well
a higher proportion of new, more fuel-efficient ships in its fleet, its operations remain
highly susceptible to fuel price volatility. In addition, higher crude prices have a
perceived negative effect on the spending patterns of lower-income leisure travelers,
and vice versa. We estimate a 10% change in the fuel cost per metric ton affects our
2010 EPS estimate for Carnival by approximately $0.20.
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(1-212) 622-0987 16 December 2009
Economic and event risks

We believe that demand for cruises will remain affected by the attitudes of leisure
travelers. A sluggish recovery in the U.S. or global economy likely would cause
leisure travelers to reconsider their discretionary travel budgets, which we believe
would result in decreased demand. Key risks facing all leisure and travel-related
companies include terrorism, geopolitical, and weather-related uncertainties which
could severely curtail travel volume and leisure spending levels. Cruise lines are
vulnerable to such scenarios as decreased demand could lead to continued price
discounting, which would affect overall profitability. In addition, the negative
headlines associated with events, such as ship equipment issues and cancellations,
and H1N1 outbreaks on board, could potentially have a negative impact on the
public’s perception of the cruise industry. Since the cruise industry is dependent on
first-time cruisers, we believe negative press could persuade potential cruise
passengers to consider alternative vacation options.
Company Description
Carnival Corp. (CCL) is the largest cruise company in the world, operating 93 ships
with 180,442 berths under eleven brands. Its portfolio of contemporary, premium,
and luxury brands consists of Carnival Cruise Lines, Holland America Line, Princess
Cruises, and Seabourn Cruise Line in North America; P&O Cruises, Cunard Line,
and Ocean Village in the United Kingdom; AIDA in Germany; Costa Cruises in
southern Europe; Iberocruceros in Spain; and P&O Cruises in Australia.
In April 2003 Carnival Corp. and Carnival plc (formerly P&O Princess Cruises plc)
completed a dual-listed company transaction that combined the businesses of both
companies and called for the shares of Carnival Corp. and Carnival plc to trade on
the NYSE and FTSE, respectively, under the ticker CCL. Carnival Corp. and
Carnival plc are public companies with separate stock listings and shareholders.
Carnival Corp. is incorporated in Panama, Carnival plc in England and Wales.
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(1-212) 622-0987 16 December 2009
Figure 1: Carnival Corp. & Plc – Ships/Berths by Brand

$ in millions
Ship Entered
Current Fleet Service Berths Primary Area of Operation Age of Ship
CONTEMPORARY
Carnival Cruise Lines
Carnival Dream 2009 3,652 North America 0
Carnival Splendour 2008 2,998 North America 1
Carnival Freedom 2007 2,966 North America 2
Carnival Liberty 2005 2,966 North America 4
Carnival Valor 2004 2,966 North America 5
Carnival Miracle 2004 2,118 North America 5
Carnival Glory 2003 2,966 North America 6
Carnival Conquest 2002 2,966 North America 7
Carnival Legend 2002 2,118 North America 7
Carnival Pride 2001 2,118 North America 8
Carnival Spirit 2001 2,120 North America 8
Carnival Victory 2000 2,750 North America 9
Carnival Triumph 1999 2,750 North America 10
Paradise 1998 2,048 North America 11
Elation 1998 2,048 North America 11
Carnival Destiny 1996 2,634 North America 13
Inspiration 1996 2,050 North America 13
Imagination 1995 2,050 North America 14
Fascination 1994 2,050 North America 15
Sensation 1993 2,050 North America 16
Ecstasy 1991 2,050 North America 18
Fantasy 1990 2,054 North America 19
Holiday 1985 1,450 North America 24
23 55,938 10
Costa
Costa Pacifica 2009 2,990 Europe 0
Costa Luminosa 2009 2,260 Europe 0
Costa Serena 2007 2,978 Europe 2
Costa Concordia 2006 2,978 Europe 3
Costa Magica 2004 2,702 Europe 5
Costa Fortuna 2003 2,702 Europe 6
Costa Mediterranea 2003 2,114 Europe 6
Costa Atlantica 2000 2,114 Europe 9
Costa Victoria 1996 1,928 Europe 13
Costa Romantica 1993 1,344 Europe 16
Costa Allegra 1992 784 Europe 17
Costa Classica 1991 1,302 Europe 18
Costa Marina 1990 762 Europe 19
Costa Europa 1986 1,488 Europe 23
14 28,446 10
Ocean Village
Ocean Village Two 1990 1708 United Kingdom 19
Ocean Village 1989 1,578 United Kingdom 20
2 3,286 20
P&O Cruises
Ventura 2008 3,078 United Kingdom 1
Arcadia 2005 2,016 United Kingdom 4
Oceana 2000 2,016 United Kingdom 9
Aurora 2000 1,870 United Kingdom 9
Oriana 1995 1,818 United Kingdom 14
(3)
Artemis 1984 1,200 United Kingdom 25
6 11,998 10
P&O Cruises Australia
Pacific Dawn 1991 1,596 Australia and New Zealand 18
Pacific Sun 1986 1,480 Australia and New Zealand 23
2 3,076 21
Ibero
Grand Voyager 2000 832 Southern Europe 9
Grand Voyager 1999 1,244 Southern Europe 10
Queen Mary 2 1987 1,494 Southern Europe 22
3 3,570 14
AIDA
AIDAluna 2009 2,050 Germany 0
AIDAbella 2008 2,050 Germany 1
AIDAdiva 2007 2,050 Germany 2
ADIAaura 2003 1,266 Germany 6
AIDAvita 2002 1,266 Germany 7
AIDAcara 1996 1,180 Germany 13
6 9,862 5
Source: J.P. Morgan estimates.
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(1-212) 622-0987 16 December 2009
Figure 2: Carnival Corp. & Plc – Ships/Berths by Brand (Continued)

$ in millions
Ship Entered
Current Fleet Service Berths Primary Area of Operation Age of Ship
PREMIUM
Princess
Ruby Princess 2008 3,080 North America 1
Emerald Princess 2007 3,082 North America 2
Crown Princess 2006 3,080 North America 3
Sapphire Princess 2004 2,678 North America 5
Caribbean Princess 2004 3,100 North America 5
Diamond Princess 2004 2,678 North America 5
Island Princess 2003 1,974 North America 6
Coral Princess 2002 1,974 North America 7
Star Princess 2002 2,598 North America 7
Royal Princess 2001 710 North America 8
Golden Princess 2001 2,598 North America 8
Tahitian Princess 2000 676 North America 9
Pacific Princess 1999 676 North America 10
Sea Princess 1998 2,016 North America 11
Grand Princess 1998 2,592 North America 11
Dawn Princess 1997 1,998 North America 12
Sun Princess 1995 2,022 North America 14
17 37,532 7
Holland America Line
Eurodam 2008 2,104 North America 1
Noordam 2006 1,918 North America 3
Westerdam 2004 1,916 North America 5
Oosterdam 2003 1,848 North America 6
Zuiderdam 2002 1,916 North America 7
Zaandam 2000 1,432 North America 9
Amsterdam 2000 1,380 North America 9
Volendam 1999 1,432 North America 10
Rotterdam 1997 1,316 North America 12
Veendam 1996 1,258 North America 13
Ryndam 1994 1,260 North America 15
Maasdam 1993 1,258 North America 16
Statendam 1993 1,258 North America 16
Prinsendam 1988 792 North America 21
14 21,088 10
Cunard
Queen Victoria 2007 1,980 North America 2
Queen Mary 2 2003 2,592 North America and United Kingdom 6
2 4,572 4
LUXURY
Seabourn
Seabourn Odyssey 2009 450 North America 0
Seabourn Legend 1992 208 North America 17
Seabourn Spirit 1989 208 North America 20
Seabourn Pride 1988 208 North America 21
4 1,074 15
Total Ships Total Berths Average Fleet Age

93 180,442 11
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(1-212) 622-0987 16 December 2009
Figure 3: Carnival Corp. & Plc – New Ship Orderbook

$ in millions
Expected Estimated Total Cost Price Per
New Builds Service Date Berths Gross Tons Euros Sterling USD Berth (USD)
Carnival Cruise Lines
Carnival Magic 5/11 3,652 130,000 €565 $225,876
Unnamed Spring '12 3,690 130,000 $738 $200,000
Total 2 7,342 260,000 €565 $738 $425,876
Average $212,938
Holland America Line

Nieuw Amsterdam 7/10 2,106 86,000 €425 $294,634
Total 1 2,106 86,000 $425 $294,634
Average $294,634
Seabourn
Seabourn Sojourn 6/10 450 32,000 $250 $555,556
Newbuild 6/11 450 32,000 $250 $555,556
Total 2 900 64,000 $500 $1,111,111
Average $555,556
AIDA
AIDAblu 2/10 2,174 71,000 €350 $235,051
Newbuild 4/11 2,174 71,000 €380 $255,198
Newbuild 6/12 2,174 71,000 €385 $258,556
Total 3 6,522 213,000 €1,115 $748,804
Average $249,601
Costa
Costa Deliziosa 2/10 2,260 92,700 €420 $271,327
Newbuild 7/11 3,012 €510 $247,211
Newbuild 5/12 3,012 €510 $247,211
Total 3 8,284 92,700 €1,440 $765,750
Average $255,250
P&O Cruises
Azura 4/10 3,098 116,000 €535 $252,130
Total 1 3,098 116,000 €535 $252,130
Average $252,130
Cunard
Queen Elizabeth 10/10 2,092 92,000 $700 $334,608
Total 1 2,092 92,000 $700 $334,608
Average $334,608
Total 13 30,344 923,700 €4,080 $1,938
Total Newbuild Investment (USD) $7,895

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(1-212) 622-0987 16 December 2009
4Q09 and 2010 Earnings Estimates

4Q09
Our 4Q09 recurring EPS estimate is $0.20, -58% from the recurring 2008 level, and
in line with consensus. We forecast a net yield decline of -10.9%. On the cost side,
we forecast a decrease in net cruise cost (per available lower-berth day) of
-4.2% with fuel cost per metric ton of $465. We forecast net revenues of $2.543
billion (down 4.1%) and operating income of $245 million (down 45.6%).
Full-year 2010
Our full-year 2010 recurring EPS estimate is $2.33, up ~6.5% from the recurring
full-year 2009 level, and $0.01 above consensus. We expect net yield growth of
3.2%. On the cost side, we forecast an increase in net cruise cost (per available
lower-berth day) of 4.9% with fuel cost per metric ton of $475. We forecast net
revenues of $11.59 billion (up 11.2%) and operating income of $2.26 billion (up
7.4%).
Forward Demand Commentary

As of 3Q09, Carnival noted that bookings for the next three quarters (through 2Q10)
were running +19% on a year-over-year basis. After adjusting for projected capacity
increases, Carnival was moderately behind last year’s booking levels, though
management noted that the booking window continues to lengthen. Regarding price,
on an overall basis, Carnival has seen prices stabilize, and for certain itineraries
where it has seen the booking window lengthen, it has been able to increase rates.
Carnival’s ability to meaningfully increase rates for 2010 is contingent on the
continued strengthening of customer demand, which should eventually begin to re-
establish the consumer psyche of booking further out and wean the consumer off the
heavy discounting/promotional activity that has characterized 2009. With that said,
Carnival should be successful in closing the remaining capacity-adjusted occupancy
gap that remains as it moves through 1Q10.
For 1Q10, given that Carnival is almost fully booked (as ships typically are close to
95% booked one quarter in advance) with business that was sold at lower price levels
(on a constant-dollar basis), it will be difficult for the company to increase pricing on
the close-in bookings to a level that would offset the weak rates booked earlier in
2009; thus, the company expects 1Q10 net yields to decline on a year-over-year
basis. However, given the relative weakness of the U.S. dollar to the Euro/GBP, we
expect net yields to be flat to modestly up in the 1Q10 on a current-dollar basis. If
booking volumes continue at current levels, Carnival believes that, on a quarterly
basis for 2010, it should start to see a positive effect on local-currency yields and a
gradual year-over-year improvement in net yields.
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(1-212) 622-0987 16 December 2009
Company Guidance
Figure 4: Carnival Corp. & Plc – Company Guidance
$ in millions
4Q09 1Q10 2Q10 2010 2011 2012
Capacity Growth incl. Iberocruceros 7.7% 9.9% 9.0% 7.7% 5.1% 4.7%
Net Yield Growth (Current $) -9% to -11%
Net Yield Growth (Constant $) -11% to -13%
Net Cruise Costs/ALBD Growth (Current $) -2% to -4%
Net Cruise Costs/ALBD Growth (Constant $) -4% to -6%
Net Cruise Costs/ALBD Growth (Ex Fuel)
Depreciation & Amortization
Interest Expense, Net
Tax Rate
Earnings per Share $0.16-0.20
Other Items
Fuel Consumption (MM Metric Tons) 830
Fuel Price ($ per Metric Ton) $465
Fuel Impact (10% Change) FY09; $116 million or $0.15
Euro to USD $1.46

Sterling to USD $1.67
Currency Impact (10% Change) FY09; $140 million or $0.17
Qualitative Comments
Northern American Brands
Capacity Growth 5.7% 5.3% 4.0%
Bookings Flat Moderately ↓, however stronger booking Moderately ↓
patters over the last several months
Pricing ↓ in mid-teens range, though very little inventory ↓ Currently but ↑ Compared to End of 1Q09 ↓ Currently but ↑ Compared to End of 2Q09
Yields ↓ Moderately ↓ Moderately ↓

Commentary for North American Brands
Caribbean Cruises Pricing Moderately ↓ Pricing Moderately ↓
Capacity Share 45.0% 62.0% 57.0%
Mexican Rivera Cruises Pricing Significantly ↓ Pricing Significantly ↓
Capacity Share 10% (out of Southern California) 11.0% 10.0%
Long/Exotic Cruises Pricing Significantly ↓ Pricing ↓
Capacity Share Under 10%
Alaskan Cruises Pricing Significantly ↓, Early Booking Trends Still Not
Positive Due To Head Tax
Capacity Share Under 10%
Europe Cruises Pricing Moderately ↓
Capacity Share 10.0%
European Brands
Capacity Growth 9.6% 15.0% 15.2%
Bookings Flat Moderately ↓ Moderately ↓
Pricing ↓ in local currency, very little inventory ↓ Currently but ↑ Compared to End of 1Q09 ↓ Currently but ↑ Compared to End of 2Q09
Yields ↓ Moderately ↓ in local currency, Flat to ↑ in Moderately ↓

current dollar
Commentary for European Brands

Europe Cruises Pricing Moderately ↓ Pricing Holding Well
Capacity Share 78.0% 29.0% 57.0%
Transatlantic Pricing Significantly ↓
Capacity Share 11.0% 10.0%
South America Cruises Pricing Significantly ↓
Capacity Share 11.0% Under 10%
Asia Cruises Pricing Moderately ↓
Capacity Share 11.0% Under 10%
12
(1-212) 622-0987 16 December 2009
Figure 5: CCL EPS Sensitivity to Changes in Net Yields and Fuel Prices
$ in millions
CCL Guidance (as of 3Q09) JPM Estimates
4Q09 FY09 1Q10E FY10E FY11E FY12E
Fuel Price / Metric Ton $465 $365 $475 $475 $485 $485
Consumption (Metric Tons in 000s) 0.83 3.19 0.81 3.37 3.46 3.55
Fuel Expense 386 1,164 386 1,599 1,680 1,723
Sensitivity to Change in Price of Fuel:

Percentage Change 10% 10% 10% 10% 10% 10%
Fuel Price / Metric Ton $512 $402 $523 $523 $534 $534
Fuel Expense 425 1,281 424 1,759 1,848 1,895
Increase (Decrease) to Fuel Expense 39 116 39 160 168 172
Shares Outstanding 809 806 809 809 809 809
Per Share Impact $0.05 $0.14 $0.05 $0.20 $0.21 $0.21
CCL Guidance (as of 3Q09) JPM Estimates

Available Lower Berth Days (ALBD) 16.1 62.1 15.9 66.9 70.3 73.6
Capacity Growth 7.7% 5.4% 9.9% 7.7% 5.1% 4.7%
Net Cruise Revenue 2,570 10,442 2,481 11,591 12,575 13,462
Net Yield $160.03 $168.10 $155.79 $173.25 $178.83 $182.85
% Change (1) -10.0% -14.0%
Sensitivity to Change in Net Yield:

Net Yield $161.64 $169.78 $157.35 $174.98 $180.62 $184.68
Per Share Impact $0.03 $0.13 $0.03 $0.14 $0.16 $0.17
(1) Midpoint of CCL’s Net Yield Guidance Range.

Source: Bloomberg, Company reports, and J.P. Morgan estimates.
13
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Valuation & Price Target Summary

Our calendar year-end 2010 price target of $43 assumes CCL can trade at 15x our
2011 EPS estimate. Our target multiple reflects of the multiple of forward-year EPS
at which CCL traded as the industry emerged from the negative net yield
environment in 2003, and is roughly 1.4x below its long-term average multiple of
16.4x. In the two years following the turn to positive yields (2004 and 2005),
Carnival traded at 17.2x and 18.9x forward-year EPS estimates. Given Carnival’s
improving fundamentals and ROICs, with value spreads set to recover in 2010
through 2012, we think this valuation multiple is reasonable.
At current levels, Carnival trades at 14.6x, 11.9x, and 10.2x our 2010, 2011, and
2012 EPS estimates, respectively. Since 1993, shares have traded at an average
forward-year P/E multiple of 16.4x, with a high of 30.3x (in January 1999) and a low
of 6.8x (in January 2009).
Figure 6: YE10 Price Target

$ in millions
2011E EPS $2.84

x Target Multiple 15.0x
= YE10 Price Target $43
Current Price 33.88

Appreciation Potential 26%
Figure 7: CCL EPS Sensitivity Grid and Price Target Sensitivity Analysis
$ in millions
TARGET PRICE SENSITIVITY
2011 Net Yield (YoY % Change) 2011 Net Yield (YoY % Change)
-1.0% pt. -0.5% pt. +0.5% pt. +1.0% pt. -1.0% pt. -0.5% pt. +0.5% pt. +1.0% pt.
2.2% 2.7% 3.2% 3.7% 4.2% 2.2% 2.7% 3.2% 3.7% 4.2%
-10% $428 $2.89 $2.97 $3.05 $3.13 $3.20 -10% $428 $43 $45 $46 $47 $48
2011 Fuel Price ($/Ton)
-5% $451 $2.79 $2.87 $2.94 $3.02 $3.10 -5% $451 $42 $43 $44 $45 $46
$485 $2.68 $2.76 $2.84 $2.92 $3.00 ### $485 $40 $41 $43 $44 $45
5% $499 $2.58 $2.66 $2.74 $2.81 $2.89 5% $499 $39 $40 $41 $42 $43
10% $523 $2.48 $2.55 $2.63 $2.71 $2.79 10% $523 $37 $38 $39 $41 $42
Note: Assumes a 15x target multiple.

