What changed in this filing

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Item 1A. Risk Factors

2020-11-04 compared with 2020-08-10 · 90 added, 58 removed, 401 unchanged (27% of the section changed)

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

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

Examples of these include, but are not limited to:

travel bans and cruising advisories and the resulting temporary suspension of our Global Brands' operations, which is expected to continue until at least Decemeber 31, 2020, excluding sailings from Singapore, with Celebrity Cruises having also suspended their full 2020/21

Winter program in Australia and Asia and Azamara having suspended their 2020/21 Winter sailings throughout Australia and New Zealand, South Africa and South America;

restrictions on the movement and gathering of people;

social distancing measures;

shelter-in-place/stay-at-home orders;

and disruptions to businesses in our supply chain.

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

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• Operations:

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

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

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

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

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

which could further delay our return to service.

As a result of these actions, we may be challenged in rebuilding our workforce which could further delay our return to service.

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

Furthermore, we have taken actions to monitor and mitigate changes in our supply chain, and port destination availability, which may strain relationships with our vendors and port partners.

Due to the unprecedented and uncertain nature of the COVID-19 pandemic, it is difficult to predict the impact of further disruptions and their magnitude.

On September 21, 2020, the Healthy Sail Panel, which was formed in June by the Company and Norwegian Cruise Line Holdings Ltd., submitted its report on recommendations to the U.S.

Centers for Disease Control and Prevention, which includes more than 70 detailed recommendations to protect the public health and safety of guests, crew and the communities where cruise ships call.

On October 30, 2020, the CDC issued the Conditional Order, which replaces the current “no sail” order that expired on October 31, 2020.

While the Conditional Order represents an important step in our return to service, many uncertainties remain as to the specifics and timing of implementation, administration and costs of the requirements of the Conditional Order, some of which may be significant.

Further, the Conditional Order contemplates that the CDC may issue additional requirements through technical instructions or orders as needed and that the phases required to resume operations will be further determined based on public health considerations, including the trajectory of the pandemic and the ability of the Company and other cruise ship operators to successfully employ measures that mitigate the risk of COVID-19.

In addition, the Conditional Order contains requirements that could negatively impact our results of operations, such as:

laboratory testing of crew members and guests;

simulated voyages;

and the certification process, including implementing the required testing protocols, the prohibition on itineraries longer than seven days, and the demonstration at each port where a ship intends to dock of approval with U.S.

port and local health authorities, which requires medical care agreements addressing evacuation to onshore hospitals, housing agreements with onshore facilities for isolation and quarantine of COVID-19 cases, and port agreements to limit the number of cruise ships at any single port.

Our ability to meet the requirements under the Conditional Order will determine the timing and implementation of our plans to return to service which we expect to be gradual.

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.

It is difficult to predict our ability to meet the requirements of the Conditional Order and the costs associated with compliance, some of which could be significant.

If we are unable to satisfy the requirements of the Conditional Order our operations may be negatively impacted and we could be exposed to reputational and legal risks.

Due to the unprecedented and uncertain nature of the COVID-19 pandemic and CDC guidance, it is difficult to predict the impact of further disruptions and their magnitude.

The impact of further disruptions may depend on how they coincide with the timing of when we seek to resume sailing.

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• Results of Operations:

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

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

Our suspensions of sailings have materially impacted the results of our operations.

We have incurred and will continue to incur significant costs associated with cancellations as we accommodate passengers with

refunds and future cruise credits;

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

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

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

For the nine months ended September 30, 2020, we incurred impairment charges and credit losses of $1.4 billion related to the impairment of goodwill and trademarks and trade names attributable to our Silversea Cruises reporting unit, and long-lived assets as well as credit losses on mostly receivables related to our sale of property and equipment.

Following the resumption of operations, our Global Brands and our Partner Brands may be subject to the continued impact of the COVID-19 pandemic.

Our Partner Brands, TUI Cruises and Hapag-Lloyd Cruises, resumed limited cruise operations outside of the U.S.

in July 2020 with cruises of short durations, with reduced occupancies and with limited or no ports of call.

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

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As a result, we have taken actions to increase our liquidity through a combination of capital and operating expense reductions and financing activities.

For instance, we borrowed an aggregate principal amount of $2.2 billion on March 23, 2020 and an additional $150 million on May 4, 2020 pursuant to a 364-day senior secured term loan.

On March 27, 2020, we drew down all the remaining capacity of our revolving credit facilities for a total of $3.475 billion outstanding.

On May 19, 2020, we issued $3.32 billion in senior secured notes of which $1.0 billion is due in 2023 and $2.32 billion is due in 2025.

