Definition 

of Belly of the Beast. Generally it means being in the middle of a very bad situation
or a dangerous place. You can be in the "Belly of the Beast" if you go into the central command
of enemy headquarters.

The earnings call is the quarterly judgment day for all publicly owned companies. 

The earnings call is the only opportunity to get a peek into a company's performance and future
expectations.

Richard Fain (Chairman, CEO)

I admit that it's very satisfying to look back on 2015 and I'd like to take just a moment to
celebrate a successful year. On the revenue side we achieved our target of 3.5% yield
improvement despite macroeconomic and geopolitical challenges that threatened to take us off
course. I've said it before and it still holds true that, while many factors may cause disturbances
in short periods, our team has shown a very strong capability to make adjustments when
circumstances change. On the cost side, our team worked very hard to control this. And we
ended the year down 0.6%. We began the year expecting costs to be up 1% or less. But our
finance organization and our operations team worked collaboratively to find further efficiencies
and husband our working dollars. Looking at the full picture, we anticipated doubling our 2013
earnings per share and we exceeded that target by $0.03 a share at $4.83. The brands are
delivering and I congratulate all the employees in our Company who worked so hard to make
this happen. It's equally gratifying to note that, along with the financial success that we are
enjoying, our surveys indicate that the highest levels of employee engagement in our Company's
history. Our annual survey had record participation levels and indicated higher satisfaction
across all categories. We firmly believe that happy employees lead to happy guests, and that, in
turn, leads to better yields.

Hospitality Training Schools

Partnership with WWF

Double-Double remains the lens through which we view all our decision-making at World
Caribbean. Every employee can describe the program: double [2014] earnings per share and
double-digit ROIC by 2017. The two key components of Double-Double to achieving our goals
are growing revenue yields and maintaining cost discipline. From a yield standpoint, our new
buildings are attracting and maintaining strong pricing premiums.

We are currently in the middle of our Wave period, as I think you all know, and we are happy to
report that it is proving to be a solid Wave. As we have seen, geopolitical concerns can also
threaten the demand environment from time to time. These threats are generally limited to
pockets of our portfolio, and we generally manage through them. It is important to note that
when demand in one area of the globe is weaker, many times there is an increase in demand for
other destinations. Our intent is to maximize the overall portfolio, and we see that as one of the
benefits of being a global player.

Price Integrity Policy

Tim Conder (Analyst - Wells Fargo Securities, LLC.): Thank you, everyone. A couple
questions here. One, could you give us a little bit more color on the bookings and pricing,
specifically the cadence over the last 120 days, say, from Canada and China? And pricing,
Jason, on those bookings -- similar, holding in there pretty well, or any things noticed or
higher?

Jason Liberty (CFO, SVP): All right, Tim. So, as it relates to bookings over the past 120 days,
they basically have had a similar cadence to last year. Now, obviously markets like China that
are later in the bookings cycle can influence that. So, if you look at what the cadence has been
for North America and Europe, it has been slightly higher versus same time last year. So, our
book position would be slightly better if you were to account for the mix shift change in China.
As it relates to Canada, there's nothing, I would say, that's specific that we've seen that is
different from those trends. And again, as it relates to China, it's coming in as we would expect it
to.

Well, on the Canada side I would just take our commentary as it relates to the Caribbean. We are
in a very good booked position. We are in a very good price position as it relates to the North
American consumer. In China, obviously we are guiding for our yields to be slightly down. A lot
of that, again, is driven by us further expanding into the other seasons and also expanding into
secondary markets and ports.

Richard Fain (Chairman, CEO): Let me just add one thing. I know you know this, but for some
of the others, when we talk about the broader season, Quantum of the Seas was unusual and for
the first time we were doing year-round in China. Previously we've only been there seasonally.
So what we decided was that it was a year-round opportunity. And while we don't get as much in
the winter in China as we get in the summer in China, like in the other market, we do well in the
winter. And so - but when you average it in, it brings down the average. But as it relates to
overall, China actually is helping us in our improvement in 2016.

