What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-10 compared with 2020-05-21 · 294 added, 227 removed, 290 unchanged (64% of the section changed)

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• a review of our financial presentation, including discussion of certain operational and financial metrics we utilize to assist us in managing our business;

• a discussion of our results of operations for the quarter ended March 31, 2020 compared to the same period in 2019;

• a discussion of our results of operations for the quarter ended June 30, 2020 and six months ended June 30, 2020, compared to the same periods in 2019;

• a discussion of our business outlook

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Valuation of Goodwill, Indefinite-Lived Intangible Assets and Long-Lived Assets

The outbreak of COVID-19 has resulted in an unprecedented global response to contain the spread of the disease.

The outbreak of COVID-19 has resulted in an unprecedented global response to contain the spread and control the resurgence of the disease.

These global efforts have resulted in travel restrictions and created significant uncertainty regarding worldwide port closures and availability.

As part of the global containment effort, the Company previously announced a voluntary suspension of its global cruise operations from March 13 through at least July 31, 2020 and China sailings until at least June 30, 2020.

As part of the global containment effort, the Company previously announced a voluntary suspension of its Global Brands' cruise operations through at least October 31, 2020, excluding China and Australia.

Continued disruptions to travel and port operations in various regions may result in further suspensions.

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General to our consolidated financial statements for further information regarding COVID-19 and its impact to the Company.

As a result of these developments, we performed an interim impairment evaluation on our goodwill, indefinite-lived intangible assets and long-lived assets as discussed below in connection with the preparation of our financial statements for the quarter ended March 31, 2020.

As a result of these developments, we performed interim impairment evaluations on our goodwill, indefinite-lived intangible assets and long-lived assets as discussed below in connection with the preparation of our financial statements for the quarters ended March 31, 2020 and June 30, 2020.

When performing the goodwill impairment test, the fair value of the reporting unit is determined and compared to the carrying value of the net assets allocated to the reporting unit.

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The estimation of fair value utilizing discounted expected future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as assumptions regarding the cruise vacation industry's competitive environment and general economic and business conditions, among other factors.

The principal assumptions we use in the discounted cash flow model are projected operating results, weighted-average cost of capital, and terminal value.

The principal assumptions we use in the discounted cash flow model are projected operating results, weighted average cost of capital, revenue base, revenue growth rate and terminal rate.

The discounted cash flow model uses the most current projected operating results for the upcoming fiscal year as a base.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations within our Annual Report on Form 10-K for the year ended December 31, 2019, as updated by our Current Report on Form 8-K dated May 13, 2020.

For further discussion on impairment losses recorded in the three months ended March 31, 2020, refer to Note 3.

For further discussion on impairment losses recorded in the six months ended June 30, 2020, refer to Note 3.

I mpairment and Credit Losses to our consolidated financial statements.

Royal Caribbean International Reporting Unit

We performed an interim impairment evaluation of Royal Caribbean International’s goodwill in connection with the preparation of our financial statements during the quarter ended March 31, 2020.

As a result of the test, we determined that the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 32% resulting in no impairment to the Royal Caribbean International goodwill.

As of March 31, 2020, the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was $296.3 million.

We performed interim impairment evaluations of Royal Caribbean International’s goodwill in connection with the preparation of our financial statements during the quarters ended March 31, 2020 and June 30, 2020.

As a result of the tests, we determined that the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 30% and 8% resulting in no impairment to the Royal Caribbean International goodwill in either period.

We estimated the fair value of the Royal Caribbean International reporting unit using a probability-weighted discounted cash flow model in combination with a market based valuation approach.

Significant assumptions used in these valuations include the weighted average cost of capital discount factor, revenue base, revenue growth rate and terminal rate.

As of June 30, 2020, the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was $296.5 million.

Silversea Cruises Reporting Unit

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Accordingly, upon the completion of the impairment test, we recognized impairment charges of $576.2 million and $30.8 million for goodwill and the trade name, respectively, during the quarter ended March 31, 2020.

We estimated the fair value of the Silversea Cruises reporting unit using a probability-weighted discounted cash flow model in combination with a market based valuation approach.

Significant assumptions used in these valuations include the weighted average cost of capital discount factor, revenue growth rates and royalty rate.We did not recognize any impairment charges related to the Silversea Cruises reporting unit for the quarter ended June 30, 2020.

Long-lived Assets

We identified that the undiscounted cash flows of certain long-lived assets, consisting of 8 ships and certain right-of-use assets, were less than their carrying values.

During the quarter ended March 31, 2020, we identified that the undiscounted cash flows of certain long-lived assets, consisting of 8 ships and certain right-of-use assets, were less than their carrying values.

Events surrounding the COVID-19 pandemic negatively impacted the expected undiscounted cash flows of these assets.

As a result of this determination, we evaluated these assets pursuant to our long-lived asset impairment test, which resulted in an impairment charge of $463.0 million to write down these assets to their estimated fair values during the quarter ended March 31, 2020.

The combined impairment charge of $1.1 billion related to our goodwill, trademarks and trade names, vessels and right-of-use assets was recognized in earnings during the quarter ended March 31, 2020 and is reported within Impairment and credit losses within our consolidate d statements of comprehensive income (loss).

During the quarter ended June 30, 2020, Monarch, Horizon and Sovereign , the three ships that we chartered to Pullmantur Holdings prior to the filing of the Pullmantur reorganization, met accounting criteria to be classified as held for sale which resulted in related impairment charges of $15.2 million during the quarter ended June 30, 2020 to adjust the carrying value of the assets held for sale to their fair value, less cost to sell.

During the quarter ended March 31, 2020, an impairment charge of $156.1 million, included in the $463.0 million impairment charge to write down certain long-lived assets, was recorded for these ships.

As of June 30, 2020, assets held for sale were not material to our consolidated balance sheet.

We also updated our undiscounted cash flows analysis for other long-lived assets during the quarter ended June 30, 2020 and identified that the undiscounted cash flows for some of those assets, consisting of 2 ships and one right-of-use asset, were less than their carrying values.

Based on our evaluation, we determined that an additional impairment charge of $49.7 million was required to write down these assets to their estimated fair values during the quarter ended June 30, 2020.

The combined impairment charges of $65.0 million and $1.1 billion related to our goodwill, trademarks and trade names, vessels and right-of-use assets were recognized in earnings during the quarter and six months ended June 30, 2020, respectively, and are reported within Impairment and credit losses within our consolidate d statements of comprehensive income (loss).

For further information on the impairment losses and the fair value measurements used to estimate the fair value of these assets, refer to Note 3.

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Adjusted Net (Loss) Income represents net (loss) income less net income attributable to noncontrolling interest excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis.

For the periods presented, these items included (i) asset impairment and credit losses recorded in the first quarter of 2020 as a result of the impact of COVID-19;

(ii) the change in fair value in the Silversea Cruises contingent consideration;

(iii) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas;

(iv) restructuring charges incurred in relation to the reorganization of our international sales and marketing structure and other initiatives expenses;

(v) the amortization of the Silversea Cruises intangible assets resulting from the acquisition;

(vi) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest;

(vii) transaction costs related to the Silversea Cruises acquisition and (viii) equity investment impairment..

For the periods presented, these items included (i) asset impairment and credit losses recorded in the first and second quarters of 2020 as a result of the impact of COVID-19;

(ii) equity investment impairment charges recorded in the first quarter of 2020 as a result of the impact of COVID-19;

(iii) currency translation losses recognized in connection with the ships classified as assets held-for-sale that were previously chartered to Pullmantur;

(iv) settlement costs with Pullmantur S.A.

incurred in connection with its reorganization filing;

(v) restructuring charges incurred in relation to the reduction in our U.S.

workforce in the second quarter of 2020, the reorganization of our global sales and marketing structure and other initiatives expenses;

(vi) the amortization of non-cash debt discount on the $1.15 billion convertible notes;

(vii) loss on the extinguishment of debt;

(viii) the amortization of the Silversea Cruises intangible assets resulting from the 2018 Silversea Cruises acquisition;

(ix) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s ("Heritage") prior to the July 2020 noncontrolling interest purchase;

(x) the change in fair value in the Silversea Cruises contingent consideration;

(xi) net insurance recoveries or costs related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas;

(xii) transaction costs related to the 2018 Silversea Cruises acquisition.

Available Passenger Cruise Days ( “APCD” ) is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period, which excludes canceled cruise days and drydock days.

We use this measure to perform capacity and rate analysis to identify our main non-capacity drivers that cause our cruise revenue and expenses to vary.

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.

For the periods presented, Gross Cruise Costs exclude (i) restructuring charges incurred in relation to the reorganization of our international sales and marketing structure and other initiative costs and (ii) transaction costs related to the Silversea Cruises acquisition, which were included within Marketing, selling and administrative expenses .

