What changed in this filing

/stocks — the workspaceLOADING

Item 1A. Risk Factors

2020-08-10 compared with 2020-05-21 · 132 added, 82 removed, 327 unchanged (40% of the section changed)

6 unchanged sentences

The global COVID-19 pandemic has had, and will continue to have, a material adverse impact on our business and results of operations.

The global spread of COVID-19 and the unprecedented responses by governments and other authorities to control and contain the spread has caused significant disruptions, created new risks, and exacerbated existing risks to our business.

The global spread of COVID-19 and the unprecedented responses by governments and other authorities to control and contain the disease, has caused significant disruptions, created new risks, and exacerbated existing risks to our business.

We have been, and will continue to be, negatively impacted by the COVID-19 pandemic, including impacts that resulted from actions taken in response to the outbreak.

Examples of these include, but are not limited to, travel bans and cruising advisories and the resulting temporary suspension of our operations, which is expected to continue until at least July 31, 2020 and China sailings until at least June 30, 2020, restrictions on the movement and gathering of people, social distancing measures, shelter-in-place/stay-at-home orders, and disruptions to businesses in our supply chain.

Examples of these include, but are not limited to, travel bans and cruising advisories and the resulting temporary suspension of our operations, which is expected to continue until at least October 31, 2020, excluding China and Australia, restrictions on the movement and gathering of people, social distancing measures, shelter-in-place/stay-at-home orders, and disruptions to businesses in our supply chain.

In addition to the imposed restrictions affecting our business, the extent, duration, and magnitude of the COVID-19 pandemic’s effect on the economy and consumer demand for cruising and travel is still rapidly fluctuating and difficult to predict.

2 unchanged sentences

• Operations:

Due to the global public health circumstances, we have decided to extend the suspension of sailings of our global fleet through at least July 31, 2020 and China sailings until at least June 30, 2020.

It is uncertain as to whether we will need to suspend additional sailings and to what extent.

Due to the global public health circumstances, we have decided to extend the suspension of sailings of our Global Brands' fleet through at least October 31, 2020, excluding China and Australia.

It is uncertain as to whether we will need to suspend additional sailings and to what extent, although once such suspension ends, we still do not expect to return to normal sailings for some time.

The suspension of sailings and the expected reduction in demand for future cruising once we resume sailing has led to a significant decline in our revenues and cash inflows, which has required us to take cost and capital expenditure containment actions.

Consequently, we have reduced and furloughed our workforce, with approximately 23% of our U.S.

shoreside employee base being impacted and, except for the minimum safe manning shipboard crew required to operate the ships during the suspension of operations, our shipboard crew were notified that their contracts would end early and they would be notified about new assignments when operations resume in the future, which may delay our ability to rebuild our workforce in the case of

improved conditions.

As a result of these actions, we may be challenged in rebuilding our workforce

which could further delay our return to service.

In addition, we have reduced our planned capital spending through 2021, which may negatively impact our execution of planned growth strategies, particularly as it relates to investments in our ships, technology, and our expansion of land-based developments.

4 unchanged sentences

• Results of Operations:

Our decision to suspend sailings of our global fleet through at least July 31, 2020 and China sailings until at least June 30, 2020 and the resulting trip cancellations have materially impacted the results of our operations.

Our decision to suspend sailings of our Global Brands' fleet through at least October 31, 2020, excluding China and Australia, and the resulting trip cancellations have materially impacted the results of our operations.

We have incurred and will continue to incur significant costs associated with cancellations as we accommodate passengers with refunds and future cruise credits;

as well as assisting our crew with their return home, food, housing, and medical needs.

as well as continuing to assist our crew with their return home, food, housing, and medical needs.

In addition, although cruise operations are currently suspended, we have incurred and will likely continue to incur significant overhead costs associated with layup of our fleet and enhanced COVID-19 related sanitation procedures.

As we cannot control adverse media coverage and we cannot predict exactly when we will resume sailing operations, we are experiencing and may continue to experience weak demand for cruising for an undeterminable length of time and we cannot predict when we will return to pre-outbreak demand or fare pricing or if we will return to such levels in the foreseeable future.

In turn, these negative impacts to our financial performance have resulted and may continue to result in impairments of our long-lived and intangible assets.

For the three months ended March 31, 2020, we incurred impairment charges of $1.1 billion primarily related to the impairment of goodwill attributable to our Silversea Cruises reporting unit and several of our vessels.

Additionally, future profitability will be impacted by increased debt service costs as a result of our liquidity actions.

In turn, these negative impacts to our financial performance have resulted and may continue to result in impairments of our long-lived and intangible assets, which has influenced our decision making relating to early disposal, sale or retirement of assets.

