What changed in this filing

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Item 1. Financial Statements

2020-11-04 compared with 2020-08-10 · 392 added, 300 removed, 1036 unchanged (40% of the section changed)

3 unchanged sentences

in thousands, except per share data)

Quarter Ended June 30,

Quarter Ended September 30,

Passenger ticket revenues $ 3,204 $ 2,344,779

44 unchanged sentences

in thousands, except per share data)

Six Months Ended June 30,

Nine Months Ended September 30,

Passenger ticket revenues $ 1,487,077 $ 6,072,599

44 unchanged sentences

(in thousands, except share data)

June 30, December 31,

September 30, December 31,

Current assets

1 unchanged sentence

Trade and other receivables, net of allowances of $ 7,673 and $ 5,635

at June 30, 2020 and December 31, 2019, respectively

at September 30, 2020 and December 31, 2019, respectively

165,225 305,821

6 unchanged sentences

Goodwill 809,471 1,385,644

Other assets, net of allowances of $ 61,990 and $ 0 at June 30, 2020

Other assets, net of allowances of $ 73,156 and $ 0 at September 30, 2020

and December 31, 2019, respectively

24 unchanged sentences

500,000,000 shares authorized;

237,187,862 and 236,547,842 shares issued, June 30, 2020 and December 31, 2019, respectively)

242,502,983 and 236,547,842 shares issued, September 30, 2020 and December 31, 2019, respectively)

Paid-in capital 4,329,557 3,493,959

1 unchanged sentence

Accumulated other comprehensive loss ( 869,107 ) ( 797,713 )

Treasury stock ( 27,799,775 and 27,746,848 common shares at cost, June 30, 2020 and December 31, 2019, respectively)

Treasury stock ( 27,799,775 and 27,746,848 common shares at cost, September 30, 2020 and December 31, 2019, respectively)

( 2,063,991 ) ( 2,058,091 )

5 unchanged sentences

in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

3 unchanged sentences

Net deferred income tax (benefit) expense ( 4,586 ) 4,664

Loss (gain) on derivative instruments not designated as hedges 84,280 ( 713 )

Loss on derivative instruments not designated as hedges 64,541 24,229

Share-based compensation expense 29,871 51,256

2 unchanged sentences

Amortization of commercial paper notes discount 7,269 23,583

Amortization of debt discounts and premiums 29,061 265

Loss on extinguishment of secured senior term loan 41,109 6,326

4 unchanged sentences

Decrease (increase) in inventories 19,675 ( 13,640 )

Decrease (increase) in prepaid expenses and other assets 249,481 ( 51,443 )

Increase in accounts payable 118,398 43,594

Decrease in prepaid expenses and other assets 271,315 41,757

(Decrease) increase in accounts payable ( 90,306 ) 51,011

Increase in accrued interest 164,284 50,011

26 unchanged sentences

Cash and cash equivalents at end of period $ 3,016,788 $ 276,730

The accompanying notes are an integral part of these consolidated financial statements.

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

in thousands)

Nine Months Ended September 30,

Supplemental Disclosure

4 unchanged sentences

Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities $ 13,603 0

Non-cash Financing Activities

Purchase of Silversea Cruises non-controlling interest $ 592,313 0

Termination of Silversea Cruises contingent consideration obligation $ 17,274 0

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Shareholders' Equity

Balance at April 1, 2020 2,372 3,473,253 9,915,758 ( 1,095,617 ) ( 2,063,991 ) 10,231,775

Balance at July 1, 2020 2,372 3,700,288 8,276,463 ( 951,227 ) ( 2,063,991 ) 8,963,905

Activity related to employee stock plans 1 20,445 — — — 20,446

Equity component of convertible notes, net of issuance costs — 208,988 — — — 208,988

Silversea acquisition 52 608,824 608,876

Changes related to cash flow derivative hedges — — — 66,135 — 66,135

3 unchanged sentences

— — ( 1,346,756 ) — — ( 1,346,756 )

Balance at June 30, 2020 $ 2,372 $ 3,700,288 $ 8,276,463 $ ( 951,227 ) $ ( 2,063,991 ) $ 8,963,905

Balance at September 30, 2020 $ 2,425 $ 4,329,557 $ 6,929,710 $ ( 869,107 ) $ ( 2,063,991 ) $ 8,328,594

Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Shareholders' Equity

2 unchanged sentences

Equity component of convertible notes, net of issuance costs — 208,988 — — — 208,988

Silversea acquisition 52 608,824 — — — 608,876

Common stock dividends, $ 0.78 per share

6 unchanged sentences

— — ( 4,430,527 ) — — ( 4,430,527 )

Balance at June 30, 2020 $ 2,372 $ 3,700,288 $ 8,276,463 $ ( 951,227 ) $ ( 2,063,991 ) $ 8,963,905

Balance at September 30, 2020 $ 2,425 $ 4,329,557 $ 6,929,710 $ ( 869,107 ) $ ( 2,063,991 ) $ 8,328,594

The accompanying notes are an integral part of these consolidated financial statements.

3 unchanged sentences

Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Shareholders' Equity

Balance at April 1, 2019 2,364 3,432,419 10,366,612 ( 578,980 ) ( 1,953,345 ) 11,269,070

Balance at July 1, 2019 2,364 3,454,831 10,692,890 ( 653,173 ) ( 1,958,509 ) 11,538,403

Activity related to employee stock plans 1 11,810 — — — 11,811

6 unchanged sentences

— — 883,240 — — 883,240

Balance at June 30, 2019 $ 2,364 $ 3,454,831 $ 10,692,890 $ ( 653,173 ) $ ( 1,958,509 ) $ 11,538,403

Balance at September 30, 2019 $ 2,365 $ 3,466,641 $ 11,412,773 $ ( 946,363 ) $ ( 1,958,509 ) $ 11,976,907

Common Stock Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Total Shareholders' Equity

8 unchanged sentences

— — 1,605,751 — — 1,605,751

Balance at June 30, 2019 $ 2,364 $ 3,454,831 $ 10,692,890 $ ( 653,173 ) $ ( 1,958,509 ) $ 11,538,403

Balance at September 30, 2019 $ 2,365 $ 3,466,641 $ 11,412,773 $ ( 946,363 ) $ ( 1,958,509 ) $ 11,976,907

The accompanying notes are an integral part of these consolidated financial statements.

11 unchanged sentences

We are a global cruise company.

As of June 30, 2020, we control and operate four global cruise brands:

As of September 30, 2020, we control and operate four global cruise brands:

Royal Caribbean International, Celebrity Cruises, Azamara, and Silversea Cruises (collectively, our "Global Brands").

5 unchanged sentences

("Pullmantur Holdings"), in which we own a 49 % non-controlling interest, filed for reorganization under the terms of the Spanish insolvency laws (the "Pullmantur reorganization") due to the negative impact of the COVID-19 pandemic on the company.

The Pullmantur brand has cancelled all its ship operations until, at least, November 15, 2020.

Subsequently, Pullmantur Holdings and certain of its other subsidiaries filed for reorganization in Spain.

The Pullmantur brand has cancelled all of its ship operations until, at least, November 15, 2020.

We suspended equity method accounting for Pullmantur Holdings during the second quarter of 2020.

7 unchanged sentences

The share purchase did not result in a change of control.

The purchase will be accounted for as an equity transaction and no gain or loss will be recognized in earnings.

The purchase was accounted for as an equity transaction and no gain or loss was recognized in earnings.

Redeemable Noncontrolling Interest for further information regarding our acquisition of Silversea Cruises' noncontrolling interest.

Management's Plan and Liquidity

As part of the global containment effort for the COVID-19 pandemic, we implemented a voluntary suspension of our Global Brands' cruise operations effective March 13, 2020 which has been extended through at least October 31, 2020, excluding China and Australia.

Celebrity Cruises also suspended its full 2020/21 Winter program in Australia and Asia.

Additionally, Azamara suspended its 2020/21 Winter sailings throughout Australia and New Zealand, South Africa and South America.

On March 14, 2020, concurrent with our and the broader cruise industry’s suspension, the U.S.

Centers for Disease Control and Prevention (“CDC”) issued a No Sail Order which has been extended through the earliest of (a) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency, (b) the date the Director of the CDC rescinds or modifies the No Sail Order or (c) September 30, 2020.

Centers for Disease Control and Prevention (“CDC”) issued a No Sail Order, which expired on October 31, 2020.

On and effective as of October 30, 2020, the CDC issued a Framework for Conditional Sailing Order (the “Conditional Order”) that will conditionally permit cruise ship passenger operations in U.S.

waters under certain conditions and using a phased approach.

The phases contemplated

in the Conditional Order are subject to further interpretation and guidance by the CDC and to change based on public health considerations and the ability of the Company and other cruise ship operators’ to mitigate COVID-19 risks.

The Conditional Order shall remain in effect until the earlier of (1) the expiration of the Secretary of Health and Human Services’ declaration that COVID-19 constitutes a public health emergency;

(2) the CDC Director rescinds or modifies the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021.

We are currently reviewing the Conditional Order and assessing the uncertainties relating to the Conditional Order’s requirements.

Based on our initial assessment of these conditions or for other reasons, we may determine it necessary to further extend our voluntary suspension of our Global Brands’ cruise sailings which currently extends through at least December 31, 2020.

Significant events affecting travel, including COVID-19, typically have an impact on the booking pattern for cruise vacations, with the full extent of the impact generally determined by the length of time the event influences travel decisions.

Based on our assumptions and estimates and our financial condition, we believe that the liquidity described in the following paragraphs will be sufficient to fund our liquidity requirements for at least the next twelve months.

However, there can be no

assurance that our assumptions and estimates are accurate due to possible unknown variables, including, but not limited to, whether the CDC will continue to extend the current No Sail Orders on cruises out of the United States and whether efforts by other countries to contain the disease will further restrict our ability to commence operations.

However, there can be no assurance that our assumptions and estimates are accurate due to possible variables, including, but not limited to, the uncertainties associated with the CDC’s interpretation and application of the requirements in the Conditional Order and subsequent changes to those requirements, our ability to meet the requirements of the Conditional Order and the costs associated with compliance, some of which may be significant, and whether efforts by other countries to contain the disease will further restrict our ability to commence operations.

The suspension of our operations and the impact to our global bookings resulting from the COVID-19 pandemic will continue to have a material negative impact on our results of operations and liquidity, which may be prolonged beyond containment of the disease.

We have undertaken several proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses, furloughing staff and laying up of vessels.

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

Through the six months ended June 30, 2020 and through the issuance of these financial statements, we executed and amended various financing arrangements, as described in Note 7.

Debt , which resulted in a $ 0.6 billion increase in our revolving credit facilities;

additional liquidity of $ 5.5 billion with the issuance of new debt, net of repayments;

£ 300.0 million, or $ 370.8 million based on exchange rates as of June 30, 2020, of available and issued liquidity under a government commercial paper program with the Bank of England and the deferral of $ 0.9 billion of existing debt amortization under our export-credit backed ship debt facilities through April 2021.

As of September 30, 2020, we had liquidity of $ 3.7 billion, consisting of cash and cash equivalents of $ 3.0 billion and a $ 0.7 billion one-year commitment for a 364-day term loan facility .

As of September 30, 2020, our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities.

Through the nine months ended September 30, 2020, we executed and amended various financing arrangements, as described in Note 7.

Debt , which have resulted in $ 8.1 billion of incremental liquidity, including:

• a $ 0.6 billion increase in the capacity available under our revolving credit facilities;

• additional liquidity of $ 6.2 billion through the issuance of new debt, net of repayments, and the securing of a one-year $ 700 million commitment for a 364-day term loan facility;

• £ 300.0 million, or $ 387.9 million, based on exchange rates as of September 30, 2020, of available and issued liquidity under an unsecured government commercial paper program with the Bank of England;

• the deferral of $ 0.9 billion of existing debt amortization under our export-credit backed ship debt facilities through April 2021.

In October 2020, we issued $ 575 million of 2.875 % senior convertible notes due 2023.

Debt for further information on the debt issuance.

Concurrently, we issued 9.6 million shares of common stock at a price of $ 60.00 per share, for approximately $ 575 million.

Shareholders' Equity for further information on the common stock issuance.

Additionally, as of June 30, 2020, we amended our export credit facilities and our non-export credit facilities, totaling an outstanding principal amount of $ 11.0 billion, and certain of our credit card processing agreements to suspend the testing of financial covenants through and including the first quarter of 2021.

Certain of the amended agreements imposed a monthly-tested liquidity covenant of $ 300.0 million of cash and cash equivalents for the duration of the waiver period.

Subsequent to June 30, 2020, we further extended the financial covenant waiver on our export credit facilities, certain of our non-export credit facilities and our credit card processor agreements through and including the fourth quarter of 2021, which resulted in an increased minimum liquidity covenant of $ 500.0 million, as applicable, subject to reduction in the event of further capital raises.

As of September 30, 2020, we further extended the financial covenant waiver on our export credit facilities, certain of our non-export credit facilities and our credit card processor agreements through and including the fourth quarter of 2021.