Gross Yields represent total revenues per APCD.

Net Cruise Costs and Net Cruise Costs Excluding Fuel represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses and, in the case of Net Cruise Costs Excluding Fuel, fuel expenses (each of which is described above under the Description of Certain Line Items heading).

In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs and Net Cruise Costs Excluding Fuel to be the most relevant indicators of our performance.

A reconciliation of historical Gross Cruise Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of Operations .

Net Cruise Costs and Net Cruise Costs Excluding Fuel exclude net insurance recoveries related to the collapse of the drydock structure at Grand Bahama Shipyard involving Oasis of the Seas .

Net Revenues represent total revenues less commissions, transportation and other expenses and onboard and other expenses (each of which is described above under the Description of Certain Line Items heading).

Net Yields represent Net Revenues per APCD.

We utilize Net Revenues and Net Yields to manage our business on a day-to-day basis as we believe that they are the most relevant measures of our pricing performance because they reflect the cruise revenues earned by us net of our most significant variable costs, which are commissions, transportation and other expenses and onboard and other expenses.

A reconciliation of historical Gross Yields to Net Yields is provided below under Results of Operations .

Occupancy , in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days by APCD.

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Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

We believe Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel are our most relevant non-GAAP financial measures.

However, a significant portion of our revenue and expenses are denominated in currencies other than the United States dollar.

Because our reporting currency is the United States dollar, the value of these revenues and expenses can be affected by changes in currency exchange rates.

Although such changes in local currency prices are just one of many elements impacting our revenues and expenses, they can be an important element.

For this reason, we also monitor Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel as if the current period's currency exchange rates had remained constant with the comparable prior period's rates, or on a “Constant Currency” basis.

It should be emphasized that Constant Currency is primarily used for comparing short-term changes and/or projections.

Changes in guest sourcing and shifting the amount of purchases between currencies can change the impact of the purely currency-based fluctuations.

The use of certain significant non-GAAP measures, such as Net Yields, Net Cruise Costs and Net Cruise Costs Excluding Fuel, allows us to perform capacity and rate analysis to separate the impact of known capacity changes from other less predictable changes which affect our business.

We believe these non-GAAP measures provide expanded insight to measure revenue and cost performance in addition to the standard GAAP based financial measures.

There are no specific rules or regulations for determining non-GAAP and Constant Currency measures, and as such, they may not be comparable to other companies within the industry.

Although discussed in previous periods, we did not report nor reconcile our Gross Yields, Net Revenues, Net Yields, Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel, as defined in our Annual Report on Form 10-K for the year ended December 31, 2019, for the quarter and six months ended June 30, 2020.

Historically, we have utilized these financial metrics to measure relevant rate comparisons to other periods.

However, our 2020 reduction in capacity and revenues and the shift in the nature of our running costs due to the suspension of our operations do not allow for a meaningful comparison to the 2019 metrics and as such these metrics have been excluded from this report.

Recent Developments:

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These global efforts have resulted in travel restrictions and created significant uncertainty regarding worldwide port closures and availability.

Continued disruptions to travel and port operations in various regions may result in further suspensions.

The Company has been developing a comprehensive and multi-faceted program to address the unique public health challenges posed by COVID-19.

As part of the global containment effort, the Company previously announced a voluntary suspension of its Global Brands' cruise operations beginning March 13, which has been extended through at least October 31, 2020, excluding China and Australia.

Containment efforts as a result of the disease and continued disruptions to travel and port operations in various regions may result in further suspensions.

We have been developing a comprehensive and multi-faceted program to address the unique public health challenges posed by COVID-19.

This includes, among other things, enhanced screening, upgraded cleaning and disinfection protocols and plans for social distancing.

The Company will continue to work with the Centers for Disease Control and Prevention, global public health authorities and national and local governments to enhance measures to protect the health, safety and security of guests, crew and the communities visited when we are out of service and once operations resume.

Together with Norwegian Cruise Line, we recently established a “Healthy Sail Panel” made up of leading experts in relevant fields, including epidemiology, infectious diseases, public policy and regulation, engineering and general health safety to advise us in our effort to establish and implement appropriate safety protocols.

We are working with the Centers for Disease Control and Prevention, global public health authorities and national and local governments to enhance measures to protect the health, safety and security of guests, crew and the communities visited while we are out of service and once operations resume.

Update on Bookings

Prior to the outbreak of COVID-19, the Company started the year in a strong booked position and at higher prices on a prior year comparable basis.

Given the impact of COVID-19, booking volumes for the remainder of 2020 are meaningfully lower than the same time last year at prices that are down low-single digits.

Due to the suspension in sailings, booking trends reflect elevated cancellations for 2020 and more typical levels for 2021 and beyond.

Although still early in the booking cycle, the booked position for 2021 is within historical ranges when compared to same time last year with 2021 prices up mid-single digits compared to 2020, subject to the uncertainty around the duration of our suspension of sailings and resumption of service.

The Company has instituted several programs in order to best serve its guests:

for cancelled cruises, guests are offered the choice of future cruise credits valued at 125% of the initial cruise fare paid in lieu of providing cash refunds.

These future cruise credits can be redeemed on any sailing on or before December 31, 2021.

As of April 30, 2020, approximately 45% of the guests booked on cancelled sailings have requested cash refunds.

For non-cancelled cruises, the Company has implemented a “Cruise with Confidence” policy.

This policy allows guests to cancel up to 48 hours prior to sailing (for sailings on or before August 1, 2020) and receive a full credit for their fare usable until April 30, 2022.

As of March 31, 2020, the Company had $2.4 billion in customer deposits.

This includes approximately $0.8 billion of future cruise credits related to previously announced voyage cancellations.

The Company also continues to take future bookings for 2020, 2021 and 2022, and receive new customer deposits and final payments on these bookings.

The extended suspension of cruising has significantly impacted bookings for the remainder of 2020 which are meaningfully lower than the same time last year and at lower prices.

Although still early in the booking cycle, the booked position for 2021 is trending well and is within historical ranges.

Pricing for 2021 bookings is relatively flat year-over-year when including the negative yield impact of bookings made with future cruise credits;

it is slightly up year-over-year when excluding them.

The Company has implemented various programs to best serve its booked guests providing the choice of future cruise credits (“FCCs”) or the opportunity to “Lift & Shift” their booking to the same sailing the following year in lieu of providing cash refunds.

Over the past two months, approximately 60% of the 2021 bookings are new and the rest are due to the redemption of FCCs and the “Lift & Shift” program.

As of June 30, 2020, the Company had $1.8 billion in customer deposits of which approximately $300 million correspond to fourth quarter 2020 sailings.

Approximately 48% of the guests booked on cancelled sailings have requested cash refunds.

Update on Recent Liquidity Actions and Ongoing Uses of Cash

As of April 30, 2020, the Company had liquidity of approximately $2.3 billion all in the form of cash and cash equivalents.

As of June 30, 2020, the Company had liquidity of approximately $4.1 billion all in the form of cash and cash equivalents.

In response to the financial impacts of COVID-19, the Company has taken preemptive actions that focus on strengthening liquidity through significant cost and capital reductions, cash conservation and additional financing sources, as described below.

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• suspended travel for shoreside employees and instituted a hiring freeze across the organization.

The Company estimates that its average ongoing ship operating expenses and administrative expenses are approximately $150 million to $170 million per month during a prolonged suspension of operations.

The Company may seek to further reduce this average monthly requirement under a further prolonged non-revenue scenario.

The Company may seek to further reduce its average monthly expenses under a further prolonged non-revenue scenario.

This includes consideration of additional vessels heading to cold layup as well as further assessment of its US shoreside workforce, including those coming back from furlough.

Reduced Capital Expenditures

Since the start of February 2020, the Company has identified approximately $3.0 billion and $1.4 billion of capital expenditure reductions or deferrals in 2020 and 2021, respectively.

The reductions or deferrals of capital expenditures in 2020 comprise:

Since the start of February 2020, the Company has identified approximately $4.4 billion of total capital expenditure reductions or deferrals in 2020 and 2021.

The reductions or deferrals of capital expenditures comprise of the following:

• $1.3 billion of non-newbuild, discretionary capital expenditures;

• $3.1 billion in reduced spend or deferred installment payments for newbuild related payments which the Company is currently finalizing.

The Company believes COVID-19 has impacted shipyard operations and will result in delivery delays of ships previously planned for delivery in 2020 and 2021.

COVID-19 has impacted shipyard operations which have resulted in delivery delays of ships previously planned for delivery in 2020 and 2021.

Of five ships originally scheduled for delivery between July 2020 and December 2021, we expect that Silver Moon, Silver Dawn and Odyssey of the Seas will be delivered within the remaining time frame.

The exact duration of the ship delivery delays are currently under discussion with the impacted shipyards.