14
(1-212) 622-0987 16 December 2009
Risk/Reward Analysis
Our risk/reward analysis derives a matrix of year-end 2011 per share valuations for
Carnival with a range of EPS estimates and a range of valuation multiples. The base
case represents our 2011 EPS estimate, while the upside/downside cases represent
positive and negative variances (in 5% increments) from our estimate. The valuation
range considers our fair value estimate and current/historical trading multiples.
Figure 8: Carnival Corp. & Plc – Risk/Reward Analysis

$ in millions
Estimated 2011 EPS Range
Downside Case J.P. Morgan Estimate Upside Case
2011E EPS $2.41 $2.56 $2.70 $2.84 $2.98 $3.12 $3.27
% change from J.P. Morgan estimate -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
Price Range Based on Estimated 2009 EPS Range

5.9x $14.31 $15.16 $16.00 $16.84 $17.68 $18.52 $19.37
Multiple Contraction
-58% -55% -53% -50% -48% -45% -43%
7.9x $19.14 $20.27 $21.39 $22.52 $23.65 $24.77 $25.90

-44% -40% -37% -34% -30% -27% -24%
9.9x $23.97 $25.38 $26.79 $28.20 $29.61 $31.02 $32.43

-29% -25% -21% -17% -13% -8% -4%
Current 1-Yr Forward P/E Multiple 11.9x $28.80 $30.49 $32.19 $34 $35.57 $37.27 $38.96
% change from current price -15% -10% -5% 0% 5% 10% 15%
13.9x $33.63 $35.60 $37.58 $39.56 $41.54 $43.52 $45.49

Multiple Expansion
-1% 5% 11% 17% 23% 28% 34%
15.9x $38.45 $40.72 $42.98 $45.24 $47.50 $49.76 $52.03

14% 20% 27% 34% 40% 47% 54%
17.9x $43.28 $45.83 $48.37 $50.92 $53.47 $56.01 $58.56

28% 35% 43% 50% 58% 65% 73%
Note:
Represents current share price.
Historical Valuation
Average: 15.1x
35.0x
Peak: 30.3x
Trough: 6.8x
30.0x
Current Forward Valuation
2011: 11.9x 25.0x
20.0x
15.0x
10.0x
5.0x
Jan-88
Jul-88
Jan-89
Jul-89
Jan-90
Jul-90
Jan-91
Jul-91
Jan-92
Jul-92
Jan-93
Jul-93
Jan-94
Jul-94
Jan-95
Jul-95
Jan-96
Jul-96
Jan-97
Jul-97
Jan-98
Jul-98
Jan-99
Jul-99
Jan-00
Jul-00
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Forward P/E Multiples Average
15
(1-212) 622-0987 16 December 2009
Discounted Cash Flow

Our discounted cash flow (DCF) valuation projects five years (2009-13) of
unleveraged free cash flow, based on what we would characterize as reasonable
growth assumptions. We then discount these cash flows using the company’s
weighted average cost of capital (WACC). Our terminal value is based on a multiple
of 12.5x (our projection of a normalized trading multiple for CCL in year six)
applied to our 2013 EBITDA estimate, which we then discount back to the present.
Our analysis yields a base-case year-end 2010 share price of $43 with a valuation
range of $37-$50.
Figure 9: Carnival Corp. & Plc – Discounted Cash Flow Valuation ($ in millions, except per share data)
$ in millions
CAGR
2009E 2010E 2011E 2012E 2013E 2009 - 2013
Earnings Before Interest & Taxes (EBIT) $2,105 $2,261 $2,689 $3,072 $3,379 13%
Less: Taxes 9 25 30 34 38
Tax Rate 0.4% 1.1% 1.1% 1.1% 1.1%
Less: Investment & Other Capex 3,400 3,700 2,700 2,400 2,400
Plus: Depreciation & Amortization 1,314 1,409 1,529 1,645 1,645
= Unlevered Free Cash Flow $10 ($55) $1,489 $2,283 $2,587 300%
Terminal Value Multiple 12.5x
Terminal Value 62,806
PV Discount Factor at WACC 0.931 0.846 0.769 0.699 0.636 0.636
PV of FCF 9 -46 1145 1596 1644 39,923
Capital Value $44,272
Less: 3Q09 Net Debt 9,138
= Equity Value $35,134
Diluted Shares Outstanding 809.0
= Equity Value per Share $43
Current Price $33.88
WACC Inputs: Enterprise Value/Capital Structure:

Capital % Cost Total Capital Total %
Debt 27.0% 3.9% 1.0% Debt 10,114 27.0%
Equity (Cost Approx. by CAPM) 73.0% 12.3% 9.0% Market Cap 27,409 73.0%
WACC 2.5% 10.0% Total Cap 37,523 100.0%
CAPM: 12.3%
=Rf + Beta *(Rm-Rf)
Risk Free Rate, Rf 3.4%
Expected Market Return, Rm 10.00%
Beta 1.35
Sensitivity Analysis:
WACC
9.0% 10.0% 11.0%
11.5x 41.71 39.50 37.40
Terminal Value
Multiple
12.5x 45.83 43.45 41.19
13.5x 49.96 47.40 44.97

16
(1-212) 622-0987 16 December 2009
ROIC Analysis
We believe that return on invested capital (ROIC), which measures the un-leveraged
cash returns generated per dollar invested in the company, is the most accurate gauge
of a company’s ability to create value. ROIC measures the cash-on-cash returns
generated by a company, independent of its financing and accounting strategies.
While other performance measures such as return on equity, EBITDA returns, and
project returns can prove useful and serve as proxies for value creation, ROIC, while
more difficult to calculate, is the most effective, in our view. While the
aforementioned statistics can be skewed by leverage, stock buybacks, and/or
accounting strategies, ROIC is relatively immune to these manipulations.
ROIC enables investors to determine how efficiently management runs its assets
independent of how it chooses to finance them. For investors, it provides the
opportunity to look through various financial strategies and accounting procedures
and identify the real economic return a company’s management can generate. When
evaluating a company’s weighted average cost of capital (WACC), which represents
the minimum rate of return (adjusted for risk) that a company must earn to create
value for both shareholders and creditors, the spread between ROIC and WACC
represents the company’s true economic profit.
Moreover, positive changes in ROIC tend to effectively highlight economically

efficient growth prospects (as opposed to growth achieved through expensive
acquisitions or mediocre expansions). As ROIC improves, one can reasonably
assume that the company is either more efficiently utilizing its existing asset base
and/or investing in new high-return projects. We project that Carnival’s return on
invested capital and value spreads will consistently improve between 2010 and 2012,
which bodes well for potential multiple expansion.
Figure 10: Carnival Corp. & Plc – Historical and Projected ROICs, 2003-12E
$ in millions
16% 14.6%
14% 12.6%
11.8%
12% 10.6% 10.5% 10.2% 9.9% 9.8% 10.0% 10.0%
10%
8%
6%
4%
2%
8.5% 11.7% 13.0% 12.5% 12.1% 11.0% 9.6% 9.9% 12.0% 11.2%
0%
2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
CCL ROIC CCL WACC
Source: Company reports and J.P. Morgan estimates.
17
(1-212) 622-0987 16 December 2009
Figure 11: Carnival Corp. & Plc – ROIC and Value Spread Trends, 2003-12E
$ in millions
2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
Recurring EBIT $1,416 $2,172 $2,639 $2,613 $2,725 $2,729 $2,105 $2,261 $2,689 $3,072
Tax Rate 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
After-Tax EBIT 1,381 2,118 2,573 2,548 2,657 2,661 2,052 2,205 2,622 2,995
Plus: Depreciation & Amortization $660 $811 $902 $988 $1,101 $1,249 $1,314 $1,409 $1,529 $355
Less: Other Capex $233 $370 $503 $511 $597 $908 $665 $746 $682 $186
= Net Operating Profit After Tax (NOPAT) $1,808 $2,559 $2,972 $3,025 $3,161 $3,002 $2,702 $2,869 $3,470 $3,164
Total Assets 24491 27636 28432 30552 34181 33400

- Current Liabilities 3315 5034 5192 5415 7260 5781
Invested Capital $21,176 $22,602 $23,240 $25,137 $26,921 $27,619 $28,565 $29,265 $28,424 $27,845
CCL ROIC 8.5% 11.7% 13.0% 12.5% 12.1% 11.0% 9.6% 9.9% 12.0% 11.2%
CCL WACC 11.8% 12.6% 14.6% 10.6% 10.5% 10.2% 9.9% 9.8% 10.0% 10.0%
ROIC - WACC -3.2% -0.9% -1.6% 1.9% 1.7% 0.8% -0.3% 0.1% 2.0% 1.2%
Risk Free Rate, Rf 4.4% 4.2% 4.4% 4.7% 3.9% 2.4% 3.3% 3.3% 3.3% 3.3%
Expected Market Return, Rm 12.0% 12.0% 12.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Beta 1.20 1.23 1.52 1.31 1.29 1.36 1.35 1.35 1.35 1.35
Market Cap 30,155 49,043 45,610 41,006 36,838 19,845 26,414 26,414 26,414 26,414
Total Debt 5,946 6,495 5,894 6,451 7,456 8,477 9,749 10,449 9,608 10,262
% Equity of Capital Structure 84% 88% 89% 86% 83% 70% 73% 72% 73% 72%
% Debt of Capital Structure 16% 12% 11% 14% 17% 30% 27% 28% 27% 28%
Cost of Debt, After Tax 3.0% 3.5% 4.4% 3.9% 4.0% 4.3% 3.5% 3.3% 3.6% 4.0%
WACC 11.8% 12.6% 14.6% 10.6% 10.5% 10.2% 9.9% 9.8% 10.0% 10.0%
18
(1-212) 622-0987 16 December 2009
Figure 12: Carnival Corp. & Plc – EPS Model

$ in millions
EARNINGS MODEL 2006 2007 2008E 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Quarter Ended 11/30/06 11/30/07 11/30/08 02/28/09 05/31/09 08/31/09 11/30/09 11/30/09 02/28/10 05/31/10 08/31/10 11/30/10 11/30/10 11/30/11 11/30/12
Revenues
Passenger Ticket 8,903 9,792 11,210 2,219 2,242 3,105 2,421 9,987 2,465 2,532 3,446 2,703 11,146 12,145 13,031
yoy % change 6.0% 10.0% 14.5% -9.0% -13.4% -15.1% -4.1% -10.9% 11.1% 12.9% 11.0% 11.6% 11.6% 9.0% 7.3%
Onboard & Other 2,514 2,846 3,044 634 673 825 736 2,868 703 753 907 814 3,176 3,393 3,605
yoy % change 7.5% 13.2% 7.0% -9.7% -9.4% -4.5% 0.2% -5.8% 10.8% 11.8% 9.9% 10.6% 10.7% 6.9% 6.2%
Gross Cruise Revenues 11,417 12,638 14,254 2,853 2,915 3,930 3,157 12,855 3,168 3,284 4,353 3,517 14,321 15,539 16,636
yoy % change 6.3% 10.7% 12.8% -9.1% -12.5% -13.1% -3.2% -9.8% 11.0% 12.7% 10.8% 11.4% 11.4% 8.5% 7.1%
Other (Tour) 422 395 392 11 33 209 39 292 11 33 211 39 295 295 295
yoy % change 18.2% -6.4% -0.8% -8.3% -29.8% -28.4% -4.0% -25.4% 0.0% 0.5% 1.0% 0.0% 0.8% 0.0% 0.0%
Total Revenues 11,839 13,033 14,646 2,864 2,948 4,139 3,197 13,148 3,179 3,317 4,564 3,556 14,616 15,833 16,931
yoy % change 6.7% 10.1% 12.4% -9.1% -12.7% -14.0% -3.2% -10.2% 11.0% 12.5% 10.3% 11.2% 11.2% 8.3% 6.9%
Less: Commissions, Transportation & Other 1,749 1,941 2,232 514 440 515 493 1,962 571 497 596 550 2,214 2,412 2,588
yoy % change 6.3% 11.0% 15.0% -7.9% -16.2% -22.0% 0.8% -12.1% 11.1% 12.9% 15.7% 11.6% 12.8% 9.0% 7.3%
Less: Onboard & Other 453 495 501 104 110 131 121 466 115 123 144 134 516 552 586
yoy % change 10.0% 9.3% 1.2% -16.8% -9.1% -2.2% 0.2% -6.9% 10.8% 11.8% 9.9% 10.6% 10.7% 6.9% 6.2%
Net Cruise Revenues 9,215 10,202 11,521 2,235 2,365 3,284 2,543 10,427 2,481 2,664 3,613 2,832 11,591 12,575 13,462
yoy % change 6.2% 10.7% 12.9% -9.0% -11.9% -11.9% -4.1% -9.5% 11.0% 12.7% 10.0% 11.4% 11.2% 8.5% 7.1%
Expenses
Payroll & Related 1,158 1,336 1,470 352 366 387 392 1,497 391 403 414 420 1,628 1,729 1,828
yoy % change 3.2% 15.4% 10.0% -2.2% 0.3% 1.6% 7.7% 1.8% 11.0% 10.1% 7.1% 7.3% 8.8% 6.2% 5.7%
Food 644 747 856 198 203 223 220 844 218 222 237 234 911 957 1,002
yoy % change 5.1% 16.0% 14.6% -4.3% -3.3% -3.5% 5.5% -1.5% 10.2% 9.3% 6.3% 6.5% 8.0% 5.1% 4.7%
Fuel 932 1,096 1,774 208 243 327 386 1,164 386 405 398 410 1,599 1,680 1,723
yoy % change 31.8% 17.6% 61.9% -46.9% -42.8% -38.2% -9.8% -34.4% 85.4% 66.8% 21.7% 6.3% 37.4% 5.1% 2.5%
% of Gross Cruise Revenues 8.2% 8.7% 12.4% 7.3% 8.3% 8.3% 12.2% 9.1% 12.2% 12.3% 9.1% 11.7% 11.2% 10.8% 10.4%
Other Ship Operating 1,541 1,717 1,913 458 488 498 538 1,982 505 533 528 573 2,139 2,259 2,377
yoy % change 5.2% 11.4% 11.4% 0.9% 4.1% -1.4% 10.9% 3.6% 10.2% 9.3% 6.0% 6.5% 7.9% 5.6% 5.2%
Selling & Administrative (Cruise) 1,405 1,547 1,594 384 386 372 405 1,547 422 421 394 430 1,668 1,753 1,835
yoy % change 9.0% 10.1% 3.0% -7.9% -7.2% 2.2% 2.1% -2.9% 9.9% 9.0% 6.0% 6.2% 7.8% 5.1% 4.7%
Net Cruise Costs 5,680 6,443 7,607 1,600 1,686 1,807 1,941 7,034 1,921 1,984 1,971 2,068 7,944 8,378 8,765
yoy % change 9.3% 13.4% 18.1% -12.6% -10.6% -10.1% 3.1% -7.5% 20.1% 17.7% 9.1% 6.5% 12.9% 5.5% 4.6%
Other (Tour) 314 296 293 16 35 145 36 232 16 35 146 36 233 233 233
yoy % change 23.6% -5.7% -1.0% -11.1% -20.5% -25.3% -4.0% -21.0% 0.0% 0.5% 1.0% 0.0% 0.7% 0.0% 0.0%
Selling & Administrative (Tour) 42 32 35 8 7 9 11 35 9 8 10 12 38 40 41
yoy % change -8.7% -23.8% 9.4% 0.0% -22.2% 12.5% 10.6% 0.2% 9.9% 9.0% 6.0% 6.2% 7.6% 5.1% 4.7%
EBITDA 3,601 3,826 3,978 622 670 1,532 595 3,419 546 671 1,697 757 3,671 4,219 4,717
Depreciation & Amortization 988 1,101 1,249 311 317 336 350 1,314 346 352 355 356 1,409 1,529 1,645
yoy % change 9.5% 11.4% 13.4% 3.3% 1.6% 4.0% 12.0% 5.2% 11.4% 11.2% 5.6% 1.5% 7.2% 8.5% 7.6%
Operating Income (EBIT) 2,613 2,725 2,729 311 353 1,196 245 2,105 200 318 1,342 401 2,261 2,689 3,072
yoy % change -1.0% 4.3% 0.1% -0.3% -26.8% -19.5% -45.6% -22.9% -35.7% -9.9% 12.2% 63.9% 7.4% 18.9% 14.2%
Margin 22.1% 20.9% 18.6% 10.9% 12.0% 28.9% 7.7% 16.0% 6.3% 9.6% 29.4% 11.3% 15.5% 17.0% 18.1%
yoy bps change -1.7% -1.2% -2.3% 1.0% -2.3% -2.0% -6.0% -2.6% -4.6% -2.4% 0.5% 3.6% -0.5% 1.5% 1.2%
Interest Expense, Net (287) (300) (379) (92) (88) (91) (90) (361) (89) (93) (94) (93) (369) (378) (358)
Other Income (Expense), Net (8) (1) 27 19 5 (8) 16 0
Income Before Income Taxes (EBT) 2,318 2,424 2,377 238 270 1,097 155 1,760 111 225 1,248 308 1,892 2,311 2,714
Income Tax Benefit (Expense), Net (39) (16) (47) 22 (6) (24) 0 (8) 10 (5) (27) 1 (21) (26) (30)
Tax Rate 1.7% 0.7% 2.0% -9.2% 2.2% 2.2% -0.3% 0.4% -9.2% 2.2% 2.2% -0.3% 1.1% 1.1% 1.1%
Net Income 2,279 2,408 2,330 260 264 1,073 155 1,752 121 220 1,221 309 1,871 2,286 2,684
Convertible Interest 33 30 28 3 3 3 3 12 3 3 3 3 12 12 12
Net Income (for Diluted Earnings per Share) 2,312 2,438 2,358 263 267 1,076 158 1,764 124 223 1,224 312 1,883 2,298 2,696
Reported Diluted Earnings per Share 2.77 2.94 2.90 0.33 0.33 1.33 0.20 2.19 0.15 0.28 1.51 0.39 2.33 2.84 3.33
yoy % change 2.6% 6.4% -1.5% 9.5% -31.5% -19.2% -58.3% -24.6% -53.1% -16.9% 13.7% 97.3% 6.5% 22.0% 17.3%
Nonrecurring Items (per Share) 0.02 0.00
Recurring Diluted Earnings per Share 2.79 2.94 2.90 0.33 0.33 1.33 0.20 2.19 0.15 0.28 1.51 0.39 2.33 2.84 3.33
yoy % change 2.0% 5.3% -1.5% 9.5% -31.5% -19.2% -58.3% -24.6% -53.1% -16.9% 13.7% 97.3% 6.5% 22.0% 17.3%
Common Shares Outstanding - Basic 801 793 786 787 787 787 787 787 787 787 787 787 787 787 787
Common Shares Outstanding - Diluted 836 828 813 803 804 809 809 806 809 809 809 809 809 809 809
Dividend per Share 1.03 1.38 1.60 0.40 0.40 0.075 0.075 0.075 0.075 0.30 0.30 0.30
Figure 13: Carnival Corp. & Plc – Capacity-Adjusted Statistics

$ in millions
CAPACITY ADJUSTED STATISTICS 2006 2007 2008E 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Quarter Ended 11/30/06 11/30/07 11/30/08 02/28/09 05/31/09 08/31/09 11/30/09 11/30/09 02/28/10 05/31/10 08/31/10 11/30/10 11/30/10 11/30/11 11/30/12
Current $
Gross Yield = Gross Cruise Revenue per ALBD (in $) 228.59 233.46 241.83 196.86 190.15 241.97 196.64 206.94 198.88 196.55 252.83 206.23 214.06 220.98 225.97
yoy % change 1.7% 2.1% 3.6% -11.2% -17.3% -17.6% -10.1% -14.4% 1.0% 3.4% 4.5% 4.9% 3.4% 3.2% 2.3%
Net Yield = Net Cruise Revenue per ALBD (in $) 184.50 188.46 195.46 154.22 154.27 202.19 158.40 167.86 155.79 159.46 209.87 166.11 173.25 178.83 182.85
yoy % change 1.5% 2.1% 3.7% -11.1% -16.8% -16.5% -10.9% -14.1% 1.0% 3.4% 3.8% 4.9% 3.2% 3.2% 2.3%
Net Cruise Costs per ALBD (in $) 113.72 119.02 129.06 110.40 109.98 111.26 120.88 113.23 120.62 118.74 114.51 121.25 118.74 119.14 119.05
yoy % change 4.5% 4.7% 8.4% -14.6% -15.5% -14.8% -4.2% -12.3% 9.3% 8.0% 2.9% 0.3% 4.9% 0.3% -0.1%
Net Cruise Costs (excl. Fuel) per ALBD (in $) 95.06 98.78 98.96 96.05 94.13 91.12 96.84 94.49 96.41 94.48 91.40 97.20 94.84 95.24 95.65
yoy % change 1.1% 3.9% 0.2% -5.4% -6.6% -5.3% -0.7% -4.5% 0.4% 0.4% 0.3% 0.4% 0.4% 0.4% 0.4%
19
(1-212) 622-0987 16 December 2009
Figure 14: Carnival Corp. & Plc – Free Cash Flow and Balance Sheet Model
$ in millions
FREE CASH FLOW MODEL 2006 2007 2008E 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Net Income 2,279 2,408 2,330 260 264 1,073 155 1,752 121 220 1,221 309 1,871 2,286 2,684
Add: Depreciation & Amortization 988 1,101 1,249 311 317 336 350 1,314 346 352 355 356 1,409 1,529 1,645
Less: Capitalized Interest Expense (37) (52) (53) (9) (10) (9) (9) (37) (11) (11) (11) (11) (44) (38) (30)
Less: Dividends (803) (1,050) (1,261) (314) (314) (59) (59) (59) (59) (236) (236) (236)
Less: Investment Capex (Incl. New Ships) (1,969) (2,716) (2,445) 0 (1,626) (292) (818) (2,735) 0 (1,620) (740) (595) (2,954) (2,018) (1,111)
Less: Other Capex (511) (597) (908) (306) (24) (154) (180) (665) (186) (186) (186) (186) (746) (682) (1,289)
Gross Free Cash Flow (53) (905) (1,088) (58) (1,079) 954 (501) (684) 211 (1,303) 579 (187) (699) 841 1,663
Less: Acquisitions/Other 0 0 0
Add: Share Issuances (Repurchases) (841) (415) (82)
Add (Less): Other 375 86 386 (157) 193 (298) (262)
Net Free Cash Flow (519) (1,234) (784) (215) (886) 656 (501) (946) 211 (1,303) 579 (187) (699) 841 1,663
Beginning Long-Term Debt 7,352 7,847 8,852 9,343 9,515 10,279 10,114 9,343 10,615 10,404 11,707 11,128 10,615 11,315 10,474
New Net Long-Term Debt 495 1,005 491 172 764 (165) 501 1,272 (211) 1,303 (579) 187 699 (841) (1,663)
Ending Long-Term Debt 7,847 8,852 9,343 9,515 10,279 10,114 10,615 10,615 10,404 11,707 11,128 11,315 11,315 10,474 8,812
Less: Cash & Cash Equivalents 1,163 943 650 607 485 976 976 976 976 976 976 976 976 976 976
Net Debt 6,684 7,909 8,693 8,908 9,794 9,138 9,639 9,639 9,428 10,731 10,152 10,339 10,339 9,498 7,836
Change in Net Debt 519 1,225 784 215 886 (656) 501 946 (211) 1,303 (579) 187 699 (841) (1,663)
Balance Sheet Items:

Cash & Cash Equivalents 1,163 943 650 607 485 976 976 976 976 976 976 976 976 976 976
Total Long-Term Debt 7,847 8,852 9,343 9,515 10,279 10,114 10,615 10,615 10,404 11,707 11,128 11,315 11,315 10,474 8,812
Equity 18,210 19,963 19,098 19,154 20,385 21,560 21,715 21,715 21,777 21,939 23,100 23,350 23,350 25,400 27,847
Book Value per Share 21.78 24.11 23.48 23.85 25.35 26.65 26.84 26.93 26.92 27.12 28.55 28.86 28.86 31.40 34.42
ROAE 13% 13% 12% 9% 8% 9% 10%
Leverage Ratios:
Long-Term Debt/Total Capital 30.1% 30.7% 32.9% 33.2% 33.5% 31.9% 32.8% 32.8% 32.3% 34.8% 32.5% 32.6% 32.6% 29.2% 24.0%
Net Debt/Total Capital 26.8% 28.4% 31.3% 31.7% 32.5% 29.8% 30.7% 30.7% 30.2% 32.8% 30.5% 30.7% 30.7% 27.2% 22.0%
EBITDA/Interest 11.5x 10.4x 8.0x 9.7x 8.8x 8.8x 9.1x 9.1x 9.0x 8.8x 9.2x 9.5x 9.5x 10.9x 12.9x
Net Debt/EBITDA (TTM) 1.9x 2.1x 2.2x 2.2x 2.5x 2.5x 2.8x 2.8x 2.8x 3.2x 2.9x 2.8x 2.8x 2.3x 1.7x
Long-Term Debt/EBITDA (TTM) 2.2x 2.3x 2.3x 2.4x 2.7x 2.8x 3.1x 3.1x 3.1x 3.5x 3.2x 3.1x 3.1x 2.5x 1.9x
EBIT/Interest 8.4x 7.4x 5.5x 6.6x 5.9x 5.7x 5.6x 5.6x 5.4x 5.2x 5.5x 5.9x 5.9x 7.0x 8.4x
Figure 15: Carnival Corp. & Plc – Revenue Drivers

$ in millions
REVENUE DRIVERS 2006 2007 2008E 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Quarter Ended 11/30/06 11/30/07 11/30/08 02/28/09 05/31/09 08/31/09 11/30/09 11/30/09 02/28/10 05/31/10 08/31/10 11/30/10 11/30/10 11/30/11 11/30/12
Cruise Operating Statistics
Available Lower Berth Days (ALBD) 49.9 54.1 58.9 14.5 15.3 16.2 16.1 62.1 15.9 16.7 17.2 17.1 66.9 70.3 73.6
yoy % change 4.6% 8.4% 8.9% 2.3% 5.9% 5.5% 7.7% 5.4% 9.9% 9.0% 6.0% 6.2% 7.7% 5.1% 4.7%
Occupancy 106.0% 105.5% 105.7% 103.9% 103.3% 111.4% 102.6% 105.3% 104.5% 103.9% 112.2% 103.2% 105.9% 106.7% 107.2%
yoy change (bps) 0.4% -0.5% 0.1% -0.4% -1.5% 0.5% 0.0% -0.4% 0.6% 0.6% 0.8% 0.6% 0.6% 0.8% 0.5%
Passenger Cruise Days (PCD) 53.0 57.2 62.3 15.1 15.8 18.1 16.5 65.5 16.6 17.4 19.3 17.6 70.9 75.0 78.9
yoy % change 5.0% 7.9% 9.0% 1.9% 4.3% 6.0% 7.7% 5.1% 10.5% 9.6% 6.7% 6.8% 8.3% 5.8% 5.2%
Cruise Revenues
Passenger Ticket 8,903 9,792 11,210 2,219 2,242 3,105 2,421 9,987 2,465 2,532 3,446 2,703 11,146 12,145 13,031
yoy % change 6.0% 10.0% 14.5% -9.0% -13.4% -15.1% -4.1% -10.9% 11.1% 12.9% 11.0% 11.6% 11.6% 9.0% 7.3%
Passenger Ticket per PCD (in $) 168.1 171.3 179.9 147.4 141.6 171.6 147.0 152.6 148.1 145.8 178.5 153.6 157.2 161.9 165.1
yoy % change 0.9% 1.9% 5.0% -10.7% -17.0% -19.9% -11.0% -15.2% 0.5% 3.0% 4.0% 4.5% 3.0% 3.0% 2.0%
Onboard & Other 2,514 2,846 3,044 634 673 825 736 2,868 703 753 907 814 3,176 3,393 3,605
yoy % change 7.5% 13.2% 7.0% -9.7% -9.4% -4.5% 0.2% -5.8% 10.8% 11.8% 9.9% 10.6% 10.7% 6.9% 6.2%
Onboard & Other per PCD (in $) 47.5 49.8 48.9 42.1 42.5 45.6 44.7 43.8 42.2 43.3 47.0 46.3 44.8 45.2 45.7
yoy % change 2.4% 4.9% -1.9% -11.4% -13.2% -9.9% -7.0% -10.3% 0.3% 2.0% 3.0% 3.5% 2.2% 1.0% 1.0%
Gross Cruise Revenues 11,417 12,638 14,254 2,853 2,915 3,930 3,157 12,855 3,168 3,284 4,353 3,517 14,321 15,539 16,636
yoy % change 6.3% 10.7% 12.8% -9.1% -12.5% -13.1% -3.2% -9.8% 11.0% 12.7% 10.8% 11.4% 11.4% 8.5% 7.1%
Other (Tour) 422 395 392 11 33 209 39 292 11 33 211 39 295 295 295
yoy % change 18.2% -6.4% -0.8% -8.3% -29.8% -28.4% -4.0% -25.4% 0.0% 0.5% 1.0% 0.0% 0.8% 0.0% 0.0%
Total Revenues 11,839 13,033 14,646 2,864 2,948 4,139 3,197 13,148 3,179 3,317 4,564 3,556 14,616 15,833 16,931
yoy % change 6.7% 10.1% 12.4% -9.1% -12.7% -14.0% -3.2% -10.2% 11.0% 12.5% 10.3% 11.2% 11.2% 8.3% 6.9%
Less: Commissions, Transportation & Other 1,749 1,941 2,232 514 440 515 493 1,962 571 497 596 550 2,214 2,412 2,588
yoy % change 6.3% 11.0% 15.0% -7.9% -16.2% -22.0% 0.8% -12.1% 11.1% 12.9% 15.7% 11.6% 12.8% 9.0% 7.3%
% of Passenger Ticket Revenues 19.6% 19.8% 19.9% 23.2% 19.6% 16.6% 20.4% 19.6% 23.2% 19.6% 17.3% 20.4% 19.9% 19.9% 19.9%
Less: Onboard & Other 453 495 501 104 110 131 121 466 115 123 144 134 516 552 586
yoy % change 10.0% 9.3% 1.2% -16.8% -9.1% -2.2% 0.2% -6.9% 10.8% 11.8% 9.9% 10.6% 10.7% 6.9% 6.2%
% of Onboard & Other Revenues 18.0% 17.4% 16.5% 16.4% 16.3% 15.9% 16.5% 16.3% 16.4% 16.3% 15.9% 16.5% 16.3% 16.3% 16.3%
Net Cruise Revenues 9,215 10,202 11,521 2,235 2,365 3,284 2,543 10,427 2,481 2,664 3,613 2,832 11,591 12,575 13,462
yoy % change 6.2% 10.7% 12.9% -9.0% -11.9% -11.9% -4.1% -9.5% 11.0% 12.7% 10.0% 11.4% 11.2% 8.5% 7.1%
Gross Yield = Gross Cruise Revenue per ALBD (in $) 228.59 233.46 241.83 196.86 190.15 241.97 196.64 206.94 198.88 196.55 252.83 206.23 214.06 220.98 225.97
yoy % change 1.7% 2.1% 3.6% -11.2% -17.3% -17.6% -10.1% -14.4% 1.0% 3.4% 4.5% 4.9% 3.4% 3.2% 2.3%
Net Yield = Net Cruise Revenue per ALBD (in $) 184.50 188.46 195.46 154.22 154.27 202.19 158.40 167.86 155.79 159.46 209.87 166.11 173.25 178.83 182.85
yoy % change 1.5% 2.1% 3.7% -11.1% -16.8% -16.5% -10.9% -14.1% 1.0% 3.4% 3.8% 4.9% 3.2% 3.2% 2.3%
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(1-212) 622-0987 16 December 2009
Figure 16: Carnival Corp. & Plc – Expense Drivers

$ in millions
EXPENSE DRIVERS 2006 2007 2008E 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Quarter Ended 11/30/06 11/30/07 11/30/08 02/28/09 05/31/09 08/31/09 11/30/09 11/30/09 02/28/10 05/31/10 08/31/10 11/30/10 11/30/10 11/30/11 11/30/12
Cruise Expenses
Payroll & Related 1,158 1,336 1,470 352 366 387 392 1,497 391 403 414 420 1,628 1,729 1,828
yoy % change 3.2% 15.4% 10.0% -2.2% 0.3% 1.6% 7.7% 1.8% 11.0% 10.1% 7.1% 7.3% 8.8% 6.2% 5.7%
Payroll & Related per ALBD (in $) 23.2 24.7 24.9 24.3 23.9 23.8 24.4 24.1 24.5 24.1 24.1 24.7 24.3 24.6 24.8
yoy % change -1.3% 6.4% 1.1% -4.5% -5.3% -3.7% 0.0% -3.4% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0% 1.0%
Food 644 747 856 198 203 223 220 844 218 222 237 234 911 957 1,002
yoy % change 5.1% 16.0% 14.6% -4.3% -3.3% -3.5% 5.5% -1.5% 10.2% 9.3% 6.3% 6.5% 8.0% 5.1% 4.7%
Food per ALBD (in $) 12.9 13.8 14.5 13.7 13.2 13.7 13.7 13.6 13.7 13.3 13.8 13.7 13.6 13.6 13.6
yoy % change 0.4% 7.0% 5.2% -6.5% -8.7% -8.5% -2.0% -6.5% 0.3% 0.3% 0.3% 0.3% 0.2% 0.0% 0.0%
Fuel 932 1,096 1,774 208 243 327 386 1,164 386 405 398 410 1,599 1,680 1,723
yoy % change 31.8% 17.6% 61.9% -46.9% -42.8% -38.2% -9.8% -34.4% 85.4% 66.8% 21.7% 6.3% 37.4% 5.1% 2.5%
Fuel per ALBD (in $) 18.7 20.2 30.1 14.4 15.9 20.1 24.0 18.7 24.2 24.3 23.1 24.0 23.9 23.9 23.4
yoy % change 26.0% 8.5% 48.7% -48.2% -46.0% -41.4% -16.3% -37.7% 68.7% 53.1% 14.8% 0.1% 27.6% 0.0% -2.1%
Fuel Consumption (Metric Tons) 2.79 3.04 3.18 0.75 0.80 0.81 0.83 3.19 0.81 0.85 0.84 0.86 3.37 3.46 3.55
yoy % change 2.4% 8.9% 4.6% -4.1% -0.4% 1.6% 4.3% 0.4% 7.7% 6.8% 3.8% 4.0% 5.5% 5.1% 4.7%
Fuel Price ($ per Metric Ton) 334 361 558 276 304 405 465 363 475 475 475 475 475 485 485
yoy % change 29.0% 8.0% 54.7% -44.7% -42.6% -39.2% -13.6% -35.1% 72.1% 56.3% 17.3% 2.2% 31.0% 2.1% 0.0%
Other Ship Operating 1,541 1,717 1,913 458 488 498 538 1,982 505 533 528 573 2,139 2,259 2,377
yoy % change 5.2% 11.4% 11.4% 0.9% 4.1% -1.4% 10.9% 3.6% 10.2% 9.3% 6.0% 6.5% 7.9% 5.6% 5.2%
Other Ship Operating per ALBD (in $) 30.9 31.7 32.5 31.6 31.8 30.7 33.5 31.9 31.7 31.9 30.7 33.6 32.0 32.1 32.3
yoy % change 0.6% 2.8% 2.3% -1.4% -1.7% -6.5% 3.0% -1.7% 0.3% 0.3% 0.0% 0.3% 0.2% 0.5% 0.5%
Selling & Administrative (Cruise) 1,405 1,547 1,594 384 386 372 405 1,547 422 421 394 430 1,668 1,753 1,835
yoy % change 9.0% 10.1% 3.0% -7.9% -7.2% 2.2% 2.1% -2.9% 9.9% 9.0% 6.0% 6.2% 7.8% 5.1% 4.7%
% Selling & Administrative (Total) 97.1% 98.0% 97.9% 98.0% 98.2% 97.6% 97.3% 97.8% 98.0% 98.2% 97.6% 97.3% 97.8% 97.8% 97.8%
Selling & Administrative (Total) 1,447 1,579 1,629 392 393 381 416 1,582 431 428 404 442 1,705 1,792 1,876
yoy % change 8.4% 9.1% 3.2% -7.8% -7.5% 2.4% 2.3% -2.9% 9.9% 9.0% 6.0% 6.2% 7.8% 5.1% 4.7%
Selling & Administrative (Total) per ALBD (in $) 29.0 29.2 27.6 27.0 25.6 23.5 25.9 25.5 27.0 25.6 23.5 25.9 25.5 25.5 25.5
yoy % change 3.6% 0.7% -5.3% -9.9% -12.7% -2.9% -5.0% -7.8% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0%
Net Cruise Costs 5,680 6,443 7,607 1,600 1,686 1,807 1,941 7,034 1,921 1,984 1,971 2,068 7,944 8,378 8,765
yoy % change 9.3% 13.4% 18.1% -12.6% -10.6% -10.1% 3.1% -7.5% 20.1% 17.7% 9.1% 6.5% 12.9% 5.5% 4.6%
Net Cruise Costs per ALBD (in $) 113.72 119.02 129.06 110.40 109.98 111.26 120.88 113.23 120.62 118.74 114.51 121.25 118.74 119.14 119.05
yoy % change 4.5% 4.7% 8.4% -14.6% -15.5% -14.8% -4.2% -12.3% 9.3% 8.0% 2.9% 0.3% 4.9% 0.3% -0.1%
Net Cruise Costs (excl. Fuel) per ALBD (in $) 95.06 98.78 98.96 96.05 94.13 91.12 96.84 94.49 96.41 94.48 91.40 97.20 94.84 95.24 95.65
yoy % change 1.1% 3.9% 0.2% -5.4% -6.6% -5.3% -0.7% -4.5% 0.4% 0.4% 0.3% 0.4% 0.4% 0.4% 0.4%
Other Expenses
Other (Tour) 314 296 293 16 35 145 36 232 16 35 146 36 233 233 233
yoy % change 23.6% -5.7% -1.0% -11.1% -20.5% -25.3% -4.0% -21.0% 0.0% 0.5% 1.0% 0.0% 0.7% 0.0% 0.0%
% Other (Tour) Revenues 74.4% 74.9% 74.7% 145.5% 106.1% 69.4% 90.2% 79.2% 145.5% 106.1% 69.4% 90.2% 79.1% 79.1% 79.1%
Selling & Administrative (Tour) 42 32 35 8 7 9 11 35 9 8 10 12 38 40 41
yoy % change -8.7% -23.8% 9.4% 0.0% -22.2% 12.5% 10.6% 0.2% 9.9% 9.0% 6.0% 6.2% 7.6% 5.1% 4.7%
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(1-212) 622-0987 16 December 2009
Royal Caribbean Cruises Ltd.

Royal Caribbean Cruises (RCL;RCL US)
Company Data 2008A 2009E 2009E 2010E 2010E 2011E
Price ($) 25.93 (Old) (New) (Old) (New)
Date Of Price 15 Dec 09 EPS Reported ($)
52-week Range ($) 26.24 - 5.40 Q1 (Mar) 0.35 (0.35) (0.17)A (0.04)
Mkt Cap ($ bn) 5.55 Q2 (Jun) 0.40 (0.05) (0.16)A 0.01
Fiscal Year End Dec Q3 (Sep) 1.92 1.49 1.07A 1.44
Shares O/S (mn) 214 Q4 (Dec) 0.01 (0.02) (0.05)A 0.15
Price Target ($) 34.00 FY 2.68 1.07 0.69A 1.18 1.56 2.43
Price Target End Date 31 Dec 10 Bloomberg EPS FY ($) 2.71 0.71A 1.46 2.11
Source: Company data, Bloomberg, J.P. Morgan estimates. 'Bloomberg' above denotes Bloomberg
consensus estimates.
Key Investment Points

Royal Caribbean’s booking patterns and net yields in FY10 should be
incrementally stronger than in FY09
We believe that in 2010 Royal Caribbean’s net yields and occupancy levels will stem
the tide of negative results experienced in 2009. Key to this is the continued success
of Royal Caribbean’s Oasis of the Seas and its Solstice class vessels which at this
point have been instrumental in driving ticket price increases for 2010 bookings. We
believe that, to date, the Oasis of the Seas is pricing at ~40-50% premium to older
vessels in the Royal Caribbean fleet, and Solstice has been able to demand premium
pricing as well. These newer vessels should drive the lion’s share of estimated net
yield improvement of ~200bps in 2010. Pricing on 1Q10 bookings is trending above
2008 levels, though we point out that much of that pricing power is being driven by
the newer Solstice class hardware and the Oasis of the Seas, which are heavily
booked for 1Q10 (and account for ~13% of Royal Caribbean’s total berths).
Excluding Royal’s newer Solstice class vessels and the Oasis of the Seas, pricing is
below 2008 levels. Net-net, we believe that Royal will achieve higher net yields in
1Q10 (+2.1%) than it did in 1Q09 (-14.5%), and that net yields will get sequentially
stronger as 2010 unfolds. We estimate net yield growth of +3.5% in 2010. As Royal
Caribbean turned to 1Q10, the pace of forward bookings turned positive in August
2009 and has continued through early November 2009. Forward bookings on a
cumulative basis continue to remain slightly behind the year-ago level; however, we
believe the steeper acceleration in bookings that Royal Caribbean has experienced
since August 2009 should allow the company to fill the booking gap by year-end
2009. We believe the extended booking windows will allow Royal Caribbean to fill
the remaining capacity with more profitable, higher-rated business, as longer lead
times should reduce the risk of drastic, last-minute discounting of large room blocks.
Cruise stocks historically have been strong-second derivative performers