Certain of these amended agreements impose a monthly-tested liquidity covenant.

The minimum liquidity requirement was $ 500.0 million as of September 30, 2020;

however, this amount was subsequently reduced to $ 350.0 million upon completion of our capital raising activities in October.

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

As of June 30, 2020, we were in compliance with the minimum liquidity covenant of $ 300.0 million and we estimate that we will be in compliance with our amended minimum liquidity covenant of $ 500.0 million for at least the next twelve months.

As of September 30, 2020, we were in compliance with the applicable minimum liquidity covenant and we estimate that we will be in compliance for at least the next twelve months.

Refer to Note 7.

Debt for further information regarding our debt covenants.

Any further covenant waivers may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as may be agreed with our lenders.

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

If we were not able to obtain additional 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 contracts.

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.

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.

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.

Any further covenant waivers may lead to increased costs, increased interest rates, additional restrictive covenants and other available lender protections as may be agreed with our lenders.

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

If we require additional waivers and are not able to obtain them 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 contracts.

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

Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds allow the surety to request collateral in the form of cash or letters of credit.

Several of these agreements are currently up for renewal.

We expect that our current and/or new providers will request collateral in the amount of approximately $ 80 million based on the exchange rate at September 30, 2020.

Basis for Preparation of Consolidated Financial Statements

The unaudited consolidated financial statements are presented pursuant to the rules and regulations of the Securities and Exchange Commission.

In our opinion, these statements include all adjustments necessary for a fair statement of the results of the interim periods reported herein.

Adjustments consist only of normal recurring items, except for any items discussed in the notes below.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted as permitted by such rules and regulations.

Estimates are required for the preparation of financial statements in accordance with these principles.

Actual results could differ from these estimates.

Refer to Note 2.

Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q and in 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 a discussion of our significant accounting policies.

All significant intercompany accounts and transactions are eliminated in consolidation.

We consolidate entities over which we have control, usually evidenced by a direct ownership interest of greater than 50%, and variable interest entities where we are determined to be the primary beneficiary.

Refer to Note 6.

Other Assets for further information regarding our variable interest entities.

We consolidate the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements.

No material events or other transactions involving Silversea Cruises have occurred from July 1, 2020 through September 30, 2020 that would require further disclosure or adjustment to our consolidated financial statements as of and for the quarter ended September 30, 2020, with the exception of our July 2020 acquisition of the noncontrolling interest, which was accounted for in our consolidated financial statements as of September 30, 2020.

For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

Summary of Significant Accounting Policies

10 unchanged sentences

The guidance clarifies how to account for the transition into and out of the equity method of accounting when considering observable transactions under the measurement alternative.

The ASU is effective for annual reporting periods beginning after December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted.

The ASU is effective for annual reporting periods beginning after

December 15, 2020, including interim reporting periods within those annual periods, with early adoption permitted.

We are currently evaluating the impact of the new guidance on our consolidated financial statements.

9 unchanged sentences

The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods, with early adoption permitted no earlier than the fiscal year beginning after December 15, 2020.

We are currently evaluating the impact of the new guidance on our consolidated financial statements.

The guidance is expected to have an impact on our consolidated financial statements given the recent issuance of convertible notes, however, we are still evaluating the magnitude of the new guidance on our consolidated financial statements.

Impairment and Credit Losses

The increased challenges related to COVID-19 has significantly impacted our expected investments, operating plans and projected cash flows.

The increased challenges related to COVID-19 have significantly impacted our expected investments, operating plans and projected cash flows.

Refer to Note 1.

General for further information regarding COVID-19 and its impact to the Company.

As a result of these developments, we performed interim impairment evaluations on certain assets as further discussed below.

As a result of these developments, we performed interim impairment evaluations in 2020 on certain assets as further discussed below.

Goodwill & Intangible Assets

The following are the carrying amounts of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and Silversea Cruises reporting units and the changes in such balances during the quarter and six months ended June 30, 2020 (in thousands) are as follows:

The following are the carrying amounts of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and Silversea Cruises reporting units and the changes in such balances during the quarter and nine months ended September 30, 2020 (in thousands) are as follows:

Royal Caribbean International Celebrity Cruises Silversea Cruises Total

3 unchanged sentences

Foreign currency translation adjustment 35 — — 35

Balance at June 30, 2020 $ 296,480 $ 4,326 $ 508,578 $ 809,384

We performed interim impairment evaluations of Royal Caribbean International’s goodwill in connection with the preparation of our financial statements for the quarters ended March 31, 2020 and June 30, 2020 due to the significant impact that COVID-19 has had on our projected cash flows.

Our extended suspension of our operations and the possibility of further extensions have created some uncertainty in forecasting the operating results and future cash flows used in our impairment analyses.

As a result of our evaluations, we determined that the fair value of the Royal Caribbean International reporting unit exceeded its carrying values as of March 31, 2020 and June 30, 2020 by approximately 30 % and 8 %, respectively, resulting in

no impairment to the Royal Caribbean International goodwill.

We will continue to monitor Royal Caribbean International's goodwill for any additional adverse impact of COVID-19 that may result in changes to the assumptions used in the impairment testing, and will perform interim testing impairment evaluations, if deemed necessary, prior to our annual impairment evaluation to be performed in the fourth quarter of 2020.

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.

Balance at September 30, 2020 $ 296,567 $ 4,326 $ 508,578 $ 809,471

We performed interim impairment evaluations of Royal Caribbean International’s goodwill in connection with the preparation of our quarterly financial statements for the periods ended March 31, 2020 and June 30, 2020 due to the significant impact that COVID-19 has had on our projected cash flows and triggering events identified in those quarters.

Our extended suspension of our operations and the possibility of further extensions created some uncertainty in forecasting the operating results and future cash flows used in our impairment analyses.

As a result of our evaluations, we determined that the fair value of the Royal Caribbean International reporting unit exceeded its carrying value as of March 31, 2020 and June 30, 2020 by approximately 30 % and 8 %, respectively, resulting in no impairment to the Royal Caribbean International goodwill.

We did not perform an interim impairment evaluation of Royal Caribbean International's goodwill during the quarter ended September 30,

2020 as no triggering events were identified.

We will assess Royal Caribbean International's goodwill during our annual impairment evaluation to be performed in the fourth quarter of 2020 for any additional adverse impact of COVID-19 that may result in changes to the assumptions used in the June 30, 2020 impairment testing.

For the quarters ended March 31, 2020 and June 30, 2020, 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 the three months ended June 30, 2020, the carrying amount of goodwill attributable to our Royal Caribbean International reporting unit was $ 296.5 million.

As of the three months ended September 30, 2020, the carrying amount of goodwill attributable to our Royal Caribbean International reporting unit was $ 296.6 million.

We also performed an interim impairment evaluation of Silversea Cruises’ goodwill and trade name in connection with the preparation of our financial statements for the quarter ended March 31, 2020.

3 unchanged sentences

Accordingly, we recognized a goodwill impairment charge of $ 576.2 million for the quarter ended March 31, 2020.

For the quarter ended June 30, 2020, we had no further indication of impairment to the carrying amount of the Silversea Cruises goodwill and trade name.

For the quarters ended June 30, 2020 and September 30, 2020, w e did not perform interim impairment evaluations of the Silversea Cruises goodwill and trade name, as no triggering events were identified.

As of September 30, 2020, the carrying amount of goodwill attributable to our Silversea Cruises reporting unit was $ 508.6 million.

Intangible assets consist of finite and indefinite life assets and are reported within Other assets in our consolidated balance sheets.

The following is a summary of our intangible assets as of June 30, 2020 and December 31, 2019 (in thousands):

June 30, 2020

The following is a summary of our intangible assets as of September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020

Gross Carrying Value Accumulated Amortization Accumulated Impairment losses Net Carrying Value

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Total intangible assets, net $ 508,904 $ 20,329 $ 488,575

Impairment charges related to the Silversea Cruises trade name included within Indefinite-life intangible assets in the table above were $ 30.8 million for the six months ended June 30, 2020 and were recorded during the quarter ended Mach 31, 2020.

Impairment charges related to the Silversea Cruises trade name included within Indefinite-life intangible assets in the table above were $ 30.8 million for the nine months ended September 30, 2020 and were recorded during the quarter ended March 31, 2020.

Long-lived Assets

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Consequently, the ships met accounting criteria to be classified as held for sale which resulted in a further impairment charge 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.

As of June 30, 2020, the net book value of assets held for sale was not material to our consolidated balance sheet.

As a result of the continuing effect of COVID-19 on our expected future operating cash flows, we determined certain impairment triggers had occurred.

Accordingly, we updated and performed undiscounted cash flow analyses on certain ships in our fleet and right of use of assets as of June 30, 2020 and identified further impairment on two ships and one right of use asset, as the undiscounted cashflows were less than their carrying values.

We sold the ships to third parties during the three months ended September 30, 2020 for amounts approximating their carrying values.

As a result of the continuing effect of COVID-19 on our expected future operating cash flows, we determined certain impairment triggers had occurred during the quarter ended June 30, 2020.

Accordingly, we updated and performed undiscounted cash flow analyses on certain ships in our fleet and right-of-use of assets and identified further impairment on two ships and one right of use asset, as the undiscounted cashflows were less than their carrying values.

We determined that an additional impairment charge of $ 49.7 million was required to write down these assets to their estimated fair values as of June 30, 2020.

We performed undiscounted cash flow recoverability evaluations for three ships with a combined net book value of approximately $ 400.0 million in connection with the preparation of our financial statements during the quarter ended September 30, 2020.

As a result of these recoverability evaluations, it was determined the carrying value of these three ships were recoverable at September 30, 2020.

Our assessment applied probability scenario cash flows by using a 50 % weighting to undiscounted cash flows through the remaining life of the ships and 50 % to cash flows assuming disposal of the ships.

In the event that our intent to continue to operate the ships changes, or the probability of disposing increases to approximately 75 %, the vessels would need to be fair valued and we expect that a material impairment charge would be recorded.

We will continue to monitor these ships and our intent to use these ships in light of the COVID-19 environment.

For the quarter ended September 30, 2020, we had no further indication of impairment to the carrying amount of our other ships and our right-of-use assets .

During the quarter ended September 30, 2020, we determined that certain construction in progress projects would be reduced in scope or would no longer be completed as a result of capital cost containment measures due to the impact COVID-19 has had on our operations.

This led to the impairment of $ 83.9 million of construction in progress assets previously reported in Property and equipment, net .

These impairment charges were reported within Impairment and Credit Losses in our consolidated statements of comprehensive (loss) income.

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In evaluating the credit loss allowance, management considered factors such as historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect the borrower’s ability to repay, the estimated value of any underlying collateral, peer group information and prevailing economic conditions.

Based on these credit loss estimation factors, we recorded and subsequently wrote-off loan loss allowances of $ 38.1 million during the quarter ended March 31, 2020, primarily due to loans and other net receivables related to Pullmantur Holdings.

Based on these credit loss estimation factors, we recorded and subsequently wrote-off loan loss allowances of $ 72.8 million during the quarter ended March 31, 2020, primarily due to loans and other receivables related to Pullmantur Holdings.

Refer to Note 6.

Other Assets for further information regarding our investment in Pullmantur Holdings.

During the quarter ended June 30, 2020, we incurred credit losses of $ 91.6 million due to loss provisions recognized on notes receivable related to our previous sale of property and equipment and on net receivables related to Pullmantur Holdings.

The following table summarizes our credit loss allowance related to receivables for the six months ended June 30, 2020 (in thousands):

During the quarters ended June 30, 2020 and September 30, 2020, we incurred credit losses of $ 91.6 million and $ 6.0 million, respectively, due to loss provisions recognized on notes receivable related to our previous sale of property and equipment and on receivables mostly related to Pullmantur Holdings.

The following table summarizes our credit loss allowance related to receivables for the nine months ended September 30, 2020 (in thousands):

Credit Loss Allowance

1 unchanged sentence

Loss provision for receivables 172,286

Bad debt write-offs ( 91,142 )

Balance at June 30, 2020 $ 83,351

Our credit loss allowance balance as of June 30, 2020 primarily related to a $ 73.3 million loss provision recognized during the three months ended June 30, 2020 on notes receivable related to our previous sale of property and equipment.

Write-offs ( 97,092 )

Balance at September 30, 2020 $ 80,829

Our credit loss allowance balance as of September 30, 2020 primarily related to a $ 73.2 million loss provision recognized during the three months ended June 30, 2020 on notes receivable related to our previous sale of property and equipment.

Equity Investments

For an equity method investment that experiences a loss in fair value determined to be other than temporary, we will reduce our basis in the investment to fair value and record an impairment loss.

Given the recent impact of the COVID-19 pandemic to our business, we evaluated whether our equity method investments were other than temporarily impaired.

Given the impact of the COVID-19 pandemic to our business, we evaluated whether our equity method investments were other than temporarily impaired.