Debt Maturities, New Financings and Other Liquidity Actions

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The previously mentioned $2.35 billion, 364-day senior secured loan was repaid in its entirety with a portion of the proceeds of these notes;

• obtained a $0.8 billion, 12-month debt amortization and financial covenant holiday with respect to certain export-credit backed facilities;

• amended certain of our non-export-credit backed bank facilities to incorporate a 12-month financial covenant holiday;

• secured deferrals of existing debt amortization under our export-credit backed debt facilities which increased the Company’s liquidity by an additional $0.9 billion;

• issued $1.0 billion senior guaranteed notes maturing 2023;

• issued $1.15 billion convertible notes maturing 2023;

• qualified for a government commercial paper program by the Bank of England and issued £300.0 million, or approximately $370.8 million, of commercial paper thereunder;

• agreed with certain of our lenders that we will not pay dividends or engage in stock repurchases for so long as our debt covenant waivers are in effect.

Expected debt maturities for the remainder of 2020 and 2021 are $0.3 billion and $1.3 billion, respectively.

The expected debt maturities do not include the repayment at maturity of the $2.35 billion 364-day senior secured loan agreement, which we repaid in full with a portion of the proceeds from the issuance of the $3.32 billion secured senior notes.

The Company estimates its cash burn to be, on average, in the range of approximately $250 million to $290 million per month during a prolonged suspension of operations.

This range includes ongoing ship operating expenses, administrative

expenses, debt service expense, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes cash refunds of customer deposits as well as cash inflows from new and existing bookings.

The Company is considering ways to further reduce the average monthly requirement under a further prolonged out-of-service scenario and during start-up of operations.

This range includes all interest expenses, including the increases driven by the latest capital raises.

It also includes ongoing ship operating expenses, administrative expenses, hedging costs, expected necessary capital expenditures (net of committed financings in the case of newbuilds) and excludes cash refunds of customer deposits, commissions, debt obligations and cash inflows from new and existing bookings.

The Company is considering ways to further reduce the average monthly cash burn under a further prolonged out-of-service scenario and during re-start of operations.

The Company continues to identify and evaluate further actions to improve its liquidity.

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further reductions in capital expenditures, operating expenses and administrative costs and additional financings.

Furthermore, certain of our separate unsecured bank facilities totaling an outstanding principal amount of approximately $4.7 billion as of March 31, 2020 contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%.

In May 2020, the requisite lenders under such unsecured bank facilities agreed to waive the requirement to comply with such financial covenants, so that the next time we will be required to comply with such covenants will be for the three months then ended June 30, 2021.

As a condition to obtaining such waivers, we agreed to certain additional covenants during the covenant waiver period, including that we maintain at least $300 million in unrestricted cash and cash equivalents (tested monthly) and that we are not permitted during the covenant waiver period, subject to limited exceptions, to pay cash dividends or make share repurchases unless we would have been compliant with our fixed charge coverage ratio at such time.

Furthermore, both our export credit facilities and non-export credit bank facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%.

In the second quarter of 2020, the requisite lenders under such facilities agreed to waive the requirement to comply with such financial covenants through and including the first quarter of 2021.

In certain of these facilities, we agreed to additional covenants during the covenant waiver period, including that we maintain at least $300 million in unrestricted cash and cash equivalents (tested monthly) and that we are not permitted during the covenant waiver period, subject to limited exceptions, to pay cash dividends or make share repurchases unless we would have been compliant with our fixed charge coverage ratio at such time.

Subsequent to June 30, 2020, we further amended our export facilities and certain of our non-export credit facilities, to extend the financial covenant waiver through and including, the fourth quarter of 2021.

In connection therewith, we increased the minimum liquidity covenant to $500 million, as applicable, subject to reduction in the event of further capital raises, and extended the dividend and share repurchase restrictions through the new waiver period.

Results of Operations

Net Loss attributable to Royal Caribbean Cruises Ltd.

and Adjusted Loss attributable to Royal Caribbean Cruises Ltd.

for the first quarter of 2020 were $(1.4) billion and $(310.4) million, or $(6.91) and $(1.48) per share on a diluted basis, respectively, reflecting the impact of our suspension of global fleet sailings starting in mid-March, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Income attributable Royal Caribbean Cruises Ltd.

of $249.7 million and $275.8 million, or $1.19 and $1.31 per share on a diluted basis, respectively, for the first quarter of 2019.

Significant items for the quarter ended March 31, 2020 include:

• Total revenues, excluding the effect of changes in foreign currency exchange rates, decreased $385.3 million for the quarter ended March 31, 2020 as compared to the same period in 2019, reflecting the volume impact of our cancelled sailings during the first quarter of 2020 as a result of the COVID-19 pandemic.

• The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions, denominated in currencies other than the United States dollar, resulted in a decrease in total revenues of $21.6 million for the quarter ended March 31, 2020 compared to the same period in 2019.

• Total cruise operating expenses, excluding the effect of changes in foreign currency exchange rates, increased $105.4 million for the quarter ended March 31, 2020 as compared to the same period in 2019.

The increase was primarily due to incremental costs incurred as a result of the COVID-19 pandemic.

• The effect of changes in foreign currency exchange rates related to our cruise operating expenses, denominated in currencies other than the United States dollar, resulted in a decrease in total operating expenses of $8.3 million for the quarter ended March 31, 2020 compared to the same period in 2019.

• During the quarter ended March 31, 2020, as a result of the current and expected ongoing impact of COVID-19 pandemic on our operations and cash flows, we recorded total impairment and credit losses of $1.1 billion related to goodwill, intangibles, vessels, operating lease right-of-use assets and credit losses related to other long-lived assets.

• Our consolidated results of operations for the quarter ended March 31, 2020 include the results for October, November and December 2019 for Silversea Cruises due to the three month reporting lag for the entity.

Net Loss and Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

for the second quarter of 2020 were $(1,639.3) million and $(1,282.6) million, or $(7.83) and $(6.13) per share on a diluted basis, respectively, reflecting the impact of our suspension of global fleet sailings starting in mid-March, compared to Net Income and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

of $472.8 million and $532.7 million, or $2.25 and $2.54 per share on a diluted basis, respectively, for the second quarter of 2019.

Net Loss and Adjusted Net Loss to attributable Royal Caribbean Cruises Ltd.

for the six months ended June 30, 2020 were $(3,083.8) million and $(1,593.0) million, or $(14.74) and $(7.61) per share on a diluted basis, respectively, compared to Net Income and Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

of $722.5 million and $808.6 million, or $3.44 and $3.85 per share on a diluted basis, respectively, for the six months ended June 30, 2019.

Significant items for the quarter and six months ended June 30, 2020 include:

• Total revenues, excluding the effect of changes in foreign currency exchange rates, decreased $2,629.5 million and $3,014.9 million for the quarter and six months ended June 30, 2020 as compared to the same periods in 2019, reflecting the volume impact of our cancelled sailings during 2020 as a result of the COVID-19 pandemic.

• The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions, denominated in currencies other than the United States dollar, resulted in a decrease in total revenues of $1.5 million and $23.2 million for the quarter and six months ended June 30, 2020 compared to the same periods in 2019.

• Total cruise operating expenses, excluding the effect of changes in foreign currency exchange rates, decreased $861.0 million and $752.3 million for the quarter and six months ended June 30, 2020 as compared to the same periods in 2019 due to the suspension of operations during the full quarter ended June 30, 2020.

• The effect of changes in foreign currency exchange rates related to our cruise operating expenses, denominated in currencies other than the United States dollar, resulted in decreases in total operating expenses of $2.7 million and $14.3 million for the quarter and six months ended June 30, 2020 compared to the same period in 2019.

• During the quarter and six months ended June 30, 2020, as a result of the current and expected ongoing impact of COVID-19 pandemic on our operations and cash flows, we recorded total impairment and credit losses of $156.5 million and $ 1.3 billion.

The impairment charges related to our goodwill, trademarks and trade names, vessels and right-of-use assets and the credit losses related to our notes receivable.

• Our consolidated results of operations include Silversea Cruises’ results of operations on a three-month reporting lag from January 1, 2020 through March 31, 2020 for the quarter ended June 30, 2020 and from October 1, 2019 through March 31, 2020 for the six months ended June 30, 2020.

Refer to Note 1.

General to our consolidated financial statements for further information on this three-month reporting lag.

• In March 2020, we increased the capacity of our $1.7 billion and $1.2 billion unsecured revolving credit facilities due in 2024 and 2022, by $200 million and $400 million, respectively.

• In March and June 2020, we took delivery of Celebrity Apex and Silver Origin , respectively.

To finance the purchase of Celebrity Apex , we borrowed $0.7 billion under a previously committed unsecured term loan.

• In March 2020, we borrowed $2.2 billion pursuant to a 364-day senior secured term loan agreement which would have matured 364 days after funding and could have been extended at our option for an additional 364 days.