Like its chief cruise competitor Carnival, Royal Caribbean has historically
outperformed the S&P 500 in the year following periods of net yield declines on a
year-over-year basis. In periods when net yields accelerated on a year-over-year basis
(i.e., a positive swing rather than positive growth in net yields), Royal Caribbean has
outperformed the S&P 500, posting average returns of +12.8% versus +3.0%,
respectively. We anticipate this relationship will continue through 2010 as Royal
Caribbean’s net yields benefit from the introduction of the Oasis of the Seas (and the
22
(1-212) 622-0987 16 December 2009
pricing premium that it commands over the company’s older fleet) and the continued
success of the Solstice class vessels. Royal Caribbean has historically outperformed
the S&P 500 by a spread of +980bps, versus +340bps for Carnival. We believe this is
due to Royal Caribbean’s substantial operating leverage, which helps its EBITDA
and EPS rebound at a faster pace given its smaller scale (it is approximately one-third
the size of Carnival); we think this is fully recognized by investors.
Royal Caribbean’s operating leverage should help drive substantial EBITDA

and EPS growth in 2010
Royal Caribbean possesses greater operating leverage; therefore, our estimated net
yield increase of +3.5% in 2010 should have a greater proportional impact on EPS.
We believe that Royal Caribbean’s stock will react at an accelerated pace (to the
upside or downside, depending on the operating environment) vis-à-vis Carnival’s.
For 2010, we believe solid ticket price advances (primarily stemming from the solid
performance of its Oasis of the Seas and Solstice class vessels) and an extension of
the booking window will help to drive net yields higher. We estimate passenger
ticket per passenger cruise day will increase to ~$153 in 2010 (+3.5%), and ~$157 in
2011 (+3.0%), compared to a decline of -13.9% in 2009. Given the cruise liners’
reliance on rates, for which every incremental dollar above the breakeven rate
generates 100% flow-through to EBITDA, we believe Royal Caribbean will be able
to drop 40.8% and 40.2% of incremental net revenue to the EBITDA line in 2010
and 2011, respectively. While not necessarily inspiring, we note that elevated fuel
costs, up an estimated +10.8% year-over-year in 2010, should erode much of the
company’s operating leverage. That said, if we exclude fuel costs, flow-through
improves to 50.3% and 47.6% in 2010 and 2011, respectively. Given Royal
Caribbean’s smaller size and scale versus Carnival, it is a less efficient operator.
Carnival is over three times larger than Royal Caribbean, and therefore Royal does
not derive the same economies of scale as does Carnival. As a result of this disparity,
Royal has historically generated lower operating margins.
Royal Caribbean’s new hardware to substantially contribute to 2010 net yield

performance
We believe Royal Caribbean’s innovative brand strategy has enabled it to:
1) consistently increase the number of first-time and repeat cruisers; 2) partly
weather soft demand periods by making ships the destination; and 3) drive higher
yields, through higher ticket prices and onboard spending relative to its older ships.
The company’s brand strategy has been to build larger “destination” ships with a
superior mix of amenities, which is evident with its brand new Oasis of the Seas. We
believe first-time and repeat cruise passengers favor more modern and advanced
ships, in terms of design, innovation, and enhanced amenities. In addition, we believe
that its order book of four ships between 2010 and 2012 (the Allure of the Seas, and
three additional Solstice class vessels) will continue to bolster yield performance as
newer vessels command premium prices. Given Royal’s significant expenses to build
these newer-generation ships, it needs to achieve higher pricing relative to the
industry to generate similar returns, all else being equal.
Compelling valuation versus long-term average

At current levels, RCL trades at 14.8x, 10.7x, and 8.6x our 2010, 2011, and 2012
EPS estimates, respectively. Since 1993, shares have traded at an average forward-
year P/E multiple of 14.8x, with a high of 58.4x (in January 2008) and a low of 4.4x
(in February 2009). We establish a calendar year-end 2010 price target of $34
(replaces prior calendar year-end 2009 price target of $9), which assumes RCL can
23
(1-212) 622-0987 16 December 2009
trade at 14x our 2011 EPS estimate. Our target multiple is 0.8x below the company’s
average forward-year P/E multiple over the long term. We believe using such a
multiple is reasonable given the earnings contribution from its new hardware and
significant operating leverage to a cycle of increases in industry net yields. In the two
years following the turn to positive yields (2004 and 2005), Royal traded at 14.6x
and 15.5x forward-year EPS estimates. The target multiple we apply to our 2011 EPS
estimate for Royal is one turn below our valuation multiple for Carnival due to
Royal’s higher financial leverage and lower historical multiples in a recovery.
Investment Risks
Potential downside risks to our rating and price target include: 1) investor sentiment
towards consumer discretionary stocks could erode further and valuation multiples
contract; 2) fuel costs, which accounted for 20.5% of operating expenses in 2008,
could escalate more meaningfully than we are currently forecasting; 3) overcapacity
in the cruise industry stemming from new competitive supply could negatively affect
pricing should demand not outstrip supply growth; 4) risks associated with two large
shareholder groups controlling ~36% of the outstanding stock; and 5) regulatory and
generic investment risks such as a weakening economy or unfavorable legislative
changes both domestically or internationally.
Fuel-price volatility
Unlike Carnival, Royal Caribbean has historically hedged ~50% of its forward-year
fuel consumption needs. More recently, Royal Caribbean has been more aggressive
with its hedging efforts for future periods; the company is presently 50% hedged in
2010, 45% hedged in 2011, and 5% hedged in 2012. While Royal is partly insulated
from volatile bunker price moves to the upside, Royal is still susceptible to increased
operating expense for the unhedged portion of its consumption. Conversely, in a
decreasing bunker fuel environment, the hedged component of forward bunker
consumption could be more expensive than at-the-market bunker spot levels, and
thereby weigh on earnings. While the company has made strides in reducing its level
of consumption through technological innovations, as well a higher proportion of
new, more fuel-efficient ships in its fleet, its operations remain highly susceptible to
fuel price volatility. In addition, higher crude prices have a perceived negative effect
on the spending patterns of lower-income leisure travelers, and vice versa. We
estimate a 10% change in the fuel cost per metric ton would affect our 2010 EPS
estimate for Royal by approximately $0.16.
Economic and event risks

We believe that demand for cruises will remain affected by the attitudes of leisure
travelers. A sluggish recovery in the U.S. or global economy would cause leisure
travelers to reconsider their discretionary travel budgets, which we believe would
result in decreased demand. Key risks facing all leisure and travel-related companies
include terrorism, geopolitical, and weather-related uncertainties that could severely
curtail travel volume and leisure spending levels. Cruise lines are vulnerable to such
scenarios as decreased demand could lead to continued price discounting, which
would affect overall profitability. In addition, the negative headlines associated with
events, such as ship equipment issues and cancellations, and H1N1 outbreaks on
board, could potentially have a negative impact on the public’s perception of the
cruise industry. Since the cruise industry is dependent on first-time cruisers, we
24
(1-212) 622-0987 16 December 2009
believe negative press could persuade potential cruise passengers to consider

alternative vacation options.
Company Description
Royal Caribbean International was founded in 1968. The current parent corporation,
Royal Caribbean Cruises Ltd., was incorporated on July 23, 1985, in the Republic of
Liberia under the Business Corporation Act of Liberia.
Royal Caribbean is the world’s second-largest cruise company, operating 39 ships

with ~85,900 berths. RCL operates under the Royal Caribbean International,
Celebrity Cruises, Azamara Cruises, Pullmantur, and CDF Croisieres de France
brands.
Figure 17: Royal Caribbean Cruises Ltd. – Ships/Berths by Brand

$ in millions
Current Fleet Enterer Service Berths Primary Area of Operation Age of Fleet % of Brand Berths % of Total Berths
Royal Caribbean International
Oasis of the Seas 2009 5,400 Eastern Caribbean 0 9.5% 6.3%
Independence of the Seas 2008 3,600 Europe, Eastern/Western Caribbean 1 6.4% 4.2%
Liberty of the Seas 2007 3,600 Eastern/Western Caribbean 2 6.4% 4.2%
Freedom of the Seas 2006 3,600 Eastern/Western Caribbean 3 6.4% 4.2%
Jewel of the Seas 2004 2,100 Caribbean, Panama Canal, Canada/New England, Europe 5 3.7% 2.4%
Mariner of the Seas 2003 3,100 South America, Mexican Riviera 6 5.5% 3.6%
Serenade of the Seas 2003 2,100 Alaska, Southern Caribbean, Panama Canal 6 3.7% 2.4%
Navigator of the Seas 2002 3,100 Western Caribbean, Europe 7 5.5% 3.6%
Brilliance of the Seas 2002 2,100 Europe 7 3.7% 2.4%
Adventure of the Seas 2001 3,100 Southern Caribbean 8 5.5% 3.6%
Radiance of the Seas 2001 2,100 South America, Mexican Riviera, Alaska 8 3.7% 2.4%
Explorer of the Seas 2000 3,100 Eastern/Southern Caribbean, Bermuda, Canada/New England 9 5.5% 3.6%
Voyager of the Seas 1999 3,100 Western Caribbean, Europe 10 5.5% 3.6%
Vision of the Seas 1998 2,000 Southern Caribbean, Europe, Brazil 11 3.5% 2.3%
Enchantment of the Seas 1997 2,250 Western/Southern Caribbean 12 4.0% 2.6%
Rhapsody of the Seas 1997 2,000 Australia/NZ, Canada 12 3.5% 2.3%
Grandeur of the Seas 1996 1,950 Eastern/Western Caribbean, Bermuda, Canada/New England 13 3.4% 2.3%
Splendour of the Seas 1996 1,800 Europe, Brazil 13 3.2% 2.1%
Legend of the Seas 1995 1,800 Asia, Europe 14 3.2% 2.1%
Majesty of the Seas 1992 2,350 Bahamas 17 4.1% 2.7%
Monarch of the Seas 1991 2,400 Bahamas 18 4.2% 2.8%
21 56,650 9 100.0% 65.9%
Celebrity
Equinox 2009 2,850 Europe, Caribbean 0 14.7% 3.3%
Solstice 2008 2,850 Europe, Eastern Caribbean 1 14.7% 3.3%
Constellation 2002 2,050 Caribbean, Europe, Canada/New England, Panama Canal 7 10.5% 2.4%
Summit 2001 2,050 Europe, Southern Caribbean 8 10.5% 2.4%
Infinity 2001 2,050 Alaska, Panama Canal, South America 8 10.5% 2.4%
Millennium 2000 2,050 Southern Caribbean, Panama Canal, Hawaii, Alaska, Australia/NZ 9 10.5% 2.4%
Mercury 1997 1,850 Alaska, Pacific Northwest, Panama Canal, Hawaii, Bahamas, Eastern Caribbean 12 9.5% 2.2%
Galaxy 1996 1,850 Southern Caribbean 13 9.5% 2.2%
Century 1995 1,750 Western Caribbean, Bahamas, Europe 14 9.0% 2.0%
Celebrity Xpedition 2004 100 Galapagos Islands 5 0.5% 0.1%
10 19,450 8 100.0% 22.6%
Pullmantur
Ocean Dream 2008 1,000 Southern Caribbean, Bermuda 1 13.1% 1.2%
Zenith 1992 1,400 Western Europe, Baltic 17 18.3% 1.6%
Empress 1990 1,600 Eastern Mediterranean 19 20.9% 1.9%
Sovereign 1988 2,300 Western Mediterranean 21 30.1% 2.7%
Pacific Dream 1990 1,350 Mexico 19 17.6% 1.6%
5 7,650 15 100.0% 8.9%
Azamara Cruises
Azamara Quest 2006 700 Europe, Caribbean, Panama Canal 3 50.0% 0.8%
Azamara Journey 2004 700 Europe, Asia 5 50.0% 0.8%
2 1,400 4 100.0% 1.6%
CDF Croisieres France
Bleu de France 2005 750 Mediterranean, Caribbean 4 100.0% 0.9%
1 750 4 100.0% 0.9%
Total 39 85,900 9
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Figure 18: Royal Caribbean Cruises Ltd. – New Ship Orderbook

$ in millions
Expected Contract Price Price
New Builds Delivery Berths Gross Tons ($MM) Per Berth (USD)
Royal Caribbean International
Allure of the Seas 12/12/2010 5,400 220,000 $1,242 $230,000
5,400 220,000 $1,242 $230,000
Celebrity
Celebrity Eclipse 4/26/2010 2,850 118,000 $700 $245,614
Solstice Class Unnamed 3Q11 2,850 118,000 $798 $280,000
Solstice Class Unnamed 4Q12 2,850 118,000 $798 $280,000
8,550 354,000 $2,296 $268,538
Total 13,950 574,000 $3,538

4Q09 and 2010 Earnings Outlook

4Q09
Our 4Q09 recurring EPS estimate of ($0.05) is in line with consensus. We forecast a
net yield decline of -7.4%. On the cost side, we forecast a decrease in net cruise costs
(per available passenger cruise day) of -10.0% with fuel cost per metric ton of $489.
We forecast net revenues of $1.082 billion (down 0.6%) and operating income of
$74.1 million (up 16.6%).
Full-year 2010
Our full-year 2010 recurring EPS estimate of $1.56 (up 125.9% from the full-year
2009 level) is $0.10 above consensus. We forecast net yield growth of 3.5%. On the
cost side, we forecast an increase in net cruise costs (per available passenger cruise
day) of 0.4% with fuel cost per metric ton of $488. We forecast net revenues of $5.08
billion (up 15.5%) and operating income of $688.7 billion (up 43%). Royal has not
yet provided formal 2010 guidance.
Forward Demand Commentary

On RCL’s 3Q09 earnings call, management commented that 4Q09 forward booking
patterns have improved since June, when the booking pace turned positive, with
year-over-year changes in price hitting the black in October. However, we note that
September/October 2008 was an extremely tough period following the collapse of
Lehman Brothers, so the improvement is largely due to easier comparisons.
For 1Q10, the bookings pace turned positive (compared to the same time last year) in
August and continued through October. On a 1Q10 cumulative basis, Royal
Caribbean is slightly behind the year-ago level, but given the steep acceleration in
bookings from August onwards, the company expects to be more booked (versus the
same period in ’08) relatively soon. Prices for 1Q10 are trending above 2008 levels
(mostly driven by the Oasis of the Seas and Solstice class vessels which are heavily
booked in 1Q10). Excluding the newly launched Oasis of Seas and Solstice class
vessels (which will account for ~50% of Royal’s fleet in 2010), pricing for 1Q10 is
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(1-212) 622-0987 16 December 2009
largely trending below 2008 levels. While Royal Caribbean did not provide formal
net yield guidance for 1Q10, it believes that it should achieve better net yields in
1Q10 than it did in 1Q09.
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(1-212) 622-0987 16 December 2009
Company Guidance
Figure 19: Royal Caribbean Cruises Ltd. – Company Guidance
$ in millions
2009E 2009E 2009E 4Q09E 2010E 2011E 2012E
As of 4/23/09 As of 7/29/09 As of 11/3/09 As of 11/3/09 As of 11/3/09 As of 11/3/09 As of 11/3/09
Capacity Growth +5.9% +5.2% +5.1% +7.5% +11.6% +8.8% +2.7%
Net Yields ~ -12% to -13% ~ -14% ~ -14% ~ -7% to -8%
Net Cruise Costs per APCD ~ -10% to -12% ~ -10% ~ -10% ~ -10%
Net Cruise Costs per APCD, excl. Fuel ~ -6% to -8% ~ -6% to -7% ~ -6% to -7% ~ -7% to -8%
Depreciation & Amortization $560-565 $565-570 $565-570 $150
Interest Expense, Net of Capitalized Interest $295-300 $310 $305 $80
Earnings per Share ~$1.35 $0.70 - $0.80 ~$0.70 ~($0.05)
Other Items
Fuel
Fuel Consumption (Metric Tons) 1,240 1,220 1,220 323
Fuel Expenses $574 $591 $591 $158
Fuel Price (Current $ per Metric Ton) $463 $484 $484 $489
Fuel Consumption Hedged 48% 50% 50% 40% 50% 50% 10%
Investment & Other Capex $2,100 $2,100 $2,100 $2,200 $1,000 $1,000
Figure 20: Royal Caribbean Cruises Ltd. EPS Sensitivity to Changes in Net Yields and Fuel Prices
$ in millions
RCL Guidance (as of 3Q09) JPM Estimates
4Q09 1Q10E FY10E FY11E FY12E
Fuel Price / Metric Ton, net of hedges $489 $488 $488 $491 $515
JPM Estimated Unhedged Fuel Price / Metric Ton $471 $518 $518 $518 $518
JPM Estimated Hedged Fuel Price / Metric Ton $516 $459 $459 $459 $459
Total Consumption (Metric Tons in 000s) 0.323 0.32 1.35 1.44 1.44
Unhedged Consumption (Metric Tons in 000s) 0.194 0.161 0.676 0.790 1.368
Hedged Consumption (Metric Tons in 000s) 0.129 0.161 0.676 0.646 0.072
Percent Hedged (forward consumption) 40% 50% 50% 45% 5%
Fuel Expense 158 157 660 706 741
Sensitivity to Change in Price of Fuel:

Percentage Change (Impacting Unhedged Consumption) 10% 10% 10% 10% 10%
Fuel Price / Metric Ton for Unhedged Amount $518 $570 $570 $570 $570
Fuel Expense 167 165 695 747 812
Increase (Decrease) to Fuel Expense 9 8 35 41 71
Shares Outstanding 216 216 216 216 216
Per Share Impact $0.04 $0.04 $0.16 $0.19 $0.33
RCL Guidance (as of 3Q09) JPM Estimates

Available Passenger Cruise Days (APCD) 7.3 27.9 7.5 31.1 33.9 34.8
Capacity Growth 7.5% 5.4% 9.5% 11.6% 8.8% 2.7%
Net Revenue 1,082 4,426 1,125 5,082 5,699 5,997
Net Yield $147.47 $158.65 $150.58 $163.25 $168.25 $172.40
% Change (1) -7.5% -14.0%
Sensitivity to Change in Net Yield:

Net Yield $148.95 $160.23 $152.09 $164.89 $169.93 $174.12
Per Share Impact $0.05 $0.21 $0.05 $0.24 $0.26 $0.28
(1) Midpoint of RCL’s Net Yield Guidance Range.

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Valuation & Price Target Summary

Our calendar year-end 2010 price target of $34 assumes RCL can trade at 14x our
2011 EPS estimate. Our target multiple is 0.8x below the stock’s long-term multiple
of forward-year EPS. We believe using a multiple below the long-term average is
reasonable given the earnings contribution from the company’s new hardware and
significant operating leverage to an upturn in industry net yields. In the two years
following the turn to positive yields (2004 and 2005), Royal traded at 14.6x and
15.5x forward-year EPS estimates. The target multiple we apply to our 2011 EPS
estimate for Royal is one turn below our valuation multiple for Carnival due to
Royal’s higher financial leverage and lower historical multiples in a recovery.
At current levels, RCL trades at 14.8x, 10.7x, and 8.6x our 2010, 2011, and 2012
EPS estimates, respectively. Since 1993, shares have traded at an average forward-
year P/E multiple of 14.8x, with a high of 58.4x (in January 2008) and a low of 4.4x
(in February 2009).
Figure 21: YE10 Price Target

$ in millions
2011E EPS $2.43

x Assumed Multiple 14.0x
= YE 2010 Price Target $34
Current Price 25.93

Potential Return 31.0%
Figure 22: Royal Caribbean Cruises Ltd. EPS Sensitivity Grid and Price Target Sensitivity Analysis
$ in millions
PRICE TARGET SENSITIVITY
2011 Net Yield (YoY % Change) 2011 Net Yield (YoY % Change)
-1.0% pt. -0.5% pt. +0.5% pt. +1.0% pt. -1.0% pt. -0.5% pt. +0.5% pt. +1.0% pt.
2.1% 2.6% 3.1% 3.6% 4.1% 2.1% 2.6% 3.1% 3.6% 4.1%
-10% $442 $2.35 $2.48 $2.62 $2.75 $2.88 -10% $442 $33 $35 $37 $38 $40
-5% $467 $2.26 $2.39 $2.52 $2.65 $2.79 -5% $467 $32 $33 $35 $37 $39
$491 $2.16 $2.29 $2.43 $2.56 $2.69 $491 $30 $32 $34 $36 $38
5% $516 $2.07 $2.20 $2.33 $2.46 $2.60 5% $516 $29 $31 $33 $35 $36
10% $541 $1.97 $2.11 $2.24 $2.37 $2.50 10% $541 $28 $29 $31 $33 $35
Note: Assumes a 14x target multiple.