Based on our review of each of the investment's most recent financial results and projections, we determined that certain of our equity method investments, primarily Grand Bahama Shipyard Ltd.

(“Grand Bahama”), were other than temporarily impaired, which resulted in an impairment charge of $ 39.7 million during the quarter ended March 31, 20 20.

For the quarter ended June 30, 2020, we had no further indication of impairment to our equity investment balances.

For the quarters ended June 30, 2020, and September 30, 2020, we had no further indication of impairment to our equity investment balances.

Refer to Note 6.

Other Assets for information regarding our significant equity investments.

During the three and six months ended June 30, 2020, we recognized combined impairment and credit loss charges of $ 156.5 million and $ 1.3 billion, respectively.

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 are reported within Impairment and credit losses within our consolidate d statements of comprehensive (loss) income.

The impairment charge of $ 39.7 million related to our equity investments was reported within Equity investment (loss) income within our consolidate d statements of comprehensive (loss) income during the quarter ended March 31, 2020 and six months ended June 30, 2020.

During the three and nine months ended September 30, 2020, we recognized combined impairment and credit loss charges of $ 89.9 million and $ 1.4 billion, respectively.

The impairment charges primarily related to our goodwill, trademarks and trade names, property and equipment, net and right-of-use assets and the credit losses related to our notes receivable were reported within Impairment and credit losses within our consolidate d statements of comprehensive (loss) income.

For further information on the measurements used to estimate the fair value of these assets, refer to Note 13.

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These impairment assessments and the resulting charges were determined based on management’s current estimates and projections using information through the time of the issuance of these financial statements.

The adverse impact COVID-19 will continue to have on our business, operating results, cash flows and overall financial condition is uncertain and may result in changes to the assumptions used in the impairment tests discussed above, which may result in additional impairments to these assets in the future.

Revenue Recognition

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These type of port costs, along with port costs that do not vary by passenger head counts, are included in our cruise operating expenses.

There were no port costs charged to our guests and included within Passenger ticket revenues on a gross basis for the quarter ended June 30, 2020.

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 173.6 million for the quarter ended June 30, 2019, and $ 124.5 million and $ 325.6 million for the six months ended June 30, 2020, and 2019, respectively.

There were no port costs charged to our guests or included within Passenger ticket revenues for the quarter ended September 30, 2020.

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 184.0 million for the quarter ended September 30, 2019, and $ 124.5 million and $ 509.6 million for the nine months ended September 30, 2020, and 2019, respectively.

Our total revenues also include O nboard and other revenues , which consist primarily of revenues from the sale of goods and services onboard our ships that are not included in passenger ticket prices.

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The following table disaggregates our total revenues by geographic regions where we provide cruise itineraries (in thousands):

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Passenger ticket revenues are attributed to geographic areas based on where the reservation originates.

For the quarters and six months ended June 30, 2020 and 2019, our guests were sourced from the following areas:

Quarter Ended June 30,

For the quarters and nine months ended September 30, 2020 and 2019, our guests were sourced from the following areas:

Quarter Ended September 30,

Passenger ticket revenues:

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United Kingdom 14 % 12 %

China 11 % 5 %

All other countries (1) 20 % 26 %

Six Months Ended June 30,

Nine Months Ended September 30,

Passenger ticket revenues:

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All other countries (1) 33 % 35 %

(1) No other individual country's revenue exceeded 10% for the quarters and six months ended June 30, 2020 and 2019.

(1) No other individual country's revenue exceeded 10% for the quarters and nine months ended September 30, 2020 and 2019.

Customer Deposits and Contract Liabilities

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Additionally, refunds payable to guests who have elected cash refunds for cancelled sailings are recorded in Accounts Payable.

ASC 606, Revenues from Contracts with Customers , defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for which the entity has received consideration from the customer.

ASC 606, Revenues from Contracts with Customers , defines a “contract liability” as an entity’s obligation to transfer goods or services to a customer for

which the entity has received consideration from the customer.

We do not consider customer deposits to be a contract liability until the customer no longer retains the unilateral right, resulting from the passage of time, to cancel such customer's reservation and receive a full refund.

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At the same time, we experienced significant cancellations beginning in the second half of March 2020, which has led to issuance of refunds to customers, while other customers have been rebooked on future cruises or received credits in lieu of cash refunds.

As of June 30, 2020, refunds due to customers mostly as a result of booking cancellations were $ 467.9 million compared to $ 25.5 million as of June 30, 2019 and are included within Accounts payable in our consolidated balance sheets.

Onboard and other revenues for the quarter ended September 30, 2020 includes a charge of $ 67.9 million to correct cancellation revenue, for certain immaterial bookings, that was incorrectly recognized during the six months ended June 30, 2020.

The charge is considered immaterial to our financial statements.

As of September 30, 2020, refunds due to customers mostly as a result of booking cancellations were $ 189.2 million compared to $ 32.4 million as of September 30, 2019 and are included within Accounts payable in our consolidated balance sheets.

Customer deposits also include deposits related to cancelled cruises prior to the election of a cash refund by guests.

Due to the uncertainty around the return of demand for cruising, we are unable to estimate the amount of the June 30, 2020 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel through the end of 2020.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 161.8 million and $ 1.7 billion as of June 30, 2020 and December 31, 2019, respectively.

Due to the uncertainty around the return of demand for cruising, we are unable to estimate the amount of the September 30, 2020 customer deposits that will be recognized in earnings compared to amounts that will be refunded to customers or issued as a credit for future travel through the end of 2020.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 167.5 million and $ 1.7 billion as of September 30, 2020 and December 31, 2019, respectively.

Contract Receivables and Contract Assets

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As a result, we have outstanding receivables from passenger cruise contracts in those markets.

We also have receivables from credit card merchants for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise voyage.

We also have receivables from credit card processors for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise voyage.

In addition, we have receivables due from concessionaires onboard our vessels.

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We have contract assets that are conditional rights to consideration for satisfying the construction services performance obligations under a service concession arrangement.

As of June 30, 2020 and December 31, 2019, our contract assets were $ 54.3 million and $ 55.5 million, respectively, and were included within Other assets in our consolidated balance sheets.

As of September 30, 2020 and December 31, 2019, our contract assets were $ 53.7 million and $ 55.5 million, respectively, and were included within Other assets in our consolidated balance sheets.

Given the short duration of our cruises and our collection terms, we do not have any other significant contract assets.

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Prepaid travel agent commissions are an incremental cost of obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets.

Prepaid travel agent commissions were $ 163.2 million as of December 31, 2019.

Our prepaid travel agent commissions at December 31, 2019 were expensed and reported primarily within Other operating in our consolidated statements of comprehensive income (loss) during the six months ended June 30, 2020.

We did not report any prepaid travel agent commissions as of June 30, 2020

Prepaid travel agent commissions were $ 7.9 million and $ 163.2 million as of September 30, 2020 and December 31, 2019, respectively.

(Loss) Earnings Per Share

A reconciliation between basic and diluted (loss) earnings per share is as follows (in thousands, except per share data):

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Diluted (loss) earnings per share $ ( 6.29 ) $ 4.20 $ ( 21.01 ) $ 7.65

There were approximately 421,000 and 662,000 antidilutive shares for the quarter and six month ended June 30, 2020, respectively.

There were no antidilutive shares for the quarter and six month ended June 30, 2019.

There were approximately 192,981 and 265,606 antidilutive shares for the quarter and nine month ended September 30, 2020, respectively.

There were no antidilutive shares for the quarter and nine month ended September 30, 2019.

Since the Company expects to settle in cash the principal outstanding under the 4.25 % convertible notes that mature in 2023, we currently use the treasury stock method when calculating their potential dilutive effect, if any.

While no shares of the convertible notes are currently convertible, they would be anti-dilutive for the three and six months ended June 30, 2020.

While no shares of the convertible notes are currently convertible, they would be anti-dilutive for the three and nine months ended September 30, 2020.

A Variable Interest Entity (“VIE”) is an entity in which the equity investors have not provided enough equity to finance the entity’s activities or the equity investors:

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We and TUI AG each made an equity contribution of € 75.0 million, or approximately $ 84.2 million, to TUIC to fund a portion of the purchase price, the remainder of which was financed by third-party financing.

As of June 30, 2020, the net book value of our investment in TUIC was $ 655.6 million, primarily consisting of $ 509.0 million in equity and a loan of € 126.8 million, or approximately $ 142.4 million based on the exchange rate at June 30, 2020.

of December 31, 2019, the net book value of our investment in TUIC was $ 598.1 million, primarily consisting of $ 443.1 million in equity and a loan of € 133.2 million, or approximately $ 149.5 million based on the exchange rate at December 31, 2019.

As of September 30, 2020, the net book value of our investment in TUIC was $ 617.8 million, primarily consisting of $ 467.4 million in equity and a loan of € 122.9 million, or approximately $ 144.1 million based on the exchange rate at September 30, 2020.

As of December 31, 2019, the net book value of our investment in TUIC was $ 598.1 million, primarily consisting of $ 443.1 million in equity and a loan of € 133.2 million, or approximately $ 149.5 million based on the exchange rate at December 31, 2019.

The loan, which was made in connection with the sale of Splendour of the Seas in April 2016, accrues interest at a rate of 6.25 % per annum and is payable over 10 years.

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On June 22, 2020, Pullmantur S.A., a subsidiary of Pullmantur Holdings, filed for reorganization under the terms of the Spanish insolvency laws at the direction of its Board as a result of the adverse impact of the COVID-19 pandemic on the company's operations and liquidity.

Subsequently, Pullmantur Holdings and certain of its other subsidiaries filed for reorganization in Spain.

We suspended the equity method of accounting for Pullmantur Holdings during the second quarter of 2020 as we do not intend to fund the entity's future losses and lost our ability to exert significant influence over the entity's activities as a result of the reorganization process.

In connection with the reorganization, we terminated the agreements chartering three of our ships to Pullmantur Holdings and agreed to sell the ships to a third party.

In connection with the reorganization, we terminated the agreements chartering three of our ships to Pullmantur Holdings and sold the ships to third parties during the quarter ended September 30, 2020 for amounts approximating their carrying values.

Refer to Note 3.

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In addition, we recognized a loss of $ 69.0 million during the quarter ended June 30, 2020, representing deferred currency translation adjustment losses, net of hedging, as we no longer have significant involvement in the Pullmantur operation.

This loss was recorded within Other expense in our consolidated statements of comprehensive (loss) income for the quarter ended June 30, 2020.

This loss was recognized within Other expense in our consolidated statements of comprehensive (loss) income for the quarter ended June 30, 2020.

During the quarter ended June 30, 2020, we entered into an agreement with Springwater Capital LLC to settle the guarantees previously issued by them and for costs that we incurred as a result of Pullmantur S.A.'s reorganization.

As part of this settlement, we agreed to provide Pullmantur guests the option to apply their paid deposits toward a Royal Caribbean International or Celebrity Cruises sailing, or request a cash refund.

this settlement, we agreed to provide Pullmantur guests the option to apply their paid deposits toward a Royal Caribbean International or Celebrity Cruises sailing, or request a cash refund.

An amount of $ 21.6 million, approximating the estimated total cash refund expected to be paid to Pullmantur guests and other expenses incurred as part of the reorganization, was recorded in Other expense in our consolidated statements of comprehensive (loss) income for the quarter ended June 30, 2020.

We had previously provided a non-revolving working capital facility to a Pullmantur Holdings subsidiary in the amount of up to € 15.0 million or approximately $ 16.8 million based on the exchange rate at June 30, 2020.

We had previously provided a non-revolving working capital facility to a Pullmantur Holdings subsidiary in the amount of up to € 15.0 million or approximately $ 17.6 million based on the exchange rate at September 30, 2020.

Proceeds of the facility, which were available to be drawn through December 2018 accrued interest at an interest rate of 6.5 % per annum and were payable through 2022.

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As of December 31, 2019, € 11.0 million, or approximately $ 12.3 million, based on the exchange rate at December 31, 2019, was outstanding under this facility.

During the quarter ended June 30, 2020, we funded Pullmantur $ 18.3 million for operational purposes during its reorganization for which we recorded and subsequently wrote-off loss allowances.

Impairments and Credit losses for further discussion.

As of June 30, 2020, we did not have any exposure to credit loss in Pullmantur Holdings.

During the quarters ended June 30, 2020 and September 30, 2020, we funded Pullmantur $ 18.3 million and $ 1.9 million, respectively, for operational purposes during its reorganization for which we recorded and subsequently wrote-off loss allowances.

As of September 30, 2020, we did not have any exposure to credit loss in Pullmantur Holdings.

Refer to Note 3.

Impairment and Credit Losses for further information on our credit loss evaluation of Pullmantur related receivables as of June 30, 2020.

Impairment and Credit Losses for further information on our credit loss evaluation of Pullmantur related receivables as of September 30, 2020.

As of December 31, 2019, our maximum exposure to loss in Pullmantur Holdings was $ 49.7 million, consisting of loans and other receivables.