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

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

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

For instance, we borrowed an aggregate principal amount of $2.2 billion in March 2020 and an additional $150 million in May 2020 pursuant to a 364-day senior secured term loan.

In March 2020, we drew down all the remaining capacity of our revolving credit facilities for a total of $3.475 billion outstanding.

In May 2020, we issued $3.32 billion in Senior Secured Notes of which $1.0 billion is due in 2023 and $2.32 billion is due in 2025.

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

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

Also in June and October 2020, we issued $1.15 billion, and $575.0 million, respectively, in convertible notes which are convertible into shares of our common stock, cash, or a combination of common stock and cash, at our election after meeting certain conditions prior to March 15, 2023 and August 15, 2023, respectively.

The convertible notes mature in 2023.

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

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

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

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

In August 2020, we obtained a one-year commitment for a $700 million senior guaranteed 364-day term loan facility which may be increased to $1.0 billion.

In October 2020, we issued approximately 9.6 million of shares of common stock for approximately $575.0 million.

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

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+.

On August 24, 2020, Moody’s also downgraded the Silversea Notes from Baa3 to Ba2 and on August 31, 2020, S&P downgraded Silversea Cruises' Notes from BBB- to BB and as a result, certain covenants of the indenture governing the Silversea Notes have been reinstated.

These downgrades reduce our ability to incur secured indebtedness by reducing the amount of indebtedness that we are permitted to secure, and may negatively impact our access to, and cost of, debt financing.

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

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

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

If we raise additional funds by issuing debt,

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

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

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

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

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

There is no guarantee that financing will be

available in the future or that such financing will be available with similar terms or terms that are commercially acceptable to us.

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

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

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

Impairments and Credit Losses for further information.

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

Impairments and Credit Losses to our consolidated financial statements under Item 1.

Financial Statements for further information.

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

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Factors that will be critical to our success in these markets include our ability to continue to raise awareness of our products and our ability to adapt our offerings to best suit rapidly evolving consumer demands.

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

This risk is further heightened by the COVID-19

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

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

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

Events such as terrorist attacks, war (or war-like conditions), conflicts (domestic or cross-border), civil unrest and other hostilities, including an escalation in the frequency or severity of incidents, and the resulting political instability, travel restrictions and advisories, and concerns over safety and security aspects of traveling or the fear of any of the foregoing have

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

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

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

These events could also result in additional security measures taken by local authorities which may potentially impact access to ports and/or destinations.

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

In addition, the new operating protocols we are developing and any other health protocol we may develop or that may be required by law in the future in response to COVID-19 or other infectious diseases may be costly to implement and less effective than we expected in reducing the risk of infection and spread of such disease on our cruise ships, which will negatively impact our operations and expose us to reputational and legal risks.

Incidents on ships, at port facilities, land destinations and/or affecting the cruise vacation industry in general, and the associated negative media coverage and publicity, could affect our reputation and impact our sales and results of operations.

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Natural disasters (e.g.

earthquakes, volcanos), weather and/or climate events (including hurricanes and typhoons) could impact our source markets and operations resulting in travel restrictions, guest cancellations, an inability to source our crew or our provisions and supplies from certain places.

earthquakes, volcanos, wild fires), weather and/or climate events (including hurricanes and typhoons) could impact our source markets and operations resulting in travel restrictions, guest cancellations, an inability to source our crew or our provisions and supplies from certain places.

We are often forced to alter itineraries and occasionally cancel a cruise or a series of cruises or to redeploy our ships due to these types of events, which could have an adverse effect on our sales, operating costs and profitability in the current and future periods.

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As such, any disruptions effecting the newbuild or fleet modernization supply chain will adversely impact our business as there are limited substitutes.

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

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

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

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

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

As of December 31, 2019, a total of 67 new ships with approximately 159,000 berths were on order for delivery

through 2024 in the cruise industry, including 16 ships currently scheduled to be delivered to us.

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

Additionally, due to our

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

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

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

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In certain destinations, countermeasures to limit the volume of tourists are being contemplated and/or put into effect, including proposed limits on cruise ships and cruise passengers.

Potential restrictions in ports and destinations such as Venice and Barcelona could limit the itinerary and destination options we can offer our passengers going forward.

Potential restrictions in ports and destinations such as Venice, Barcelona or Key West, could limit the itinerary and destination options we can offer our passengers going forward.

Some environmental groups have also generated negative publicity about the environmental impact of the cruise vacation industry and are advocating for more stringent regulation of ship emissions at berth and at sea.