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Risk/Reward Analysis
Our risk/reward analysis derives a matrix of year-end 2011 per share valuations for
Royal Caribbean from a range of EPS estimates and a range of valuation multiples.
The base case represents our 2011 EPS estimate, while the upside/downside cases
represent positive and negative variances (in 5% increments) from our estimate. The
valuation range considers our fair value estimate and current/historical trading
multiples.
Figure 23: Royal Caribbean Cruises Ltd. – Risk/Reward Analysis

$ in millions
Estimated 2011 EPS Range
Downside Case J.P. Morgan Estimate Upside Case
2011E EPS $2.06 $2.18 $2.31 $2.43 $2.55 $2.67 $2.79
% change from J.P. Morgan estimate -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0%
4.7x $9.66 $10.23 $10.80 $11.37 $11.94 $12.50 $13.07

Multiple Contraction
-63% -61% -58% -56% -54% -52% -50%
6.7x $13.79 $14.60 $15.41 $16.22 $17.03 $17.84 $18.65

-47% -44% -41% -37% -34% -31% -28%
8.7x $17.91 $18.97 $20.02 $21.08 $22.13 $23.18 $24.24

-31% -27% -23% -19% -15% -11% -7%
Current 1-Yr Forward P/E Multiple 10.7x $22.04 $23.34 $24.63 $26 $27.23 $28.52 $29.82
% change from current price -15% -10% -5% 0% 5% 10% 15%
12.7x $26.17 $27.71 $29.25 $30.78 $32.32 $33.86 $35.40

Multiple Expansion
1% 7% 13% 19% 25% 31% 37%
14.7x $30.29 $32.07 $33.86 $35.64 $37.42 $39.20 $40.98

17% 24% 31% 37% 44% 51% 58%
16.7x $34.42 $36.44 $38.47 $40.49 $42.52 $44.54 $46.57

33% 41% 48% 56% 64% 72% 80%
Historical Valuation
70.0x
Average: 14.8x
Peak: 58.4x 60.0x
Trough: 3.9x
50.0x
Current Forward Valuation
2011: 10.7x 40.0x
30.0x
20.0x
10.0x
0.0x
12/30/1993
12/30/1994
12/30/1995
12/30/1996
12/30/1997
12/30/1998
12/30/1999
12/30/2000
12/30/2001
12/30/2002
12/30/2003
12/30/2004
12/30/2005
12/30/2006
12/30/2007
12/30/2008
12/30/2009
Forward P/E Multiples LT Average
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(1-212) 622-0987 16 December 2009
Discounted Cash Flow

Our discounted cash flow (DCF) valuation projects five years (2009-13) of
unleveraged free cash flow, based on what we would characterize as reasonable
growth assumptions. We then discount these cash flows using the company’s
weighted average cost of capital (WACC). Our terminal value is based on a multiple
of 13.0x (our projection of a normalized trading multiple for RCL in year six)
applied to our 2013 EBITDA estimate, which we then discount back to the present.
Our analysis yields a base-case year-end 2010 share price of $35 with a valuation
range of $27-$44.
Figure 24: Royal Caribbean Cruises Ltd. – Discounted Cash Flow Valuation ($ in millions, except per share data)
$ in millions
CAGR
2009E 2010E 2011E 2012E 2013E 2009 - 2013
Earnings Before Interest & Taxes (EBIT) $480 $689 $886 $1,001 $1,028 21%
Less: Taxes 12 17 22 25 26
Tax Rate 2.5% 2.5% 2.5% 2.5% 2.5%
Less: Investment & Other Capex 2,100 2,200 1,000 1,000 1,000
Plus: Depreciation & Amortization 569 639 689 706 740
= Unlevered Free Cash Flow ($1,063) ($889) $554 $682 $742
Terminal Value Multiple 13.0x
Terminal Value 22,974
PV Discount Factor at WACC 0.934 0.852 0.778 0.710 0.648 0.648
PV of FCF -992 -758 431 484 480 14,884
Capital Value $14,529
Less: 3Q09 Net Debt 7,010
= Equity Value $7,519
Diluted Shares Outstanding 216
= Equity Value per Share $35
Current Price $25.93

WACC Inputs: Enterprise Value/Capital Structure:

Capital % Cost Total Capital Total %
Debt 56.6% 4.1% 2.3% Debt 7,296 56.6%
Equity (Cost Approx. by CAPM) 43.4% 16.8% 7.3% Market Cap 5,592 43.4%
WACC 2.5% 9.6% Total Cap 12,888 100.0%
CAPM: 16.8%
=Rf + Beta *(Rm-Rf)
Risk Free Rate, Rf 3.3%
Expected Market Return, Rm 10.00%
Beta 2.02
Sensitivity Analysis:
WACC
8.6% 9.6% 10.6%
12.0x 32.45 29.48 26.66
Terminal Value
Multiple
13.0x 37.99 34.78 31.74
14.0x 43.53 40.08 36.82

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ROIC Analysis
We believe that return on invested capital (ROIC), which measures the un-leveraged
cash returns generated per dollar invested in the company, is the most accurate gauge
of a company’s ability to create value. ROIC measures the cash-on-cash returns
generated by a company, independent of its financing and accounting strategies.
While other performance measures such as return on equity, EBITDA returns, and
project returns can prove useful and serve as proxies for value creation, ROIC, while
more difficult to calculate, is the most effective, in our view. While the
aforementioned statistics can be skewed by leverage, stock buybacks, and/or
accounting strategies, ROIC is relatively immune to these manipulations.
ROIC enables investors to determine how efficiently management runs its assets
independent of how it chooses to finance them. For investors, it provides the
opportunity to look through various financial strategies and accounting procedures
and identify the real economic return a company’s management can generate. When
evaluating a company’s weighted average cost of capital (WACC), which represents
the minimum rate of return (adjusted for risk) that a company must earn to create
value for both shareholders and creditors, the spread between ROIC and WACC
represents the company’s true economic profit.
Moreover, positive changes in ROIC tend to effectively highlight economically

efficient growth prospects (as opposed to growth achieved through expensive
acquisitions or mediocre expansions). As ROIC improves, one can reasonably
assume that the company is either more efficiently utilizing its existing asset base
and/or investing in new high-return projects. We project that Royal Caribbean’s
return on invested capital will remain below its weighted average cost of capital
between 2009 and 2012. The company has committed to improving its ROICs and
should make progress on that endeavor starting in 2010 as fundamentals and cash
flow generation improve, it continues to vigilantly manage its costs, and as its capital
investment/new build program begins to slow.
Figure 25: Royal Caribbean Cruises Ltd. – Historical and Projected ROICs, 2003-12E
$ in millions
16%
14.1%
14%
11.8% 12.0%
12%
8.9% 8.9% 9.3% 9.0% 8.9% 9.0%

10% 8.5%
8%
6% 12.1%
10.3% 10.0%
4% 7.9% 8.4% 7.8% 8.5%
2% 4.4%
2.0% 2.6%
0%
2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
RCL ROIC RCL WACC
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(1-212) 622-0987 16 December 2009
Figure 26: Royal Caribbean Cruises Ltd. – ROIC and Value Spread Trends, 2003-12E
$ in millions
2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
Recurring EBIT $526 $754 $872 $858 $901 $832 $480 $689 $886 $1,001
Tax Rate 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5%
After-Tax EBIT 513 735 850 837 879 811 468 671 864 976
Plus: Depreciation & Amortization $363 $394 $402 $422 $483 $520 $569 $639 $689 $706
Less: Other Capex $103 $126 $107 $220 $350 $1,061 $656 $646 $362 $362
= Net Operating Profit After Tax (NOPAT) $773 $1,003 $1,145 $1,039 $1,012 $271 $381 $664 $1,192 $1,320
Total Assets 11,323 11,964 11,256 13,393 14,982 16,463

- Current Liabilities 1,505 2,274 1,989 1,872 2,339 2,674
Invested Capital $9,818 $9,691 $9,267 $11,521 $12,643 $13,789 $15,007 $15,028 $15,596 $15,294
RCL ROIC 7.9% 10.3% 12.1% 10.0% 8.4% 2.0% 2.6% 4.4% 7.8% 8.5%
RCL WACC 11.8% 12.0% 14.1% 8.9% 8.9% 8.5% 9.3% 9.0% 8.9% 9.0%
ROIC - WACC -4.0% -1.7% -2.0% 1.1% -0.5% -6.4% -6.7% -4.6% -1.1% -0.5%
Risk Free Rate, Rf 4.4% 4.2% 4.4% 4.7% 3.9% 2.4% 3.3% 3.3% 3.3% 3.3%
Expected Market Return, Rm 12.0% 12.0% 12.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%
Beta 1.81 1.45 1.74 1.11 1.12 1.87 2.02 2.02 2.02 2.02
Market Cap 6,803 10,924 9,479 8,752 9,092 2,945 5,592 5,592 5,592 5,592
Total Debt 5,836 5,732 4,155 5,411 5,698 7,011 8,113 8,134 8,702 8,399
% Equity of Capital Structure 54% 66% 70% 62% 61% 30% 41% 41% 39% 40%
% Debt of Capital Structure 46% 34% 30% 38% 39% 70% 59% 59% 61% 60%
Cost of Debt, After Tax 4.5% 5.3% 6.0% 6.2% 6.0% 5.0% 4.2% 3.7% 3.8% 3.9%
WACC 11.8% 12.0% 14.1% 8.9% 8.9% 8.5% 9.3% 9.0% 8.9% 9.0%
33
(1-212) 622-0987 16 December 2009
Figure 27: Royal Caribbean Cruises Ltd. – EPS Model

$ in millions
EARNINGS MODEL 2006 2007 2008 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Revenues
Passenger Ticket 3,838.6 4,427.4 4,730.3 949.3 956.6 1,270.6 1,031.9 4,208.4 1,065.5 1,138.6 1,503.5 1,179.9 4,887.5 5,502.3 5,805.7
Onboard & Other 1,390.9 1,721.8 1,802.2 376.3 392.4 492.9 402.3 1,664.0 416.2 460.3 569.3 451.1 1,897.0 2,104.5 2,198.7
Total Revenues 5,229.6 6,149.1 6,532.5 1,325.6 1,349.0 1,763.5 1,434.2 5,872.4 1,481.7 1,598.9 2,072.8 1,631.0 6,784.5 7,606.8 8,004.4
yoy % change 6.7% 17.6% 6.2% -7.2% -14.8% -14.5% -1.5% -10.1% 11.8% 18.5% 17.5% 13.7% 15.5% 12.1% 5.2%
Less: Commissions, Transportation & Other 917.9 1,124.0 1,192.3 235.8 232.6 304.0 257.9 1,030.3 264.7 276.8 359.7 294.9 1,196.1 1,346.6 1,420.8
Less: Onboard & Other 331.2 405.6 458.4 83.2 112.5 152.6 94.4 442.8 92.0 132.0 176.2 105.9 506.2 561.5 586.7
Net Revenues 3,980.4 4,619.5 4,881.8 1,006.5 1,003.9 1,307.0 1,081.9 4,399.3 1,124.9 1,190.1 1,536.9 1,230.2 5,082.2 5,698.7 5,996.9
yoy % change 6.5% 16.1% 5.7% -7.9% -15.0% -14.0% -0.6% -9.9% 11.8% 18.5% 17.6% 13.7% 15.5% 12.1% 5.2%
Expenses
Payroll & Related 501.9 584.1 657.7 168.7 165.5 171.2 178.0 683.3 187.5 193.1 195.8 197.6 774.1 854.8 891.1
yoy % change -1.7% 16.4% 12.6% 9.4% 1.3% 0.5% 4.8% 3.9% 11.1% 16.7% 14.4% 11.0% 13.3% 10.4% 4.2%
Food 278.6 323.0 342.6 85.4 80.9 88.4 88.4 343.1 94.0 93.5 100.1 97.2 384.8 425.0 440.8
yoy % change 2.9% 15.9% 6.1% 2.9% -1.4% -2.3% 1.5% 0.2% 10.0% 15.6% 13.3% 9.9% 12.2% 10.4% 3.7%
Fuel 480.2 546.0 722.0 154.9 136.5 146.3 157.9 595.6 156.8 163.4 171.3 168.6 660.1 706.0 741.4
yoy % change 30.5% 13.7% 32.2% -2.1% -21.7% -29.4% -13.3% -17.5% 1.2% 19.7% 17.1% 6.8% 10.8% 6.9% 5.0%
Other Operating 739.8 998.9 1,030.6 224.2 237.5 253.7 258.4 973.9 248.0 273.1 285.9 285.6 1,092.6 1,206.6 1,251.6
yoy % change 9.2% 35.0% 3.2% -2.6% -11.8% -3.9% -3.3% -5.5% 10.6% 15.0% 12.7% 10.5% 12.2% 10.4% 3.7%
Marketing, Selling & Administrative 699.9 783.0 776.5 189.2 190.6 196.6 177.9 754.2 207.1 219.2 221.6 194.6 842.4 930.3 965.0
yoy % change 10.2% 11.9% -0.8% -7.7% -3.0% 2.9% -3.3% -2.9% 9.5% 15.0% 12.7% 9.4% 11.7% 10.4% 3.7%
Net Cruise Costs 2,700.3 3,235.1 3,529.5 822.4 811.0 856.1 860.6 3,350.2 893.5 942.4 974.7 943.6 3,754.1 4,122.7 4,290.0
yoy % change 9.7% 19.8% 9.1% -1.0% -8.4% -7.2% -3.3% -5.1% 8.6% 16.2% 13.8% 9.6% 12.1% 9.8% 4.1%
EBITDA 1,280.1 1,384.4 1,352.3 184.1 193.0 450.9 221.2 1,049.2 231.5 247.8 562.2 286.6 1,328.1 1,575.9 1,707.0
Depreciation & Amortization 421.6 483.1 520.4 139.9 137.9 144.0 147.1 568.9 155.5 159.0 161.0 164.0 639.4 689.5 706.4
yoy % change 4.9% 14.6% 7.7% 12.4% 8.4% 6.9% 9.8% 9.3% 11.2% 15.3% 11.8% 11.5% 12.4% 7.8% 2.5%
Operating Income (EBIT) 858.4 901.3 832.0 44.3 55.1 306.8 74.1 480.3 76.0 88.8 401.3 122.6 688.7 886.5 1,000.6
yoy % change -1.5% 5.0% -7.7% -67.8% -67.4% -33.6% 16.6% -42.3% 71.7% 61.2% 30.8% 65.5% 43.4% 28.7% 12.9%
Margin 16.4% 14.7% 12.7% 3.3% 4.1% 17.4% 5.2% 8.2% 5.1% 5.6% 19.4% 7.5% 10.2% 11.7% 12.5%
yoy bps change -1.4% -1.8% -1.9% -6.3% -6.6% -5.0% 0.8% -4.6% 1.8% 1.5% 2.0% 2.4% 2.0% 1.5% 0.8%
Interest Expense, Net (252.6) (313.8) (313.2) (77.7) (67.2) (71.7) (79.4) (296.0) (83.0) (85.0) (86.0) (88.0) (342.0) (352.0) (348.0)
Other Income (Expense) 28.1 15.8 54.9 (2.8) (23.0) (4.8) (4.5) (35.0) (1.0) (2.0) (5.0) (3.0) (11.0) (11.0) (2.0)
Net Income (for Diluted Earnings per Share) 651.0 603.4 573.7 (36.2) (35.1) 230.4 (9.8) 149.3 (8.0) 1.8 310.3 31.6 335.7 523.5 650.6
Reported Diluted Earnings per Share 2.97 2.82 2.68 (0.17) (0.16) 1.07 (0.05) 0.69 (0.04) 0.01 1.44 0.15 1.56 2.43 3.02
Nonrecurring Items (per Share) (0.16) 0.00 0.00
Recurring Diluted Earnings per Share 2.81 2.82 2.68 (0.17) (0.16) 1.07 (0.05) 0.69 (0.04) 0.01 1.44 0.15 1.56 2.43 3.02
yoy % change -1.2% 0.2% -4.9% -148.1% -141.5% -44.5% -756.2% -74.3% -78.1% -105.0% 34.7% -423.2% 125.9% 55.9% 24.3%
Common Shares Outstanding - Basic 210.7 212.8 213.5 213.7 213.8 213.8 213.8 213.8 213.8 213.8 213.8 213.8 213.8 213.8 213.8
Common Shares Outstanding - Diluted 221.5 214.2 214.2 213.7 213.8 215.7 215.7 214.7 215.7 215.7 215.7 215.7 215.7 215.7 215.7
Figure 28: Royal Caribbean Cruises Ltd. – Capacity-Adjusted Statistics

$ in millions
CAPACITY ADJUSTED STATISTICS 2006 2007 2008 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
All-in year-over-year Capacity Growth 3.0% 12.3% 5.2% 7.7% 3.5% 3.1% 7.5% 5.4% 9.5% 15.0% 12.7% 9.4% 11.6% 8.8% 2.7%
Net Yield = Net Revenue per APCD (in $) 177.76 183.64 184.47 147.54 152.46 182.60 147.56 157.70 150.58 157.16 190.53 153.38 163.25 168.25 172.40
yoy % change 3.4% 3.3% 0.5% -14.5% -17.9% -16.5% -7.4% -14.5% 2.1% 3.1% 4.3% 3.9% 3.5% 3.1% 2.5%
Net Cruise Costs per APCD (in $) 120.59 128.60 133.37 120.55 123.15 119.61 117.38 120.09 119.60 124.44 120.83 117.64 120.59 121.72 123.33
yoy % change 6.4% 6.6% 3.7% -8.1% -11.5% -10.0% -10.0% -10.0% -0.8% 1.0% 1.0% 0.2% 0.4% 0.9% 1.3%
Net Cruise Costs (Excl. Fuel) per APCD (in $) 99.15 106.90 106.09 97.85 102.42 99.18 95.84 98.74 98.61 102.86 99.60 96.62 99.39 100.88 102.01
yoy % change 2.9% 7.8% -0.8% -7.9% -8.4% -3.8% -7.6% -6.9% 0.8% 0.4% 0.4% 0.8% 0.7% 1.5% 1.1%
34
(1-212) 622-0987 16 December 2009
Figure 29: Royal Caribbean Cruises Ltd. – Free Cash Flow and Balance Sheet Model
$ in millions
FREE CASH FLOW MODEL 2006 2007 2008 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Net Income 634 603 574 (36) (35) 230 (10) 149 (8) 2 310 32 336 523 651
Add: Depreciation & Amortization 422 483 520 140 138 144 147 569 155 159 161 164 639 689 706
Less: Capitalized Interest Expense (28) (28) (44) (10) (20) (11) (7) (48) (7) (7) (7) (7) (28) (28) (28)
Less: Dividends (124) (98) (128) 0 0 0 0 0 0 0 0 0 0 0 0
Less: Investment Capex (Incl. New Ships) (861) (967) (1,163) (513) (932) (1,444) (560) (994) (1,554) (638) (638)
Less: Other Capex (220) (350) (1,061) (219) (104) (317) (15) (656) (162) (162) (162) (162) (646) (362) (362)
Gross Free Cash Flow (177) (357) (1,302) (126) (22) (466) (817) (1,430) (21) (568) 303 (967) (1,253) 185 329
Less: Acquisitions/Other (653) 0 51 291 291 0
Add: Share Issuances (Repurchases) (165) 0 0
Add (Less): Other (282) 195 105 (68) 74 (85) (79) 0
Net Free Cash Flow (1,277) (162) (1,146) 97 52 (551) (817) (1,219) (21) (568) 303 (967) (1,253) 185 329
Beginning Long-Term Debt 4,155 5,411 5,698 7,011 6,967 6,769 7,296 7,011 8,113 8,134 8,702 8,399 8,113 9,366 9,180
New Net Long-Term Debt 1,257 287 1,313 (44) (199) 527 817 1,101 21 568 (303) 967 1,253 (185) (329)
Ending Long-Term Debt 5,411 5,698 7,011 6,967 6,769 7,296 8,113 8,113 8,134 8,702 8,399 9,366 9,366 9,180 8,851
Less: Cash & Cash Equivalents 105 231 403 456 310 286 286 286 286 286 286 286 286 286 286
Net Debt 5,306 5,467 6,609 6,511 6,459 7,010 7,827 7,827 7,848 8,416 8,113 9,080 9,080 8,894 8,565
Change in Net Debt 1,277 161 1,141 (97) (52) 551 817 1,218 21 568 (303) 967 1,253 (185) (329)
Balance Sheet Items:

Cash & Cash Equivalents 105 231 403 456 310 286 286 286 286 286 286 286 286 286 286
Total Long-Term Debt 5,411 5,698 7,011 6,967 6,769 7,296 8,113 8,113 8,134 8,702 8,399 9,366 9,366 9,180 8,851
Equity 6,092 6,757 6,806 6,750 7,047 7,444 7,434 6,955 6,947 6,949 7,259 7,291 7,291 7,814 8,465
Book Value per Share 27.50 31.54 31.78 31.59 32.97 34.51 34.47 32.39 32.21 32.22 33.66 33.81 33.81 36.23 39.25
ROAE 11% 9% 8% 2% 5% 7% 8%
Leverage Ratios:
Long-Term Debt/Total Capital 47.0% 45.7% 50.7% 50.8% 49.0% 49.5% 52.2% 53.8% 53.9% 55.6% 53.6% 56.2% 56.2% 54.0% 51.1%
Net Debt/Total Capital 46.6% 44.7% 49.3% 49.1% 47.8% 48.5% 51.3% 52.9% 53.0% 54.8% 52.8% 55.5% 55.5% 53.2% 50.3%
EBITDA/Interest 4.8x 4.1x 4.3x 3.9x 3.7x 3.3x 3.5x 3.5x 3.6x 3.6x 3.8x 3.9x 3.9x 4.5x 4.9x
Long-Term Debt/EBITDA (TTM) 4.2x 4.1x 5.2x 5.5x 5.8x 7.1x 7.7x 7.7x 7.4x 7.6x 6.7x 7.1x 7.1x 5.8x 5.2x
Figure 30: Royal Caribbean Cruises Ltd. – Revenue Drivers