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We utilize this facility, among other ship repair facilities, for our regularly scheduled drydocks and certain emergency repairs as may be required.

During the six months ended June 30, 2020, we made payments of $ 0.2 million to Grand Bahama for ship repair and maintenance services.

We made payments of $ 4.8 million and $ 45.1 million during the quarter and six months ended June 30, 2019, respectively.

During the nine months ended September 30, 2020, we made payments of $ 0.2 million to Grand Bahama for ship repair and maintenance services.

We made payments of $ 0.4 million and $ 45.5 million during the quarter and nine months ended September 30, 2019, respectively.

We have determined that we are not the primary beneficiary of this facility as we do not have the power to direct the activities that most significantly impact the facility’s economic performance.

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Impairment and Credit Losses for further information regarding the impairment evaluation.

We suspended the equity method of accounting for this investment during the second quarter of 2020.

As of June 30, 2020, we had exposure to credit loss in Grand Bahama consisting of $ 24.0 million in loans.

As a result of the impairment charge that reduced our Grand Bahama investment balance to zero , we are currently recognizing our share of equity method losses against the carrying value of our loans receivable from Grand Bahama.

As of September 30, 2020, we had exposure to credit loss in Grand Bahama consisting of $ 21.1 million in loans.

Our loans to Grand Bahama mature between December 2020 and March 2026 and bear interest at LIBOR plus 2.00 % to 3.75 %, capped at 5.75 % for the majority of the outstanding loan balance.

Interest payable on the loans is due on a semi-annual basis.

We did not receive principal and interest payments during the first half of 2020.

During the quarter and six months ended June 30, 2019, we received principal and interest payments of $ 1.1 million and $ 7.6 million, respectively.

We did no t receive principal and interest payments through the nine months ended September 30, 2020.

During the quarter and nine months ended September 30, 2019, we received principal and interest payments of $ 7.6 million and $ 14.2 million, respectively.

The loan balances are included within Trade and other receivables, net and Other assets in our consolidated balance sheets.

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Effective April 1, 2020, we placed the loans in non-accrual status based on our review of Grand Bahama's projected cash flows which have been adversely affected by impacts to their operations caused by the 2019 crane accident related to Oasis of the Seas, Hurricane Dorian and most recently, COVID-19.

As of our June 30, 2020 assessment, no credit losses were recorded related to these loans.

During the nine months ended September 30, 2020, no credit losses were recorded related to these loans.

As of December 31, 2019, the net book value of our investment in Grand Bahama was $ 47.9 million, consisting of $ 27.0 million in equity and loans of $ 20.9 million.

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The following tables set forth information regarding our investments accounted for under the equity method of accounting, including the entities discussed above (in thousands):

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Dividends received (1) $ — $ 67,713 $ 2,215 $ 148,285

(1) There were no dividends received from TUIC for the quarter and six months ended June 30, 2020.

For the quarter ended June 30, 2019, the amount includes dividends from TUIC of € 40.0 million, or approximately $ 45.6 million, based on exchange rate at the time of the transaction.

For the six months ended June 30, 2019, amounts include dividends from TUIC of € 90 million or approximately $ 101.8 million based on the exchange rates at the time of the transactions.

(1) There were no dividends received from TUIC for the quarter and nine months ended September 30, 2020.

For the quarter ended September 30, 2019, the amount includes dividends from TUIC of € 80.0 million, or approximately $ 88.5 million, based on exchange rate at the time of the transaction.

For the nine months ended September 30, 2019, amounts include dividends from TUIC of € 170 million or approximately $ 190.3 million based on the exchange rates at the time of the transactions.

The amounts included in the table above are net of tax withholding .

As of June 30, 2020 As of December 31, 2019

As of September 30, 2020 As of December 31, 2019

Total notes receivable due from equity investments $ 165,203 $ 184,558

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We recorded the following as it relates to these services in our operating results within our consolidated statements of comprehensive income (loss) (in thousands):

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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Debt consist of the following (in thousands):

Interest Rate(1) Maturities Through Quarter Ended June 30, 2020 Year Ended December 31, 2019

Interest Rate(1) Maturities Through As of September 30, 2020 As of December 31, 2019

Fixed rate debt:

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Unsecured revolving credit facilities(2) 1.48 % 2022 - 2024 3,382,000 165,000

UK Commercial paper 2021 368,952 —

Unsecured UK Commercial paper 2021 386,683 —

USD Commercial paper — — 1,434,180

USD unsecured term loan 1.55 % to 4.05 %

USD Unsecured term loan 0.74 % - 4.05 %

2020- 2028 3,641,968 3,519,853

Euro unsecured term loan 1.15 % to 1.58 %

Euro Unsecured term loan 1.15 % - 1.58 %

2021 - 2028 657,977 676,740

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Long-term portion 17,633,737 8,414,110

(1) Interest rates based on outstanding loan balance as of June 30, 2020 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

(2) Includes $ 1.9 billion facility due in 2024 and $ 1.5 billion facility due in 2022, each of which accrue interest at LIBOR plus 1.30 %, which interest rate was 1.60 % as of June 30, 2020 and each is subject to a facility fee of 0.20 %.

(3) At June 30, 2020 and December 31, 2019, the weighted average interest rate for total debt was 5.68 % and 3.99 %, respectively.

(1) Interest rates based on outstanding loan balance as of September 30, 2020 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

(2) Includes $ 1.9 billion facility due in 2024 and $ 1.5 billion facility due in 2022, each of which accrue interest at LIBOR plus 1.30 %, which interest rate was 1.53 % as of September 30, 2020 and each is subject to a facility fee of 0.20 %.

(3) At September 30, 2020 and December 31, 2019, the weighted average interest rate for total debt was 6.00 % and 3.99 %, respectively.

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, utilizing their respective accordion features.

As of June 30, 2020, our aggregate revolving borrowing capacity was $ 3.5 billion and was fully utilized.

As of September 30, 2020, our aggregate revolving borrowing capacity was $ 3.4 billion and was fully utilized through a combination of amounts drawn and letters of credit issued under the facilities.

In March 2020, we took delivery of Celebrity Apex .

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In May 2020, the Secured Term Loan was increased by an additional $ 150 million through the exercise of the accordion feature.

The increased Secured Term Loan balance was repaid with proceeds from the $ 3.32 billion senior secured notes issued in May 2020 and discussed below.

The Senior Secured Term Loan would have matured 364 days after funding and maturity could have been extended at our option for an additional 364 days subject to customary conditions, including the payment of a 1.00 % extension fee.

Our obligations were guaranteed by our wholly-owned subsidiaries, Celebrity Cruises Holdings Inc., Celebrity Cruises Inc.

and certain of our wholly-owned vessel-owning subsidiaries, and was secured by certain of our trademarks and a pledge of 100 % of the equity interests of certain of our vessel-owning subsidiaries.

The increased Secured Term Loan balance was repaid with proceeds from the $ 3.32 billion senior secured notes (as described below) issued in May 2020 and discussed below.

The Senior Secured Term Loan would have matured 364

days after funding and maturity could have been extended at our option for an additional 364 days subject to customary conditions, including the payment of a 1.00 % extension fee.

Interest accrued at LIBOR plus a margin of 2.25 % which would have increased to 2.50 % and 2.75 % at 180 days and 365 days, respectively, after funding.

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Additionally, two of our board members each purchased a participation interest equal to $ 100 million.

The repayment of this Secured Term Loan in May 2020 resulted in a total loss on the extinguishment of debt of $ 40.3 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2020.

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

We repaid the $ 2.35 billion, 364 -day Secured Term Loan in its entirety with a portion of the proceeds of these $ 3.32 billion secured notes.

The repayment of this Secured Term Loan in May 2020 resulted in a total loss on the extinguishment of debt of $ 41.1 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) during the nine months ended September 30, 2020.

In May 2020, we issued $ 3.32 billion in senior secured notes, less original issue discount (the "Senior Secured Notes").

We repaid the $ 2.35 billion, 364 -day Secured Term Loan in its entirety with a portion of the proceeds of the Senior Secured Notes.

$ 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 (the "2025 Secured Notes").

The notes are fully and unconditionally guaranteed by Celebrity Cruises Holdings Inc., Celebrity Cruises Inc., and certain of our wholly-owned vessel-owning subsidiaries.

$ 1.66 billion of the obligations under the 2025 Secured Notes and the related guarantees are secured by first priority security interests in the collateral (which generally includes certain of our material intellectual property, a pledge of 100 % of the equity interests of certain of our vessel-owning subsidiaries and mortgages on the 28 vessels owned by such subsidiaries, subject to permitted liens and certain exclusions and release provisions), subject to certain adjustments after the date of issuance based on our debt rating as of the date of issuance and our lien basket amount in certain of our credit facilities.

Prior to June 1, 2022, we may, at our option, redeem some or all of the 2025 Secured Notes at 100 % of the principal amount plus accrued and unpaid interest plus the applicable “make-whole premium” described in the Secured Notes Indenture.

The remaining $ 2.32 billion of the Senior Secured Notes accrue interest at a fixed rate of 11.5 % and mature in 2025 (the "2025 Secured Notes").

The Senior Secured Notes are fully and unconditionally guaranteed by Celebrity Cruises Holdings Inc., Celebrity Cruises Inc., and certain of our wholly-owned vessel-owning subsidiaries.

$ 1.66 billion of the obligations under the Senior Secured Notes and the related guarantees are secured by first priority security interests in the collateral (which generally includes certain of our material intellectual property, a pledge of 100 % of the equity interests of certain of our vessel-owning subsidiaries and mortgages on the 28 vessels owned by such subsidiaries, subject to permitted liens and certain exclusions and release provisions), subject to certain adjustments after the date of issuance based on our debt rating as of the date of issuance and our lien basket amount in certain of our credit facilities.

On or after June 1, 2022, we may, at our option, redeem some or all of the 2025 Secured Notes at the applicable redemption prices set forth in the Secured Notes Indenture.

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• if, prior to March 15, 2023, the trading price per $1,000 principal amount of notes is less than 98 % of the product of the last reported sale price per share of our common stock and the conversation rate for ten consecutive trading days (in which case the notes are convertible at any time during the five business day period following the 10 consecutive trading day period);

• if we call the notes for a tax redemption or

• if we call the notes for a tax redemption;

• upon the occurrence of specified corporate events.

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The fair value of the convertible notes' debt component was determined utilizing a present value calculation.

We recognized the equity component by ascribing the difference between the proceeds and the fair value of the debt component to Paid-in-capital and the corresponding debt discount will be amortized to interest expense over the term of the convertible notes using the straight-line method, which approximates the effective interest method.

We recognized the equity component by ascribing the difference between the proceeds and

the fair value of the debt component to Paid-in-capital and the corresponding debt discount will be amortized to interest expense over the term of the convertible notes using the straight-line method, which approximates the effective interest method.

Debt issuance costs on the convertible notes were allocated to the debt and equity components in proportion to the allocation of proceeds to those components.

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The net carrying value of the liability component of the convertible notes was as follows:

(in thousands) As of June 30, 2020

(in thousands) As of September 30, 2020

Principal 1,150,000

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The interest expense recognized related to the convertible notes was as follows:

(in thousands) As of June 30, 2020

(in thousands) Nine Months Ended September 30, 2020

Contractual interest expense 15,206

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The maturities of the commercial paper notes can vary by note, but cannot exceed 364 days from the date of issuance.

As of June 30, 2020, we had £ 300.0 million, or approximately $ 370.8 million, based on the exchange rate at June 30, 2020, of commercial paper notes outstanding under this program

As of December 31, 2019, we had $ 1.4 billion of commercial paper notes outstanding under our traditional commercial paper program established on June 14, 2018.

As of June 30, 2020, we did not have a balance outstanding on this commercial paper program.

As of September 30, 2020, we had £ 300.0 million, or approximately $ 387.9 million, based on the exchange rate at September 30, 2020, of commercial paper notes outstanding under this program.

As of December 31, 2019, we had $ 1.4 billion of commercial paper notes outstanding under our US commercial paper program established on June 14, 2018.

We terminated this commercial paper program as of August 5, 2020.

During the quarter ended June 30, 2020, we amended certain export-credit backed ship debt facilities to benefit from a 12-month debt amortization ("Debt Holiday").

Under the Debt Holiday, deferred debt amortization of approximately $ 0.9 billion will be paid over a period of four years after the 12-month deferral period.

The Debt Holiday was offered by certain export credit agencies as a result of the current impact to cruise-line borrowers as a result of COVID-19.

Except for the financings incurred to acquire Celebrity Flora and Azamara Pursuit , all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed.

As of June 30, 2020, in consideration for these guarantees, depending on the financing arrangement, we pay to the applicable export credit agency (1) a fee of 1.96 % per annum based on the outstanding loan balance semi-annually over the term of the loan (subject to adjustments based upon our credit ratings) or (2) an upfront fee of 2.35 % to 2.37 % of the maximum loan amount.

In August 2020, we secured a binding commitment from Morgan Stanley Senior Funding Inc.

for a $ 700 million term loan facility.