Subsequently, the term loan was increased to $2.35 billion and was repaid on May 19, 2020.

• In March 2020, we took delivery of Celebrity Apex.

Operating results for the quarter ended March 31, 2020 compared to the same period in 2019 are shown in the following table (in thousands, except per share data):

Quarter Ended March 31,

• In May 2020, we issued $3.32 billion in senior secured notes, less original issue discount.

$1.0 billion of the notes accrue interest at 10.875% and mature in 2023.

The remaining $2.32 billion of the notes accrue interest at a fixed rate of 11.5% and mature in 2025.

• In June 2020, we issued $1.0 billion in senior unsecured notes which accrue interest at 9.125% and mature in 2023.

• In June 2020, we issued $1.15 billion in convertible notes which accrue interest at 4.25% and mature in 2023.

The notes are convertible into shares of common stock of the Company, cash, or a combination of common stock and cash, at our election.

• In May 2020, we qualified for a U.K.

government commercial paper program providing £300.0 million of available liquidity and issued £300.0 million, or approximately $370.8 million, of commercial paper thereunder.

Operating results for the quarter ended June 30, 2020 compared to the same period in 2019 are shown in the following table (in thousands, except per share data):

Quarter Ended June 30,

Revenues % of Total

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Diluted (Loss) Earnings per Share $ (7.83) $ 2.25

Six Months Ended June 30,

Revenues % of Total

Passenger ticket revenues $ 1,483,873 67.2 % $ 3,727,820 71.1 %

Onboard and other revenues 724,482 32.8 % 1,518,578 28.9 %

Total revenues 2,208,355 100.0 % 5,246,398 100.0 %

Cruise operating expenses:

Commissions, transportation and other 345,953 15.7 % 790,089 15.1 %

Onboard and other 145,297 6.6 % 309,599 5.9 %

Payroll and related 574,267 26.0 % 535,101 10.2 %

Food 148,799 6.7 % 286,381 5.5 %

Fuel 273,460 12.4 % 342,095 6.5 %

Other operating 703,463 31.9 % 694,943 13.2 %

Total cruise operating expenses 2,191,239 99.2 % 2,958,208 56.4 %

Marketing, selling and administrative expenses 697,308 31.6 % 791,821 15.1 %

Depreciation and amortization expenses 644,087 29.2 % 603,885 11.5 %

Impairment and credit losses 1,264,615 57.3 % — — %

Operating (Loss) Income (2,588,894) (117.2) % 892,484 17.0 %

Other (expense) income:

Interest income 10,740 0.5 % 16,126 0.3 %

Interest expense, net of interest capitalized (311,800) (14.1) % (211,719) (4.0) %

Equity investment income (62,245) (2.8) % 66,739 1.3 %

Impairment loss related to Skysea Holding — — % — — %

Extinguishment of unsecured senior notes — — % — — %

Other expense (116,684) (5.3) % (26,869) (0.5) %

(479,989) (21.7) % (155,723) (3.0) %

Net (Loss) Income $ (3,068,883) (139.0) % $ 736,761 14.0 %

Net Income attributable to noncontrolling interest 14,888 0.7 % 14,250 0.3 %

Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.

$ (3,083,771) (139.6) % $ 722,511 13.8 %

Diluted (Loss) Earnings per Share $ (14.74) $ 3.44

Adjusted Net (Loss) Income attributable to Royal Caribbean Cruises Ltd and Adjusted (Loss) Earnings per Share attributable to Royal Caribbean Cruises Ltd were calculated as follows (in thousands, except per share data):

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.

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Equity investment impairment (2) — — 39,735 —

Change in fair value of the Silversea contingent consideration (3) (51,019) —

Net insurance recoveries of Oasis of the Seas incident (4)

Currency translation adjustment losses (3) 69,044 — 69,044 —

Pullmantur reorganization settlement (4) 21,637 — 21,637 —

Restructuring charges and other initiatives expense (5) 32,982 — 45,025 —

Amortization of Silversea Cruises intangible assets resulting from the acquisition (3) 3,069 3,069

Convertible debt amortization of debt discount (6) 4,184 — 4,184 —

Loss on extinguishment of debt (7) 40,335 6,326 40,335 6,326

Amortization of Silversea Cruises intangible assets resulting from the 2018 Silversea Cruises acquisition (8) 3,069 3,069 6,138 6,138

Noncontrolling interest adjustment (8) 22,557 12,663 46,616 34,574

Transaction costs related to Silversea acquisition (3) — 1,186

Change in fair value of the Silversea contingent consideration (9) 6,414 10,700 (44,605) 10,700

Net insurance recoveries of Oasis of the Seas incident (10) — 27,147 (1,938) 27,147

Transaction costs related to the 2018 Silversea Cruises acquisition (8) — — — 1,186

Net Adjustments to Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.

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Diluted 209,385 210,052 209,241 209,962

(1) Represents asset impairment and credit losses recorded in the first quarter of 2020 as a result of the impact of COVID-19.

(1) Represents asset impairment and credit losses recorded in the first and second quarters of 2020 as a result of the impact of COVID-19.

(2) Represents equity investment asset impairment, primarily for our investment in Grand Bahama Shipyard, recorded in the first quarter of 2020 as a result of the impact of COVID-19.

(3) Represents currency translation losses recognized in connection with the ships classified as assets held-for-sale that were previously chartered to Pullmantur.

Refer to Note 6.

Other Assets for further information.

(4) Represents settlement costs with Pullmantur in connection with its reorganization filing.

(5) Represents restructuring charges incurred in relation to the reduction in our U.S.

workforce in the second quarter of 2020, the reorganization of our international sales and marketing structure and other initiatives expenses.

(6) Represents the amortization of non-cash debt discount on the $1.15 billion convertible notes.

(7) For the quarter and six months ended June 30, 2020, loss on the extinguishment of the $2.2 billion Senior Secured Term Loan.

For the quarter and six months ended June 30, 2019, loss on the extinguishment of the $700 million 364-day loan related to the 2018 Silversea Cruises acquisition and the remaining balance of the unsecured term loan originally incurred in 2010 to purchase Allure of the Seas .

(8) Related to the 2018 Silversea Cruises acquisition.

(9) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by the Silversea Cruises noncontrolling interest prior to the July 2020 noncontrolling interest purchase.

(10) Amount includes net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

(5) Represents restructuring charges incurred in relation to the reorganization of our international sales and marketing structure and other initiatives expenses.

(6) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Silversea Cruises Group Ltd.'s noncontrolling interest.

Selected statistical information is shown in the following table (1):

Quarter Ended March 31, (1)

Quarter Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Passengers Carried 20,027 1,663,900 1,259,846 3,197,126

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Occupancy 84.5 % 108.5 % 102.6 % 107.8 %

(1) Due to the three-month reporting lag, these metrics include October, November and December amounts for Silversea Cruises.

Gross Yields and Net Yields were calculated as follows (in thousands, except APCD and Yields):

Quarter Ended March 31,

2020 2020 On a Constant Currency Basis 2019

Passenger ticket revenues $ 1,376,851 $ 1,391,923 $ 1,709,984

Onboard and other revenues 655,899 662,465 729,783

Total revenues 2,032,750 2,054,388 2,439,767

Commissions, transportation and other 317,129 320,131 363,155

Onboard and other 123,718 124,119 135,170

Net Revenues $ 1,591,903 $ 1,610,138 $ 1,941,442

APCD 8,217,133 8,217,133 9,860,600

Gross Yields $ 247.38 $ 250.01 $ 247.43

Net Yields $ 193.73 $ 195.95 $ 196.89

Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD):

Quarter Ended March 31,

2020 2020 On a Constant Currency Basis 2019

Total cruise operating expenses $ 1,510,819 $ 1,519,124 $ 1,413,704

Marketing, selling and administrative expenses (1) (2) 383,847 385,694 413,761

Gross Cruise Costs 1,894,666 1,904,818 1,827,465

Commissions, transportation and other 317,129 320,131 363,155

Onboard and other 123,718 124,119 135,170

Net Cruise Costs Including Other Costs 1,453,819 1,460,568 1,329,140

Net insurance recoveries related to the Oasis of the Seas incident included within cruise operating expenses

(1,580) (1,580) —

Net Cruise Costs 1,455,399 1,462,148 1,329,140

Fuel (3) 193,458 193,463 160,171

Net Cruise Costs Excluding Fuel $ 1,261,941 $ 1,268,685 $ 1,168,969

APCD 8,217,133 8,217,133 9,860,600

Gross Cruise Costs per APCD $ 230.58 $ 231.81 $ 185.33

Net Cruise Costs per APCD $ 177.12 $ 177.94 $ 134.79

Net Cruise Costs Excluding Fuel per APCD $ 153.57 $ 154.40 $ 118.55

(1) For the quarter ended March 31, 2020, the amount does not include restructuring charges and other initiatives expense of $12.0 million.