Felicia Hendrix (Analyst - Barclays Capital): I did have a question on China, so we are on

that topic. Let's stick there. So we have strong demands, we have a little bit of a different
cadence this year because you are in the first and fourth quarter, which is seasonally
priced. You also have a different mix, which you just mentioned. But overall demand is
strong and you guys said that yields are up low single digits, driven by China. So that's all
good. What I was hoping you could clarify is that we get a lot of questions just about the
charter companies, charter agents and the status there. I think the view is that some of the
charter agents are losing money on the China cruises in general. I was just wondering
whether or not that's actually true and if there are issues, what is Royal Caribbean doing,
if anything, to stick to that.
Michael Bayley (CEO of Royal Caribbean International, President of Royal Caribbean
International): Just to correct one point, yields are slightly down in China this year, 2016 versus
2015, based upon all of the different elements that we just talked about. With regards to charter
companies, it's quite a mix in relation to our total distribution. But over time, obviously we have
been changing the mix of our distribution, and we continue that journey. So literally every single
year we are doubling the number of agents who are selling Royal Caribbean in the China market.
And of course, we are broadening our regional footprint, especially now with the introduction of
Ovation in Tianjin. So it's true that some of the charter companies, really out of Shanghai, had
some challenges in 2015 in relation to MERS in Korea and, of course, the typhoon season, which
was particularly difficult. And so some of the charters did experience some losses during some of
the sailings. But having said that, they did particularly well the rest of the year with Royal
Caribbean and have done well with Royal Caribbean over the past nine years that we have been
in the market. So it was a bit of a hiccup. And of course, we, as we are in the United States, we
are long-term partners with our travel partners. So we have worked hard at finding some
workarounds with them in terms of our 2016 inventory and how we have worked with them in
terms of our cooperative marketing and this type of thing. So we feel that we have been very
responsive to some of the feedback that we have had from some of these charterers. And we
think we are in a fairly good position for 2016.

Felicia Hendrix (Analyst - Barclays Capital): And then also I'm just wondering if you are
seeing any differences in how different Chinese brands are performing there versus your
brand. In other words, how are you differentiated? You did mention that you guys
performed better than everyone else in the market.

Michael Bayley (CEO of Royal Caribbean International, President of Royal Caribbean

International): With regards to the differentiation of the brands, that's, I think, a highly relevant
question. When you look at Royal Caribbean against the competition, we have been in the
market now for nine years and we have been investing over a nine-year period in the market. We
have the newest hardware in the key ports. Quantum of the Seas genuinely has been a huge hit
out of Shanghai. Ovation coming into Tianjin is doing very well. We have eight consecutive
years of being the top cruise line in China, awarded by The Travel Trade Gazette and The Travel
Weekly. We have been focused on launching consumer campaigns and we're -- in fact we are
launching a new campaign literally in the coming weeks. We have been working on expanding
our distribution footprint. And of course, we are the largest single cruise brand in China, with a
really professional and competent sales organization and marketing team who really have been
with us for quite some time. So I think the spread between Royal Caribbean International and the
competing brands in the market is quite significant. And a lot of that is driven by the hardware.
Quantum and Ovation are world-class leading hardware and they are the only brand-new ships in
the China market.
Steve Wieczynski (Analyst - Stifel Nicolaus): So going back to China real quick, I have a
two-part question there. First -- and Jason, you said this before, I guess. When you say
yields will be down in 2015, can you break that yield factor down for us, meaning how
much is ticket price versus onboard? What I'm trying to get at is, is that onboard spending
-- is that onboard spend holding up? And then second, Jason, you've always talked about
profitability on a per-customer basis in China and how much stronger that is versus other
markets. Is that profitability on a customer basis still holding up despite the ticket prices
coming back in?

Jason Liberty (CFO, SVP): So as it relates to our yields being slightly down in 2016, the
weighting is more concentrated on the mix of the secondary markets and the seasonality. And
then there is some pressure, as Michael talked about, on just general ticket. And then obviously,
when you have ships like Ovation come in, that also helps balance out some of the pressures we
have on some of our older assets that are in that market, really not Quantum -class assets. But the
mix between ticket and onboard is actually pretty similar. You would end up a little bit higher on
the onboard side because you have Quantum coming into the market. Now, the point on
profitability of the Chinese guest - it is still very much there. China is one of our highest yielding
markets. The product is one of our highest yielding products. It is a little bit more expensive to
operate but also we get higher yields for those products. So it is very much contributing to our
yields. It is very much contributing to our profits and our margins in our business, which is why
our outlook continues to be very favorable for the Chinese market.