$ in millions
REVENUE DRIVERS 2006 2007 2008 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Operating Statistics
Available Passenger Cruise Days (APCD) 22.4 25.2 26.5 6.8 6.6 7.2 7.3 27.9 7.5 7.6 8.1 8.0 31.1 33.9 34.8
yoy % change 3.0% 12.3% 5.2% 7.7% 3.5% 3.1% 7.5% 5.4% 9.5% 15.0% 12.7% 9.4% 11.6% 8.8% 2.7%
Occupancy 106.5% 105.7% 104.5% 101.2% 102.3% 105.4% 100.7% 102.4% 101.7% 102.8% 105.9% 101.2% 102.9% 103.4% 104.2%
bp change -0.1% -0.8% -1.2% -3.2% -1.7% -2.4% -1.0% -2.1% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.8%
Passenger Cruise Days (PCD) 23.8 26.6 27.7 6.9 6.7 7.5 7.4 28.6 7.6 7.8 8.5 8.1 32.0 35.0 36.2
yoy % change 2.9% 11.5% 4.0% 4.4% 1.8% 0.8% 6.4% 3.3% 10.0% 15.6% 13.2% 9.9% 12.2% 9.3% 3.4%
Revenues
Passenger Ticket 3,838.6 4,427.4 4,730.3 949.3 956.6 1,270.6 1,031.9 4,208.4 1,065.5 1,138.6 1,503.5 1,179.9 4,887.5 5,502.3 5,805.7
yoy % change 6.3% 15.3% 6.8% -8.5% -16.1% -15.2% -2.1% -11.0% 12.2% 19.0% 18.3% 14.3% 16.1% 12.6% 5.5%
Passenger Ticket per PCD (in $) 161.0 166.5 171.0 137.5 142.0 168.4 139.8 147.3 140.2 146.3 176.0 145.4 152.5 157.1 160.2
yoy % change 3.4% 3.4% 2.7% -12.4% -17.6% -15.8% -8.0% -13.9% 2.0% 3.0% 4.5% 4.0% 3.5% 3.0% 2.0%
Onboard & Other 1,390.9 1,721.8 1,802.2 376.3 392.4 492.9 402.3 1,664.0 416.2 460.3 569.3 451.1 1,897.0 2,104.5 2,198.7
yoy % change 7.5% 23.8% 4.7% -3.8% -11.6% -12.8% 0.0% -7.7% 10.6% 17.3% 15.5% 12.1% 14.0% 10.9% 4.5%
Onboard & Other per PCD (in $) 58.3 64.7 65.2 54.5 58.3 65.3 54.5 58.2 54.8 59.1 66.6 55.6 59.2 60.1 60.7
yoy % change 4.5% 11.0% 0.7% -7.9% -13.1% -13.5% -6.0% -10.6% 0.5% 1.5% 2.0% 2.0% 1.6% 1.5% 1.0%
Total Revenues 5,229.6 6,149.1 6,532.5 1,325.6 1,349.0 1,763.5 1,434.2 5,872.4 1,481.7 1,598.9 2,072.8 1,631.0 6,784.5 7,606.8 8,004.4
yoy % change 6.7% 17.6% 6.2% -7.2% -14.8% -14.5% -1.5% -10.1% 11.8% 18.5% 17.5% 13.7% 15.5% 12.1% 5.2%
Less: Commissions, Transportation & Other 917.9 1,124.0 1,192.3 235.8 232.6 304.0 257.9 1,030.3 264.7 276.8 359.7 294.9 1,196.1 1,346.6 1,420.8
yoy % change 6.9% 22.5% 6.1% -8.6% -18.3% -19.1% -5.9% -13.6% 12.2% 19.0% 18.3% 14.3% 16.1% 12.6% 5.5%
% of Passenger Ticket Revenues 23.9% 25.4% 25.2% 24.8% 24.3% 23.9% 25.0% 24.5% 24.8% 24.3% 23.9% 25.0% 24.5% 24.5% 24.5%
Less: Onboard & Other 331.2 405.6 458.4 83.2 112.5 152.6 94.4 442.8 92.0 132.0 176.2 105.9 506.2 561.5 586.7
yoy % change 7.3% 22.5% 13.0% 6.0% -4.1% -9.3% 0.0% -3.4% 10.6% 17.3% 15.5% 12.1% 14.3% 10.9% 4.5%
% of Onboard & Other Revenues 23.8% 23.6% 25.4% 22.1% 28.7% 31.0% 23.5% 26.6% 22.1% 28.7% 31.0% 23.5% 26.7% 26.7% 26.7%
Net Revenues 3,980.4 4,619.5 4,881.8 1,006.5 1,003.9 1,307.0 1,081.9 4,399.3 1,124.9 1,190.1 1,536.9 1,230.2 5,082.2 5,698.7 5,996.9
yoy % change 6.5% 16.1% 5.7% -7.9% -15.0% -14.0% -0.6% -9.9% 11.8% 18.5% 17.6% 13.7% 15.5% 12.1% 5.2%
Net Yield = Net Revenue per APCD (in $) 177.76 183.64 184.47 147.54 152.46 182.60 147.56 157.70 150.58 157.16 190.53 153.38 163.25 168.25 172.40
yoy % change 3.4% 3.3% 0.5% -14.5% -17.9% -16.5% -7.4% -14.5% 2.1% 3.1% 4.3% 3.9% 3.5% 3.1% 2.5%
35
(1-212) 622-0987 16 December 2009
Figure 31: Royal Caribbean Cruises Ltd. – Expense Drivers

$ in millions
EXPENSE DRIVERS 2006 2007 2008 1Q09 2Q09 3Q09 4Q09E 2009E 1Q10E 2Q10E 3Q10E 4Q10E 2010E 2011E 2012E
Payroll & Related 501.9 584.1 657.7 168.7 165.5 171.2 178.0 683.3 187.5 193.1 195.8 197.6 774.1 854.8 891.1
yoy % change -1.7% 16.4% 12.6% 9.4% 1.3% 0.5% 4.8% 3.9% 11.1% 16.7% 14.4% 11.0% 13.3% 10.4% 4.2%
Payroll & Related per APCD (in $) 22.4 23.2 24.9 24.7 25.1 23.9 24.3 24.5 25.1 25.5 24.3 24.6 24.9 25.2 25.6
yoy % change -4.6% 3.6% 7.0% 1.5% -2.1% -2.5% -2.5% -1.4% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Food 278.6 323.0 342.6 85.4 80.9 88.4 88.4 343.1 94.0 93.5 100.1 97.2 384.8 425.0 440.8
yoy % change 2.9% 15.9% 6.1% 2.9% -1.4% -2.3% 1.5% 0.2% 10.0% 15.6% 13.3% 9.9% 12.2% 10.4% 3.7%
Food per APCD (in $) 12.4 12.8 12.9 12.5 12.3 12.3 12.1 12.3 12.6 12.3 12.4 12.1 12.4 12.5 12.7
yoy % change -0.1% 3.2% 0.8% -4.5% -4.8% -5.2% -5.5% -5.0% 0.5% 0.5% 0.5% 0.5% 0.5% 1.5% 1.0%
Fuel 480.2 546.0 722.0 154.9 136.5 146.3 157.9 595.6 156.8 163.4 171.3 168.6 660.1 706.0 741.4
yoy % change 30.5% 13.7% 32.2% -2.1% -21.7% -29.4% -13.3% -17.5% 1.2% 19.7% 17.1% 6.8% 10.8% 6.9% 5.0%
As % of Net Cruise Costs 17.8% 16.9% 20.5% 18.8% 16.8% 17.1% 18.4% 17.8% 17.5% 17.3% 17.6% 17.9% 17.6% 17.1% 17.3%
As % of Net Cruise Revenue 12.1% 11.8% 14.8% 15.4% 13.6% 11.2% 14.6% 13.5% 13.9% 13.7% 11.1% 13.7% 13.0% 12.4% 12.4%
Fuel per APCD (in $) 21.4 21.7 27.3 22.7 20.7 20.4 21.5 21.3 21.0 21.6 21.2 21.0 21.2 20.8 21.3
yoy % change 26.7% 1.2% 25.7% -9.2% -24.3% -31.5% -19.3% -21.8% -7.5% 4.1% 3.9% -2.4% -0.7% -1.7% 2.3%
Fuel Consumption (Metric Tons) 1.1 1.2 1.20 0.3 0.3 0.3 0.3 1.24 0.3 0.3 0.4 0.3 1.35 1.44 1.44
yoy % change 9.4% 5.9% 0.5% 12.2% 0.5% 1.7% -4.6% 3.6% 7.0% 12.5% 10.2% 6.9% 9.1% 6.3% 0.2%
Fuel Price ($ per Metric Ton) 429 461 604 516 459 460 489 481 488 488 488 488 488 491 515
yoy % change 19.6% 7.5% 31.0% -12.8% -22.1% -31.2% -13.5% -20.3% -5.4% 6.4% 6.2% -0.1% 1.5% 0.6% 4.8%
Other Operating 739.8 998.9 1,030.6 224.2 237.5 253.7 258.4 973.9 248.0 273.1 285.9 285.6 1,092.6 1,206.6 1,251.6
yoy % change 9.2% 35.0% 3.2% -2.6% -11.8% -3.9% -3.3% -5.5% 10.6% 15.0% 12.7% 10.5% 12.2% 10.4% 3.7%
Other Operating per APCD (in $) 33.0 39.7 38.9 32.9 36.1 35.4 35.2 34.9 33.2 36.1 35.4 35.6 35.1 35.6 36.0
yoy % change 5.9% 20.2% -1.9% -9.6% -14.8% -6.7% -10.0% -10.4% 1.0% 0.0% 0.0% 1.0% 0.5% 1.5% 1.0%
Marketing, Selling & Administrative 699.9 783.0 776.5 189.2 190.6 196.6 177.9 754.2 207.1 219.2 221.6 194.6 842.4 930.3 965.0
yoy % change 10.2% 11.9% -0.8% -7.7% -3.0% 2.9% -3.3% -2.9% 9.5% 15.0% 12.7% 9.4% 11.7% 10.4% 3.7%
Marketing, Selling & Admin. per APCD 31.3 31.1 29.3 27.7 28.9 27.5 24.3 27.0 27.7 28.9 27.5 24.3 27.1 27.5 27.7
yoy % change 6.9% -0.4% -5.7% -14.3% -6.3% -0.2% -10.0% -7.9% 0.0% 0.0% 0.0% 0.0% 0.1% 1.5% 1.0%
Net Cruise Costs 2,700.3 3,235.1 3,529.5 822.4 811.0 856.1 860.6 3,350.2 893.5 942.4 974.7 943.6 3,754.1 4,122.7 4,290.0
yoy % change 9.7% 19.8% 9.1% -1.0% -8.4% -7.2% -3.3% -5.1% 8.6% 16.2% 13.8% 9.6% 12.1% 9.8% 4.1%
Net Cruise Costs per APCD (in $) 120.59 128.60 133.37 120.55 123.15 119.61 117.38 120.09 119.60 124.44 120.83 117.64 120.59 121.72 123.33
yoy % change 6.4% 6.6% 3.7% -8.1% -11.5% -10.0% -10.0% -10.0% -0.8% 1.0% 1.0% 0.2% 0.4% 0.9% 1.3%
Net Cruise Costs (excl. Fuel) per APCD (in $) 99.15 106.90 106.09 97.85 102.42 99.18 95.84 98.74 98.61 102.86 99.60 96.62 99.39 100.88 102.01
yoy % change 2.9% 7.8% -0.8% -7.9% -8.4% -3.8% -7.6% -6.9% 0.8% 0.4% 0.4% 0.8% 0.7% 1.5% 1.1%
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Cruise Industry Summary

The cruise industry has been one of the fastest-growing segments of the global
vacation market, with worldwide passengers expanding at a compound annual rate of
approximately 7.2% between 1990 and 2008 (North America passenger CAGR of
7.2% from 1981 to 2008, and International passenger CAGR of 13.9% from 1990 to
2008). The global cruise industry carried ~16.8m passengers in 2008, comprising
~10.5 passengers from North America (63% of the total market), ~4.6m passengers
from Europe (28%), and ~1.5m passengers from the United Kingdom (9%). The
cruise market is positioned for continued growth as the market is modestly
penetrated—only 19.9% of Americans have gone on a cruise, with international
penetration substantially lower. We continue to believe that Europe holds significant
growth potential. In addition, cruise companies are looking to redeploy older
capacity to Asia, the South Pacific, Australia, New Zealand, and South America, to
expand the global cruise market and provide future catalysts for earnings growth.
Figure 32: Annual Passenger Growth

Actual ‘000s
North America % Chg. Foreign % Chg. Worldwide % Chg.
1980 1.431 -- -- -- -- --
1981 1.453 1.5% -- -- -- --
1982 1.471 1.2% -- -- -- --
1983 1.755 19.3% -- -- -- --
1984 1.859 5.9% -- -- -- --
1985 2.152 15.8% -- -- -- --
1986 2.624 21.9% -- -- -- --
1987 2.898 10.4% -- -- -- --
1988 3.175 9.6% -- -- -- --
1989 3.286 3.5% -- -- -- --
1990 3.496 6.4% 0.278 -- 3.774 --
1991 3.834 9.7% 0.334 20.1% 4.168 10.4%
1992 4.023 4.9% 0.362 8.4% 4.385 5.2%
1993 4.318 7.3% 0.41 13.3% 4.728 7.8%
1994 4.314 -0.1% 0.486 18.5% 4.8 1.5%
1995 4.223 -2.1% 0.498 2.5% 4.721 -1.6%
1996 4.477 6.0% 0.493 -1.0% 4.97 5.3%
1997 4.864 8.6% 0.516 4.7% 5.38 8.2%
1998 5.243 7.8% 0.625 21.1% 5.868 9.1%
1999 5.69 8.5% 0.647 3.5% 6.337 8.0%
2000 6.546 15.0% 0.668 3.2% 7.214 13.8%
2001 6.637 1.4% 0.862 29.0% 7.499 4.0%
2002 7.472 12.6% 1.176 36.4% 8.648 15.3%
2003 7.99 6.9% 1.536 30.6% 9.526 10.2%
2004 8.87 11.0% 1.59 3.5% 10.46 9.8%
2005 9.671 9.0% 1.509 -5.1% 11.18 6.9%
2006 10.078 4.2% 1.928 27.8% 12.006 7.4%
2007 10.247 1.7% 2.316 20.1% 12.563 4.6%
2008 10.093 -1.5% 2.912 25.7% 13.005 3.5%
CAGR (1980-2008) 7.2% 7.4% 13.9% 14.6% 7.1% 7.2%
Source: CLIA and J.P. Morgan estimates.
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(1-212) 622-0987 16 December 2009
Figure 33: North American and International Supply

By Berths
North American Supply International Supply
Lower Berths % Chg. Capacity Utilization Lower Berths % Chg.
1980 -- 1980
1981 41,073 1981
1982 47,266 15.1% 1982
1983 47,834 1.2% 1983
1984 52,392 9.5% 1984
1985 56,771 8.4% 1985
1986 60,446 6.5% 1986
1987 66,810 10.5% 1987
1988 72,268 8.2% 1988
1989 72,369 0.1% 1989
1990 83,533 15.4% 1990
1991 86,631 3.7% 1991
1992 97,539 12.6% 1992
1993 103,988 6.6% 1993
1994 103,296 -0.7% 1994
1995 105,161 1.8% 1995
1996 110,230 4.8% 1996
1997 118,013 7.1% 1997
1998 138,373 17.3% 1998
1999 148,750 7.5% 1999
2000 166,201 11.7% 2000
2001 175,855 5.8% 2001
2002 197,553 12.3% 98.6% 2002
2003 212,004 7.3% 103.3% 2003 60,000
2004 225,714 6.5% 103.3% 2004 58,000 -3.3%
2005 231,091 2.4% 103.3% 2005 66,000 13.8%
2006 248,774 7.7% 103.9% 2006 72,000 9.1%
2007 267,145 7.4% 105.7% 2007 81,000 12.5%
2008 280,093 4.8% 104.2% 2008 91,000 12.3%
CAGR (1981-2008) 7.4% 7.5% 103.2% CAGR (2003-2008) 8.7% 8.9%
CAGR (2009E-2013E) 3.8% 4.0% --
Source: CLIA and J.P. Morgan estimates.
Major Players
The cruise industry is essentially a duopoly, with the two largest global companies—
Carnival and Royal Caribbean—controlling approximately 75% of worldwide
capacity and ~85% of North American capacity in 2009 (approximately 372,000
berths, assuming double occupancy per cabin). The other company of note is NCL
Corporation (Norwegian Cruise Lines), which controls ~6% of worldwide capacity
and ~9% of North American capacity. The remainder of the industry generally
consists of regional cruise companies and/or vertically integrated tour operators.
Figure 34: Worldwide Market Share

By Berths
Other, 19.0%
RCL, 26.0%
NCL, 6.3%
CCL, 48.6%
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Cruise Segments
The typical cruise passenger is 50 years old on average, with above-average income
($109,000 per household), married (86%), with a college education (69%), and the
majority of cruisers are employed (62%) versus the 17% who are retired. The typical
cruiser sailed an average of 6.6 days with his/her spouse (75%) and spent
approximately $1,880 per person for their cruise, including air and all onboard
expenses. Cruise company brands can be broadly segmented into contemporary,
premium, and luxury. However, there generally is significant overlap and
competition among the product offerings.
• Contemporary. The contemporary cruise lines (Carnival Cruise Lines, Royal

Caribbean International, and Norwegian Cruise Lines) target a range of ages and
incomes, and generally market to first-time cruisers and families. On average, a
contemporary cruise is seven days or less. Typically, contemporary cruises are on
large- to mega-sized ships offering modern amenities and numerous onboard
activities.
• Premium. The premium lines (Cunard, Holland America, Princess, and
Celebrity) target experienced cruisers who are generally more affluent and older
than contemporary cruisers. On average, a premium cruise is seven to 14 days.
Typically, premium cruises are more service-oriented and emphasize quality,
comfort, style, and more destination-focused itineraries.
• Luxury. The luxury lines (Seabourn) target wealthy, experienced cruisers. On
average, a luxury cruise is seven to 14 days. Typically, luxury cruises are on
smaller, modern ships offering high-end service, dining, and amenities, and sail
on more exotic itineraries to ports inaccessible to bigger ships.
Figure 35: Major Operator Segment Distribution

By Berths
Lux ury , 1%
Premium, 34%
Contemporary ,
65%
Note: Includes CCL, RCL, and NCL data only.

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(1-212) 622-0987 16 December 2009
Key Markets
Cruise companies primarily source passengers and operate in North America and
Europe. Other key markets are Asia/South Pacific, including Australia and New
Zealand, and South America. Besides North America (19.9% of U.S. population has
ever taken a cruise), cruising represents a smaller portion of the overall vacation
market in other regions. For example, in the U.K. and Continental Europe, the
penetration per capita is three-fifths and one-fifth, respectively, of that in North
America. Elsewhere in the world, cruising is at an early stage of development and
has far lower penetration rates. Accordingly, these markets have considerable growth
potential, in our opinion.
• North America is the largest source market for cruise passengers.