(2) For the quarter ended March 31, 2019, the amount does not include the transaction costs related to the Silversea Cruises acquisition of $1.2 million.

(3) For the quarter ended March 31, 2020, the amount does not include the fuel impact of the Oasis of the Seas incident of $0.8 million already considered to arrive at Net Cruise Costs.

(1) ) Due to the three-month reporting lag, we include Silversea Cruises' result of operations from January 1 through March 31 for the quarters ended June 30, 2020 and 2019 and from October 1 through March 31 for the six months ended June 30, 2020 and 2019.

Refer to Note 1.

General to our consolidated financial statements for more information on the three-month reporting lag.

On March 10, 2020, we withdrew our full-year 2020 guidance due to the heightened impact and uncertainty of changes in the magnitude, duration and geographic reach of COVID-19.

The duration and intensity of this global health crisis and related disruptions continue to be highly uncertain.

The adverse impact of the COVID-19 pandemic on our revenues, consolidated results of operations, cash flows and financial condition will be material in 2020.

We expect to report a loss for the second quarter ended June 30, 2020 and the year ended December 31, 2020, the extent of which will depend on the timing and extent of our return to service.

However, we cannot reasonably estimate the magnitude of the expected loss or any future results as it is not known when the COVID-19 pandemic will end, when or how quickly the current travel restrictions and advisories will be modified or cease to be necessary and the resulting impact on the global economy and the Company’s operations.

Quarter Ended March 31, 2020 Compared to Quarter Ended March 31, 2019

In this section, references to 2020 refer to the quarter ended March 31, 2020 and references to 2019 refer to the quarter ended March 31, 2019.

The magnitude, duration and speed of COVID-19 and related disruptions remain uncertain.

As a consequence, the Company cannot reasonably estimate the impact of COVID-19 on its business, financial condition or near or longer-term financial or operational results with reasonable certainty.

The adverse impact of the COVID-19 pandemic on our revenues, consolidated results of operations, cash flows and financial condition has been and will continue to be material in 2020.

We expect to incur a net loss on both a US GAAP and adjusted basis for our third quarter and the 2020 fiscal year, the extent of which will depend on the timing and extent of the return to service.

Quarter Ended June 30, 2020 Compared to Quarter Ended June 30, 2019

In this section, references to 2020 refer to the quarter ended June 30, 2020 and references to 2019 refer to the quarter ended June 30, 2019.

Total revenues for 2020 decreased $2,631.0 million, or 93.7%, to $0.2 billion from $2.8 billion in 2019.

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The decrease was due to a 97.9% decrease in capacity, which decreased Passenger ticket revenues by $1,976.6 million, driven by our cancelled sailings resulting from the suspension of our global fleet operations in mid-March 2020 in response to the COVID-19 pandemic.

To a lesser degree, we experienced decreased capacity due to a higher number of drydock days in 2020, partially offset by the inclusion of Spectrum of the Seas in our fleet during the first quarter of 2020.

Passenger ticket revenues was also affected negatively by unfavorable foreign currency exchange rates movements related to our revenue transactions denominated in currencies other than the United States dollar of $15.0 million.

The decrease in Passenger ticket revenues due to capacity and foreign currency exchange rate movements was somewhat offset by a $66.4 million increase in rate primarily due to the reporting of Silversea Cruises' January through March sailings in our consolidated results for the quarter months ended June 30, 2020 due to the three month reporting lag.

The remaining 39.1% of 2020 total revenues was comprised of Onboard and other revenues , which decreased $720.2 million, or 91.3%, to $68.6 million in 2020 from $788.8 million in 2019.

The decrease in Onboard and other revenues was primarily due to the 97.9% decrease in capacity noted above, and was partially offset by higher cancellation fee revenue associated with non-refundable deposits.

Unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar decreased Onboard and other revenues by $6.6 million.

Onboard and other revenues included concession revenues of $2.7 million in 2020 and $87.2 million in 2019.

Cruise Operating Expenses

Total Cruise operating expenses for 2020 increased $97.1 million, or 6.9%, to $1.5 billion from $1.4 billion in 2019.

The increase was primarily due to:

• a $60.8 million increase in Payroll and related costs primarily due to crew contract terminations and higher repatriation costs as a result our cancelled sailings due to the COVID-19 pandemic;

• a $34.1 million increase in Fuel expenses;

• an increase in commissions as a result of sailing cancellations, mostly recorded in Other operating and

• to a lesser extent, an increase in running costs related to the inclusion of Spectrum of the Seas in 2020.

The increase in Cruise operating expenses was partially offset by:

• a $11.5 million decrease in Onboard and other expenses and $18.2 million decrease in Food due to the decrease in capacity discussed above and

• the favorable effect of changes in foreign currency exchange rates related to our cruise operating expenses denominated in currencies other than the United States dollar of $8.3 million.

Total Cruise operating expenses for 2020 decreased $864.1 million, or (55.9)%, to $0.7 billion from $1.5 billion in 2019.

The majority of the decrease was due to our cancelled sailings as follows:

• a $398.1 million decrease in Commissions, transportation and other primarily due to lower commission and variable passenger tax expenses;

• a $152.9 million decrease in Onboard and other expenses mostly due to lower shore excursion costs and beverage costs;

• a $119.4 million decrease in Food expenses;

• a $102.7 million decrease in Fuel expenses;

• a $69.30 million decrease in Other operating expenses mostly due to lower port fees and a decrease in ship maintenance and consumable costs.

The decrease in Cruise operating expenses was partially offset by the favorable effect of changes in foreign currency exchange rates related to our cruise operating expenses denominated in currencies other than the United States dollar of $2.7 million.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2020 decreased $75.5 million, or 20.0%, to $301.4 million from $376.9 million in 2019.

The decrease was primarily due to a lower stock price year over year related to our performance share awards, partially offset by an increase in payroll and benefits expense primarily driven by an increase in headcount.

The decrease was due to a reduction and deferral of global sales and marketing activities due to the suspension of our operations.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2020 increased $8.2 million, or 2.6%, to $319.8 million from $311.6 million in 2019.

The increase was primarily due to new shipboard additions associated with our 2019 ship modernization projects, additions related to A Perfect Day and the addition of Spectrum of the Seas in the first quarter of 2019.

The increase was primarily due to new shipboard additions associated with our 2019 ship modernization projects, additions related to our shoreside projects and the addition of Celebrity Apex and Silver Origin in the first and second quarters of 2020, respectively.

Impairment and Credit Losses

During the quarter ended March 31, 2020, as a result of the current and expected ongoing impact of COVID-19 pandemic on our operations and cash flows, we recorded total impairment and credit losses of $1.1 billion related to goodwill, intangibles, vessels, operating lease right-of-use assets and credit losses related to other long-lived assets.

During the quarter ended June 30, 2020, as a result of the current and expected ongoing impact of the COVID-19 pandemic on our operations and cash flows, we recorded total impairment and credit losses of $156.5 million related to the impaired value of certain of long-lived assets and due to credit losses on receivables mostly related to the sale of our property and equipment.

Impairment and Credit Losses for further information on the impacted assets.

Other Income (Expense)

Interest expense, net of interest capitalized for 2020 decreased $7.5 million, or 7.5%, to $92.9 million from $100.4 million in 2019.

The decrease was primarily due to lower interest rates overall and as a result of debt refinancing in 2019.

Equity investment (loss) income was a loss of ($10.4) million for the three months ended March 31, 2020.

The loss includes a $39.7 million impairment charge of equity investments, primarily Grand Bahama Shipyard, that we deemed to be impaired due to the impact of the COVID-19 pandemic to our business.

Excluding the impairment loss, we reported equity investment income of $29.3 million in 2020 compared to income of $33.7 million in 2019.

Other expense for 2020 increased $27.8 million to $32.9 million from $5.1 million in 2019.

The increase was primarily due to a net $26.6 million loss related the change in fair value of fuel swaps with no hedge accounting and $11.1 million in foreign currency losses on the remeasurement of monetary assets.

Gross and Net Yields

Gross and Net Yields remained flat and decreased 1.6%, respectively, in 2020 compared to 2019.

Gross and Net Yields on a Constant Currency basis increased 1.0% and decreased 0.5%, respectively, in 2020 compared to 2019.

Gross and Net Cruise Costs

Gross Cruise Costs increased 3.7% in 2020 compared to 2019 primarily due to the net increase in cruise operating expenses discussed above.

Net Cruise Costs increased 9.5% in 2020 compared to 2019 primarily due to a decrease in Commissions, transportation and other and Onboard and other related to the decrease in capacity discussed above.