Harry Curtis (Analyst - Nomura Securities): Okay, I'll get off the soapbox and ask an
operating question, then. Going back to China, Jason, if you look at your pricing like for
like, your pricing in China is being dragged down just by the timing of the introduction of
your ships. Is it fair or is it relevant to try and look at pricing on a like period for like
period, particularly, for example, with the Quantum?

Jason Liberty (CFO, SVP): First off, we really try to have a general conversation about the
region versus the market itself. And the reason for that is because China has to work with also
the winter season, which means Australia and Southeast Asia need to work. So it is and
continues to contribute to the overall yield of the region. Quantum continues to perform as we
expected and perform well. There has been a little bit of like-for-like pressure on the older
tonnage that we have in that marketplace. But the Quantum -class ships continued to demand a
premium to the relative pricing that's in the marketplace. I also think it's important to point out - I
know there has been a lot of concern about what's happening in the China marketplace with the
consumer. And I think that patterns that we are seeing with the Chinese consumer continue to
show that they have a strong sentiment and a very strong desire for cruise. And a lot of the
pressure on pricing just has to do with a lot of capacity coming in, more seasonality in terms of
the China offering and us going into other markets, which we've talked about before.
Jamie Rollo (Analyst - Morgan Stanley): A couple of questions, please - first, sticking with
China, roughly, what was the average revenue, your premium you generated last year
versus the rest of the group? And then the other question - looking at your customer
deposits of $1.7 billion at the end of the year, they were actually slightly lower than a year
ago, and yet your book position is similar. You've got higher prices. You've got more
capacity. I was wondering whether that's a currency impact or was that - is that China or
something else that is causing that?

Jason Liberty (CFO, SVP): On the China premium side, it's not something that we talk publicly
about in terms of the specific number. Obviously, we are happy with the margins and the yields
that we get in that market as we add more capacity in so you can follow where the investment is
going. And then as it relates to - on the deposit side it's a combination of a few things. Some of
that is currency-related. Some of that also, as we expand our mix into China, the cadence of
deposits are much closer or the payment is much closer to the time of the sailing because it's a
late booking market than it is for other markets. So, that skews it a little bit. And also there's
different promotional activity we do where you might put a little bit less of a deposit down. And
that is really what drives that differential in the customer deposit line on the balance sheet.

Robin Farley (Analyst - UBS): Two questions, actually. One is on China. You have talked
about being likely to maybe add more ships there. You don't have anything announced for
2017 or after that. And I'm just wondering what your most recent thoughts on that are
versus where they were two or three months ago. And then outside of China your
commentary in the release talks about volume being or load being at the same level as last
year but price higher. And in October both volume and - both load and price were up. And
obviously your volume can only be up, at the end of the day, as much as your supply is up.
So I'm wondering if the lower volume now versus October, just relative to your booked
position in the prior year - is that pretty much in line with your expectations that because
you are raising price that you have been expecting volume to slow between October and
now?

Michael Bayley (CEO of Royal Caribbean International, President of Royal Caribbean

International): Just to answer your first question, on China and more ships, obviously we don't
make any announcements on new ships until we make the announcements. And we are aware of
announcements that have been made already for 2017. So when we are ready, we will announce.
But I think overall we continue to be very positive about the opportunity in China. It's the
beginning of something that we think is really, really positive. So our intention is to continue to
invest and grow that market.

Jason Liberty (CFO, SVP): And on the volume and price side, as you said, on the October call
we said we were booked ahead on both rate and volume. Outside of the little hiccups we saw as
relates to the Paris attacks and some of the geopolitical events, which quickly bounced back, it
has been very much in line with our expectations. And as we have a greater mix of our capacity
going into China, that does skew the year-over-year comparable because it is a much closer-in
booking environment. But I would describe it overall as that it's in line with our expectations.
Tim Conder (Analyst - Wells Fargo Securities, LLC.): And then anything on that related to
the Zika virus? Have you seen that show up in any way in the recent bookings over the last
couple weeks?