We may draw on the facility at any time prior to August 12, 2021.

Once drawn, the loan will bear interest at LIBOR + 3.75 % and will mature 364 days from funding.

The facility will be guaranteed by RCI Holdings, LLC, our wholly owned subsidiary that owns the equity interests in subsidiaries that own seven of our vessels.

We have the ability to increase the capacity of the facility by an additional $ 300 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries.

In October 2020, we issued $ 575 million aggregate principal amount of senior convertible notes which accrue interest at 2.875 % 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 the election of the Company.

The initial conversion rate per $1,000 principal amount of the convertible notes is 12.1212 shares of our common stock, which is equivalent to an initial conversion price of approximately $ 82.50 per share, subject to adjustment in certain circumstances.

Prior to August 15, 2023, the convertible notes will be convertible at the option of holders during certain periods, and only under the following conditions:

• during any calendar quarter after December 31, 2020, if the last reported sale price per share of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

• if, prior to August 15, 2023, the trading price per $1,000 principal amount of notes is less than 98 % of the product of the last reported sale price per share of our common stock and the conversation rate for ten consecutive trading days

(in which case the notes are convertible at any time during the five business day period following the 10 consecutive trading day period);

• if we call the notes for a tax redemption;

• upon the occurrence of specified corporate events.

On or after August 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.

Holders of the convertible notes may require the Company, upon the occurrence of certain events that constitute a fundamental change under the indenture, to offer to repurchase the convertible notes at a repurchase price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest.

We expect to use a portion of the net proceeds from the offering to repay the 2.650 % Senior Notes due November 2020, with the remainder to be used for general corporate purposes.

In October 2020, we took delivery of Silver Moon .

To finance the purchase, we borrowed $ 300 million under a previously committed unsecured term loan facility, guaranteed by us, to pay a portion of the ship's contract price.

The loan is due and payable at maturity in June 2028, provided however, that each lender may elect to cause us to repay the outstanding amount of any advances held by such lender on June 2026 upon 90 days advance notice.

The loan amortizes semi-annually starting six months after funding, with 1/24th of the outstanding principal payable every six months and the balance payable upon maturity.

Interest on the loan accrues at LIBOR plus 1.50 %.

During the quarters ended June 30, 2020 and September 30, 2020, we amended certain export-credit backed ship debt facilities to benefit from a 12-month debt amortization deferral (the "Debt Deferral").

Under the Debt Deferral, deferred debt amortization of approximately $ 0.9 billion will be paid over a period of four years after the 12-month deferral period.

The Debt Deferral was offered by certain export credit agencies as a result of the current impact to cruise-line borrowers as a result of COVID-19.

Except for the financings incurred to acquire Celebrity Flora, Azamara Pursuit and Silver Moon , all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed.

As of September 30, 2020, in consideration for these guarantees, depending on the financing arrangement, we pay to the applicable export credit agency (1) a fee of 2.97 % per annum based on the outstanding loan balance semi-annually over the term of the loan (subject to adjustments based upon our credit ratings) or (2) an upfront fee of 2.35 % to 2.37 % of the maximum loan amount.

We amortize the fees that are paid upfront over the life of the loan and those that are paid semi-annually over each respective payment period.

Prior to the loan being drawn, we present these fees within Other assets in our consolidated balance sheets.

Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or long-term debt .

Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of debt or long-term debt .

In our consolidated statements of cash flows, we classify these fees within Amortization of debt issuance costs .

Both our export credit facilities and our non-export credit facilities totaling an outstanding principal amount of approximately $ 11.0 billion as of June 30, 2020 contain covenants that, among other things, require us to maintain financial ratios, including in certain cases, a fixed charge coverage ratio of at least 1.25 x and limit our net debt-to-capital ratio.

During the quarter ended June 30, 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 of $ 300 million of cash and cash equivalents for the duration of the waiver period.

Both our export credit facilities and our non-export credit facilities totaling an outstanding principal amount of approximately $ 11.0 billion as of September 30, 2020 contain covenants that, among other things, require us to maintain financial ratios, including in certain cases, a fixed charge coverage ratio of at least 1.25 x and/or minimum shareholders' equity and limit our net debt-to-capital ratio.

During the quarter ended June 30, 2020, we amended all of our export credit facilities, all of 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.

During the quarter ended September 30, 2020, we further amended each of these agreements, with the exception of a $ 130.0 million term loan due 2023, to extend the financial covenant waiver through and including the fourth quarter of 2021.

The $ 130.0 million term loan, which remains subject to a covenant waiver through the end of the first quarter of 2021, is prepayable at any time without penalty.

Certain of these amendments impose a new monthly-tested minimum liquidity covenant.

The minimum liquidity requirement was $ 500.0 million as of September 30, 2020;

however, this amount was subsequently reduced to $ 350.0 million upon completion of our capital raising activities in October.

As of September 30, 2020 and the date of these financial statements, we were in compliance with the applicable minimum liquidity covenant.

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

Subsequent to June 30, 2020, we further amended certain of these agreements 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.

Pursuant to these amendments, debt totaling an outstanding amount of

approximately $ 130.0 million will remain subject to the covenant waiver to the first quarter of 2021.

This debt is prepayable at any time without penalty.

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.

For information related to the covenants in our Port of Miami Terminal "A" operating lease agreement, refer to Note 8.

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.

The following is a schedule of annual maturities on our total debt net of debt issuance costs, and including finance leases and commercial paper, as of June 30, 2020 for each of the next five years (in thousands):

On August 24, 2020, Moody’s downgraded our senior unsecured rating from Ba2 to B2, and on August 31, 2020, S&P Global downgraded our senior unsecured rating from BB to B+.

The following is a schedule of annual maturities on our total debt net of debt issuance costs, and including finance leases and commercial paper, as of September 30, 2020 for each of the next five years (in thousands):

Remainder of 2020 333,655

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The finance lease for the Silver Whisper will expire in 2022, subject to an option to purchase the ship.

The total aggregate amount of the finance lease liabilities recorded for this ship was $ 31.5 million and $ 55.6 million at June 30, 2020 and December 31, 2019, respectively.

The total aggregate amount of the finance lease liabilities recorded for this ship was $ 31.5 million and $ 55.6 million at September 30, 2020 and December 31, 2019, respectively.

The lease payments on the Silver Whisper are subject to adjustments based on the LIBOR rate.

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets , and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of June 30, 2020 and December 31, 2019.

Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheet.

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During the three months ended March 31, 2020, we determined that the lease for Silver Explorer , operated by Silversea Cruises and previously classified as a finance lease, is an operating lease based on modification of the terms of the lease during the quarter.

Due to the three-month reporting lag for Silversea Cruises, the reclassification of the lease to an operating lease is reflected in our Consolidated Balance Sheet as of June 30, 2020.

Due to the three-month reporting lag for Silversea Cruises, the reclassification of the lease to an operating lease was reflected in our Consolidated Balance Sheet as of June 30, 2020.

The operating lease for Silver Explorer will expire in 2023.

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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 $ 45.9 million to write down these right-of-use assets to their estimated fair values during the quarter ended March 31, 2020.

We updated our analysis during the second quarter ended June 30, 2020, which resulted in an impairment of the Silver Exporer right-of-use asset of $ 13.3 million to write down the asset to its estimated fair value as of June 30, 2020.

Due to the continuing effect of COVID-19, we updated our analysis during the second quarter ended June 30, 2020, which resulted in an impairment of the Silver Explorer right-of-use asset of $ 13.3 million to write down the asset to its estimated fair value as of June 30, 2020.

For the quarter ended September 30, 2020, we had no further indication of impairment to the carrying amount of our right of use assets .

Our finance leases include Silver Whisper, operated by Silversea Cruises, and are included within Property and equipment, net and Long-term debt, with the current portion of the debt reported within Current portion of debt , in our consolidated balance sheets.

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For some of our real estate leases and berthing agreements, we do have the option to extend our current lease term.

For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the

renewal periods for berthing agreements range from one to 20 years.

For those lease agreements with renewal options, the renewal periods for real estate leases range from one to 10 years and the renewal periods for berthing agreements range from one to 20 years.

Generally, we do not include renewal options as a component of our present value calculation for berthing agreements.

However, for certain real estate leases, we include them.

We have a residual value guarantee associated with our Port of Miami Terminal "A" operating lease agreement ("Port of Miami terminal lease") that approximates a percentage of cost of the asset as of the inception of the lease.

We have a residual value guarantee associated with our Port of Miami Terminal "A" operating lease agreement ("Port of Miami terminal lease") that approximates a percentage of the 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 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 lenders' terminal construction debt, estimated at $ 181.1 million as of June 30, 2020.

The collateral is to be returned when all amounts due by us under the lease have been paid in full.

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This obligation is prepayable at any time without penalty.

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

As of September 30, 2020, we were in compliance with the amended covenants under the lease agreement.

As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments.

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Commencing in 2016 when we sold our 51 % interest in the Pullmantur brand to Pullmantur Holdings, and continuing through the quarter ended June 30, 2020, we bareboat chartered to Pullmantur Holdings the vessels operated by the Pullmantur brand.

On June 22, 2020, Pullmantur S.A., a subsidiary of Pullmantur Holdings, filed for reorganization in Spain.

We terminated the bareboat charters.

On June 22, 2020, Pullmantur S.A., a subsidiary of Pullmantur Holdings, filed for reorganization in Spain, at which time we terminated these bareboat charters.

Other Assets for further discussion of Pullmantur.

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The components of lease expense were as follows (in thousands):

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended June 30, 2020 Six Months Ended June 30, 2020

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended September 30, 2020 Nine Months Ended September 30, 2020

Operating lease costs Commission, transportation and other $ 17,648 $ 50,268

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In addition, certain of our berthing agreements include variable lease costs based on the number of passengers berthed.

During the six months ended June 30, 2020, we had $ 25.6 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss).

For the quarter ended June 30, 2020 there were no variable lease costs as a result of the ongoing suspension of our cruise operations.

During the quarter and six months ended June 30, 2019, we had $ 21.5 million and $ 55.8 million, respectively, of variable lease costs recorded within C ommission, transportation and other in our consolidated statement of comprehensive income (loss).

During the nine months ended September 30, 2020, we had $ 25.6 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss).

For the quarter ended September 30, 2020 there were no variable lease costs as a result of the ongoing suspension of our cruise operations.

During the quarter and nine months ended September 30, 2019, we had $ 17.3 million and $ 73.1 million, respectively, of variable lease costs recorded within C ommission, transportation and other in our consolidated statement of comprehensive income (loss).

Weighted average of the remaining lease terms and weighted average discount rates are as follows:

As of June 30, 2020

As of September 30, 2020

Weighted average years of the remaining lease term

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Supplemental cash flow information related to leases is as follows (in thousands):

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Cash paid for amounts included in the measurement of lease liabilities:

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Financing cash flows from finance leases $ 13,291

As of June 30, 2020, maturities related to lease liabilities were as follows (in thousands):

As of September 30, 2020, maturities related to lease liabilities were as follows (in thousands):

Year Operating Leases Finance Leases

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In connection with the 2018 Silversea Cruises acquisition, we recorded redeemable noncontrolling interest due to the put options held by the noncontrolling interest shareholder.

At the date of the 2018 Silversea Cruises acquisition, the estimated fair value of the redeemable noncontrolling interest was based on 33.3 % of Silversea Cruises' equity value, which was determined based on the transaction price paid for 66.7 % of Silversea Cruises in the 2018 Silversea Cruises acquisition.

As of June 30, 2020, the noncontrolling interest shareholder's interest is presented as Redeemable noncontrolling interest and is classified outside of shareholders' equity in our consolidated balance sheets.

Additionally, the noncontrolling interest's share in the net earnings (loss) and contractual accretion requirements associated with the put options are included in Net income attributable to noncontrolling interest in our consolidated statements of comprehensive income (loss).

The following table presents changes in the redeemable noncontrolling interest for the quarters and six months ended June 30, 2020 and June 30, 2019 (in thousands):

Beginning balance at April 1, 2020 $ 577,425

At the date of the 2018 Silversea Cruises acquisition, the estimated fair value of the noncontrolling interest was based on 33.3 % of Silversea Cruises' equity value, which was determined based on the transaction price paid for 66.7 % of Silversea Cruises in the 2018 Silversea Cruises acquisition.

On July 9, 2020, we acquired the 33.3 % noncontrolling interest in Silversea Cruises from Heritage in exchange for 5.2 million shares of common stock, par value $ 0.01 per share, of Royal Caribbean Cruises Ltd.

Pursuant to the agreement governing the acquisition of the noncontrolling interest, among other things, the parties terminated any existing obligation to issue Heritage any contingent consideration, at fair value, in connection with our acquisition of a 66.7 % interest in Silversea Cruises in 2018.

The purchase of the noncontrolling interest was accounted for as an equity transaction during the quarter ended September 30, 2020 and no gain or loss was recognized in earnings.