Approximately 10.5 million persons took a cruise in 2008. At year-end, North
America was served by 122 ships (approximately 211,000 berths). North
American capacity is projected to grow 0.9%, 9.4%, 6.4%, and 3.5% in 2009,
2010, 2011, and 2012, respectively.
• Europe is the second-largest source market. Approximately 4.6 million
Europeans took a cruise in 2008. Major markets are the U.K. (21% of all
European-sourced passengers), Southern Europe (19%), and Germany (13%).
However, despite being the largest leisure vacation market in the world, Europe
has a much lower penetration rate than North America. At year-end 2008, 117
ships with approximately 130,000 berths were serving Europe. In 2009, 2010,
2011, and 2012, capacity is projected to grow 10.8%, 8.3%, 5.1%, and 4.9%,
respectively.
Demand Outlook
Carnival demand commentary
As of 3Q09, Carnival noted that bookings for the next three quarters (through 2Q10)
were running up +19% on a year-over-year basis. After adjusting for projected
capacity increases, Carnival was moderately behind last year’s booking levels,
though management noted that the booking window continues to lengthen.
Regarding price, on an overall basis, Carnival has seen prices stabilize, and for
certain itineraries where it has seen the booking window lengthen, it has been able to
increase rates. Carnival’s ability to meaningfully increase rates for 2010 is contingent
on the continued strengthening of customer demand, which should eventually begin
to re-establish the consumer psyche of booking further out and wean the consumer
off the heavy discounting/promotional activity that has characterized 2009. With that
said, Carnival should be successful in closing the remaining capacity-adjusted
occupancy gap that remains as it moves through 1Q10.
For 1Q10, given that Carnival is almost fully booked (as ships typically are close to
95% booked one quarter in advance) with business that was sold at lower price levels
(on a constant-dollar basis), it will be difficult for the company to increase pricing on
close-in bookings to a level that would offset the weak rates booked earlier in 2009,
and the company expects 1Q10 net yields to decline on a year-over-year basis.
However, given the relative weakness of the U.S. dollar to the Euro/GBP, we expect
net yields to be flat to modestly up in 1Q10 on a current-dollar basis. If booking
volumes continue at current levels, Carnival believes that, on a quarterly basis for
2010, it should start to see a positive effect on local-currency yields and a gradual
year-over-year improvement in net yields.
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(1-212) 622-0987 16 December 2009
Our checks on Carnival’s new vessel the Dream (3,650 berths or ~2% of supply),
show it is driving a low-double-digit premium over pricing for older vessels with
similar itineraries in 1Q10 and 2Q10.
Royal Caribbean demand commentary

On RCL’s 3Q09 earnings call, management commented that 4Q09 forward booking
patterns have improved since June, when the booking pace turned positive, with
year-over-year changes in price hitting the black in October. However, we note that
September/October 2008 was an extremely tough period following the collapse of
Lehman Brothers, so the improvement is largely due to easier comparisons.
For 1Q10, the bookings pace turned positive (compared to the same time last year) in
August and continued through October. On a 1Q10 cumulative basis, Royal
Caribbean is slightly behind the year-ago level, but given the steep acceleration in
bookings since August, the company expects to be more booked (versus the same
period in ’08) relatively soon. Prices for 1Q10 are trending above 2008 levels
(mostly driven by the Oasis of the Seas and Solstice class vessels which are heavily
booked in 1Q10). Excluding the newly launched Oasis of Seas and Solstice class
vessels (which will account for ~50% of Royal’s fleet in 2010), pricing for 1Q10 is
largely trending below 2008 levels. While Royal Caribbean did not provide formal
net yield guidance for 1Q10, it believes that it should achieve better net yields in
1Q10 than it did in 1Q09.
Longer term, we believe demand growth will continue to be supported by favorable

demographics, low domestic/international market penetration, high customer
satisfaction, and the introduction of innovative onboard facilities/amenities as well as
new worldwide itineraries and ports. It is important to note that the key to growth is
the industry’s ability to attract first-time cruisers because repeat levels are very high.
Supply Outlook
Supply growth is expected to slow from 2009 to 2012, versus the fairly substantial
build-out the industry experienced from 2001 through 2009. We estimate worldwide
cruise industry supply will grow at an average rate of approximately 5.9% between
2009 and 2012, reaching 425,000 berths by 2012. We believe supply increases will
be concentrated in Europe, and to a lesser extent North America.
We project North American supply to grow at an average rate of approximately 5%

between 2009 and 2012, reaching approximately 253,000 berths by 2012.
Comparatively, the region increased supply by 9% between 2001 and 2008.
We project European supply to grow at an average rate of approximately 7%

between 2009 and 2012, reaching approximately 172,000 berths by 2012.
Comparatively, the region increased supply by 10% between 2001 and 2008. We
believe that the largely under-penetrated nature of the European market is the
primary driver of the increased supply, in addition to itineraries priced in Euros/GBP.
Given the U.S. dollar’s continued weakness, the return profile of a euro-denominated
new build is higher on euro-priced itineraries than on those priced in dollars.
41
(1-212) 622-0987 16 December 2009
Figure 36: North American and European Historical/Future Capacity Growth

By Berths
North American Capacity Grow th

300,000 9%
2009-2012
+5% 8%
250,000 2002-2009
+8%
7%
200,000 6%
Year-over-Year % Growth
5%
Capacity
150,000
4%
100,000 3%
2%
50,000
1%
0 0%
2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
European Capacity Grow th

200,000 12%
2009-2012
180,000 +7%
10%
160,000
2002-2009
140,000 +10%
8%
Year-over-Year % Growth
120,000
Capacity
100,000 6%
80,000
4%
60,000
40,000
2%
20,000
0 0%
2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E
Source: Cruise Industry News, Company reports, and J.P. Morgan.
Key Cruise Industry Terms

• Passenger Cruise Days (PCD) = number of passengers carried for the period x
number of days of their respective cruises.
• Available Passenger Cruise Days (APCD) or Available Lower Berth Days
(ALBD) = double occupancy per cabin x number of cruise days for the period; a
measure of capacity.
• Occupancy = passenger cruise days / APCD or ALBD; > 100% = three or more
passengers per cabin.
• Gross Yield = total revenues / APCD or ALBD.
• Wave Season = period between January and March when the cruise industry
typically generates approximately 30%-35% of bookings for the year.
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(1-212) 622-0987 16 December 2009
• Net Yield = (total revenues – commissions, transportation & other expenses –

onboard & other expenses) / APCD or ALBD. The most relevant measure of
pricing performance because it reflects cruise revenues earned, net of the most
significant variable costs; used to manage business on a day-to-day basis.
• Gross Cruise Costs = total cruise operating expenses + marketing, selling, and
administrative expenses.
• Net Cruise Costs = total cruise operating expenses + marketing, selling, and
administrative expenses – commissions, transportation & other expenses –
onboard & other expenses. The most relevant measure of cost performance; used
to measure the ability to control costs in a manner that positively affects net
income.
• Rebating = when travel agents give a portion of their commissions to consumers,
thereby lowering the ticket price. The agent’s motivation is to drive higher
volumes and market share. The cruise lines believe that rebating by select agents
confuses the market and commoditizes the product. Cruise lines want consistent
pricing.
• Air/Sea Mix = proportion of passengers who book air travel through the cruise
line as part of their cruise package versus passengers who make their own travel
arrangements (air or other, if necessary). A change in the air/sea mix affects
margins, but not operating income because the airfare collected by cruise lines is
booked as an expense to the airlines. However, the higher the air/sea mix, the
lower the operating margins, the higher the gross yield, and vice versa.
• Ship Options = reservations with shipyards to build vessels. Options do not cost
anything and can be deferred prior to the expiration date in the event that the
cruise operator cannot commit capital to construction of a new ship.
Cruise Industry Stock Drivers

Cruise line industry stocks are high-beta stocks that historically have traded in wide
ranges (for 2009 to date, the beta for CCL was 1.35 and for RCL 2.17). We believe
net yields (and net yields expectations) and fuel prices are the two key factors that
influence investor sentiment, with each having played a more important role at
different points in history. Other factors include changes in measures of consumer
confidence (University of Michigan Survey), EPS growth (valuation-to-growth
profile is important as these stocks are valued on P/E), and returns on invested
capital/value spreads (improving implies higher multiples).
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(1-212) 622-0987 16 December 2009
Figure 37: CCL and RCL Stock Price Trends
$70.00
$60.00
$50.00
Stock Price
$40.00
$30.00
$20.00
$10.00
$0.00
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09E
RCL CCL
Source: Bloomberg and J.P. Morgan.
44
(1-212) 622-0987 16 December 2009
Figure 38: Forward P/E, EV/EBITDA, and EV/Berth Multiples for CCL and RCL
60x
55x
50x
45x
40x
35x
Forward P/E
30x
25x
20x
15x
10x
5x
0x
2Q93
4Q93
2Q94
4Q94
2Q95
4Q95
2Q96
4Q96
2Q97
4Q97
2Q98
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
2Q04
4Q04
2Q05
4Q05
2Q06
4Q06
2Q07
4Q07
2Q08
4Q08
2Q09
4Q09
RCL Fw d. P/E CCL Fw d. P/E
30x
25x
20x
Forward EV/EBITDA
15x
10x
5x
0x
2Q93
4Q93
2Q94
4Q94
2Q95
4Q95
2Q96
4Q96
2Q97
4Q97
2Q98
4Q98
2Q99
4Q99
2Q00
4Q00
2Q01
4Q01
2Q02
4Q02
2Q03
4Q03
2Q04
4Q04
2Q05
4Q05
2Q06
4Q06
2Q07
4Q07
2Q08
4Q08
2Q09
4Q09
RCL Fw d. EV/EBITDA CCL Fw d. EV/EBITDA
$700,000
$600,000
$500,000
$400,000
EV/Berth
$300,000
$200,000
$100,000
$0
1Q98
3Q98
1Q99
3Q99
1Q00
3Q00
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
1Q09
3Q09
RCL EV/Berth CCL EV/Berth
45
(1-212) 622-0987 16 December 2009
Net Yields
Net yields are the most relevant measure of pricing performance because they reflect
cruise revenues net of the most significant variable costs (commissions,
transportation, and other expenses, onboard and other expenses) on a capacity-
adjusted basis. Our analysis indicates that investors effectively price in what they
perceive to be the net yields approximately two quarters in advance. We calculate a
correlation coefficient of approximately 0.76 and 0.71 between CCL’s and RCL’s
stock prices (with a two-quarter lead) and net yields, respectively.
For 2009, on a current-dollar and constant-dollar basis, Carnival guided for net yields
to decline -14% and -10%, respectively, as the effects of the relatively strong dollar
in 1Q09 and 2Q09 drove current-dollar net yields lower. In 4Q09, currency is
expected to benefit net yields by ~200bps, as current-dollar and constant-dollar net
yield guidance calls for declines of -9% to -11%, and -11% to -13%, respectively.
We estimate that a change of one percentage point in net yield growth would affect
our 2010 EPS estimates by approximately $0.14 per share.
For 2009, Royal Caribbean guided for net yields to decline -14% on a constant-
currency basis, or -12% to -13% on a current-dollar basis. In the 4Q09, RCL guided
for net yields to decline -7% to -8%. We estimate that a change of one percentage
point in net yield growth would affect our 4Q09 EPS estimates by approximately
$0.05 per share for Royal Caribbean.
We estimate 2010 net yields will increase 3.5% for Royal Caribbean on capacity
increases and pricing that should begin to recover modestly in 2010. We estimate that
Royal Caribbean’s net yields will benefit by ~200bps, from the higher-priced
itineraries from its newly launched Oasis (Oasis of the Seas) and Solstice class
vessels (Equinox), and from its Freedom class vessels (which in total account for
21,900 berths, or 25% of RCL’s total berths). We believe that offsetting these strong
results will be cannibalization of demand that we think is all but inevitable when
introducing newer vessels; thus, pricing on some of RCL’s older ships should be
impacted. We estimate that a change of one percentage point in net yield growth
would affect our 2010 EPS estimates by approximately $0.24 per share for Royal
Caribbean.
In 2010, we expect Carnival’s net yields to increase 3.0%, as it largely benefits from
a modest recovery in the leisure traveler, and begins to regain pricing power on some
itineraries. In addition, we believe foreign exchange translation from its European
fleet will benefit CCL’s net yields by ~200bps in 2010, as the dollar continues to be
weak against the Euro and the British Pound. We estimate that a change of one
percentage point in net yield growth would affect our 2010 EPS estimates by
approximately $0.14 per share for Carnival.
46
(1-212) 622-0987 16 December 2009
Figure 39: Net Yield and CCL Stock Price Trends
20% 100%
15% 80%
60%
Stock Price (YoY % Change)

10%
Net Yield (YoY % Change)
40%
5% 20%
0% 0%
-5% -20%
-40%
-10%
-60%
-15% -80%
-20% -100%
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09E
1Q10E
CCL Net Yield CCL Stock Price (2 Qtr. Lead)
Source: Company reports, Bloomberg, and J.P. Morgan.
Figure 40: Net Yield and RCL Stock Price Trends
20% 200%
15% 150%
Stock Price (YoY % Change)

10% 100%
Net Yield (YoY % Change)
5% 50%
0% 0%
-5% -50%
-10% -100%
-15% -150%
-20% -200%
1Q00
2Q00
3Q00
4Q00
1Q01
2Q01
3Q01
4Q01
1Q02
2Q02
3Q02
4Q02
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
4Q06
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09E
1Q10E
RCL Net Yield RCL Stock Price (2 Qtr. Lead)
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(1-212) 622-0987 16 December 2009
Net Yields vs. Stock Performance—A Look at History

Cruise stocks have historically had large second-derivative moves, meaning that the
stocks have tended to outperform when net yield acceleration occurred on a year-
over-year basis (i.e., a positive swing rather than positive growth in net yields). We
anticipate the second-derivative change in annual net yields to turn positive in 2010
(even though we assume low-single-digit net yield increases for RCL and CCL, this
should be less negative than in 2009).
Figure 41: RCL Price Performance in Periods of Net Yield Acceleration/Deceleration (Two-Quarter Lead for Stock/S&P500 Performance)
YOY % Change YOY Swing RCL Stock S&P 500 Outperformance/
Year RCL Net Yield in Net Yield in Net Yield % Performance (Indexed) Index Return (Underperformance)
1Q00 $166.43 6.0% 6.0% 12.7% 14.5% -1.8%

2Q00 $169.45 2.4% -3.6% -43.2% 2.0% -45.2%
3Q00 $187.28 -1.0% -3.4% -33.9% -2.9% -31.0%
4Q00 $132.52 -7.0% -6.0% 39.1% -1.2% 40.4%
1Q01 $148.12 -11.0% -4.0% 2.8% -8.1% 10.8%
2Q01 $154.54 -8.8% 2.2% -12.9% -12.1% -0.7%
3Q01 $174.55 -6.8% 2.0% -4.1% 5.5% -9.6%
4Q01 $118.34 -10.7% -3.9% -51.5% -15.0% -36.5%
1Q02 $137.76 -7.0% 3.7% 51.0% 10.3% 40.7%
2Q02 $149.44 -3.3% 3.7% 39.2% -0.1% 39.3%
3Q02 $171.58 -1.7% 1.6% -13.5% -13.7% 0.2%
4Q02 $130.89 10.6% 12.3% -18.4% -17.6% -0.7%
1Q03 $143.66 4.3% -6.3% 4.9% 7.9% -3.0%
2Q03 $143.69 -3.8% -8.1% -10.0% -3.6% -6.4%
3Q03 $168.56 -1.8% 2.1% 54.1% 14.9% 39.2%
4Q03 $130.85 0.0% 1.7% 21.4% 2.2% 19.2%
1Q04 $151.22 5.3% 5.3% 23.8% 11.6% 12.1%
2Q04 $161.73 12.6% 7.3% 26.8% 1.3% 25.5%
3Q04 $190.08 12.8% 0.2% -1.6% 1.3% -2.9%
4Q04 $136.56 4.4% -8.4% 0.4% -2.3% 2.7%
1Q05 $163.59 8.2% 3.8% 24.9% 8.7% 16.1%
2Q05 $171.99 6.3% -1.8% -17.9% -2.6% -15.3%
3Q05 $203.18 6.9% 0.6% 8.2% 0.9% 7.3%
4Q05 $147.77 8.2% 1.3% -10.7% 3.1% -13.8%
1Q06 $166.76 1.9% -6.3% 4.3% 1.6% 2.7%
2Q06 $182.23 6.0% 4.0% -6.7% 3.7% -10.5%
3Q06 $208.71 2.7% -3.2% -9.0% -1.9% -7.1%
4Q06 $152.58 3.3% 0.5% 1.5% 5.2% -3.7%
1Q07 $161.11 -3.4% -6.6% 6.6% 6.2% 0.4%
2Q07 $183.80 0.9% 4.2% 1.9% 0.2% 1.7%
3Q07 $217.26 4.1% 3.2% 1.9% 5.8% -3.9%
4Q07 $169.41 11.0% 6.9% -9.2% 1.6% -10.7%
1Q08 $172.55 7.1% -3.9% 8.7% -3.8% 12.6%
2Q08 $185.72 1.0% -6.1% -22.5% -9.9% -12.6%
3Q08 $218.80 0.7% -0.3% -31.7% -3.2% -28.5%
4Q08 $159.43 -5.9% -6.6% -7.7% -8.9% 1.2%
1Q09 $147.54 -14.5% -8.6% -33.7% -22.6% -11.2%
2Q09 $152.46 -17.9% -3.4% -41.7% -11.7% -30.1%
3Q09 $179.17 -18.1% -0.2% 69.0% 15.2% 53.8%
4Q09E $147.56 -7.4% 10.7% 77.8% 15.0% 62.9%
1Q10E $150.58 2.1% 9.5% -- -- --
Avg. Return When Net Yield Growth Accelerates 12.8% 3.0% 9.8%
Avg. Return When Net Yield Growth Decelerates -8.8% -3.4% -5.4%
48
(1-212) 622-0987 16 December 2009
Figure 42: CCL Price Performance in Periods of Net Yield Acceleration/Deceleration (Two-Quarter Lead for Stock/S&P500 Performance)
YOY % Change YOY Swing CCL Stock S&P 500 Outperformance/
Year CCL Net Yield in Net Yield in Net Yield % Performance (Indexed) Index Return (Underperformance)
1Q03 $143.86 1.4% 14.6% 7.9% 6.7%

2Q03 $138.78 -6.7% -8.1% -18.1% -3.6% -14.5%
3Q03 $190.20 -3.4% 3.3% 33.2% 14.9% 18.3%
4Q03 $144.73 -4.1% -0.7% 13.0% 2.2% 10.8%
1Q04 $149.76 4.9% 9.0% 1.7% 11.6% -9.9%
2Q04 $157.10 13.8% 8.9% 26.1% 1.3% 24.8%
3Q04 $210.88 10.9% -2.9% -4.0% 1.3% -5.3%
4Q04 $159.40 10.1% -0.8% 6.1% -2.3% 8.5%
1Q05 $161.14 7.6% -2.5% 17.2% 8.7% 8.5%
2Q05 $170.17 8.3% 0.7% 2.6% -2.6% 5.2%
3Q05 $224.68 6.5% -1.8% -2.8% 0.9% -3.7%
4Q05 $169.17 6.1% -0.4% -7.1% 3.1% -10.2%
1Q06 $162.86 1.1% -5.1% 11.0% 1.6% 9.4%
2Q06 $172.67 1.5% 0.4% -5.2% 3.7% -8.9%
3Q06 $227.02 1.0% -0.4% -22.8% -1.9% -20.9%
4Q06 $173.05 2.3% 1.3% 1.9% 5.2% -3.3%
1Q07 $163.35 0.3% -2.0% 20.7% 6.2% 14.5%
2Q07 $172.86 0.1% -0.2% -5.2% 0.2% -5.4%
3Q07 $232.72 2.5% 2.4% 8.6% 5.8% 2.8%
4Q07 $181.52 4.9% 2.4% -10.7% 1.6% -12.3%
1Q08 $173.50 6.2% 1.3% 0.3% -3.8% 4.1%
2Q08 $185.42 7.3% 1.1% -12.8% -9.9% -2.9%
3Q08 $242.20 4.1% -3.2% 1.8% -3.2% 5.0%
4Q08 $177.82 -2.0% -6.1% -7.5% -8.9% 1.4%
1Q09 $154.22 -11.1% -9.1% -43.3% -22.6% -20.8%
2Q09 $154.27 -16.8% -5.7% -6.9% -11.7% 4.8%
3Q09 $202.19 -16.5% 0.3% 30.1% 15.2% 14.8%
4Q09E $158.40 -10.9% 5.6% 19.3% 15.0% 4.3%
1Q10E $155.79 1.0% 11.9% -- -- --
Avg. Return When Net Yield Growth Accelerates 8.4% 5.1% 3.4%
Avg. Return When Net Yield Growth Decelerates -3.2% -2.0% -1.2%
49
(1-212) 622-0987 16 December 2009
The Relationship Between Net Yields and Lodging RevPAR

We have found that historically net yield performance has been highly correlated to
domestic lodging RevPAR performance on a quarterly basis (0.82 correlation
coefficient, and 0.67 R2).
While lodging and cruise demand characteristics are different, as cruise demand is
~100% leisure-driven, and lodging demand is more levered to corporate
transient/group (~65-70% of rooms demanded) than leisure (~30% of rooms
demanded), we think the way the companies have historically managed demand and
occupancy in a slowing macro/consumer environment make for similarly weak
operating environments for both industries.
In the present lodging downcycle and sluggish macroeconomic environment, lodging

companies tended to reduce rates aggressively, in addition to experiencing outsized
occupancy declines, leading to negative RevPAR results. Similarly, cruise companies
aggressively discounted pricing and increased promotional activity substantially to
reach 100%+ occupancy targets, leading to reduced net yields. In either case, the
relevant operational metric was impacted by these actions:
Figure 43: Quarterly Cruise Net Yields vs. Lodging RevPAR