Michael Bayley (CEO of Royal Caribbean International, President of Royal Caribbean

International): With regards to the question on Zika, to date, we have really seen no impact
whatsoever; it has been really immaterial. Obviously, it's all over the media and we see it. But
today, we haven't had any material impact.

Tim Conder (Analyst - Wells Fargo Securities, LLC.): And then finally, could you just review
the no discounting policy? Richard, you mentioned that that was streamlined to nothing within
30 days. Was it tiered before? Was there like a 10-day, 30-day, 60-day? If you could just review
what it was and to now it's streamlined into the 30 days?

Richard Fain (Chairman, CEO): And on the question of the discounting policy, the previous
policy had, depending on the length of the cruise, different -- we had different periods. So in
some cases we said there would be no discounting within the last 10 days, in some the last 20, in
some the last 30, in some the last 40. And people weren't sure which applied to which, and we
thought it was easier both from the public's point of view but also a key driver of this is from our
own revenue managers' point of view. And so it's important that we have a clear policy that
everybody understood and could follow, and we have decided to expand it to 30 days across the
board except for the three- and four-nights.

Felicia Hendrix (Analyst - Barclays Capital): But to add on to that, if you look at how your
cost trended in 2015 versus your original guidance for the full year, they came in better
than expected or lower than expected. So I was wondering what drove that and do you
think you can achieve a similar result in 2016?

Jason Liberty (CFO, SVP): Well, I think that there's - the first thing I want to start off, as it
relates to 2015, is this is really a corporate enterprise-wide effort on trying to identify cost
improvements. And so as I said in the past, it's not one thing; it's thousands of little things that
we do. The leadership - for example, Adam has given around supply chain and that team, the
consolidation of our marine organization and finding more efficiencies in our back office is
really what we just do day to day when we use the lens of Double-Double. So that is ongoing and
continuing. There are a lot of headwinds and costs in 2016. Obviously, as we expand our mix
into Asia, the cost of operating there is higher. There are some more upfront cost on the sales and
marketing side as we are delivering two new ships this year. And also having Voom, the fastest
Internet bandwidth at sea, also has a high cost to it. So, there are a lot of headwinds. But our
efforts to try to continue to identify opportunities is never-ending. But I think we think the 1% or
less guidance is really our best view, based off of all of our plans that we have to date to manage
cost-effectively in 2016.
Richard Fain (Chairman, CEO): We manage on an annual basis, and one thing that is a little
unique about our business that I think distinguishes us from many others is that we have some
significant big costs that we can shift around in terms of timing. So we would look at a booking
pattern to see whether we ought to dry-dock a ship in March or April or September or October or
what have you. And when we make those decisions we simply don't pay attention internally to
whether that falls in this quarter or that quarter. But those kinds of what we think of as
immaterial tweaking to get the best outcome, particularly as it relates - for example, if I take a
dry docking we might find that for whatever reason we were just booking better at the end of
September then early October, and we would just decide to shift the dry-dock by - from one
quarter into another. From an operating point of view, they are immaterial. And those kind of
changes can actually help us in bringing our overall cost number down. But I fully recognize that
as it relates to individual quarters, they will distort the numbers. And unfortunately, that's simply
a fact of life. And we think our best strategy is to continue to focus on the year. If it's cheaper for
us to do it in March than April we will do it in March rather than April. And the Double-Double,
and so we have - and the Double-Double has really been very helpful. You talked about our cost
containment over the last number of years now. The Double-Double is actually a very helpful
concept that everybody can focus on and move towards that common goal. So I think that's why
we've had the results that we've had. But I do acknowledge it does relate to bumps in any given
quarter or period.

Felicia Hendrix (Analyst - Barclays Capital):

Thanks for that color. Jason, for some glitchy reason I can't see the slide. So if this is on the
slide, just -- I just was wondering if you could walk us through the bucket of currencies.
What are the weightings for the second quarter and the full year?