The carrying amount of the noncontrolling interest was adjusted to zero and the difference between the carrying amount of the noncontrolling interest and the fair value of the consideration paid was recognized in additional paid in capital.

The noncontrolling interest's share in the net earnings (loss) and contractual accretion requirements associated with the put options, for periods prior to our acquisition of the noncontrolling interest, are included in Net income attributable to noncontrolling interest in our consolidated statements of comprehensive income (loss).

As of December 31, 2019, the noncontrolling interest shareholder's interest is presented as Redeemable noncontrolling interest and is classified outside of shareholders' equity in our consolidated balance sheets.

The following table presents changes in the noncontrolling interest for the quarters and nine months ended September 30, 2020 and September 30, 2019 (in thousands):

Beginning balance at July 1, 2020 $ 584,869

Net income attributable to noncontrolling interest, including the contractual accretion of the put options 7,444

Balance at June 30, 2020 $ 584,869

Acquisition of noncontrolling interest ( 592,313 )

Balance at September 30, 2020 $ —

Beginning balance at January 1, 2020 $ 569,981

Net income attributable to noncontrolling interest, including the contractual accretion of the put options 22,332

Ending balance June 30, 2020 $ 584,869

Beginning balance at April 1, 2019 $ 549,645

Acquisition of noncontrolling interest ( 592,313 )

Ending balance September 30, 2020 $ —

Beginning balance at July 1, 2019 $ 556,770

Net income attributable to noncontrolling interest, including the contractual accretion of the put options 7,125

Ending balance at June 30, 2019 $ 556,770

Distribution to noncontrolling interest ( 501 )

Ending balance at September 30, 2019 $ 563,394

Beginning balance at January 1, 2019 $ 542,020

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Distribution to noncontrolling interest ( 501 )

Ending balance at June 30, 2019 $ 556,770

on the date of acquisition.

The purchase of the 33.3 % interest in Silversea Cruises will be accounted for as an equity transaction in July 2020 and no gain or loss will be recognized in earnings.

The carrying amount of Silversea Cruises' noncontrolling interest will be adjusted to zero and the difference between the carrying amount of noncontrolling interest and the fair value of the consideration paid will be recognized in additional paid in capital.

Ending balance at September 30, 2019 $ 563,394

Commitments and Contingencies

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Our future capital commitments consist primarily of new ship orders.

As of June 30, 2020, we had one Quantum-class ship, two Oasis-class ships and three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 32,400 berths.

As of June 30, 2020, we had two Edge-class ships on order for our Celebrity Cruises brand with an aggregate capacity of approximately 6,500 berths.

Additionally, as of June 30, 2020, we have four ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 2,300 berths.

In June 2019, Silversea Cruises entered into a $ 300 million unsecured term loan facility for the financing of Silver Moon to pay a portion of the ship's contract price through a facility guaranteed by us.

We expect to draw upon this loan when we take delivery of the ship.

The loan will be due and payable at maturity in June 2028, provided however, that each lender may elect to cause us to repay the outstanding amount of any advances held by such lender on June 2026 upon 90 days advance notice.

The loan amortizes semi-annually starting six months after funding, with 1/24th of the outstanding principal payable every six months and the balance payable upon maturity.

Interest on the loan will accrue at LIBOR plus 1.50 %.

As of September 30, 2020, we had one Quantum-class ship, two Oasis-class ships and three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 32,400 berths.

As of September 30, 2020, we had two Edge-class ships on order for our Celebrity Cruises brand with an aggregate capacity of approximately 6,500 berths.

Additionally, as of September 30, 2020, we have four ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 2,300 berths.

In September 2019, Silversea Cruises entered into two credit agreements, guaranteed by us, for the unsecured financing of the first and second Evolution-class ships for an amount of up to 80 % of each ship's contract price through facilities to be guaranteed 95 % by Euler Hermes, the official export credit agency of Germany.

The maximum loan amount under each facility is not to exceed the United States dollar equivalent of € 351.6 million in the case of the first Evolution-class ship and € 359.0 million in the case of the second Evolution-class ship, or approximately $ 394.8 million and $ 403.1 million, respectively, based on the exchange rate at June 30, 2020.

The maximum loan amount under each facility is not to exceed the United States dollar equivalent of € 351.6 million in the case of the first Evolution-class ship and € 359.0 million in the case of the second Evolution-class ship, or approximately $ 412.3 million and $ 421.0 million, respectively, based on the exchange rate at September 30, 2020.

Each loan, once funded, will amortize semi-annually and will mature 12 years following the delivery of each ship.

At our election, interest on each loan will accrue either (1) at a fixed rate of 4.14 % and 4.18 %,

respectively (inclusive of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.79 % and 0.83 %, respectively.

At our election, interest on each loan will accrue either (1) at a fixed rate of 4.14 % and 4.18 %, respectively (inclusive of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.79 % and 0.83 %, respectively.

The first and second Evolution-class ships will each have a capacity of approximately 600 berths.

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Under the financing arrangement, we have the right, but not the obligation, to satisfy the obligations to be incurred upon delivery and acceptance of the ship under the shipbuilding contract by assuming, at delivery and acceptance, the debt indirectly incurred by the shipbuilder during the construction of the ship.

The maximum loan amount under the facility is not to exceed the United States dollar equivalent of € 1.3 billion, or approximately $ 1.5 billion based on the exchange rate at June 30, 2020.

The maximum loan amount under the facility is not to exceed the United States dollar equivalent of € 1.3 billion, or approximately $ 1.5 billion based on the exchange rate at September 30, 2020.

The loan will amortize semi-annually and will mature 12 years following delivery of the ship.

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In December 2019, we entered into a credit agreement for the unsecured financing of the third Icon-class ship for up to 80 % of the ship’s contract price.

Finnvera plc, the official export credit agency of Finland, has agreed to guarantee 95 % of the substantial majority of the financing, with a smaller portion of the financing to be 95 % guaranteed by Euler Hermes, the official German export credit agency.

The maximum loan amount under the facility is not to exceed the United States dollar equivalent of € 1.4 billion, or approximately $ 1.6 billion based on the exchange rate at June 30, 2020.

German export credit agency.

The maximum loan amount under the facility is not to exceed the United States dollar equivalent of € 1.4 billion, or approximately $ 1.6 billion based on the exchange rate at September 30, 2020.

The loan, once funded, will amortize semi-annually and will mature 12 years following the delivery of the ship.

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Our future capital commitments consist primarily of new ship orders.

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

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.

As of September 30, 2020, our Global Brands and Partner Brands have the following ships on order.

COVID-19 has impacted shipyard operations which have and will result in delays of our previously contracted ship deliveries as noted below.

Of the six ships originally scheduled for delivery between July 2020 and December 2021, Silver Moon was delivered in October 2020 and we expect that Silver Dawn and Odyssey of the Seas will be delivered within the remaining time frame, with the shift of the Odyssey of the Seas expected delivery into early 2021.

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

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Silversea Cruises —

Silver Moon Fincantieri 3rd Quarter 2020 550

Silver Dawn Fincantieri 3rd Quarter 2021 550

Silver Moon (1)

Fincantieri 4th Quarter 2020 550

Silver Dawn Fincantieri 4th Quarter 2021 550

Evolution Class:

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Total Berths 52,530

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 approximately $ 13.9 billion, of which we had deposited $ 833.1 million as of such date.

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

(1) In October 2020, we took delivery of Silver Moon .

As of September 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 approximately $ 14.1 billion, of which we had deposited $ 770.7 million as of such date.

Approximately 64.4 % of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, 2020.

Refer to Note 13.

Fair Value Measurements and Derivative Instruments for further information.

In addition, as of June 30, 2020, we have an agreement in place with Chantiers de l'Atlantique to build an additional Edge-class ship for delivery in the 4th quarter of 2024, which is contingent upon completion of conditions precedent and financing.

In addition, as of September 30, 2020, we have an agreement in place with Chantiers de l'Atlantique to build an additional Edge-class ship for delivery in the 4th quarter of 2024, which is contingent upon completion of conditions precedent and financing.

As previously reported in 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, two lawsuits were filed against Royal Caribbean Cruises Ltd.

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District Court for the Southern District of Florida under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act.

The complaint filed by Havana Docks Corporation alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban Government.

The complaint filed by Havana Docks Corporation ("Havana Docks Action") alleges it holds an interest in the Havana Cruise Port Terminal and the complaint filed by Javier Garcia-Bengochea (the "Port of Santiago Action") alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban Government.

The complaints further allege that Royal Caribbean Cruises Ltd.

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Royal Caribbean Cruises Ltd.

filed its answer to each complaint in October 2019.

We believe we have meritorious defenses to the claims, and we intend to vigorously defend ourselves against them.

We believe that it is unlikely that the outcome of these matters will have a material adverse impact to our financial condition, results of operations or cash

filed its answer to each complaint in October 2019 and on October 15, 2020, the Court dismissed the Port of Santiago Action on the basis that the plaintiffs in that action lacked standing to bring the claim.

This decision may be appealed by the plaintiffs.

We believe we have meritorious defenses to the claims alleged in both the Havana Docks Action and the Port of Santiago Action, and we intend to vigorously defend ourselves against them.

We believe that it is unlikely that the outcome of either action will have a material adverse impact to our financial condition, results of operations or cash flows.

However, the outcome of litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of this case will not be material.

On October 7, 2020, a shareholder filed a putative class action complaint against us and certain officers, in the United States District Court for the Southern District of Florida, alleging misrepresentations relating to COVID-19 in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5, seeking unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020.

On October 27, 2020, a second complaint was filed by another shareholder against us and our same officers in the United States District Court for the Southern District of Florida alleging the same misrepresentations relating to COVID-19.

As is the case with the first action, the second action seeks unspecified damages on behalf of a purported class consisting of all persons and entities (subject to specified exceptions) that purchased or otherwise acquired our securities from February 4, 2020 through March 17, 2020.We cannot predict the duration or outcome of these lawsuits at this time, although management believes the claims are without merit.

Depending on how these cases progress, they could be costly to defend and could divert the attention of management and other resources from operations.

Accordingly, even if ultimately resolved in our favor, these actions could have a material adverse effect on our business, financial condition, results of operations and liquidity.

We are also routinely involved in claims typical within the cruise vacation industry.

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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.

In September 2019 we declared a cash dividend on our common stock of $ 0.78 per share, which was paid in October 2019.

During both the first and second quarters of 2019, we declared a cash dividend on our common stock of $ 0.70 per share, which was paid in April 2019 and July 2019, respectively.

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.

During the three months ended June 30, 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect.

In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities as part of the Debt Holiday.

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

During the second quarter of 2020, we agreed with certain of our lenders not to pay dividends or engage in common stock repurchases for so long as our debt covenant waivers are in effect.

In addition, in the event we declare a dividend or engage in share repurchases, we will need to repay the amounts deferred under our export credit facilities as part of the Debt Deferral.

Accordingly, we did not declare a dividend during the second, and third quarters of 2020.

During October 2020, we issued 9.6 million shares of common stock, par value $ 0.01 per share, at a price of $ 60.00 per share.

We received net proceeds of $ 557.4 million from the sale of our common stock, after deducting the underwriters’ discount and the estimated offering expenses payable by us.

Changes in Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2020 and 2019 (in thousands):

Accumulated Other Comprehensive Income (Loss) for the six months ended June 30, 2020 Accumulated Other Comprehensive Income (Loss) for the Six Months Ended June 30, 2019

The following table presents the changes in accumulated other comprehensive income (loss) by component for the nine months ended September 30, 2020 and 2019 (in thousands):

Accumulated Other Comprehensive Income (Loss) for the nine months ended September 30, 2020 Accumulated Other Comprehensive Income (Loss) for the Nine Months Ended September 30, 2019

Changes related to cash flow derivative hedges Changes in defined benefit plans Foreign currency translation adjustments Accumulated other comprehensive loss Changes related to cash flow derivative hedges Changes in defined benefit plans Foreign currency translation adjustments Accumulated other comprehensive loss

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Ending balance $ ( 798,668 ) $ ( 62,511 ) $ ( 7,928 ) $ ( 869,107 ) $ ( 825,331 ) $ ( 48,854 ) $ ( 72,178 ) $ ( 946,363 )

The following table presents reclassifications out of accumulated other comprehensive income (loss) for the quarters and six months ended June 30, 2020 and 2019 (in thousands):

The following table presents reclassifications out of accumulated other comprehensive income (loss) for the quarters and nine months ended September 30, 2020 and 2019 (in thousands):

Amount of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income

Details About Accumulated Other Comprehensive Income (Loss) Components Quarter Ended June 30, 2020 Quarter Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Affected Line Item in Statements of

Details About Accumulated Other Comprehensive Income (Loss) Components Quarter Ended September 30, 2020 Quarter Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Affected Line Item in Statements of

Comprehensive Income (Loss)

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Total reclassifications for the period $ ( 52,101 ) $ ( 3,447 ) $ ( 132,778 ) $ 15,812

During the quarter and six months ended June 30, 2020, a $ 69.0 million loss was recorded within Other expense in our consolidated statements of comprehensive (loss) income, consisting of a $ 92.6 million loss resulting from the recognition of a currency translation adjustment, partially offset by the recognition of a deferred $ 23.6 million foreign exchange gain related to the Pullmantur net investment hedge.