For the six months ended June 30, 2020, we incurred impairment charges and credit losses of $1.3 billion related to the impairment of goodwill and trademarks and trade names attributable to our Silversea Cruises reporting unit, and long-lived assets as well as credit losses on mostly on receivables related to our sale of property and equipment.

Additionally, any future profitability will be impacted by increased debt service costs as a result of our liquidity actions.

The suspension of our sailings and the reduction in demand for future cruising has adversely impacted our liquidity as we have experienced a significant increase in refunds of customer deposits while cash inflows from new or existing bookings on future sailings has reduced sharply.

4 unchanged sentences

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

On June 9, 2020, we issued $ 1.0 billion in senior unsecured notes which mature in 2023.

Also on June 9, 2020, we issued $ 1.15 billion in convertible notes which are convertible into shares of our common stock, cash, or a combination of common stock and cash, at our election after meeting certain conditions prior to March 15, 2023.

The convertible notes mature in 2023.

In June 2020, we established a commercial paper facility for the purpose of issuing short-term, unsecured Sterling-denominated notes for purchase under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility commercial paper program in an aggregate principal amount up to £ 300.0 million.

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.

These downgrades reduce our ability to incur secured indebtedness by reducing the amount of indebtedness that we are permitted to secure.

In April and May 2020, we obtained interim debt service and financial covenant holidays under certain of our export-credit backed loan facilities to generate a cumulative $0.8 billion of incremental liquidity through April 2021.

During the three months ended June 30, 2020, we obtained interim debt service and financial covenant holidays under certain of our export-credit backed loan facilities to generate a cumulative $0.9 billion of incremental liquidity over a period of four years after the 12-month deferral period.

Our ability to raise additional financing, whether or not secured, could be limited if our credit rating is further downgraded, and/or if we fail to comply with applicable covenants governing our outstanding indebtedness, and/or if overall financial market conditions worsen.

Additionally, due to the complexity of the pandemic’s impact to the economy and uncertainty of its duration, we cannot guarantee that assumptions used to project our liquidity needs will be correct, which may result in the need for additional financing and/or may result in the inability to satisfy covenants required by our current credit facilities.

If we raise additional funds through equity or debt issuances, our shareholders could experience dilution of their ownership interest, and these securities could have rights, preferences, and privileges that are superior to that of holders of our ordinary shares.

If we raise additional funds by issuing debt, we may be subject to limitations on our operations due to restrictive covenants, which may be more restrictive than the covenants in our existing debt agreements, and we may be required to further encumber our assets.

If we continue to raise additional funds through equity or convertible debt issuances, our shareholders could experience dilution of their ownership interest, and these securities could have rights, preferences, and privileges that are superior to that of holders of our ordinary shares.

If we raise additional funds by issuing debt,

we may be subject to limitations on our operations due to restrictive covenants, which may be more restrictive than the covenants in our existing debt agreements, and we may be required to further encumber our assets.

Also, as a result of our additional debt issuances, we will require a significant amount of cash to service our debt and sustain operations.

Our ability to generate cash depends on factors beyond our control and we may be unable to repay or repurchase debt at maturity.

If adequate funds are not available on acceptable terms, or at all, we may be unable to fund our operations, or respond to competitive pressures, any of which could negatively affect our business.

There is no guarantee that financing will be available in the future or that such financing will be available with similar terms or terms that are commercially acceptable to us.

Further, if any government agrees to provide us with disaster relief assistance, or other assistance due to the impacts of the COVID-19 pandemic, and we determine it is beneficial to seek such government assistance, it may impose restrictions on executive compensation, share buybacks, dividends, prepayment of debt and other similar restrictions until the aid is repaid or redeemed in full, which could significantly limit our corporate

activities and adversely impact our business and operations.

We cannot assure you that any such disaster relief would be available to us.

We cannot assure you that any more such disaster relief would be available to us.

Adverse worldwide economic or other conditions could result in prolonged reduction in the demand for cruises and passenger spending, adversely impacting our operating results, cash flows and financial condition including impairing the value of our goodwill, ships, trademarks and other assets and potentially affecting other critical accounting estimates where the change may be material to our operating results.

5 unchanged sentences

The COVID-19 pandemic could cause a global recession, which would have a further adverse impact on our financial condition and results of operations.

In past recessions, demand in the cruise industry was significantly negatively impacted resulting in lower occupancy rates and adverse pricing, with a corresponding increase in the use of credits and other means to attract travelers.

Additionally, the impact of COVID-19 on the financial markets is complicated and we cannot predict its effect on geopolitical events and/or international trade policies as countries attempt to mitigate the impact as economies re-open.