Gross and Net Cruise Costs per APCD increased 24.4% and 31.4%, respectively, in 2020 compared to 2019 and Gross and Net Cruise Costs per APCD on a Constant Currency basis increased 25.1% and 32.0%, respectively, in 2020 compared to 2019 due to the increase in Gross Cruise Costs and Net Cruise Costs discussed above applied to a lower number of APCD's in 2020.

Net Cruise Costs Excluding Fuel

Net Cruise Costs Excluding Fuel per APCD increased 29.5% in 2020 compared to 2019 and increased 30.2% in 2020 compared to 2019 on a Constant Currency basis.

Interest expense, net of interest capitalized for 2020 increased $107.6 million, or 96.7%, to $218.9 million from $111.3 million in 2019.

The increase was primarily due to interest expense related to new debt issuances in 2020, a higher average balance on our revolver facilities and a loss on the extinguishment of the $2.35 billion senior term loan of $40.3 million.

Equity investment (loss) income in 2020 was $(51.9) million compared to $33.0 million in 2019.

The $84.9 million variance was primarily due to losses reported by our equity investments as a result of the adverse impact of COVID-19 on their operations and earnings.

Other expense in 2020 was $83.8 million compared to $21.8 million in 2019.

The increase of $62.0 million in Other expense was primarily due to the recognition of a deferred currency translation adjustment loss of $69.0 million in the quarter ended June 30, 2020 related to the 2016 sale of our majority interest in the Pullmantur brand.

We recognized the deferred currency translation loss as we no longer have significant involvement in Pullmantur's operations.

In June 2020, we terminated the agreements chartering our ships to the Pullmantur brand as a result of its reorganization filing under Spanish law.

We also recognized $21.6 million of expense during the second quarter of 2020, approximating the estimated total cash refund expected to be paid to Pullmantur guests and other expenses incurred as part of a settlement agreement with our joint venture partner as part of the brand's reorganization.

These expenses were partially offset by the recognition of income on remeasurement of our foreign monetary assets of $15.7 million in 2020 compared to loss of $1.8 million in 2019 and a decrease in net tax expense mostly attributable to the suspension in our operations of $11.9 million.

Other Comprehensive (Loss) Income

Other comprehensive (loss) in 2020 was $(297.9) million compared to Other comprehensive income of $48.8 million in 2019.

The increase in loss of $(346.7) million was primarily due to a Loss on cash flow derivative hedges in 2020 of $(300.6) million compared to a Gain on cash flow derivative hedges in 2019 of $48.8 million.

Other comprehensive income (loss) in 2020 was $144.4 million compared to $(74.2) million in 2019.

The increase in income of $218.6 million was primarily due to Gain on cash flow derivative hedges in 2020 of $124.3 million compared to a Loss on cash flow derivative hedges in 2019 of $71.7 million.

The increase in cash flow derivative hedge income in 2020 was primarily due to increases in the fair values of our fuel swaps and interest rate swaps in 2020 compared to decreases in the fair values of these in 2019 due to changes in market rates.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

In this section, references to 2020 refer to the six months ended June 30, 2020 and references to 2019 refer to the six months ended June 30, 2019.

Total revenues for 2020 decreased $3.0 billion, or 57.9%, to $2.2 billion from $5.2 billion in 2019.

Passenger ticket revenues comprised 67.2% of our 2020 total revenues.

Passenger ticket revenues for 2020 decreased by $2.2 billion, or 60.2%, from 2019.

The decrease was due to a 58% decrease in capacity driven by our cancelled sailings resulting from the suspension of our global fleet operations since mid-March 2020 in response to the COVID-19 pandemic.

Passenger ticket revenues were also decreased by $15.7 million due to the unfavorable effect of changes in foreign currency exchange rates related to our revenues in currencies other than the United States dollar.

The remaining 32.8% of 2020 total revenues was comprised of Onboard and other revenues , which decreased $794.1 million, or 52.3%, to $724.5 million in 2020 from $1.5 billion in 2019.

The decrease in Onboard and other revenues was primarily due to the 58% decrease in capacity related to cancelled sailings noted above and, to a much lesser extent, to the unfavorable effect of changes in foreign currency exchange rates related to our onboard and other revenues denominated in currencies other than the United States dollar of $7.4 million.

Onboard and other revenues included concession revenue of $74.7 million in 2020 and $184.5 million in 2019.

Cruise Operating Expenses

Total cruise operating expenses for 2020 decreased $0.8 billion, or (25.9)%, to $2.2 billion from $3.0 billion in 2019.

The majority of the decrease was due to the 58% decrease in capacity noted above as a result of our cancelled sailings as follows::

• a $444.1 million decrease in Commissions, transportation and other primarily due to lower commission and variable passenger tax expenses;

• a $164.3 million decrease in Onboard and other expenses mostly due to lower shore excursion costs and beverage costs;

• a $137.6 million decrease in Food expenses;

• a $68.6 million decrease in Fuel expenses;

• the favorable effect of changes in foreign currency exchange rates related to our expense transactions denominated in currencies other than the United States dollar of $14.7 million.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses decreased $94.5 million, or 11.9%, to $697.3 million from $791.8 million in 2019.

The decrease was due to the reduction and deferral of global sales and marketing activities due to the suspension of our operations.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2020 increased $40.2 million, or 6.7%, to $644.1 million from $603.9 million in 2019.

The increase was primarily due to the additions of Spectrum of the Seas in the second quarter of 2019 and Celebrity Apex and Silver Origin in the first and second quarters of 2020, respectively.

Additionally, the increase is also attributable to new shipboard additions associated with our ship upgrade projects and additions related to our shoreside projects.

Impairment and Credit Losses

For the six months ended June 30, 2020, as a result of the current and expected ongoing impact of the COVID-19 pandemic on our operations and cash flows, we recorded total impairment and credit losses of $1.3 billion, most of which was recorded during the three months ended March 31, 2020, related to the impairment of goodwill, intangibles, long-lived assets and credit losses related to the sale of our property and equipment.

Impairment and Credit Losses for further information on the impacted long-lived assets.

Other Income (Expense)

Interest expense, net of interest capitalized, for 2020 increased $100.1 million, or 47.3%, to $311.8 million from $211.7 million in 2019.

The increase was primarily due to interest expense related to new debt issuances in 2020, a higher average balance on our revolver and a loss on extinguishment of the $2.35 billion senior term loan of $40.3 million.

Equity investment (loss) income decreased $129.0 million, or (193.3)%, to a loss of $(62.2) million in 2020 from income of $66.7 million in 2019 mainly due to losses reported by our equity investments as a result of the adverse impact of COVID-19 on their operations and earnings and a $39.7 million impairment charge of equity investments, recorded during the three months ended March 31, 2020, primarily for our investment in Grand Bahama Shipyard.

Other expense was $116.7 million in 2020 compared to $26.9 million in 2019.

The $89.8 million increase in expense includes recognition of a deferred currency translation adjustment loss of $69.0 million in the quarter ended June 30, 2020 related to the 2016 sale of our majority interest in the Pullmantur brand.

We recognized the deferred currency translation loss as we no longer have significant involvement in Pullmantur's operations.

In June 2020, we terminated the agreements chartering our ships to the Pullmantur brand as a result of its reorganization filing under Spanish law.

These expenses were partially offset by income of $55.3 million for the change in contingent consideration payable as of June 30, 2020 to Heritage and a decrease in net tax expense mostly attributable to the suspension in our operations of $16.2 million.

Other Comprehensive (Loss)

Other comprehensive loss in 2020 was $153.5 million compared to other comprehensive loss of $25.4 million in 2019.

The change of $128.1 million, or 503.5%, was primarily due to a loss on cash flow derivative hedges in 2020 of $176.3 million, compared to a loss on cash flow derivative hedges of $22.9 million in 2019 primarily due to a decrease in our fuel swap values in 2020 compared to an increase in 2019 due to changes in fuel prices.

Future Application of Accounting Standards

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Sources and Uses of Cash

As a result of the COVID-19 impact on our business, including the suspension of global sailings, we have experienced a decrease in bookings and an increase in customer deposit refunds in the first quarter of 2020 which has significantly affected our liquidity and cash flow.

Net cash provided by operating activities decreased $879.7 million to $198.7 million for the first three months in 2020 compared to $1.1 billion for the same period in 2019.

The current disruptions to our business led to a decrease in customer deposits of $959.6 million in the first three months of 2020.

Also affecting our operating cash flows, we experienced a decrease of Onboard and other revenues of $73.9 million and a decrease of $40.4 million in dividends received from unconsolidated affiliates during the first three months in 2020 compared to the same period in 2019.

Net cash used in investing activities increased $890.7 million to $1.3 billion for the first three months in 2020 compared to $450.4 million for the same period in 2019.