In connection with the Pullmantur reorganization, we no longer have significant involvement in the Pullmantur operations and these amounts previously deferred in Accumulated other comprehensive loss were recognized in earnings.

Of the $ 69.0 million loss, $ 34.3 million was released from Accumulated other comprehensive loss as of June 30, 2020.

During the quarter and nine months ended September 30, 2020, a $ 69.0 million net loss was recorded within Other expense in our consolidated statements of comprehensive (loss) income.

The amount was recognized in earnings in connection with the Pullmantur reorganization, as we no longer have significant involvement in the Pullmantur operations and these amounts were previously deferred in Accumulated other comprehensive loss .

The net loss consisted of a $ 92.6 million loss resulting from the recognition of a currency translation adjustment, partially offset by the recognition of a deferred $ 23.6 million foreign exchange gain related to the Pullmantur net investment hedge.

Of the $ 69.0 million loss, $ 34.3 million and $ 34.7 million was released from Accumulated other comprehensive los s during the quarters ended June 30, 2020 and September 30, 2020, respectively.

Fair Value Measurements and Derivative Instruments

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The estimated fair value of our financial instruments that are not measured at fair value, categorized based upon the fair value hierarchy, are as follows (in thousands):

Fair Value Measurements at June 30, 2020 Using Fair Value Measurements at December 31, 2019 Using

Fair Value Measurements at September 30, 2020 Using Fair Value Measurements at December 31, 2019 Using

Description Total Carrying Amount Total Fair Value Level 1 (1)

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(3) Inputs that are unobservable.

The Company did not use any Level 3 inputs as of June 30, 2020 and December 31, 2019.

The Company did not use any Level 3 inputs as of September 30, 2020 and December 31, 2019.

(4) Consists of cash and marketable securities with original maturities of less than 90 days.

(5) Consists of unsecured revolving credit facilities, senior notes, senior debentures and term loans.

These amounts do not include our capital lease obligations or commercial paper.

These amounts do not include our finance lease obligations or commercial paper.

Other Financial Instruments

The carrying amounts of accounts receivable, accounts payable, accrued interest, accrued expenses and commercial paper approximate fair value at June 30, 2020 and December 31, 2019.

The carrying amounts of accounts receivable, accounts payable, accrued interest, accrued expenses and commercial paper approximate fair value at September 30, 2020 and December 31, 2019.

Assets and liabilities that are recorded at fair value have been categorized based upon the fair value hierarchy.

The following table presents information about the Company’s financial instruments recorded at fair value on a recurring basis (in thousands):

Fair Value Measurements at June 30, 2020 Using Fair Value Measurements at December 31, 2019 Using

Fair Value Measurements at September 30, 2020 Using Fair Value Measurements at December 31, 2019 Using

Description Total Level 1 (1)

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(5) Consists of foreign currency forward contracts, interest rate swaps and fuel swaps.

(6) The contingent consideration related to the 2018 Silversea Cruises acquisition was estimated by applying a Monte-Carlo simulation method using our closing stock price along with significant inputs not observable in the market, including the probability of achieving the milestones and estimated future operating results.

(6) Any obligation under the contingent consideration related to the 2018 Silversea Cruises acquisition was eliminated during the quarter ended September 30 2020 as a result of our purchase of the remaining 33.3 % non-controlling interest in Silversea Cruises.

In prior periods, the contingent consideration was estimated by applying a Monte-Carlo simulation method using our closing stock price along with significant inputs not observable in the market, including the probability of achieving the milestones and estimated future operating results.

The Monte-Carlo simulation is a generally accepted statistical technique used to generate a defined number of valuation paths in order to develop a reasonable estimate of fair value.

The reported fair values are based on a variety of factors and assumptions.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of June 30, 2020 or December 31, 2019, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of September 30, 2020 or December 31, 2019, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Nonfinancial Instruments Recorded at Fair Value on a Nonrecurring Basis

The following table presents information about the Company’s nonfinancial instruments recorded at fair value on a nonrecurring basis (in thousands):

Fair Value Measurements at June 30, 2020 Using

Description Total Carrying Amount Total Fair Value Level 3 Total Impairment for the Quarter ended June 30, 2020 Total Impairment for the Six Months ended June 30, 2020

Fair Value Measurements at September 30, 2020 Using

Description Total Carrying Amount Total Fair Value Level 3 Total Impairment for the Quarter ended September 30, 2020 Total Impairment for the Nine Months ended September 30, 2020

Silversea Cruises Goodwill (1)

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$ 318,700 $ 318,700 $ 318,700 $ — 30,800

Long-lived assets - vessels (3)

Long-lived assets - property and equipment, net (3)

$ 577,193 $ 577,193 $ 577,193 $ 83,949 560,926

Right-of-use assets (4)

Long-lived assets - right-of-use assets (4)

$ 67,265 $ 67,265 $ 67,265 $ — 50,914

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Significantly impacting these assumptions were changes in market conditions associated with COVID-19 and its impact to the business and related operating plans.

The discounted cash flow model used our 2020 projected operating

results as a base.

The discounted cash flow model used our 2020 projected operating results as a base.

To that base we added future years’ cash flows through 2030 assuming multiple revenue and expense scenarios that reflect the impact of different global economic environments for this period on Silversea Cruises' reporting unit.

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The fair value of the Silversea Cruises trade name was estimated as of March 31, 2020, the date of the last impairment test.

(3) Impairments primarily related to vessels during the six months ended June 30, 2020 and to certain construction in progress projects during the three months ended September 30, 2020.

For the vessels impaired as of March 31, 2020, we estimated the fair value of two of our vessels using a blended indication from the income and cost approaches and the fair value of the remaining vessels was estimated primarily based on their orderly liquidation values.

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A significant input in performing the fair value assessments for these vessels was management's expected use of the vessels, which takes into consideration forecasted operating results.

During the quarter ended September 30, 2020, construction in progress assets were impaired due to a reduction in scope or the decision to not complete the projects.

The impairment was calculated based on orderly liquidation values.

(4) Impairments to our right-of-use assets relate to certain of our berthing arrangements and a ship operating lease.

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The fair value of the berthing arrangements was estimated as of March 31, 2020, the date these assets were last impaired, and a significant input in performing the fair value assessments for these assets was our expected passenger headcount.

The fair value of the ship operating lease was estimated as of June 30, 2020 and significant inputs in performing the fair value assessment for this asset were current and residual values of the vessel, expected rate of return and remaining lease payments.

The fair value of the ship operating lease was estimated as of June 30, 2020, the date this asset was last impaired, and significant inputs in performing the fair value assessment for this asset were current and residual values of the vessel, expected rate of return and remaining lease payments.

(5) We estimated the fair value of our other than temporarily impaired equity-method investments using a discounted cash flow model.

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Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements

As of June 30, 2020 As of December 31, 2019

As of September 30, 2020 As of December 31, 2019

Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet Gross Amount of Eligible Offsetting

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Derivative Assets Gross Amount of Derivative Assets Presented in the Consolidated Balance Sheet Gross Amount of Eligible Offsetting

Derivative Assets Cash Collateral

Derivative Liabilities Cash Collateral

Received Net Amount of

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Gross Amounts not Offset in the Consolidated Balance Sheet that are Subject to Master Netting Agreements

As of June 30, 2020 As of December 31, 2019

As of September 30, 2020 As of December 31, 2019

Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet Gross Amount of Eligible Offsetting

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Derivative Liabilities Gross Amount of Derivative Liabilities Presented in the Consolidated Balance Sheet Gross Amount of Eligible Offsetting

Derivative Liabilities Cash Collateral

Derivative Assets Cash Collateral

Pledged Net Amount of

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Credit risk, including but not limited to counterparty nonperformance under derivative instruments, our credit facilities and new ship progress payment guarantees, is not considered significant, as we primarily conduct business with large, well-established financial institutions, insurance companies and export credit agencies many of which we have long-term relationships with and which have credit risks acceptable to us or where the credit risk is spread out among a large number of counterparties.

As of June 30, 2020, we had counterparty credit risk exposure under our derivative instruments of $ 1.7 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks.

As of September 30, 2020, we had counterparty credit risk exposure under our derivative instruments of $ 2.2 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks.

We do not anticipate nonperformance by any of our significant counterparties.

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For our regression analyses, we use an observation period of up to three years , utilizing market data relevant to the hedge horizon of each hedge relationship.

High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative

instrument and the hedged item.

High effectiveness is achieved when a statistically valid relationship reflects a high degree of offset and correlation between the changes in the fair values of the derivative instrument and the hedged item.

If it is determined that a derivative is not highly effective as a hedge or hedge accounting is discontinued, any change in fair value of the derivative since the last date at which it was determined to be effective is recognized in earnings.

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Our exposure to market risk for changes in interest rates primarily relates to our debt obligations including future interest payments.

At June 30, 2020 and December 31, 2019, approximately 66.3 % and 62.1 %, respectively, of our debt was effectively fixed.

At September 30, 2020 and December 31, 2019, approximately 65.9 % and 62.1 %, respectively, of our debt was effectively fixed.

We use interest rate swap agreements to modify our exposure to interest rate movements and to manage our interest expense.

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We use interest rate swap agreements that effectively convert a portion of our fixed-rate debt to a floating-rate basis to manage this risk.

At June 30, 2020 and December 31, 2019, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument Swap Notional as of June 30, 2020 (In thousands) Maturity Debt Fixed Rate Swap Floating Rate:

LIBOR plus All-in Swap Floating Rate as of June 30, 2020

At September 30, 2020 and December 31, 2019, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument Swap Notional as of September 30, 2020 (In thousands) Maturity Debt Fixed Rate Swap Floating Rate:

LIBOR plus All-in Swap Floating Rate as of September 30, 2020

Oasis of the Seas term loan

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We use interest rate swap agreements that effectively convert a portion of our floating-rate debt to a fixed-rate basis to manage this risk.

At June 30, 2020 and December 31, 2019, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of June 30, 2020 (In thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate

At September 30, 2020 and December 31, 2019, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of September 30, 2020 (In thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate

Celebrity Reflection term loan

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(1) Interest rate swap agreements hedging the Euro-denominated term loan for Harmony of the Seas include EURIBOR zero-floor matching the hedged debt EURIBOR zero-floor.

Amount presented is based on the exchange rate as of June 30, 2020.

Amount presented is based on the exchange rate as of September 30, 2020.

(2) Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor.

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The anticipated unsecured term loan for the financing of Odyssey of the Seas was initially expected to be drawn in October 2020.

However, due to the impact of COVID-19 to shipyard operations, there may be a delay in the ship delivery.

However, due to the impact of COVID-19 to shipyard operations, there is a delay in the ship delivery.

These interest rate swap agreements are accounted for as cash flow hedges.

The notional amount of interest rate swap agreements related to outstanding debt and our current unfunded financing arrangements as of June 30, 2020 and December 31, 2019 was $ 3.5 billion.

The notional amount of interest rate swap agreements related to outstanding debt and our current unfunded financing arrangements as of September 30, 2020 and December 31, 2019 was $ 3.5 billion.

Foreign Currency Exchange Rate Risk

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We enter into foreign currency forward contracts to manage portions of the exposure to movements in foreign currency exchange rates.

As of June 30, 2020, the aggregate cost of our ships on order was $ 13.9 billion, of which we had deposited $ 833.1 million as of such date.

These amounts do not include any ships placed on order that are contingent upon completion of conditions precedent and/or financing, any ships on order by our Partner Brands and any ships on order placed by Silversea Cruises during the reporting lag period.

As of September 30, 2020, the aggregate cost of our ships on order was $ 14.1 billion, of which we had deposited $ 770.7 million as of such date.

These amounts exclude any ships on order by our Partner Brands.

Refer to Note 10.

Commitments and Contingencies , for further information on our ships on order.

At June 30, 2020 and December 31, 2019, approximately 62.5 % and 65.9 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

At September 30, 2020 and December 31, 2019, approximately 64.4 % and 65.9 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

Our foreign currency forward contract agreements are accounted for as cash flow or net investment hedges depending on the designation of the related hedge.

On a regular basis, we enter into foreign currency forward contracts and, from time to time, we utilize cross-currency swap agreements and collar options to minimize the volatility resulting from the remeasurement of net monetary assets and liabilities denominated in a currency other than our functional currency or the functional currencies of our foreign subsidiaries.

During the second quarter of 2020, we maintained an average of approximately $ 275.1 million of these foreign currency forward contracts.

During the third quarter of 2020, we maintained an average of approximately $ 262.1 million of these foreign currency forward contracts.

These instruments are not designated as hedging instruments.

For the quarters ended June 30, 2020 and 2019, changes in the fair value of the foreign currency forward contracts resulted in a gain and a loss of $ 12.5 million and $( 4.2 ) million, respectively.