RCL CCL Total U.S. Luxury Upper Upscale Upscale Midscale w F&B Midscale wo F&B Economy
Net Yield % Change Net Yield % Change RevPAR % Change RevPAR % Change RevPAR % Change RevPAR % Change RevPAR % Change RevPAR % Change RevPAR % Change
1Q99 157.01 0.0% -- -- $47.87 2.5% $156.84 4.2% $93.50 2.3% $65.48 1.6% $38.52 1.1% $36.13 3.5% $22.83 4.0%
2Q99 165.48 3.0% -- -- $52.81 1.4% $159.09 3.3% $96.57 1.5% $68.43 0.9% $45.48 0.6% $42.77 1.7% $28.44 2.1%
3Q99 189.17 3.0% -- -- $56.02 3.4% $154.05 6.1% $93.62 3.3% $67.99 1.2% $49.48 3.1% $45.81 2.0% $32.11 3.2%
4Q99 142.50 3.0% -- -- $46.73 3.4% $161.43 7.4% $90.04 4.3% $60.52 0.5% $37.99 2.4% $35.50 2.1% $23.54 3.0%
1Q00 166.43 6.0% -- -- $49.89 4.2% $174.02 11.0% $97.63 4.4% $66.40 1.4% $39.67 3.0% $37.15 2.8% $23.42 2.6%
2Q00 169.45 2.4% -- -- $57.09 8.1% $179.12 12.6% $105.90 9.7% $73.38 7.2% $47.95 5.4% $45.10 5.4% $29.57 4.0%
3Q00 187.28 -1.0% -- -- $59.51 6.2% $168.41 9.3% $101.29 8.2% $73.05 7.4% $51.40 3.9% $47.92 4.6% $32.75 2.0%
4Q00 132.52 -7.0% -- -- $49.39 5.7% $167.90 4.0% $95.04 5.5% $64.55 6.7% $39.04 2.8% $37.33 5.2% $24.30 3.2%
1Q01 148.12 -11.0% -- -- $51.74 3.7% $169.75 -2.5% $99.39 1.8% $68.85 3.7% $40.53 2.2% $39.13 5.3% $24.24 3.5%
2Q01 154.54 -8.8% -- -- $55.13 -3.4% $164.22 -8.3% $98.73 -6.8% $70.06 -4.5% $46.10 -3.8% $45.20 0.2% $29.01 -1.9%
3Q01 174.55 -6.8% -- -- $52.91 -11.1% $132.58 -21.3% $82.15 -18.9% $63.22 -13.5% $46.56 -9.4% $45.74 -4.5% $31.02 -5.3%
4Q01 118.34 -10.7% -- -- $41.32 -16.3% $125.22 -25.4% $73.95 -22.2% $52.63 -18.5% $33.09 -15.2% $34.98 -6.3% $22.10 -9.1%
1Q02 137.76 -7.0% -- -- $46.31 -10.5% $144.18 -15.1% $85.59 -13.9% $59.06 -14.2% $36.15 -10.8% $37.25 -4.8% $22.57 -6.9%
2Q02 149.44 -3.3% -- -- $52.44 -4.9% $149.24 -9.1% $92.36 -6.5% $65.08 -7.1% $43.47 -5.7% $44.59 -1.4% $27.69 -4.6%
3Q02 171.58 -1.7% -- -- $53.12 0.4% $130.54 -1.5% $83.63 1.8% $62.88 -0.5% $46.04 -1.1% $46.15 0.9% $30.26 -2.4%
4Q02 130.89 10.6% -- -- $43.67 5.7% $134.09 7.1% $80.08 8.3% $55.33 5.1% $34.00 2.7% $35.89 2.6% $22.00 -0.4%
1Q03 143.66 4.3% 143.86 1.4% $45.68 -1.4% $138.26 -4.1% $83.22 -2.8% $57.85 -2.0% $35.29 -2.4% $36.57 -1.8% $21.72 -3.7%
2Q03 143.69 -3.8% 138.78 -6.7% $50.90 -2.9% $142.64 -4.4% $86.84 -6.0% $62.62 -3.8% $41.90 -3.6% $43.61 -2.2% $26.60 -3.9%
3Q03 168.56 -1.8% 190.20 -3.4% $54.54 2.7% $139.77 7.1% $84.30 0.8% $63.89 1.6% $46.81 1.7% $47.21 2.3% $30.37 0.3%
4Q03 130.85 0.0% 144.73 -4.1% $45.29 3.7% $142.23 6.1% $80.98 1.1% $56.43 2.0% $35.05 3.1% $37.30 3.9% $22.46 2.1%
1Q04 151.22 5.3% 149.76 4.9% $49.20 7.7% $153.37 10.9% $89.17 7.1% $61.95 7.1% $37.08 5.1% $38.92 6.4% $22.54 3.8%
2Q04 161.73 12.6% 157.10 13.8% $55.36 8.8% $159.84 12.1% $95.07 9.5% $68.41 9.3% $44.89 7.1% $46.52 6.7% $27.86 4.8%
3Q04 190.08 12.8% 210.88 10.9% $58.18 6.7% $150.65 7.8% $90.45 7.3% $69.54 8.8% $49.43 5.6% $50.33 6.6% $31.59 4.0%
4Q04 136.56 4.4% 159.40 10.1% $49.19 8.6% $155.88 9.6% $87.77 8.4% $62.11 10.1% $37.43 6.8% $40.87 9.6% $23.90 6.4%
1Q05 163.59 8.2% 161.14 7.6% $52.76 7.2% $170.59 11.2% $95.69 7.3% $67.83 9.5% $39.69 7.0% $43.51 11.8% $24.26 7.6%
2Q05 171.99 6.3% 170.17 8.3% $60.01 8.4% $176.75 10.6% $105.27 10.7% $75.48 10.3% $48.47 8.0% $51.83 11.4% $29.62 6.3%
3Q05 203.18 6.9% 224.68 6.5% $63.13 8.5% $171.27 13.7% $100.20 10.8% $75.96 9.2% $53.60 8.4% $55.61 10.5% $33.70 6.7%
4Q05 147.77 8.2% 169.17 6.1% $54.13 10.0% $170.89 9.6% $96.15 9.5% $69.16 11.3% $41.74 11.5% $46.38 13.5% $26.37 10.4%
1Q06 166.76 1.9% 162.86 1.1% $58.25 10.4% $189.24 10.9% $104.84 9.6% $75.30 11.0% $43.73 10.2% $49.16 13.0% $26.53 9.3%
2Q06 182.23 6.0% 172.67 1.5% $65.25 8.7% $197.81 11.9% $112.62 7.0% $82.63 9.5% $52.33 8.0% $57.08 10.1% $31.71 7.1%
3Q06 208.71 2.7% 227.02 1.0% $67.05 6.2% $188.61 10.1% $105.81 5.6% $81.30 7.0% $56.40 5.2% $59.70 7.4% $34.81 3.3%
4Q06 152.58 3.3% 173.05 2.3% $57.42 6.1% $194.49 13.8% $102.16 6.3% $72.87 5.4% $42.84 2.6% $49.27 6.2% $26.62 0.9%
1Q07 161.11 -3.4% 163.35 0.3% $61.31 5.2% $206.33 9.0% $110.08 5.0% $78.67 4.5% $44.54 1.8% $51.82 5.4% $26.93 1.5%
2Q07 183.80 0.9% 172.86 0.1% $68.92 5.6% $212.46 7.4% $119.10 5.7% $86.62 4.8% $54.31 3.8% $60.90 6.7% $32.61 2.8%
3Q07 217.26 4.1% 232.72 2.5% $71.24 6.2% $202.00 7.1% $112.70 6.5% $85.49 5.2% $58.80 4.2% $63.52 6.4% $35.84 3.0%
4Q07 169.41 11.0% 181.52 4.9% $60.85 6.0% $209.48 7.7% $108.04 5.8% $76.31 4.7% $44.48 3.8% $51.77 5.1% $27.01 1.5%
1Q08 172.55 7.1% 173.50 6.2% $62.51 2.0% $207.15 0.4% $111.15 1.0% $79.14 0.6% $44.47 -0.2% $52.78 1.8% $26.50 -1.6%
2Q08 185.72 1.0% 185.42 7.3% $69.89 1.4% $209.52 -1.4% $121.07 1.7% $87.54 1.1% $54.13 -0.3% $61.49 1.0% $31.96 -2.0%
3Q08 218.80 0.7% 242.20 4.1% $70.51 -1.0% $194.45 -3.7% $111.55 -1.0% $84.36 -1.3% $57.86 -1.6% $62.85 -1.1% $34.63 -3.4%
4Q08 159.43 -5.9% 177.82 -2.0% $54.90 -9.8% $173.64 -17.1% $95.99 -11.2% $68.82 -9.8% $40.36 -9.2% $47.61 -8.0% $25.02 -7.4%
1Q09 147.54 -14.5% 154.22 -11.1% $51.42 -17.7% $150.79 -27.2% $89.66 -19.3% $64.69 -18.3% $37.56 -15.5% $45.35 -14.1% $23.12 -12.7%
2Q09 152.46 -17.9% 154.27 -16.8% $56.24 -19.5% $148.76 -29.0% $94.97 -21.6% $69.35 -20.8% $44.66 -17.5% $51.34 -16.5% $26.80 -16.1%
3Q09 179.17 -18.1% 202.19 -16.5% $58.62 -16.9% $147.24 -24.3% $90.97 -18.4% $69.14 -18.0% $48.67 -15.9% $53.10 -15.5% $29.11 -15.9%
RCL CCL RCL CCL RCL CCL RCL CCL RCL CCL RCL CCL RCL CCL
Correlation 0.81 0.83 0.82 0.77 0.81 0.86 0.80 0.85 0.81 0.81 0.76 0.79 0.75 0.79
R2 0.66 0.68 0.67 0.60 0.66 0.73 0.63 0.72 0.66 0.66 0.58 0.63 0.57 0.62
Source: Company reports and Smith Travel Research.
50
(1-212) 622-0987 16 December 2009
Figure 44: Annual Cruise Net Yields vs. Lodging RevPAR

RCL CCL Total U.S. Luxury Upper Upscale Upscale Midscale w F&B Midscale wo F&B Economy
Net Yield % Change Net Yield % Change RevPAR % Change RevPAR % Change RevPAR % Change RevPAR % Change RevPAR % Change RevPAR % Change RevPAR % Change
FY98 159.93 3.6% -- -- 47.99 4.7% 150.02 5.8% 90.83 3.5% 64.85 2.4% 42.13 3.3% 39.21 2.8% 25.97 2.7%
FY99 163.29 2.1% -- -- 49.57 3.3% 157.89 5.2% 93.42 2.9% 65.53 1.1% 42.89 1.8% 40.09 2.2% 26.76 3.1%
FY00 163.29 0.0% -- -- 50.89 2.7% 172.26 9.1% 99.96 7.0% 69.33 5.8% 44.54 3.9% 41.91 4.5% 27.54 2.9%
FY01 148.59 -9.0% -- -- 54.01 6.1% 147.34 -14.5% 88.40 -11.6% 63.50 -8.4% 41.60 -6.6% 41.24 -1.6% 26.60 -3.4%
FY02 147.54 -0.7% 160.34 -3.7% 50.25 -7.0% 139.33 -5.4% 85.38 -3.4% 60.56 -4.6% 39.95 -4.0% 40.98 -0.6% 25.65 -3.6%
FY03 146.65 -0.6% 155.09 -3.3% 48.91 -2.7% 140.75 1.0% 83.83 -1.8% 60.20 -0.6% 39.80 -0.4% 41.20 0.6% 25.31 -1.3%
FY04 160.12 9.2% 170.28 9.8% 49.14 0.5% 154.93 10.1% 90.61 8.1% 65.51 8.8% 42.25 6.2% 44.20 7.3% 26.50 4.7%
FY05 171.90 7.4% 181.76 6.7% 53.02 7.9% 172.38 11.3% 99.33 9.6% 72.12 10.1% 45.92 8.7% 49.38 11.7% 28.52 7.6%
FY06 177.76 3.4% 184.50 1.5% 57.55 8.5% 192.55 11.7% 106.35 7.1% 78.01 8.2% 48.86 6.4% 53.83 9.0% 29.93 5.0%
FY07 183.64 3.3% 188.46 2.1% 62.03 7.8% 207.57 7.8% 112.47 5.7% 81.75 4.8% 50.57 3.5% 57.02 5.9% 30.62 2.3%
FY08 184.47 0.5% 195.46 3.7% 65.62 5.8% 195.85 -5.6% 109.85 -2.3% 79.85 -2.3% 49.25 -2.6% 56.15 -1.5% 29.54 -3.5%
RCL CCL RCL CCL RCL CCL RCL CCL RCL CCL RCL CCL RCL CCL
Correlation 0.13 0.52 0.84 0.57 0.89 0.74 0.87 0.73 0.87 0.68 0.76 0.61 0.78 0.66
R2 0.02 0.27 0.71 0.33 0.79 0.55 0.75 0.54 0.75 0.47 0.58 0.37 0.61 0.44
Source: Company reports and Smith Travel Research.
51
(1-212) 622-0987 16 December 2009
Fuel Prices
Cruise companies use a combination of fuel blends with bunker (IFO-380)
constituting the majority of Carnival’s and Royal Caribbean’s fuel consumption. In
2009, fuel should account for approximately 11% and 13% of net cruise revenues,
and 16% and 18% of net cruise costs, for Carnival and Royal Caribbean,
respectively.
Historically, there have periods when there was a high inverse correlation between
the price of bunker fuel and stock prices—that relationship of late has greatly
dissipated. Between 2005 and 2006, the correlation coefficient between stock prices
and the cost of IFO-380 was 0.76 and 0.79 for Carnival and Royal Caribbean,
respectively. We note that this high correlation began in 2005 when fuel prices
increased significantly. Since that point, the relationship between bunker prices and
cruise stocks significantly abated. We believe this will remain the case until the price
of bunker significantly outpaces (to the upside or downside) the importance of net
yields (ticket prices and onboard revenue). Interestingly, both Carnival and Royal
Caribbean stock prices and the price of bunker fuel have moved in tandem in 2008
and 2009 (correlation coefficients of 0.78 and 0.68 for Carnival and Royal
Caribbean, respectively), which is largely a result of both bunker and the stocks
rebounding from lows in late 2008/early 2009.
In addition, we continue to see added benefits from new, more fuel-efficient capacity
and from fuel-conservation initiatives, such as technological innovations and
restructuring itineraries. We estimate that a 10% change in fuel cost per metric ton
would affect our 2010 EPS estimates by approximately $0.20 per share for Carnival
and approximately $0.16 per share for Royal Caribbean.
52
(1-212) 622-0987 16 December 2009
Figure 45: Fuel Price and Stock Price Trends
$70 $0
$60 $100
$200
$50
Price per Metric Ton

Cruise Stock Prices
$300
$40
$400
$30
$500
$20
$600
$10 $700
$0 $800
7/31/02
1/31/03
7/31/03
1/31/04
7/31/04
1/31/05
7/31/05
1/31/06
7/31/06
1/31/07
7/31/07
1/31/08
7/31/08
1/31/09
7/31/09
CCL Stock Price RCL Stock Price Worldw ide Av erage, IFO-380
North American Av erage, IFO-380 Intl. Av erage, IFO-380
53
(1-212) 622-0987 16 December 2009
Analyst Certification:
The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple research analysts are primarily
responsible for this report, the research analyst denoted by an “AC” on the cover or within the document individually certifies, with
respect to each security or issuer that the research analyst covers in this research) that: (1) all of the views expressed in this report
accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part of any of the research
analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the
research analyst(s) in this report.
Important Disclosures
• Market Maker/ Liquidity Provider: JPMSL and/or an affiliate is a market maker and/or liquidity provider in Carnival Corporation,
Royal Caribbean Cruises.
• Client of the Firm: Carnival Corporation is or was in the past 12 months a client of JPMSI; during the past 12 months, JPMSI
provided to the company investment banking services, non-investment banking securities-related services and non-securities-related
services. Royal Caribbean Cruises is or was in the past 12 months a client of JPMSI; during the past 12 months, JPMSI provided to
the company investment banking services, non-investment banking securities-related services and non-securities-related services.
• Investment Banking (past 12 months): JPMSI or its affiliates received in the past 12 months compensation for investment banking
services from Carnival Corporation, Royal Caribbean Cruises.
• Investment Banking (next 3 months): JPMSI or its affiliates expect to receive, or intend to seek, compensation for investment
banking services in the next three months from Carnival Corporation, Royal Caribbean Cruises.
• Non-Investment Banking Compensation: JPMSI has received compensation in the past 12 months for products or services other
than investment banking from Carnival Corporation, Royal Caribbean Cruises. An affiliate of JPMSI has received compensation in
the past 12 months for products or services other than investment banking from Carnival Corporation, Royal Caribbean Cruises.
Carnival Corporation (CCL) Price Chart
Date Rating Share Price Price Target

($) ($)
80 10-Oct-06 N 48.30 --
N $22 13-Jul-07 OW 46.86 --
64 02-Jun-08 N 39.28 --
N OW N N $25 18-Dec-08 N 23.47 25.00
Price($) 48 24-Mar-09 N 23.31 22.00
32
16
0
Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
06 07 07 07 07 08 08 08 08 09 09 09 09 10
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage May 31, 2008 - Jun 02, 2008. This chart shows J.P. Morgan's continuing coverage of this stock; the
current analyst may or may not have covered it over the entire period.
J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.
54
(1-212) 622-0987 16 December 2009
Royal Caribbean Cruises (RCL) Price Chart
80
Date Rating Share Price Price Target
($) ($)
10-Oct-06 N 39.65 --
64 13-Jul-07 OW 40.39 --
02-Jun-08 N 30.41 --
48
N OW N N $9 29-Jan-09 N 9.06 9.00
Price($)
32
16
0
Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
06 07 07 07 07 08 08 08 08 09 09 09 09 10
Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.
Break in coverage May 31, 2008 - Jun 02, 2008. This chart shows J.P. Morgan's continuing coverage of this stock; the
current analyst may or may not have covered it over the entire period.
J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.
Explanation of Equity Research Ratings and Analyst(s) Coverage Universe:

J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform the
average total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelve
months, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)
coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return of
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and/or country shown on the cover of each publication. See below for the specific stocks in the certifying analyst(s) coverage universe.
Coverage Universe: Kevin Milota: Gaylord Entertainment (GET)
J.P. Morgan Equity Research Ratings Distribution, as of September 30, 2009

Overweight Neutral Underweight
(buy) (hold) (sell)
JPM Global Equity Research Coverage 39% 46% 15%
IB clients* 56% 57% 42%
JPMSI Equity Research Coverage 38% 51% 10%
IB clients* 76% 72% 56%
*Percentage of investment banking clients in each rating category.
For purposes only of NASD/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold
rating category; and our Underweight rating falls into a sell rating category.
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55
(1-212) 622-0987 16 December 2009
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(1-212) 622-0987 16 December 2009
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North America Equity Research

Assuming Coverage: Catching the Trade Winds of a RCL, RCL US

See page 54 for analyst certification and important disclosures.

Key Investment Points

Carnival to benefit from strong operating leverage and flow-through in a

Improving fundamentals and reduced capital investments related to new builds

1) a substantial increase in the common dividend; 2) share buybacks (although we

Compelling valuation versus long-term average

Next catalyst for the group—Carnival’s earnings announcement on December

Economic and event risks

Figure 1: Carnival Corp. & Plc – Ships/Berths by Brand

Source: J.P. Morgan estimates.

Figure 2: Carnival Corp. & Plc – Ships/Berths by Brand (Continued)

Total Ships Total Berths Average Fleet Age

Figure 3: Carnival Corp. & Plc – New Ship Orderbook

Holland America Line

Total 13 30,344 923,700 €4,080 $1,938

Total Newbuild Investment (USD) $7,895

4Q09 and 2010 Earnings Estimates

Forward Demand Commentary

Euro to USD $1.46

Yields ↓ Moderately ↓ Moderately ↓

Yields ↓ Moderately ↓ in local currency, Flat to ↑ in Moderately ↓

Commentary for European Brands

Source: J.P. Morgan estimates.

Sensitivity to Change in Price of Fuel:

CCL Guidance (as of 3Q09) JPM Estimates

Sensitivity to Change in Net Yield:

(1) Midpoint of CCL’s Net Yield Guidance Range.

Valuation & Price Target Summary

Figure 6: YE10 Price Target

2011E EPS $2.84

Current Price 33.88

2011 Fuel Price ($/Ton)

Note: Assumes a 15x target multiple.

Figure 8: Carnival Corp. & Plc – Risk/Reward Analysis

Price Range Based on Estimated 2009 EPS Range

-58% -55% -53% -50% -48% -45% -43%

7.9x $19.14 $20.27 $21.39 $22.52 $23.65 $24.77 $25.90

9.9x $23.97 $25.38 $26.79 $28.20 $29.61 $31.02 $32.43

13.9x $33.63 $35.60 $37.58 $39.56 $41.54 $43.52 $45.49

-1% 5% 11% 17% 23% 28% 34%

15.9x $38.45 $40.72 $42.98 $45.24 $47.50 $49.76 $52.03

17.9x $43.28 $45.83 $48.37 $50.92 $53.47 $56.01 $58.56

Forward P/E Multiples Average

Source: J.P. Morgan estimates.

Discounted Cash Flow

WACC Inputs: Enterprise Value/Capital Structure:

12.5x 45.83 43.45 41.19

13.5x 49.96 47.40 44.97

Moreover, positive changes in ROIC tend to effectively highlight economically

Source: Company reports and J.P. Morgan estimates.

Total Assets 24491 27636 28432 30552 34181 33400

Source: Company reports and J.P. Morgan estimates.

Figure 12: Carnival Corp. & Plc – EPS Model

Source: Company reports and J.P. Morgan estimates.

Figure 13: Carnival Corp. & Plc – Capacity-Adjusted Statistics