Jason Liberty (CFO, SVP): We will have in our filing that breakdown. But I know for the full
year our two largest exposures will be in the pound and the Yuan, then Australian dollar,
Canadian dollar and then the euro. That will be the cadence for the year. And then obviously
there are some changes in there, based off of the sourcing or the deployment during the course of
the year. So, for example, there's more exposure to the Southern Hemisphere, markets like Brazil
and Australia in the wintertime. And in the summertime you are more exposed to Europe, so you
have more pounds, euro as well as Yuan, because it's more of a peak period for the Chinese
consumer.

Steve Wieczynski (Analyst - Stifel Nicolaus): Okay, got you. And then second question, on
your buyback I know you have $300 million left at this point. The stock is obviously under
some decent pressure here today. And it's basically - if you look at your $7 suggested EPS
number for next year, you are trading at basically sub 10 times earnings at this point. So
my question is probably for Richard. That $300 million is only call it 2% of your shares
outstanding. How receptive will the Board be when you go back to them and say, hey, we
potentially need more than the $500 million that was originally out there?

Richard Fain (Chairman, CEO): Well, we made the decision certainly without seeing or
expecting this kind of a reaction here. And as I said, I think the Board and the management felt
very good about the trajectory we are on. And nothing has changed, in our view, as to what our
actual - the word that I keep hearing us use is cadence, but I would say the pattern of our
earnings growth over the next couple of years. So our view on the business is very constant. I
think I'm always a little cautious to speak on behalf of the Board on something like this, because
this is the sort of thing that everybody looks at. But we did see that this was - that it was
appropriate to do a share buyback. We also will temper our enthusiasm as it relates to the shares
because it is our intention to become an investment-grade company. And I think we would take
that as a consideration factor as well. So I certainly don't think there has been any negative
change in their general view. But I don't think the Board would tend to be knee-jerk on
particularly a short-term change in the share price.

Harry Curtis (Analyst - Nomura Securities): Just on that last point, the short-term
reactions to stock prices do provide the Board an opportunity to get more aggressive. Can
you give us a sense of if you do hit your earnings targets, your EBITDA targets, what your
leverage ratio is going to be at the end of the year? And does that give you - how much
room does that give you to perhaps use your balance sheet a bit more aggressively because
this share price, at 10 times earnings - those are typically really, really good opportunities
to invest in your stock.

Jason Liberty (CFO, SVP): But I think we see ourselves, based off of the guidance we've been
given, that we will be at or slightly below our targets by the end of 2016. Now, whether that - the
timing of when the rating agencies decide to provide us that rating is not only subject to the
metric but also subject to how we as a corporation are behaving and are we behaving like an
investment-grade credit. So as Richard said, as we look at do we do more or less, a lot of that
comes into keeping the balance of our growth, the balance of returning capital to shareholders
and also becoming an investment-grade credit. And those will be key things that are always
evaluated when we determine how much we will buy back or how much the program will be that
we announce.

Harry Curtis (Analyst - Nomura Securities): Where I am going with this is that there's
leverage ratio. There's also the interest coverage ratio, which is probably by the end of this
year going to be somewhere between 8 1/2 and 9 times, given the low cost of your debt. So I
just want to point out that there are opportunities for companies to be really opportunistic.
And it would seem that if you can do $7 a share next year, that this is one of those
opportunities.

Richard Fain (Chairman, CEO): Yes. And as I think - as you've made clear in this back-and-
forth, there are a lot of things that go into that equation. I'm going to be very cautious not to
preempt the Board on something that a Board rightfully focuses on carefully. But I think those
are the things. It's the opportunity when there is what appears to be the downturn in the share
price. On the other hand, there is the need to make sure we have the appropriate capital for our
new building program. And this is, of course, a capital-intensive business. And we also do want
to get to investment grade. So the Board will have to balance those things. But obviously what's
happening in the market would be something we will be looking at very closely.
Harry Curtis (Analyst - Nomura Securities): And then my last question just has to do with
suppose the value of the renminbi continues to slide. Would that, in your experience, lead
to perhaps increased demand for cruises, considering that you price your cruises in
renminbi?