For the quarters ended September 30, 2020 and 2019, changes in the fair value of the foreign currency forward contracts resulted in a gain of $ 4.9 million and a loss of $ 26.0 million, respectively.

For the nine months ended September 30, 2020 and 2019, changes in the fair value of the foreign currency contracts resulted in a loss of $ 35.3 million and $ 25.2 million, respectively.

These amounts were recognized in earnings within Other income (expense) in our consolidated statements of comprehensive income (loss).

We consider our investments in our foreign operations to be denominated in relatively stable currencies and to be of a long-term nature.

As of June 30, 2020, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investments primarily in TUI Cruises of € 245.0 million, or approximately $ 275.1 million based on the exchange rate at June 30, 2020.

As of September 30, 2020, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investments primarily in TUI Cruises of € 245.0 million, or approximately $ 287.3 million based on the exchange rate at September 30, 2020.

These forward currency contracts mature in October 2021.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of both June 30, 2020 and December 31, 2019 was $ 3.4 billion and $ 2.9 billion, respectively.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of September 30, 2020 and December 31, 2019 was $ 3.3 billion and $ 2.9 billion, respectively.

Non-Derivative Instruments

We also address the exposure of our investments in foreign operations by denominating a portion of our debt in our subsidiaries’ and investments’ functional currencies and designating it as a hedge of these subsidiaries and investments.

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 326.0 million, or approximately $ 366.0 million, as of June 30, 2020.

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 284.0 million, or approximately $ 333.1 million, as of September 30, 2020.

As of December 31, 2019, we had designated debt as a hedge of our net investments in TUI Cruises of € 319.0 million, or approximately $ 358.1 million.

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In the case that our hedged forecasted fuel consumption is not probable of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will be reclassified to Other income (expense) immediately.

For hedged forecasted fuel consumption that remains possible of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will remain in accumulated other comprehensive gain or loss until the underlying hedged transactions are recognized in earnings or the related hedged forecasted fuel consumption is deemed probable of not occurring.

The current suspension of our cruise operations due to the COVID-19 pandemic resulted in reductions to our forecasted fuel purchases.

As of June 30, 2020, we discontinued cash flow hedge accounting on 0.3 million metric tons of our fuel swap agreements maturing in 2020 and 2021.

The discontinuance of the hedging relationship for these fuel swap agreements resulted in the reclassification of a net $ 68.6 million loss from Accumulated other comprehensive loss to Other expense during the six months ended June 30, 2020 .

Changes in the fair value of these fuel derivatives are currently recognized in Other expense each reporting period.

At June 30, 2020, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2023.

As of June 30, 2020 and December 31, 2019, we had the following outstanding fuel swap agreements:

As of September 30, 2020, we discontinued cash flow hedge accounting on 0.5 million metric tons of our fuel swap agreements maturing in 2020 and 2021.

The discontinuance of cash flow hedge accounting on 0.4 million metric tons of the fuel swap agreements resulted in the reclassification of a net $ 76.3 million loss from Accumulated other comprehensive loss to Other expense during the nine months ended September 30, 2020;

whereas, the discontinuance of cash flow hedge accounting on the remaining swaps resulted in the deferral of an immaterial loss in Accumulated other comprehensive loss as the related forecasted fuel consumption remains possible of occurring.

Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other expense each reporting period.

At September 30, 2020, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2023.

As of September 30, 2020 and December 31, 2019, we had the following outstanding fuel swap agreements:

Fuel Swap Agreements

As of June 30, 2020 As of December 31, 2019

As of September 30, 2020 As of December 31, 2019

Designated as hedges:

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Fuel Swap Agreements

As of June 30, 2020 As of December 31, 2019

As of September 30, 2020 As of December 31, 2019

Designated hedges as a % of projected fuel purchases:

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Fuel Swap Agreements

As of June 30, 2020 As of December 31, 2019

As of September 30, 2020 As of December 31, 2019

Not designated as hedges:

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2021 96,450 —

At June 30, 2020, $ 52.0 million of estimated unrealized loss associated with our cash flow hedges pertaining to fuel swap agreements is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months.

At September 30, 2020, $ 48.1 million of estimated unrealized loss associated with our cash flow hedges pertaining to fuel swap agreements is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months.

Reclassification is expected to occur as the result of fuel consumption associated with our hedged forecasted fuel purchases.

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Asset Derivatives Liability Derivatives

Balance Sheet Location As of June 30, 2020 As of December 31, 2019 Balance Sheet Location As of June 30, 2020 As of December 31, 2019

Balance Sheet Location As of September 30, 2020 As of December 31, 2019 Balance Sheet Location As of September 30, 2020 As of December 31, 2019

Fair Value Fair Value Fair Value Fair Value

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Foreign currency forward contracts Derivative financial instruments $ — $ 3,186 Derivative financial instruments $ — $ 2,419

Foreign currency forward contracts Other assets — — Other long-term liabilities — —

Fuel swaps Derivative financial instruments — 1,643 Derivative financial instruments 30,578 295

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The location and amount of gain or (loss) recognized in income on fair value and cash flow hedging relationships were as follows (in thousands):

Quarter Ended June 30, 2020 Quarter Ended June 30, 2019

Quarter Ended September 30, 2020 Quarter Ended September 30, 2019

Fuel Expense Depreciation and Amortization Expenses Interest Income (Expense) Other Income (Expense) Fuel Expense Depreciation and Amortization Expenses Interest Income (Expense) Other Income (Expense)

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Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) into income n/a $( 3,782 ) n/a $( 1,511 ) n/a $( 3,592 ) n/a $( 1,251 )

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

Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

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Interest contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) into income n/a n/a $( 9,407 ) n/a n/a n/a $( 800 ) n/a

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income n/a n/a $( 15,939 ) n/a n/a n/a $( 1,173 ) n/a

Commodity contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) into income $( 26,922 ) n/a n/a $ 2,493 $ 31,380 n/a n/a $ ( 1,444 )

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income $( 32,520 ) n/a n/a $ 3,029 $ 33,815 n/a n/a $( 1,916 )

Foreign exchange contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) into income n/a $( 7,117 ) n/a $ ( 4,344 ) n/a $( 6,879 ) n/a $( 2,615 )

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income n/a $( 10,899 ) n/a $( 5,855 ) n/a $( 10,471 ) n/a $( 3,866 )

The carrying value and line item caption of non-derivative instruments designated as hedging instruments recorded within our consolidated balance sheets were as follows (in thousands):

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Non-derivative instrument designated as

hedging instrument under ASC 815-20 Balance Sheet Location As of June 30, 2020 As of December 31, 2019

hedging instrument under ASC 815-20 Balance Sheet Location As of September 30, 2020 As of December 31, 2019

Foreign currency debt Current portion of debt $ 40,153 $ 73,572

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Income on Hedged Item

Quarter Ended June 30, 2020 Quarter Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019 Quarter Ended June 30, 2020 Quarter Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019

Quarter Ended September 30, 2020 Quarter Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 Quarter Ended September 30, 2020 Quarter Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Interest rate swaps Interest expense, net of interest capitalized $ 39 $ 2,920 $ 23,338 $ 19,699 $ 2,379 $ ( 4,116 ) $ ( 20,855 ) $ ( 25,862 )

Interest rate swaps Other income (expense) — — — — — — — —

$ 39 $ 2,920 $ 23,338 $ 19,699 $ 2,379 $ ( 4,116 ) $ ( 20,855 ) $ ( 25,862 )

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Line Item in the Statement of Financial Position Where the Hedged Item is Included Carrying Amount of the Hedged Liabilities Cumulative amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities

As of June 30, 2020 As of December 31, 2019 As of June 30, 2020 As of December 31, 2019

As of September 30, 2020 As of December 31, 2019 As of September 30, 2020 As of December 31, 2019

Current portion of debt and Long-term debt $ 719,553 $ 715,234 $ 19,555 $ ( 1,301 )

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Accumulated Other Comprehensive Income (Loss) into Income

Interest rate swaps $ ( 42,488 ) $ ( 23,488 ) $ ( 90,677 ) $ ( 91,949 ) Interest expense, net of interest capitalized $ ( 6,532 ) $ ( 373 ) $ ( 15,939 ) $ ( 1,173 )

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The table below represents amounts excluded from the assessment of effectiveness for our net investment hedging instruments for which the difference between changes in fair value and periodic amortization is recorded in accumulated other comprehensive income (loss) (in thousands):

Gain (Loss) Recognized in Income (Net Investment Excluded Components) Six Months Ended June 30, 2020

Gain (Loss) Recognized in Income (Net Investment Excluded Components) Nine Months Ended September 30, 2020

Net inception fair value at January 1, 2020 $ ( 8,008 )

Amount of gain recognized in income on derivatives for the period ended June 30, 2020 3,273

Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of June 30, 2020 1,580

Fair value at June 30, 2020 $ ( 3,155 )

Amount of gain recognized in income on derivatives for the period ended September 30, 2020 4,946

Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of September 30, 2020 561

Fair value at September 30, 2020 $ ( 2,501 )

The effect of non-derivative instruments qualifying and designated as net investment hedging instruments on the consolidated financial statements was as follows (in thousands):

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Non-derivative instruments under ASC 815-20 Net

Investment Hedging Relationships Quarter Ended June 30, 2020 Quarter Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019

Investment Hedging Relationships Quarter Ended September 30, 2020 Quarter Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Foreign Currency Debt $ ( 16,732 ) $ 12,811 $ ( 16,784 ) $ 15,519

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Gain (Loss) Recognized in

Income on Derivatives Quarter Ended June 30, 2020 Quarter Ended June 30, 2019 Six Months Ended June 30, 2020 Six Months Ended June 30, 2019

Income on Derivatives Quarter Ended September 30, 2020 Quarter Ended September 30, 2019 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019

Foreign currency forward contracts Other income (expense) $ 4,907 $ ( 26,035 ) $ ( 35,265 ) $ ( 25,189 )

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If our credit rating for our senior unsecured debt is subsequently equal to or above BBB- by Standard & Poor’s or Baa3 by Moody’s, then any collateral posted at such time will be released to us and we will no longer be required to post collateral unless we meet the collateral trigger requirement, generally, at the next fifth-year anniversary.

During the quarter ended June 30, 2020, our senior unsecured debt credit rating was BB by Standard & Poor's and Ba2 by Moody's.

As of June 30, 2020, six of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $ 20.2 million to satisfy our obligations under our interest rate derivative agreements, taking into account collateral waivers issued by certain banks.

As of September 30, 2020, our senior unsecured debt credit rating was B+ by Standard & Poor's and B2 by Moody's.

As of September 30, 2020, seven of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $ 30.5 million to satisfy our obligations under our interest rate derivative agreements, taking into account collateral waivers issued by certain banks.

We believe the maximum additional collateral we may need to provide under these agreements in the next twelve months is approximately $ 60.6 million.

Restructuring Charges

We incurred restructuring charges of $ 29.3 million and $ 46.9 million for the quarter and six months ended June 30, 2020, respectively, in connection with the centralization of our global sales and marketing structure and the reduction of our U.S.

We incurred restructuring charges of $ 29.4 million and $ 50.8 million for the quarter and nine months ended September 30, 2020, respectively, in connection with the centralization of our global sales and marketing structure and the reduction of our U.S.

Centralization of Global Sales and Marketing Structure

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As a result of these actions, we incurred restructuring exit costs of $ 12.0 million for the year ended December 31, 2019, which were reported within Marketing, selling and administrative expenses in our consolidated statements of comprehensive income (loss).

As of June 30, 2020, we incurred $ 21.5 million restructuring costs and expect to incur $ 1.9 million additional costs as it relates to the restructuring activities of this strategy.

As of September 30, 2020, we incurred $ 22.9 million restructuring costs and expect to incur $ 0.5 million additional costs as it relates to the restructuring activities of this strategy.

The following table summarizes our restructuring exit costs as it relates to the centralization of our global sales and marketing structure (in thousands):

Beginning balance January 1, 2020 Accruals Payments Ending balance June 30, 2020 Cumulative

Beginning balance January 1, 2020 Accruals Payments Ending balance September 30, 2020 Cumulative

Incurred Expected

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In April 2020, we reduced our US shoreside workforce by approximately 23 % through a combination of permanent layoffs and 90-day furloughs with paid benefits.

We incurred severance costs of $ 25.4 million during the quarter ended June 30, 2020.

In July 2020, we incurred an additional $ 1.5 million of termination benefits related to this workforce reduction.

We incurred severance costs of $ 27.9 million during the nine months ended September 30, 2020, respectively, and do not expect to incur additional costs as it relates to this activity.

The following table summarizes our restructuring costs as it relates to the April 2020 reduction in our workforce (in thousands):

Beginning balance January 1, 2020 Accruals Payments Ending balance June 30, 2020 Cumulative

Beginning balance January 1, 2020 Accruals Payments Ending balance September 30, 2020 Cumulative

Incurred Expected

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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 1. Financial Statements