Additionally, the continued impact of COVID-19 on the financial markets is complicated and we cannot predict its effect on geopolitical events and/or international trade policies as countries attempt to mitigate the impact of the pandemic and as they re-open their economies or re-implement lockdown measures.

Our operating costs could increase due to market forces and economic or geopolitical factors beyond our control.

1 unchanged sentence

Increases in these operating costs could adversely affect our future profitability when an economic recovery begins.

Any further impairment of our goodwill, long-lived assets, equity investments and notes receivable could adversely affect our financial condition and operating results.

We evaluate goodwill for impairment on an annual basis, or more frequently when circumstances indicate that the carrying value of a reporting unit may not be recoverable.

A challenging operating environment, such as is currently being experienced under the impact of COVID-19, impacts affecting consumer demand or spending, the deterioration of general macroeconomic conditions, or other factors could result in a change to the future cash flows we expect to derive from our operations.

Reductions of cash flows used in the valuation analyses may result in the recording of an impairment charge to a reporting unit’s goodwill.

During the six months ended June 30, 2020, we recognized a Silversea Cruises’ goodwill impairment loss of $576.2 million.

Impairments and Credit Losses for further information.

Conducting business globally may result in increased costs and other risks.

4 unchanged sentences

This risk is further heightened by the COVID-19 pandemic, as authorities in many of these markets have implemented numerous measures to contain the spread and impact of COVID-19, such as travel bans and restrictions, shelter-in-place/stay-at-home orders, and other limitations on business activity, including business closures.

The execution of our planned growth strategies is dependent on meeting the governmental and regulatory measures and policies in each of these markets as they begin to re-open.

In addition, these measures could change unpredictably and/or could be scaled up or down in response to evolving intensity or resurgence of COVID-19 in or around these markets.

The execution of our planned growth strategies is dependent on meeting the governmental and regulatory measures and policies in each of these markets.

Our ability to realize our future growth strategy is highly dependent on our ability to satisfy country-specific policies and requirements in order to return to service, as well as meeting the needs of region specific consumer preferences as services come back online.

2 unchanged sentences

In many parts of the world, including countries in which we operate, practices in the local business communities might not conform to international business standards.

These legal and regulatory requirements and standards may change in response to the COVID-19 pandemic, and there may be greater uncertainty as to the interpretation and enforcement of applicable laws and

regulations, including those introduced in response to the COVID-19 pandemic.

We cannot guarantee consistent interpretation, application, and enforcement of rules and regulations put in place in response to the COVID-19 pandemic, which could place limits on our operations or increase our costs, as well as negatively impact our future growth strategies in our key growth markets.

19 unchanged sentences

Fears of terrorist attacks, war, and other hostilities could have a negative impact on our results of operations.

Events such as terrorist attacks, war (or war-like conditions), conflicts (domestic or cross-border), civil unrest and other hostilities, including an escalation in the frequency or severity of incidents, and the resulting political instability, travel restrictions and advisories, and concerns over safety and security aspects of traveling or the fear of any of the foregoing have had, and could have in the future, a significant adverse impact on demand and pricing in the travel and vacation industry.

had, and could have in the future, a significant adverse impact on demand and pricing in the travel and vacation industry.

In view of our global operations, we are susceptible to a wide range of adverse events.

8 unchanged sentences

Also, a significant increase in interest rates could materially impact the cost of our floating rate debt.

Furthermore, regulatory changes, such as the announcement of the United Kingdom’s Financial Conduct Authority to

phase out LIBOR by the end of 2021, may adversely affect our portfolio of floating-rate debt and interest rate derivatives.

Furthermore, regulatory changes, such as the announcement of the United Kingdom’s Financial Conduct Authority to phase out LIBOR by the end of 2021, may adversely affect our portfolio of floating-rate debt and interest rate derivatives.

If LIBOR ceases to exist, we may need to renegotiate any credit agreements or interest rate derivatives agreements extending beyond 2021 that utilize LIBOR as a factor in determining the interest rate or hedge rate, which could adversely impact our cost of debt.

18 unchanged sentences

and many nations imposed strict temporary restrictions on international travel.

This, combined with other factors, ultimately lead to the company voluntarily suspending the sailings of our fleet globally through at least July 31, 2020 and China sailings until at least June 30, 2020 and may limit or slow our ability to resume operations in the near term.

This, combined with other factors, ultimately lead to the company voluntarily suspending the sailings of our fleet globally and may limit or slow our ability to resume operations in the near term.

In addition to the loss of revenues, our financial condition is affected by refund requests, future cruise credit issuances, and other costs associated with returning passengers and crew home safely.

Furthermore, many countries have adopted restrictions against U.S.

travelers and we currently cannot predict when those restrictions will be eased.

