TAX CONFERENCE

The recently enacted "American Jobs Creation Act" gives significant tax breaks to a number of U.S. industries--including shipping.

MARINE LOG and BLANK ROME will present a senior level seminar CHANGES IN U.S. TAXATION OF SHIPPING INCOME in Stamford, Conn. on April 5 & 6, 2004

Make sure you know how the new tax rules work!


March 21, 2005

Carnival reports record first quarter

"We are delighted with the first quarter results, said Carnival Corporation & plc Chairman and CEO Micky Arison today, reporting record net income for the quarter ended February 28, 2005.

"Stronger than expected pricing coupled with a 15 percent increase in capacity more than offset higher fuel costs," noted Arison, "enabling us to achieve a very healthy 70 percent increase in net income."

Carnival Corporation & plc reported net income of $345 million, or $0.42 diluted EPS, on revenues of $2.40 billion for its first quarter ended February 28, 2005. Net income for the first quarter of 2004 was $203 million, or $0.25 diluted EPS, on revenues of $1.98 billion.

Carnival says the 21 percent increase in revenues in the 2005 first quarter was driven by a 15 percent increase in capacity and a continuation of the improvement in revenue yields (revenue per available lower berth day) that began in early 2004.

Net revenue yields for the first quarter of 2005 increased 7.2 percent compared to the prior year, primarily due to higher cruise ticket prices and onboard revenues and, to a lesser extent, higher occupancy and the weak U.S. dollar relative to the euro and sterling. Gross revenue yields increased 5.1 percent. Net revenue yields as measured on a local currency basis ("constant dollar basis") increased 5.9 percent over the same period last year.

Despite a 10 percent increase in fuel prices, gross and net cruise costs per available lower berth day ("ALBD") for the first quarter of 2005 were approximately the same as the corresponding amounts in the similar period last year.

The higher fuel costs were offset by lower selling, general and administrative costs, partly due to the delay until later in the year of advertising expenditures. On a constant dollar basis, net cruise costs per ALBD decreased 1.0 percent from the same period last year.

As previously announced, as a result of the cancellation of P&O Cruises' 2005 world cruise on the Aurora, earnings per share for the first quarter of 2005 were reduced by $0.04 per share. Also during the first quarter of 2005, the company recorded a $0.01 per share gain from a litigation settlement.

During the 2005 first quarter, Carnival Cruise Lines introduced the 2,974-passenger Carnival Valor, which is currently operating seven-day Caribbean cruises from Miami. Also during the first quarter, Carnival Corporation & plc announced an agreement to construct a new 3,000-passenger ship for Costa Cruises, with the delivery scheduled for spring 2007.

Just yesterday, delivery ceremonies were held in Venice, Italy, for P&O Cruises' 1,968-passenger Arcadia, which will operate a series of European cruises from Southampton, England, beginning April 14, 2005.

Outlook for the Remainder of 2005

Looking forward, Arison said that he continued to be optimistic about the climate for cruise vacations for the remainder of 2005. "We began this year's wave season with significantly less inventory to sell than at this same time last year, despite an 8.6 percent increase in 2005 capacity. With continued strong demand during the 2005 wave season, we have achieved higher pricing than during last year's wave season and, as a result, expect to see an increase in revenue yields for the remainder of the year," Arison said.

For the last nine months of 2005, advance booking levels are well ahead of the prior year's levels on a capacity adjusted basis, with pricing higher than last year.

Assuming a continuing strong demand for travel, the company has raised its guidance for net revenue yields for the last nine months of 2005 from an increase of 4 to 6 percent to an increase of 5 to 6 percent (3.5 to 4.5 percent on a constant dollar basis), compared to last year.

Capacity is expected to increase 6.7 percent over the balance of 2005

In recent weeks, fuel prices have spiked up significantly. The company's cost guidance for fuel is based on recent forward prices for fuel for the balance of the year, which is 23 percent higher than average prices for the last three quarters of fiscal 2004.

As a result, the company now estimates that net cruise costs per ALBD for the remainder of 2005 are expected to increase by 4 to 5 percent (2.5 to 3.5 percent on a constant dollar basis), compared to 2004.

On a constant dollar basis, and excluding the higher fuel costs, the company's forecast for net cruise costs per ALBD for the balance of 2005 is approximately flat with the prior year.

Based on these estimates, the company continues to expect that diluted earnings per share for the year 2005 will be approximately $2.70. This guidance is based on currency exchange rates of $1.30 to the euro and $1.88 to the sterling.

For the second quarter of 2005, the company expects net revenue yields to increase 6 to 7 percent (4.5 to 5.5 percent on a constant dollar basis), compared to last year.

Net cruise costs per ALBD are expected to be up 6 to 7 percent (up 4.5 to 5.5 percent on a constant dollar basis), compared to last year. The increased costs are mostly attributable to the higher fuel price estimates. Also affecting second quarter 2005 cost estimates are higher dry-dock amortization expense and the timing of expenditures between quarters.

Based on these estimates, the company expects diluted earnings per share for the second quarter of 2005 to be in the range of $0.45 to $0.47. This guidance, as well as the company's guidance for the year, includes a previously announced reduction in second quarter 2005 earnings per share of $0.02 for the impact of the cancellation of the Aurora's 2005 world cruise

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