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

Any circumstance or event which leads to a decrease in consumer cruise spending, such as worsening global economic conditions or significant incidents impacting the cruise industry, including the COVID-19 pandemic, negatively affects our operating cash flows and currently, we have no cash flows from operations.

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

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

circumstance or event which leads to a decrease in consumer cruise spending, such as worsening global economic conditions or significant incidents impacting the cruise industry, including the COVID-19 pandemic, negatively affects our operating cash flows and currently, we have no cash flows from operations.

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

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

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

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

As of September 30, 2020, we had total debt of $18.9 billion.

Our substantial debt could have important negative consequences for us.

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

limit or restrict our ability to obtain and maintain performance bonds to cover our financial responsibility requirements in various jurisdictions for non-performance of guest travel, casualty and personal injury;

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

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Refer to Note 7.

Debt for further discussion on our covenants and existing waivers.

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

downgrade occurs.

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

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

consolidated financial statements under Item 1.

Financial Statements for further discussion on our covenants and existing waivers.

On August 24, 2020, Moody’s downgraded the Silversea Notes from Baa3 to Ba2 and on August 31, 2020, S&P downgraded Silversea Cruises' Notes from BBB- to BB and as a result, certain covenants of the indenture governing the Silversea Notes have been reinstated, the application of which had been previously suspended unless and until any such downgrade occurred.

The reinstated covenants include, among other things, limitations on the ability of Silversea Cruises and its restricted subsidiaries to incur indebtedness, enter into transactions with affiliates (including Royal Caribbean and its subsidiaries that are not restricted subsidiaries of Silversea Cruises) and pay dividends and make other distributions from Silversea Cruises to Royal Caribbean, each of which may limit our ability to obtain funding and may decrease our operational and financial flexibility, including the ability to make upstream payments from Silversea Cruises and to provide funding support to Silversea Cruises.

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

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

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

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

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

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

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

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

Prior to March 15, 2023, the convertible notes will be convertible at the option of holders during certain periods only upon satisfaction of certain conditions.

On or after March 15, 2023, the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding their maturity date.

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

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

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

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

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

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

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

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

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

Payment of dividends would

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

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

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

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

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

In addition, with the exception of limited sailings outside of the U.S.

starting in July 2020, TUI Cruises and Hapag-Lloyd Cruises have, for the most part, suspended sailings and their operations, results of operations and liquidity have been and will continue to be adversely materially impacted.

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

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

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

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

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

In order to achieve cost and operational efficiencies, we outsource to third-party vendors certain services that are integral to the operations of our global businesses, such as our onboard concessionaires, certain of our call center operations and operation of a large part of our information technology systems, which are also affected by the COVID-19 pandemic.

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

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

responding to all cyber security attacks.

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

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We seek to maintain appropriate insurance coverage at commercially reasonable rates.

We normally insure based on the cost of an asset rather than replacement value and we also elect to self-insure, co-insure, or use deductibles in certain circumstances for certain risks such as loss of use of a ship or a cyber security breach.

The limits of insurance coverage we purchase are based on the availability of the coverage, evaluation of our risk profile and cost of coverage.

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We are also subject to additional premium calls based on investment and underwriting shortfalls experienced by our own individual insurers.

Certain liabilities, costs, and expenses associated with the COVID-19 pandemic are insured by our participation in these P&I clubs.

Certain liabilities, costs, and expenses associated with COVID-19 cases identified on or traced to our vessels are eligible for insurance coverage under our participation in these P&I clubs.

We cannot be certain that insurance and reinsurance coverage will be available to us and at commercially reasonable rates in the future or at all or, if available, that it will be sufficient to cover potential claims.

Additionally, if we or other insureds sustain significant losses, the result may be higher insurance premiums, cancellation of coverage, or the inability to obtain coverage.

The COVID-19 pandemic, for example, depending on its on-going scope, and duration and the associated insurance claims volumes driven by the pandemic, may potentially impact the insurance markets we rely on for coverage and could adversely impact both the coverage options available to us in the future as well as the premium costs we are required to pay for those coverages.

Such events could adversely affect our financial condition or results of operations.

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and various state and foreign government or regulatory agencies have enacted or may enact environmental regulations or policies, such as requiring the use of low sulfur fuels (e.g.

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

IMO 2020), that could increase our direct cost to

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

While we have taken and expect to continue to take a number of actions to mitigate the potential impact of certain of these regulations, there can be no assurances that these efforts will be successful over the long term.

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

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

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

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

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

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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 1A. Risk Factors