Disease outbreaks and an increase in concern about the risk of illness could adversely impact our business and results from operations.

1 unchanged sentence

Due to the complex and evolving nature of the COVID-19 pandemic we cannot predict the duration of the effect of the current pandemic, and the magnitude is dependent on the development of future events and responses from governments, other authorities, and individual consumers.

Our industry may be subject to enhanced health and safety requirements in the future which may be costly and take a significant amount of time to implement across our fleet and we may be subject to concerns that cruises are susceptible to the spread of infectious diseases such as COVID-19.

Our industry, including our passengers and crew, may be subject to enhanced health and safety requirements in the future which may be costly and take a significant amount of time to implement across our fleet and we may be subject to concerns that cruises are susceptible to the spread of infectious diseases such as COVID-19.

For example, local governments may establish their own set of rules for self-quarantines and/or require proof of individuals health status prior to or upon visiting.

These effects may extend beyond any resolution of the current COVID-19 pandemic through the development of a vaccine or effective therapeutic treatment, and the impact of any of these factors could have a material adverse effect on our business and results of operations.

5 unchanged sentences

Our reputation and our business could also be damaged by continued or additional negative publicity regarding the cruise industry in general, including publicity regarding the spread of contagious disease such as COVID-19, over-tourism in key ports and destinations and the potentially adverse environmental impacts of cruising.

The considerable expansion in the use of social and digital media over recent years has compounded the potential scope and reach of

any negative publicity.

The considerable expansion in the use of social and digital media over recent years has compounded the potential scope and reach of any negative publicity.

In addition, incidents involving cruise ships may result in additional costs to our business, increasing government or other regulatory oversight and, in certain cases, potential litigation.

10 unchanged sentences

The COVID-19 pandemic has led to suspensions and/or a slowdowns of work at certain shipyards, which impacts our ability to construct new ships when and as planned, our ability to timely and cost-effectively procure new capacity, and our ability to execute scheduled drydocks and/or fleet modernizations.

We believe the effects of the COVID-19 pandemic on the shipyards, their subcontractors, and our suppliers will result in a delay in ship deliveries and we cannot yet reasonably predict the extent and duration of such delays.

The effects of the COVID-19 pandemic on the shipyards, their subcontractors, and our suppliers have resulted in delays in our previously scheduled ship deliveries, which are currently under discussion with the shipyards.

Variations from our plan could have a significant negative impact on our business operations and financial condition.

7 unchanged sentences

Although our ships can be redeployed, cruise sales and/or pricing may be impacted by the introduction of new ships into the marketplace, reductions in cruise capacity, overall market growth and deployment decisions of ourselves and our competitors.

As of December 31, 2019, a total of 67 new ships with approximately 159,000 berths are on order for delivery through 2024 in the cruise industry, including 15 ships currently scheduled to be delivered to us through 2024.

As of December 31, 2019, a total of 67 new ships with approximately 159,000 berths were on order for delivery through 2024 in the cruise industry, including 16 ships currently scheduled to be delivered to us.

The further net growth in capacity from these new ships and future orders, without an increase in the cruise industry’s demand and/or share of the vacation market, could depress cruise prices and impede our ability to achieve yield improvement.

Additionally, due to our global suspension of operations and the suspension of operations by other cruise operators, cruise prices and yield improvement are further at risk depending on how, when, and where global operations resume.

Additionally, due to our

global suspension of operations and the suspension of operations by other cruise operators, cruise prices and yield improvement are further at risk depending on how, when, and where global operations resume.

In addition, to the extent that we or our competitors deploy ships to a particular itinerary/region and the resulting capacity in that region exceeds the demand, we may lower pricing and profitability may be lower than anticipated.

3 unchanged sentences

We believe that port destinations are a major reason why guests choose to go on a particular cruise or on a cruise vacation.

on port development, exclusivity arrangements that ports may have with our competitors, geopolitical developments and local governmental regulations;

The availability of ports and destinations is affected by a number of factors, including industry demand and competition for key ports and destinations, existing capacity constraints, constraints related to the size of certain ships, security, financial limitations on port development, exclusivity arrangements that ports may have with our competitors, geopolitical developments and local governmental regulations;

and in light of the COVID-19 pandemic, port availability could also be subject to immediate change depending on local and/or onboard disease outbreaks or other government restrictions as well as limited availability when sailing resumes.

18 unchanged sentences

To fund our capital expenditures (including new ship orders), operations and scheduled debt payments, we have historically relied on a combination of cash flows provided by operations, drawdowns under available credit facilities, the incurrence of additional indebtedness and the sale of equity or debt securities in private or public securities markets.

Any circumstance or event which leads to a decrease in consumer cruise spending, such as worsening global economic conditions or significant incidents impacting the cruise industry, including the COVID-19 pandemic, negatively affects our operating cash flows.

In the case of the COVID-19 pandemic and the resulting suspension of our operations, these circumstances have also resulted in credit rating downgrades.

In the case of the COVID-19 pandemic and the resulting

suspension of our operations, these circumstances have also resulted in credit rating downgrades.

See “—Adverse worldwide economic or other conditions could result in prolonged reduction in the demand for cruises and passenger spending, adversely impacting our operating results, cash flows and financial condition including potentially impairing the value of our goodwill, ships, trademarks and other assets and potentially affecting other critical accounting estimates where the change may be material to our operating results” and “—Incidents on ships, at port facilities, land destinations and/or affecting the cruise vacation industry in general, and the associated negative media coverage and publicity, could affect our reputation and impact our sales and results of operations” for more information.

3 unchanged sentences

If any of the foregoing occurs for a prolonged period of time it will have a long-term negative impact on our cash flows and our ability to meet our obligations cannot be guaranteed.

Our liquidity could be adversely impacted if we are unable to satisfy the covenants required by our credit facilities.

Our debt agreements contain covenants, including financial and other covenants restricting our ability, or requiring us, to take certain actions.

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 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.

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

Among other things, certain of our subsidiaries that directly own other of our subsidiaries that own certain of our cruise ships are not permitted to incur or guarantee debt in excess of $1.7 billion in the aggregate prior to April 5, 2022 and, in certain circumstances, are required to provide additional guarantees for the benefit of the lenders under such facilities.

Until such additional guarantees are released, which will occur automatically in certain circumstances where we eliminate secured and guaranteed debt, certain of our subsidiaries will be subject to limitations on incurring debt and creating liens on their assets and we and our subsidiaries will be subject to limitations on selling assets that are subject to such guarantees.

Our substantial debt, and any additional debt we may incur, could adversely affect our financial condition and operational flexibility.

In addition, we will require a significant amount of cash to service our debt and sustain our operations.

Our ability to generate cash depends on many factors beyond our control, and we may not be able to generate cash required to service our debt.

We have a substantial amount of debt and significant debt service obligations.

As of June 30, 2020, we had total debt of $19.1 billion.

Our substantial debt could have important negative consequences for us.

For example, our substantial debt could require us to dedicate a large portion of our cash flow from operations to service debt and fund repayments on our debt, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

increase our vulnerability to adverse general economic or industry conditions;

limit our flexibility in planning for, or reacting to, changes in our business or the industry in which we operate;

place us at a competitive disadvantage compared to our competitors that have less debt;

make us more vulnerable to downturns in our business, the economy or the industry in which we operate, including the current downturn related to COVID-19;

limit our ability to raise additional debt or equity capital in the future to satisfy our requirements relating to working capital, capital expenditures, development projects, strategic initiatives or other purposes;

restrict us from making strategic acquisitions, introducing new technologies or exploiting business opportunities;

make it difficult for us to satisfy our obligations with respect to the notes and our other debt;

and increase our exposure to the risk of increased interest rates as certain of our borrowings are (and may be in the future) at a variable rate of interest.

In addition, we may incur substantial additional debt in the future.

If new debt is added to our existing debt levels, the related risks that we now face would increase.

If we cannot generate sufficient cash to meet our debt service obligations or fund our other business needs, we may, among other things, need to refinance all or a portion of our debt, obtain additional financing, delay planned capital expenditures or sell assets.

We cannot assure that we will be able to generate sufficient cash through any of the foregoing.

If we are not able to refinance any of our debt, obtain additional financing or sell assets on commercially reasonable terms or at all, we may not be able to satisfy our obligations with respect to our debt.

We are subject to restrictive debt covenants that may limit our ability to finance future operations and capital needs and to pursue business opportunities and activities.

In addition, if we fail to comply with any of these restrictions, it could have a material adverse effect on us.

Certain of our debt instruments, including our unsecured bank facilities, limit our flexibility in operating our business.

For example, certain of our loan agreements and indentures restrict or limit our and our subsidiaries’ ability to, among other things:

incur or guarantee additional indebtedness;

pay dividends or distributions on, or redeem or repurchase capital stock and make other restricted payments;

make investments;

consummate certain asset sales;

engage in certain transactions with affiliates;

grant or assume certain liens;

and consolidate, merge or transfer all or substantially all of our assets.

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%.

Refer to Note 7.

Debt for further discussion on our covenants and existing waivers.

If the credit rating of Silversea Cruise Holding Ltd.'s 7.25% senior secured notes due 2025 (the “Silversea Notes”) is downgraded to below investment grade by one rating agency, then we will become subject to certain restrictive and other covenants over Silversea Cruises' operations, the application of which is currently suspended unless and until any such

downgrade occurs.

The Silversea Notes are rated Baa3 by Moody’s and BBB- by S&P.

For example, if the credit rating of the Silversea Notes is downgraded to below investment grade, among other things, Silversea Cruises and its restricted subsidiaries will be subject to limitations on the incurrence of indebtedness, limitations on entering into transactions with affiliates (including Royal Caribbean and its subsidiaries that are not restricted subsidiaries of Silversea Cruises) and limitations on the payment of dividends and other distributions from Silversea Cruises to Royal Caribbean, each of which may limit our ability to obtain funding and may decrease our operational and financial flexibility, including the ability to make upstream payments from Silversea Cruises and to provide funding support to Silversea Cruises.

The Silversea Notes are guaranteed by the Company on a senior unsecured basis.

Any event of default or acceleration of the indebtedness under the Silversea Notes could cause the borrowings under other of our debt instruments that contain cross-default provisions to be accelerated or become payable on demand.

All of these limitations are subject to significant exceptions and qualifications.

Despite these exceptions and qualifications, we cannot assure you that the operating and financial restrictions and covenants in certain of our debt instruments will not adversely affect our ability to finance our future operations or capital needs or engage in other business activities that may be in our interest.

Any future indebtedness may include similar or other restrictive terms.

In addition, our ability to comply with these covenants, and restrictions may be affected by events beyond our control.

These include prevailing economic, financial and industry conditions.

If we breach any of these covenants or restrictions, we could be in default under such indebtedness and certain of our other debt instruments and the relevant debt holders or lenders could elect to declare the debt, together with accrued and unpaid interest and other fees, if any, immediately due and payable and proceed against any collateral securing that debt.

If the debt under certain of our debt instruments that we enter into were to be accelerated, our liquid assets may be insufficient to repay in full such indebtedness.

Borrowings under other debt instruments that contain cross-default provisions also may be accelerated or become payable on demand.

In these circumstances, our assets may not be sufficient to repay in full that indebtedness and our other indebtedness then outstanding.

In addition, our ability to maintain our credit facilities may also be impacted by changes in our ownership base.

1 unchanged sentence

Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50% of our common stock coupled with a ratings downgrade, which would require us to offer to repurchase our public debt securities in the event of such change of control.

Failure to comply with the terms of these debt facilities, or any prepayment or repurchase obligations, could result in an event of default.

Generally, if an event of default under any debt agreement or debt security occurs, then pursuant to cross default acceleration clauses, our outstanding debt and derivative contract payables could become due and/or terminated.

In addition, in such events, our credit card processors could hold back payments to create a reserve.

We cannot provide assurances that we would have sufficient liquidity to repay, or the ability to refinance the debt if such amounts were accelerated upon an event of default.

If we elect to settle conversions of our convertible notes, if any, in shares of our common stock or a combination of cash and shares of our common stock, conversions of our convertible notes may result in substantial dilution for our existing shareholders.

In June 2020, we issued an aggregate principal amount of $1.15 billion in convertible notes.

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

The initial conversion rate per $1,000 principal amount of the convertible notes is 13.8672 shares of our common stock, which is equivalent to an initial conversion price of approximately $72.11 per share, subject to adjustment in certain circumstances.

connection with certain corporate events or if we issue a notice of tax redemption, we will, under certain circumstances, increase the conversion rate for holders of the convertible notes who convert their convertible notes in connection with such corporate event or whose convertible notes are called for tax redemption and who convert their convertible notes during the relevant redemption period.

Prior to March 15, 2023, the convertible notes will be convertible at the option of holders during certain periods only upon satisfaction of certain conditions On or after March 15, 2023, the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding their maturity date.

If we elect to settle conversions of our convertible notes, if any, in shares of our common stock or a combination of common stock and cash, conversions of our convertible notes may result in significant dilution to our shareholders.

We did not declare dividends on our common stock in the quarter ended June 30, 2020 and do not expect to pay dividends on our common stock for the near future.

Any return on investment may be limited to the value of our common stock.

No cash dividends were declared on our common stock during the quarter ended June 30, 2020.

We expect that any income received from operations will be devoted to our future operations and recovery.

We do not expect to pay cash dividends on our common stock in the near future due to our agreement to not pay dividends as a condition of our debt covenant amendments and as the payment of dividends would trigger repayment of our Debt Holiday.

Payment of dividends would depend upon our profitability at the time, cash available for those dividends, and other factors as our board of directors may consider relevant.