The increase in investing activities was primarily attributable to an increase in

capital expenditures of $782.4 million due to the delivery of Celebrity Apex in the first three months of 2020 compared to no ship deliveries or purchases during the same period in 2019.

Net cash provided by financing activities was $4.8 billion for the first three months in 2020 compared to Net cash used in financing activities of $667.7 million for the same period in 2019.

The change was primarily attributable to an increase in debt proceeds of $6.7 billion for the first three months in 2020 compared to the same period in 2019, partially offset by an increase of debt repayments of $224.8 million.

Also offsetting the increase in debt proceeds, was net repayments of commercial paper of $1.1 billion during the first three months of 2020 compared to net borrowings of commercial paper of $328.6 million during the same period in 2019.

The increase in debt proceeds was primarily due to the $2.2 billion 364-day senior secured term loan agreement and the $722.2 million unsecured term loan borrowed to finance Celebrity Apex , both borrowed in March 2020, and higher drawings on our revolving credit facilities, resulting in a fully drawn balance, during the first three months of 2020, compared to the same period in 2019.

As a result of the COVID-19 impact on our business, including the suspension of global sailings, we have experienced a decrease in bookings and an increase in customer deposit refunds since the first quarter of 2020 which has significantly affected our liquidity and cash flow.

Net cash (used in) provided by operating activities decreased $4.2 billion to cash used of $(2.0) billion for the first six months in 2020 compared to cash provided of $2.2 billion for the same period in 2019.

The current disruptions to our business led to a net decrease in customer deposits of $1.6 billion in the first six months of 2020.

Also affecting our operating cash flows, was a decrease of Onboard and other revenues of 794.1 million and a decrease of $78.6 million in dividends received from unconsolidated affiliates during the first six months in 2020 compared to the same period in 2019.

Net cash used in investing activities decreased $307.9 million to $1.6 billion for the first six months in 2020 compared to $1.9 billion for the same period in 2019.

The decrease in investing activities was primarily attributable to a decrease in capital expenditures of $474.3 million.

Net cash provided by financing activities was $7.5 billion for the first six months in 2020 compared to Net cash used in financing activities of $(348.9) million for the same period in 2019.

The change was primarily attributable to an increase in debt proceeds of $9.9 billion for the first six months in 2020 compared to the same period in 2019, partially offset by an increase of debt repayments of $415.5 million.

Also offsetting the increase in debt proceeds, was net repayments of commercial paper of $1.1 billion during the first six months of 2020 compared to net borrowings of commercial paper of $254.7 million during the same period in 2019.

The increase in debt proceeds was primarily due to the $2.2 billion 364-day Senior Secured Term Loan which was repaid in May 2020, the $3.32 billion Senior Secured Notes issued in May 2020, the $722.2 million unsecured term loan borrowed to finance Celebrity Apex , issuance of $1.0 billion senior unsecured notes, issuance of $1.15 billion convertible notes, and higher drawings on our revolving credit facilities, resulting in a fully utilized balance, during the first six months of 2020, compared to the same period in 2019.

Future Capital Commitments

Capital Expenditures

As of March 31, 2020, our Global Brands and our Partner Brands have 16 ships on order.

As of June 30, 2020, our Global Brands and our Partner Brands have 16 ships on order.

Their original contractual delivery dates and their approximate berths are listed below.

COVID-19 has impacted shipyard operations and we expect that this will result in delivery delays of ships on order and will adjust the timing of our contractual ship deliveries:

COVID-19 has impacted shipyard operations and will result in delays of our previously contracted ship deliveries.

Of five ships originally scheduled for delivery between July 2020 and December 2021, we expect that Silver Moon, Silver Dawn and Odyssey of the Seas will be delivered within the remaining time frame.

The exact duration of the ship delivery delays are currently under discussion with the impacted shipyards:

Ship Shipyard Contractual Delivery Date Approximate

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Wonder of the Seas Chantiers de l'Atlantique 2nd Quarter 2021 5,700

Unnamed Chantiers de l'Atlantique 4nd Quarter 2023 5,700

Unnamed Chantiers de l'Atlantique 4th Quarter 2023 5,700

Quantum-class:

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Silversea Cruises —

Silver Origin De Hoop 2nd Quarter 2020 100

Silver Moon Fincantieri 3rd Quarter 2020 550

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Unnamed Fincantieri 1st Quarter 2026 4,100

Hapag-Lloyd Cruises (50% joint venture) —

Hanseatic Spirit VARD 2nd Quarter 2021 230

Total Berths 52,530

In April 2019, we entered into an agreement with Chantiers de l’Atlantique to build the fifth Edge-class ship for Celebrity Cruises.

The ship is expected to have an aggregate capacity of approximately 3,200 berths and is expected to enter service in the

fourth quarter of 2024.

The ship is expected to have an aggregate capacity of approximately 3,200 berths.

The order with Chantiers de l’Atlantique is contingent upon completion of conditions precedent and financing.

Our future capital commitments consist primarily of new ship orders.

As of March 31, 2020, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $13.8 billion, of which we had deposited $810.9 million.

Approximately 63.6% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2020.

These amounts do not include the ship order placed by Silversea Cruises during the reporting lag period.

As of June 30, 2020, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was $13.9 billion, of which we had deposited $833.1 million.

Approximately 62.5% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at June 30, 2020.

Refer to Note 13.

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In order to preserve liquidity throughout the COVID-19 pandemic, we deferred a significant portion of our planned 2020 and 2021 capital expenditures.

As of March 31, 2020, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $0.5 billion for 2020 and $2.1 billion for 2021.

As of June 30,

2020, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $0.6 billion for 2020 and $1.8 billion for 2021.

These amounts do not include any ships on order by our Partner Brands.

Contractual Obligations

As of March 31, 2020, our contractual obligations were as follows (in thousands):

As of June 30, 2020, our contractual obligations were as follows (in thousands):

Payments due by period

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(2) Long-term debt obligations mature at various dates through fiscal year 2037 and bear interest at fixed and variable rates.

Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements using the applicable rate at March 31, 2020.

Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2020.

The interest related to the $2.2 billion 364-day secured term loan is reported in the Less than 1 year column.

Subsequent to March 31, 2020, the $2.2 billion 364-day term loan was fully repaid with a portion of the proceeds from the $3.32 billion secured bond issued in May 2020.

Interest on variable-rate debt is calculated based on forecasted debt balances, including the impact of interest rate swap agreements using the applicable rate at June 30, 2020.

Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2020.

(3) Amounts primarily represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts.

Included in the 1-3 year figure is estimated cash collateral of $181.1 million that we are required to deliver on or before July 18, 2021 in connection with our Port of Miami terminal operating lease.

Leases for further information on the collateral requirement.

(4) Amounts are based on contractual installment and delivery dates for our ships on order.

Included in these figures are $9.0 billion in final contractual installments, which have committed financing.

COVID-19 has impacted shipyard operations and we expect that this will result in delivery delays of ships on order and will adjust the timing of our contractual ship deliveries.

COVID-19 has impacted shipyard operations and will result in delays for our previously contracted ship deliveries.

Of five ships originally scheduled for delivery between July 2020 and December 2021, we expect that Silver Moon, Silver Dawn and Odyssey of the Seas will be delivered within the remaining time frame.

The exact duration of the ship delivery delays are currently under discussion with the impacted shipyards.

Amounts do not include potential obligations which remain subject to cancellation at our sole discretion or any agreements entered for ships on order that remain contingent upon completion of conditions precedent.

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(6) Amounts represent debt obligations with initial terms in excess of one year.

Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2020.

In addition, debt obligations presented above are

net of debt issuance costs of $254.7 million as of March 31, 2020.

The $2.2 billion 364-day secured term loan is reported in the "Less than 1 year" column.

Subsequent to March 31, 2020, the term loan was refinanced with debt maturing in 2023 and 2025.

Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2020.

In addition, debt obligations presented above are net of debt issuance costs of $314.4 million as of June 30, 2020.

(7) Amounts represent finance lease obligations with initial terms in excess of one year, net of imputed interest.

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Off-Balance Sheet Arrangements

TUI Cruises has entered into various ship construction and credit agreements that include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55% through May 2031.

TUIC has entered into various ship construction and credit agreements that include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUIC below 37.55% through May 2033.

Some of the contracts that we enter into include indemnification provisions that obligate us to make payments to the counterparty if certain events occur.

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We have not been required to make any payments under such indemnification clauses in the past and, under current circumstances, we do not believe an indemnification obligation is probable.

We have a residual value guarantee associated with our operating lease of a terminal at Port of Miami in Miami, Florida that approximates a percentage of cost of the asset as of the inception of the lease.

We consider the possibility of incurring costs associated with the residual value guarantee to be remote.