Well, I think that certainly we can get into an economic conversation. I think it could obviously
create more demand for some of their exported products and that could potentially improve their
wallet in which they could spend more on the cruise side. Again, I think the sentiment in China is
quite good, and I think that their demand, especially for our products, has continued to March at
the cadence that we had expected.

Jamie Rollo (Analyst - Morgan Stanley): Just on the yield premium, on the older three
ships you've got there, are those [considered] the premium for the rest of the group even
after the pricing pressure, or is it all Quantum driving that?

No. In terms of the premium it gets, especially relevant to its class and to the average, it is a very
nice premium. And also those ships have lower asset bases, so the margins we get on them are
quite good.

Jamie Rollo (Analyst - Morgan Stanley): And just on the TUI JV income, it looks like it
was down year on year in Q4. I know there are other items in that bucket, but what does
that line do, please?

No; there are many other items in that bucket. There are other equity pickups. The TUI JV
actually did exactly what we expected it to do, and it was up quite a bit year over year. Also in
that line item is our joint venture, which is really in its first year, which is SkySeas, which had
some losses, mainly just due to its being its first year of operation.

Steven Kent (Analyst - Goldman Sachs): Just was wondering who you compare yourself to
because to only have your net cruise cost ex-fuel up 0.5% relative to really any other
industry or any other stock we have under coverage seems pretty good. And it's actually
slightly below CCL's cost guidance. So on these cost headwinds seem - you've spent a lot of
time on them. I just want to understand whether there's a reason for that and why there's
so much focus on it. And then separately, is your compensation linked to achieving those
cost guidance forecasts? And then one other thing - for FX, the spread between your 2016
constant net yield and current net yield guidance, 200 basis points, was bigger than what
we were expecting. Can you just give us a little bit more color on that FX breakdown?

Richard Fain (Chairman, CEO): Steven, thank you for those comments. Thank you
particularly for the first comment. Yes, we think the cost performance has been excellent for a
number of years now. And we are quite proud of the work. And I think the fact that it comes at
the same time that our level of guest satisfaction goes up is an important feature for us, because I
think it's actually relatively easy to cut costs if you don't care about the product that you deliver
to your guests. But we have been raising guest satisfaction how we have been cutting costs. And
as you say, this level of cost discipline is actually quite good. There are a couple things, one we
will take credit for, which is that we - I think the management team has done a really very good
job of looking for new ways of doing things, new efficiencies, etc. The other is - and we did
telegraph this when we were doing it, which is that we spent money which we thought would
result in savings later on. And so we had - we talked about some of those things. We talked about
the IT spending. We talked about some of the other stuff that we were doing. And so I think that
also helps us a little bit, by comparison. But we are not resting on our laurels on that. We think
there is more to be done, continual efficiencies, because even the guidance we've given, which
now is for 2016 up marginally, obviously the inflation in the areas that we are looking at is
higher than that. In answer to your second question, was the compensation - yes, our
compensation is - all the management team's compensation has in a number of factors, one of
which is specifically net cruise cost excluding fuel but, on the other hand, another one of which
is net revenue yield. Another one is safety and environment. So we are trying to make sure that
we are meeting our cost goals and our revenue goals but also not doing things that put us at risk.
This is a long-term business. And we have worked hard to put Royal Caribbean in a position
where it is solid on, if you will, the triple bottom line as well as just the earnings per share. I'm
going to let Jason handle the last of those questions.

Jason Liberty (CFO, SVP): So, obviously, the headwinds of currency have continued,
especially in our hedge position on fuel, to outpace the benefits we have been receiving from
fuel. If you just look at it year over year, our basket of currencies is down 10% year over year.
And that's really what's driving that differential between the as-reported in the constant currency.
Some of the currencies like, for example, the Yuan, which had very little volatility, has become
more volatile more recently as it has been unhitched from the US dollar.

Steven Kent (Analyst - Goldman Sachs): Just quickly, what share count is captured in your
EPS guidance? Does it include the $500 million repurchase program?

Jason Liberty (CFO, SVP): It includes the $500 million repurchase program, but the cadence of
when that happens has it generally spread throughout the year.