If we do not pay dividends, our common stock may be less valuable because a return on an investor’s investment will only occur if our stock price appreciates.

If we are unable to appropriately balance our cost management and capital allocation strategies with our goal of satisfying guest expectations, it may adversely impact our business success.

4 unchanged sentences

There can be no assurance that our strategies will be successful, which could adversely impact our business, financial condition and results of operations.

Investments in older tonnage, in particular, run the risk of not meeting expected returns and diluting related asset values.

For example, our ownership and operation of older tonnage, in particular during the business disruption caused by COVID-19, has resulted in impaired asset values due to expected returns that we will not be able to recover.

Our attempts to expand our business into new markets and new ventures may not be successful.

1 unchanged sentence

These attempts to expand our business increase the complexity of our business, require significant levels of investment and can strain our management, personnel, operations and systems.

In addition, we may be unable to execute our attempts to expand our business as a result of the impacts of the COVID-19 pandemic, as described elsewhere herein.

There can be no assurance that these business expansion efforts will

develop as anticipated or that we will succeed, and if we do not, we may be unable to recover our investment, which could adversely impact our business, financial condition and results of operations.

In addition, we have been unable to execute our attempts to expand our business as a result of the impacts of the COVID-19 pandemic, as described elsewhere herein.

There can be no assurance that these business expansion efforts will develop as anticipated or that we will succeed, and if we do not, we may be unable to recover our investment, which could adversely impact our business, financial condition and results of operations.

Risks associated with our development and operation of key land-based destination projects may adversely impact our business or results of operations.

14 unchanged sentences

Actual or threatened natural disasters (e.g., hurricanes/typhoons, earthquakes, tornadoes, fires or floods), municipal lockdowns, curfews, quarantines, or similar events in these locations may have a material impact on our business continuity, reputation and results of operations.

For instance, virtually all Company shoreside operations are working remotely due to the COVID-19 pandemic, which may pose increased technological risks.

For instance, all Company shoreside operations are working remotely due to the COVID-19 pandemic, which has posed increased technological risks.

In addition, substantial or repeated information system failures, computer viruses or cyber attacks impacting our shoreside or shipboard operations could adversely impact our business.

12 unchanged sentences

Business activities that involve our co-investments with third parties may subject us to additional risks.

Partnerships, joint ventures and other business structures involving our co-investments with third parties generally include some form of shared control over the operations of the business and create additional risks, including the possibility that other investors in such ventures could become bankrupt or otherwise lack the financial resources to meet their obligations, or could have or develop business interests, policies or objectives that are inconsistent with ours.

In addition to financial risks, our co-investment activities may also present managerial and operational risks and expose us to reputational or legal concerns.

Partnerships, joint ventures and other business structures involving our co-investments with third parties generally include some form of shared control over the operations of the business and create additional risks, including the event that other investors in such ventures become bankrupt or otherwise lack the financial resources to meet their obligations, or could have or develop business interests, policies or objectives that are inconsistent with ours.

In addition to financial risks, our co-investment activities have also presented managerial and operational risks and expose us to reputational or legal concerns.

These or other issues related to our co-investments with third parties could adversely impact our operations or liquidity.

Due to the COVID-19 pandemic, our Pullmantur, TUI Cruises and Silversea affiliate cruise lines have suspended sailings and their operations, results of operations and liquidity have been and will continue to be adversely materially impacted.

The Company may be required to provide funding for these affiliated operations and it is unclear when and to what extent these brands will resume operations and our ability to provide such funding will be limited by the level and terms of our outstanding indebtedness.

Due to the COVID-19 pandemic, Pullmantur S.A.

filed for reorganization under the terms of the Spanish insolvency laws.

In addition TUI Cruises and Hapag-Lloyd Cruises have, for the most part, suspended sailings and their operations, results of operations and liquidity have been and will continue to be adversely materially impacted.

The Company may be required continue to provide funding for these affiliated operations and it is unclear when and to what extent these brands will resume operations and our ability to provide such funding will be limited by the level and terms of our outstanding indebtedness.

Further, due to the arrangements we have in place with our partners in these ventures, we are limited in our ability to control the strategy of these ventures if and when they resume operations, or their use of capital and other key factors to their results of operation which could adversely affect our investments and impact our results of operations.

We have a partial ownership interest in Silversea Cruises and as a result may be unable to control the amount of cash we receive or retain from the operation of Silversea Cruises and are limited in the flexibility we have to support Silversea Cruises’ operations.

On July 31, 2018, we acquired a 66.7% equity stake in Silversea Cruises.

In connection with the acquisition of our equity stake in Silversea Cruises, we with the other shareholder of Silversea Cruises became party to a Shareholders’ Agreement with Silversea Cruises and Silversea Cruises Group Ltd.

(the “Shareholders’ Agreement”).

Among other things, the Shareholders’ Agreement contains certain provisions concerning our funding and support of Silversea Cruises.

We have provided and expect to continue to provide significant operational support and funding to Silversea Cruises.

However our ability to control the operational support and funding that we believe is advisable to provide to Silversea Cruises is limited by provisions of the Shareholders’ Agreement.

To the extent we continue to own less than 100% of Silversea Cruises and Silversea Cruises requires additional operational support and funding, our flexibility to contribute such support and funding is limited by the rights of the other shareholder of Silversea Cruises.

Our inability, or limited ability, to control the operations and/or management of Silversea Cruises may limit the business strategies and operational results of Silversea Cruises and the value of our investment.

Further, our continued significant operational support and funding of Silversea Cruises may have an adverse impact on our business and results of operation.

In addition, we and Silversea Cruise Holding Ltd.

are guarantors of the 7.25% senior secured notes 2025 issued by Silversea Cruise Finance Ltd.

(the “Silversea Notes”).

The Silversea Notes are rated Baa3 by Moody’s and BBB- by S&P.

If the credit rating of the Silversea Notes is downgraded to below investment grade by one rating agency, then Silversea Cruises and its restricted subsidiaries will become subject to certain restrictive and other covenants, the application of which is currently suspended unless and until any such downgrade occurs.

The Silversea Notes are guaranteed by the Company on a senior unsecured basis.

Past or pending business acquisitions or potential acquisitions that we may decide to pursue in the future carry inherent risks which could adversely impact our financial performance and condition.

11 unchanged sentences

Any event impacting a vendor’s ability to deliver goods of the expected quality at the location and time needed could negatively impact our ability to deliver our cruise experience.

Events impacting our supply chain could be caused by factors beyond the control of our suppliers or us, including inclement weather, natural disasters, increased demand, problems in production or distribution and/or disruptions in third-party logistics or transportation systems, such as those caused by the COVID-19 pandemic.

Any such interruptions to our supply chain could increase our costs and could limit the availability of products critical to our operations.

22 unchanged sentences

In the course of doing business, we collect large volumes of employee, customer and other third-party data, including personally identifiable information and individual credit data, for various business purposes.

We are subject to federal, state and international laws (including the European Union General Data Protection Regulation), as well as industry standards, relating to the collection, use, retention, security and transfer of personally identifiable information and individual

In many cases, these laws apply not only to third-party transactions, but also to transfers of information between the Company and its subsidiaries, and among the Company, its subsidiaries and other parties with which the Company has commercial relations.

3 unchanged sentences

If we fail to comply with the various applicable data collection and privacy laws, we could be exposed to fines, penalties, restrictions, litigation or other expenses, and our business could be adversely impacted.

While we continue to evolve our cyber security practices in line with our business’ reliance on technology and the changing external threat landscape, and we invest time, effort and financial resources to secure our systems, networks and communications, our security measures cannot provide absolute assurance that we will be successful in preventing or responding to all cyber security attacks.

responding to all cyber security attacks.

There can be no assurance that any breach or incident will not have a material impact on our operations and financial results.

27 unchanged sentences

IMO 2020), that could increase our direct cost to operate in certain markets, increase our cost for fuel, limit the supply of compliant fuel, cause us to incur significant expenses to purchase and/or develop new equipment and adversely impact the cruise vacation industry.

While we have taken and expect to continue to take a number of actions to mitigate the potential impact of certain of these regulations, there can be no assurances that these efforts will be successful or completed on a timely basis.

There is increasing global regulatory focus on climate change, greenhouse gas and other emissions.

These regulatory efforts, both internationally and in the U.S.

are still developing, and we cannot yet determine what the final regulatory programs or their impact will be in any jurisdiction where we do business.

are still developing, and we cannot yet determine what the final regulatory programs

or their impact will be in any jurisdiction where we do business.

However, such climate change-related regulatory activity in the future may adversely affect our business and financial results by requiring us to reduce our emissions, purchase allowances or otherwise pay for our emissions.

32 unchanged sentences

jurisdictions.

There may also be practical difficulties for shareholders attempting to bring suit in Liberia and Liberian courts may or may not recognize and

enforce foreign judgments.

There may also be practical difficulties for shareholders attempting to bring suit in Liberia and Liberian courts may or may not recognize and enforce foreign judgments.

Thus, our public shareholders may have more difficulty in protecting their interests with respect to actions by management, directors or controlling shareholders than would shareholders of a corporation incorporated in a U.S.

6 unchanged sentences

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 1A. Risk Factors