Also in connection with the Port of Miami terminal operating lease, we are required to deliver on or before July 18, 2021, cash collateral in an amount equal to the lesser of our residual value guarantee or the aggregate balance of the lessors' terminal construction debt, estimated at $181.1 million as of June 30, 2020.

The collateral is to be issued to an escrow agent and pledged to the benefit of the terminal construction debt lenders until all amounts due by us under the lease have been paid in full.

On April 2, 2020, S&P Global downgraded us from BBB- to BB and on May 13, 2020, Moody’s downgraded us from Baa3 to Ba2.

Our access to, and cost of debt financing is negatively impacted by by the downgrades.

Based on our current projected fair value of certain derivative instruments in net liability positions, on or prior to September 23, 2020, we will be required to post collateral of approximately $80.4 million as a result of the downgrades.

As of March 31, 2020, other than the items described above, we are not party to any other off-balance sheet arrangements, including guarantee contracts, retained or contingent interest, certain derivative instruments and variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial position.

Our access to, and cost of debt financing is negatively impacted by the downgrades.

Certain of our credit card processing agreements that govern the terms to advance passenger ticket deposits, require under certain circumstances, including existence of a material adverse change, excessive chargebacks and other triggering events, that we maintain a reserve which could be satisfied by posting collateral.

We have executed amendments to these agreements, such that certain covenant and collateral requirements are waived for a period through December 2021.

Based on the triggers in the various agreements, we do not believe any incremental collateral will be required, although the maximum additional collateral or reserves we could potentially need to provide under these agreements in the next twelve months is approximately $75 million.

As of June 30, 2020, other than the items described above, we are not party to any other off-balance sheet arrangements, including guarantee contracts, retained or contingent interest, certain derivative instruments and variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial position.

Funding Needs and Sources

Historically, we relied on a combination of cash flows provided by operations, draw downs under our available credit facilities, the incurrence of additional debt and/or the refinancing of our existing debt and the issuance of additional shares of equity securities to fund our obligations.

The impact of COVID-19 resulted in our previously announced voluntary suspension of global cruise operations from March 13 through at least July 31, 2020 and China sailings until at least June 30, 2020.

The impact of COVID-19 resulted in our previously announced voluntary suspension of Global Brands' cruise operations from March 13 which has been extended through at least October 31, 2020, excluding China and Australia.

This suspension of operations has strained our sources of cash flow and liquidity, causing us to take actions resulting in reductions in our operating expenses, reductions in our capital expenses and new financings and other liquidity actions.

The Company continues to identify and evaluate further actions to improve its liquidity.

These include and are not limited to:

further reductions in capital expenditures, operating expenses and administrative costs and additional financings.

These include, and are not limited to, further reductions in capital expenditures, operating expenses and administrative costs and additional financings.

See further discussion on these liquidity actions at Recent Developments - COVID-19.

We have significant contractual obligations of which our debt service obligations and the capital expenditures associated with our ship purchases represent our largest funding needs.

As of March 31, 2020, we had $8.8 billion of committed financing for final delivery installments on our ships on order.

As of March 31, 2020, we had $6.2 billion in contractual obligations due through March 31, 2021, of which approximately $3.4 billion relates to debt maturities, $516.6 million relates to interest on debt and $1.6 billion relates to progress payments on our ship orders and the final installments payable due upon the delivery of Odyssey of the Seas , Silver Origin and Silver Moon, based on their contractual delivery dates.

The $2.2 billion 364-day secured term loan is reported as maturing prior to March 31, 2021;

however, subsequent to March 31, 2020, the term loan was refinanced with debt maturing in 2023 and 2025.

As of March 31, 2020, we had liquidity of $3.6 billion, consisting of cash and cash equivalents, net of commercial paper issuances.

As of March 31, 2020, our revolving credit facilities were fully drawn.

Subsequent to March 31, 2020, we agreed

with certain of our lenders not to pay dividends or engage in stock repurchases.

As of June 30, 2020, we had $11.3 billion of committed financing for our ships on order.

As of June 30, 2020, we had $5.6 billion in contractual obligations due through June 30, 2021, of which approximately $0.7 billion relates to debt maturities, $1.3 billion relates to interest on debt and $2.9 billion relates to progress payments on our

ship orders and the final installments payable due upon the delivery of Silver Moon, Odyssey of the Seas and Wonder of the Seas , based on their contractual delivery dates.

As of June 30, 2020, we had liquidity of $4.1 billion, consisting of cash and cash equivalents.

As of June 30, 2020, our revolving credit facilities were fully utilized.

In connection with our debt covenant waiver extensions, we agreed with certain of our lenders not to pay dividends or engage in stock repurchases.

Refer to Note 11 .

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However, there is no assurance that our assumptions and estimates are accurate due to possible unknown variables related this unprecedented suspension of our operations and, as such, there is inherent uncertainty in our ability to predict future liquidity requirements.

Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating.

On April 2, 2020, S&P Global downgraded us from BBB- to BB and on May 13, 2020, Moody’s downgraded us from Baa3 to Ba2, thereby increasing the contractual interest rate, facility fee and export credit agency fee across various facilities.

If any person acquires ownership of more than 50% of our common stock or, subject to certain exceptions, during any 24-month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms.

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Debt Covenants

Certain of our financing agreements contain covenants that require us, among other things, to maintain minimum net worth of at least $9.9 billion, a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%.

Both our export credit facilities and our non-export credit facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%.

The fixed charge coverage ratio is calculated by dividing net cash from operations for the past four quarters by the sum of dividend payments plus scheduled principal debt payments in excess of any new financings for the past four quarters.

Our minimum net worth and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total shareholders’ equity .

We were in compliance with our financial covenants as of March 31, 2020.

However, we amended these debt agreements to waive the quarterly testing of our financing covenants through and including the first quarter of 2021.

In addition to the above, as of March 31, 2020, we were not in compliance with one covenant in our Port of Miami Terminal "A" operating lease agreement which we subsequently obtained a waiver for and amended our agreement with the lessor to increase the lien basket in line with our debt facilities.

As part of obtaining these debt compliance waivers, we are now required to maintain a minimum of $300 million in cash and cash equivalents tested on a monthly basis through March 31, 2021, and we are not permitted during the covenant waiver period, subject to limited exceptions, to pay cash dividends or make share repurchases unless we would have been compliant with our fixed charge coverage ratio at such time.

In addition, the lenders under such unsecured bank facilities required a number of structural enhancements to such facilities.

Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating.

On April 2, 2020, S&P Global downgraded us from BBB- to BB and on May 13, 2020, Moody’s downgraded us from Baa3 to Ba2.

Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections that would be applicable.

There can be no assurance that we would be able to obtain waivers in a timely manner, or on acceptable terms at all.

During the second quarter of 2020, we amended our export credit facilities and our non-export credit facilities and certain of our credit card processing agreements which contain financial covenants to suspend the testing of these covenants through and including the first quarter of 2021.

Certain of these amendments imposed a new monthly-tested minimum liquidity covenant $300 million for the duration of the waiver period.

Pursuant to these amendments, we have also agreed that we will not pay cash dividends or effectuate share repurchases during the wavier period unless we are in compliance with the fixed charge coverage ratio covenant as of the end of the most recently completed quarter.

Subsequent to June 30, 2020, we further amended our export credit facilities, certain of our non-export credit facilities and our credit card processing agreements to extend the financial covenant waiver through and including, the fourth quarter of 2021.

As of June 30, 2020 and the date of these financial statements, we were in compliance with the minimum liquidity covenant, as increased by the recent amendments.

In addition to the above, during the quarter ended June 30, 2020, we amended our Port of Miami Terminal "A" operating lease agreement to increase the lien basket in line with our debt facilities.

As of June 30, 2020, were in compliance with the covenants under the lease agreement.

Any covenant waiver may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as the lenders may require.

There can be no assurance that we would be able to obtain waivers in a timely manner, or on acceptable terms.

If we were not able to obtain waivers or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contract payables.

If we were not able to obtain waivers on the credit card processing agreements, this could lead to the termination of these agreements or the trigger of reserve requirements.

During the first quarter of 2020, we declared a cash dividend on our common stock of $0.78 per share, which was paid in April 2020.

During the first quarter of 2020, we also paid a cash dividend on our common stock of $0.78 per share, which was declared during the fourth quarter of 2019.

Subsequent to March 31, 2020, we agreed with certain of our lenders not to pay

dividends for so long as our debt covenant waivers are in effect.

Accordingly, we did not declare a dividend in the second quarter of 2020.

During the first quarter of 2019, we declared a cash dividend on our common stock of $0.70 per share, which was paid in April 2019.

During the first quarter of 2019, we also paid a cash dividend on our common stock of $0.70 per share, which was declared during the fourth quarter of 2018.

Subsequent to March 31, 2020, we agreed with certain of our lenders not to pay dividends for so long as our debt covenant waivers are in effect.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis