What changed in this filing

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Item 9A. Controls and Procedures

2021-02-26 compared with 2020-02-25 · 1098 added, 534 removed, 1476 unchanged (53% of the section changed)

15 unchanged sentences

Other Information

Table of C ontents

Items 10, 11, 12, 13 and 14.

20 unchanged sentences

None of the websites referenced in this Annual Report on Form 10-K or the information contained therein is incorporated herein by reference.

Table of C ontents

Exhibits and Financial Statement Schedules

26 unchanged sentences

4.10 Description of the Company's Securities*

4.11 Indenture, dated May 19, 2020, among the Company, the guarantors named therein, and The Bank of New York Mellon Trust Company, N.A., as trustee, principal paying agent , transfer agent, registrar and security agent.

8-K 4.1 5/19/2020

4.12 Indenture, dated June 9, 2020, among the Company, RCI Holdings LLC, a limited liability company formed and existing under the laws of Liberia and a direct wholly-owned subsidiary of the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, principal paying agent, transfer agent, registrar and security agent.

8-K 4.1 6/9/2020

4.13 Indenture, dated June 9, 2020, among the Company, and The Bank of New York Mellon Trust Company, N.A., as trustee, paying agent, registrar, custodian and conversion agent.

8-K 4.2 6/9/2020

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

4.14 Indenture, dated October 16, 2020, between the Company and The Bank of New York Mellon Trust Company, N.A., as trustee, paying agent, registrar, custodian and conversion agent.

8-K 4.1 10/16/2020

10.1 Amended and Restated Registration Rights Agreement dated as of July 30, 1997, by and among the Company, A.

4 unchanged sentences

8-K 10.1 12/7/2017

Table of C ontents

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.3 Amendment to the Credit Agreement, dated as of April 5, 2019, among Royal Caribbean Cruises Ltd., the various financial institutions as are or shall become parties thereto and The Bank of Nova Scotia, as administrative agent for the lender parties

31 unchanged sentences

10-K 10.10 12/31/2015

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.13 Amendment and Restatement Agreement, dated as of August 15, 2019, in respect of a Facility Agreement dated, as of July 9, 2013, by and between the Company, the Lenders from time to time party thereto, Société Générale, as Facility Agent and Mandated Lead Arranger, BNP Paribas, as Documentation Bank and Mandated Lead Arranger, and HSBC France, as Mandated Lead Arranger

6 unchanged sentences

8-K 10.1 11/19/2015

Table of C ontents

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.16 Amendment No.

27 unchanged sentences

8-K 10.1 7/28/2017

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.25 Novation Agreement, dated as of July 24, 2017, between Hoediscus Finance Ltd., Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions as lender parties thereto

2 unchanged sentences

8-K 10.3 7/28/2017

Table of C ontents

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.27 Novation Agreement, dated as of December 13, 2019, between Palmeraie Finance Limited, Royal Caribbean Cruises Ltd., Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch HSBC France, Banco Santander S.A., Banco Bilbao Vizcaya Argentaria S.A., Paris Branch, BNP Paribas SA, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch, Société Générale, Unicredit Bank AG and the banks and financial institutions as lender parties thereto

15 unchanged sentences

10.32 Icon 3 Hull No.

1402 Credit Agreement, dated as of December 18, 2019, between Royal Caribbean Cruises Ltd., as the Borrower, KfW IPEX-Bank GmbH, as Facility Agent CIRR Agent, Documentation Agent, Hermes Agent, Initial Manadated Lead Arranger and Sole Bookrunner, and the Lenders and Residual Risk Guarantors from time to time party thereto

1402 Credit Agreement, dated as of December 18, 2019, between Royal Caribbean Cruises Ltd., as the Borrower, KfW IPEX-Bank GmbH, as Facility Agent CIRR Agent, Documentation Agent, Hermes Agent, Initial Man dated Lead Arranger and Sole Bookrunner, and the Lenders and Residual Risk Guarantors from time to time party thereto

8-K 10.1 12/20/2019

10 unchanged sentences

8-K 10.1 6/18/2018

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.36 Term Loan Agreement, dated as of March 23, 2020, among Royal Caribbean Cruises Ltd., the various financial institutions as are or shall be party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent for the lender parties and as collateral agent for the secured parties

8-K 10.1 3/23/2020

10.37 Sixth Amendment to a Credit Agreement, dated as of June 8, 2011 (as amended and restated from time to time) “Anthem of the Seas” – ex Hull No.

S-698, dated April 8, 2020, between Royal Caribbean Cruises Ltd., the lenders party thereto, KfW IPEX-Bank GmbH, as Hermes agent, facility agent, initial mandated lead arrangers and the mandated lead arrangers

8-K 10.1 4/10/2020

10.38 Third Amendment Agreement to a Credit Agreement, dated as of 13 November 2015 (as amended and restated from time to time) “Spectrum of the Seas” – ex Hull No.

S-700, dated April 8, 2020, between Royal Caribbean Cruises Ltd., the lenders party thereto, KfW IPEX-Bank GmbH, as Hermes agent, facility agent, initial mandated lead arrangers and the mandated lead arrangers

8-K 10.2 4/10/2020

10.39 Sixth Amendment Agreement to a Credit Agreement, dated as of June 8, 2011 (as amended from time to time) “Quantum of the Seas”—ex Hull No.

S-697, dated April 21, 2020 between Royal Caribbean Cruises Ltd., the lenders party thereto, KfW IPEX-Bank GmbH, as Hermes agent, facility agent, initial mandated lead arrangers and the mandated lead arrangers

8-K 10.1 4/24/2020

10.40 Second Supplemental Agreement to a Credit Agreement in respect of the financing of acquisition of m.v.

Celebrity Edge (ex hull no.

J34), dated as of April 28, 2020, between Royal Caribbean Cruises Ltd., Citibank N.A., London Branch as global coordinator, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch as ECA agent, Citibank Europe PLC, UK branch as facility agent, the mandated lead arrangers and the other lenders party thereto

8-K 10.1 5/4/2020

10.41 Second Supplemental Agreement to a Credit Agreement in respect of the financing of acquisition of m.v.

Celebrity Apex (ex hull no.

K34), dated as of April 29, 2020, between Royal Caribbean Cruises Ltd., Citibank N.A., London Bank, as global coordinator, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch as ECA agent, Citibank Europe PLC, UK Branch as facility agent, the mandated lead arrangers and the other lenders party thereto

8-K 10.2 5/4/2020

10.42 Fourth Supplemental Agreement to a Credit Agreement in respect of the financing of acquisition of m.v.

Symphony of the Seas (ex hull no.

B34), dated as of April 29, 2020, between Royal Caribbean Cruises Ltd., Citibank N.A., London Branch as ECA agent, Citibank Europe PLC, UK Branch as facility agent, the mandated lead arrangers and the other lenders party thereto

8-K 10.3 5/4/2020

10.43 Amendment to the Amended and Restated Credit Agreement, dated as of May 7, 2020, among Royal Caribbean Cruises Ltd., the various financial institutions party thereto and Nordea Bank ABP, New York Branch as administrative agent

8-K 10.1 5/11/2020

10.44 Amendment to the Amended and Restated Credit Agreement, dated as of May 7, 2020, among Royal Caribbean Cruises Ltd., the various financial institutions party thereto and The Bank of Nova Scotia as administrative agent

8-K 10.2 5/11/2020

10.45 Amendment to the Term Loan Agreement, dated as of May 7, 2020, among Royal Caribbean Cruises Ltd., the various financial institutions party thereto and Bank of America, N.A.

as administrative agent

8-K 10.3 5/11/2020

10.46 Third Amendment Agreement to a Credit Agreement dated as of 27 November 2013 (as amended and restated from time to time) “Ovation of the Seas” – ex hull no S-699, dated May 6, 2020, between Royal Caribbean Cruises Ltd., the lenders party thereto, KfW IPEX-Bank GmbH, as Hermes agent, facility agent, initial mandated lead arrangers and the mandated lead arrangers

8-K 10.4 5/11/2020

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.47 Fourth Amendment and Restatement Agreement, relating to a credit agreement in respect of the financing of the acquisition of m.v.

Harmony of the Seas (ex hull no.

A34), dated May 6, 2020, between Royal Caribbean Cruises Ltd., Société Générale as facility agent, BNP Baribas, HSBC France and Société Générale as Mandated Lead Arrangers and the banks and financial institutions listed therein as lenders

8-K 10.5 5/11/2020

10.48 First Supplemental Agreement relating to Hull No.

L34 at Chantiers de l’Atlantique (previously known as STX France S.A.), dated as of March 12, 2020, by and among Houatorris Finance Limited, Chantiers de L’Atlantique, the Company, Citibank Europe PLC, UK Branch as facility agent, Citicorp Trustee Company Limited as security trustee, Citibank N.A., London branch, HSBC France, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch and the banks and financial institutions party thereto

10-Q 10.4 5/21/2020

10.49 First Supplemental Agreement relating to Hull No.

M34 at Chantiers de l’Atlantique (previously known as STX France S.A.), dated as of March 12, 2020, by and among Hoediscus Finance Limited, Chantiers de L’Atlantique as seller, the Company as buyer, Citibank Europe PLC, UK Branch as facility agent, Citicorp Trustee Company Limited as security trustee, Citibank N.A., London branch as global coordinator, HSBC France as French coordinating bank, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch as ECA agent and the banks and financial institutions listed thereto

10-Q 10.5 5/21/2020

10.50 First Supplemental Agreement relating to Hull No.

C34 at Chantiers de l’Atlantique (previously known as STX France S.A.), dated as of March 12, 2020, by and among Hibisyeu Finance Limited as borrower, Chantiers de L’Atlantique as seller, the Company as buyer, Citibank Europe PLC, UK Branch as facility agent, Citicorp Trustee Company Limited as security trustee, Citibank N.A., London branch as global coordinator, HSBC France as French coordinating bank, Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch as ECA agent and the banks and financial institutions listed thereto

10-Q 10.6 5/21/2020

10.51 Amendment to the Amended and Restated Credit Agreement, dated as of July 28, 2020, among Royal Caribbean Cruises Ltd., the various financial institutions party thereto and Nordea Bank ABP, New York Branch as administrative agent

8-K 10.1 8/3/2020

10.52 Amendment to the Amended and Restated Credit Agreement, dated as of July 28, 2020, among Royal Caribbean Cruises Ltd., the various financial institutions party thereto and The Bank of Nova Scotia as administrative agent

8-K 10.2 8/3/2020

10.53 Amendment to Term Loan Agreement, dated as of July 28, 2020, among Royal Caribbean Cruises Ltd., the various financial institutions party thereto and Bank of America, N.A.

as administrative agent

8-K 10.3 8/3/2020

10.54 Financial Covenant Waiver Extension Consent Letter relating to the Cruise Debt Holiday Principles, dated July 28, 2020, among Royal Caribbean Cruises Ltd., Silversea Cruise Holdings Ltd.

and KfW IPEX-Bank GmbH

8-K 10.4 8/3/2020

10.55 Supplemental Agreement in relation to the extension of the waiver period for financial covenants in respect of the financing of the acquisition of Celebrity Edge (ex hull no.

J34), dated July 28, 2020, among Royal Caribbean Cruises Ltd.

and Citibank Europe plc, UK Branch

8-K 10.5 8/3/2020

10.56 Supplemental Agreement in relation to the extension of the waiver period for financial covenants in respect of the financing of the acquisition of Celebrity Apex (ex hull no.

K34), dated July 28, 2020, among Royal Caribbean Cruises Ltd.

and Citibank Europe plc, UK Branch

8-K 10.6 8/3/2020

10.57 Supplemental Agreement in relation to the extension of the waiver period for financial covenants in respect of the financing of the acquisition of Symphony of the Seas (ex hull no.

B34), dated July 28, 2020, among Royal Caribbean Cruises Ltd.

and Citibank Europe plc, UK Branch

8-K 10.7 8/3/2020

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.58 Financial Covenant Waiver Extension Consent Letter relating to the Cruise Debt Holiday Principles, dated July 31, 2020, between Royal Caribbean Cruises Ltd.

and KfW IPEX-Bank GmbH

8-K 10.8 8/3/2020

10.59 Third Amendment Agreement to a Credit Agreement dated as of 13 November 2015 (as amended and restated from time to time) in respect of “Odyssey of the Seas” – Hull S-713, dated 30 April 2020, between the Company, the lenders party thereto, KfW IPEX-Bank GmbH, as Hermes agent, facility agent, initial mandated lead arrangers and the mandated lead arrangers.

10.Q 10.15 8/10/2020

10.60 Amendment Letter, dated May 11, 2020 in respect of the Icon 3 Hull No.

1402 credit agreement, dated 18 December 2019 between the Company, the lenders and residual risk guarantors party thereto, and KfW IPEX-Bank GmbH as facility agent, CIRR agent, documentation agent, Hermes agent, initial mandated lead arranger and sole bookrunner.

10.Q 10.16 8/10/2020

10.61 Supplemental Agreement in relation to the extension of the waiver period for financial covenants in the EUR Facility Agreement in respect of m.v Harmony of the Seas, dated August 4, 2020, among the Company and Société Generale.

10.Q 10.17 8/10/2020

10.62 Supplemental Agreement in relation to the extension of the waiver period for financial covenants in the EUR Facility Agreement in respect of m.v Harmony of the Seas, dated August 4, 2020, among the Company and Societe Generale.

10.Q 10.9 11/4/2020

10.63 Supplemental Agreement in relation to certain amendments in connection with the Silversea negative covenants and the exercise of the Buyer's Stretch Option in respect of Edge 3 (ex.

L34), dated August 29, 2020, among the Company, Hoediscus Finance Limited, Citibank Europe Plc, UK Branch, Citibank N.A., London Branch, Citicorp Trustee Company Limited, HSBC France and Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch

10.Q 10.10 11/4/2020

10.64 Supplemental Agreement in relation to certain amendments in connection with the Silversea negative covenants and the exercise of the Buyer's Stretch Option in respect of Edge 4 (ex.

M34), dated August 29, 2020, by and among the Company, Hoediscus Finance Limited, Citibank Europe Plc, UK Branch, Citibank N.A., London Branch, Citicorp Trustee Company Limited, HSBC France and Sumitomo Mitsui Banking Corporation Europe Limited, Paris Branch

10.Q 10.11 11/4/2020

10.65 Supplemental Agreement in relation to certain amendments in connection with Silversea Cruise Holding Ltd.

in respect of Oasis 5 (ex.

C34), dated August 29, 2020, among the Company, Hibisyeu Finance Limited, Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch and HSBC France

10.Q 10.12 11/4/2020

10.66 Supplemental Agreement in relation to certain amendments in connection with Silversea Cruise Holding Ltd.

in respect of Oasis 6 (ex.

A35), dated August 29, 2020, among the Company, Palmeraie Finance Limited, Citibank Europe Plc, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch and HSBC France

10.Q 10.13 11/4/2020

10.67 Equity Distribution Agreement, dated as of December 3, 2020, among the Company and the financial institutions named therein.

8-K 1.1 12/4/2020

10.68 Fourth Supplemental Agreement relating to a credit agreement in respect of the financing of the acquisition of mv.

Celebrity Edge (ex hull no.

J34), dated as of October 30, 2020, between Royal Caribbean Cruises Limited, Citibank N.A., London Branch, SMBC Bank International PLC, Citibank Europe PLC, UK Branch, the mandated lead arrangers and the banks and financial institutions party thereto as lenders*

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.69 Fourth Supplemental Agreement relating to a credit agreement in respect of the financing of the acquisition of mv.

Celebrity Apex (ex hull no.

K34), dated as of October 30, 2020, between Royal Caribbean Cruises Limited, Citibank N.A., London Branch, SMBC Bank International PLC, Citibank Europe PLC, UK Branch, the mandated lead arrangers and the banks and financial institutions party thereto as lenders*

10.70 Fifth Amendment and Restatement Agreement relating to a credit agreement in respect of the financing of the acquisition of m.v.

Harmony of the Seas (ex hull no.

A34)(EUR Facility), dated October 30, 2020, between Royal Caribbean Cruises Ltd., Société Générale, the mandated lead arrangers and the banks and financial institutions party thereto*

10.71 Fourth Amendment and Restatement Agreement relating to a credit agreement in respect of the financing of m.v.

Harmony of the Seas (ex hull no.

A34)(USD Facility), dated October 30, 2020, between Royal Caribbean Cruises Ltd., Société General, the mandated lead arrangers and the banks and financial institutions party thereto*

10.72 Sixth Supplemental Agreement relating to a credit agreement in respect of the financing of the acquisition of m.v.

Symphony of the Seas (ex hull no.

B34), dated as of October 30, 2020, between Royal Caribbean Cruises Ltd., Citibank N.A., London Branch, Citibank Europe PLC, UK Branch, the mandated lead arrangers listed therein and the banks and financial institutions party thereto as lenders.*

10.73 Supplemental Agreement relating to a secured credit facility agreement for Hull No.

L34 at Chantiers l’Atlantique S.A., dated November 13, 2020, between Hoediscus Finance Limited, Royal Caribbean Cruises Ltd., Citibank Europe PLC, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, SMBC Bank International PLC, the mandated lead arrangers and the banks and financial institutions party thereto*

10.74 Supplemental Agreement relating to a secured credit facility for hull no.

M34, dated November 13, 2020, between Houatorris Finance Limited, Royal Caribbean Cruises Ltd., Citibank Europe PLC, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, SMBC Bank International PLC, the mandated lead arrangers and the banks and financial institutions party thereto*

10.75 Supplemental Agreement relating to Hull No.

C34 at Chantiers de l’Atlantique, dated November 13, 2020, between Hibisyeu Finance Limited, Royal Caribbean Cruises Ltd., Citibank Europe PLC, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, SMBC Bank International PLC, the banks and financial institutions party thereto and the mandated lead arrangers*

10.76 Supplemental Agreement relating to Hull No.

A35 at Chantiers de l’Atlantique, dated November 13, 2020, between Palmeraie Finance Limited, Royal Caribbean Cruises Ltd., Citibank Europe PLC, UK Branch, Citicorp Trustee Company Limited, Citibank N.A., London Branch, HSBC France, the mandated lead arrangers and the banks and financial institutions party thereo*

10.77 Amendment No.

4 in connection with the Credit Agreement in respect of “Celebrity Reflection” – Hull S-691, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH and the banks and financial institutions party thereto*

10.78 Amendment No.

4 in connection with the Credit Agreement in respect of “Celebrity Silhouette” – Hull S-679, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH and the banks and financial institutions party thereto*

10.79 Amendment No.

4 in connection with the Credit Agreement in respect of “Celebrity Solstice” – Hull S-675, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH, the mandated co-lead arrangers and the banks and financial institutions party thereto*

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.80 Amendment No.

4 in connection with the Credit Agreement in respect of “Odyssey of the Seas” – Hull S-713, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH, the mandated lead arrangers and the banks and financial institutions party thereto*

10.81 Amendment No.

4 in connection with the Credit Agreement in respect of “Ovation of the Seas” – Hull S-699, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH, the mandated lead arrangers and the banks and financial institutions party thereto*

10.82 Amendment No.

7 in connection with the Credit Agreement in respect of “Quantum of the Seas” – Hull S-697, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH, the mandated lead arrangers and the banks and financial institutions party thereto*

10.83 Amendment No.

4 in connection with the Credit Agreement in respect of “Spectrum of the Seas” – Hull S-700, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH, the mandated lead arrangers and the banks and financial institutions party thereto*

10.84 Amendment No.

7 in connection with the Credit Agreement in respect of “Anthem of the Seas” – Hull S-698, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH, the mandated lead arrangers and the banks and financial institutions party thereto*

10.85 Amendment No.

4 in connection with the Credit Agreement in respect of “Celebrity Eclipse” – Hull S-677, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH and the banks and financial institutions party thereto*

10.86 Amendment No.

4 in connection with the Credit Agreement in respect of “Celebrity Equinox” – Hull S-676, dated December 21, 2020, between Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH and the banks and financial institutions party thereto*

10.87 Amendment No.

1 in connection with the Credit Agreement in respect of Hull S-719, dated as of December 21, 2020, between Silversea Cruise Holding Ltd., Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH and the banks and financial institutions party thereto*

10.88 Amendment No.

1 in connection with the Credit Agreement in respect of Hull S-720, dated as of December 21, 2020, between Silversea Cruise Holding Ltd., Royal Caribbean Cruises Ltd., KfW IPEX-Bank GmbH and the banks and financial institutions party thereto*

10.89 Underwriting Agreement, dated October 13, 2020, among the Company and Morgan Stanley & Co.

LLC and BofA Securities, Inc., as representatives of the several underwriters listed in Schedule 1 thereto.

8-K 1.1 10/15/2020

10.90 Royal Caribbean Cruises Ltd.

13 unchanged sentences

10-K 10.27 12/31/2014

Table of C ontents

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.97 Form of 2008 Equity Incentive Plan Performance-Based Restricted Shares Agreement

2 unchanged sentences

10-K 10.22 12/31/2012

Incorporated By Reference

Exhibit Number Exhibit Description Form Exhibit Filing Date/ Period End Date

10.99 Employment Agreement, dated as of May 20, 2013, by and between the Company and Jason T.

47 unchanged sentences

Interactive Data File

Table of C ontents

101 The following financial statements from Royal Caribbean Cruises Ltd.'s Annual Report on Form 10-K for the year ended December 31, 2020 formatted in iXBRL (Inline eXtensible Business Reporting Language) are as follows:

21 unchanged sentences

Liberty, as Attorney-in-Fact

Table of C ontents

ROYAL CARIBBEAN CRUISES LTD.

1 unchanged sentence

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive (Loss) Income

Consolidated Balance Sheets

2 unchanged sentences

Notes to the Consolidated Financial Statements

Table of C ontents

Report of Independent Registered Public Accounting Firm

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of Royal Caribbean Cruises Ltd.

and its subsidiaries (the “Company”) as of December 31, 2019 and 2018, and the related consolidated statements of comprehensive income (loss), of shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2019, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive (loss) income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

2 unchanged sentences

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standard Codification (“ASC”) 842, Leases (“ASC 842”), which was adopted using the modified retrospective approach.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions

11 unchanged sentences

We believe that our audits provide a reasonable basis for our opinions.

Emphasis of Matter

As discussed in Note 1 to the consolidated financial statements, the impact to the Company’s global bookings resulting from the COVID-19 pandemic will continue to have a material negative impact on the Company’s results of operations and liquidity.

Further, in April 2022, approximately $1.0 billion of long- term debt will need to be refinanced or extended should the commencement of operations be delayed beyond management’s current estimate.

Management’s evaluation of the events and conditions and management’s plans to mitigate these matters are also described in Note 1.

Definition and Limitations of Internal Control over Financial Reporting

3 unchanged sentences

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Table of C ontents

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

1 unchanged sentence

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Ship Accounting

As described in Notes 2 and 7 to the consolidated financial statements, the Company had vessels with a net book value of approximately $22.7 billion recorded in its financial statements as of December 31, 2019, with capitalized ship improvement costs of approximately $538 million for the year then ended.

Ship improvement costs that add value are capitalized, the useful life of the improvement is estimated, and the replaced asset is disposed of on a net cost basis.

Any such improvements are depreciated over the shorter of the improvement’s estimated useful lives or that of the associated ship.

Accounting estimates related to ship accounting and determinations of ship improvements costs to be capitalized require considerable judgment and are inherently uncertain.

Vessels are stated at cost less accumulated depreciation and amortization and depreciation is calculated using the straight-line method over the estimated useful life of the vessels.

Management considers the costs and estimates of the useful lives of the ships’ component assets, which are categorized into major component systems, such as the hull, superstructure, main electric, engines and cabins, to determine the estimated weighted-average useful life of a vessel.

An assessment of cost allocation methodology is performed at the component level, in order to support the estimated weighted-average useful life and residual values, as well as determine the net cost basis of assets being replaced.

Management reviews estimated useful lives and residual values periodically for ongoing reasonableness, and where a trigger for change is identified, a review of the estimate is completed.

In the fourth quarter of 2019, the Company invested approximately $170 million of upgrades to its Oasis of the Seas ship under their ship upgrade program.

Based on the expected impact of these enhancements, as well as planned future investments and upgrades in the balance of the Oasis class of ships, management now estimates that certain ship components and the overall life of the Oasis class of ships will be extended longer than those previously estimated.

In determining the change in estimated useful life and residual value, management utilized quantitative and qualitative analysis, including historical and projected usage patterns, industry benchmarks, planned maintenance programs and projected operational and financial performance of the class.

The principal considerations for our determination that performing procedures relating to ship accounting is a critical audit matter are the significant judgments by management when determining (i) whether ship improvement costs add value to the Company’s ships and are capitalizable;

(ii) the related useful life assigned to these ship improvement costs;

(iii) the estimated net cost basis of the associated assets being replaced;

and (iv) whether changes to estimated weighted-average useful lives and residual values are necessary.

This in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence relating to capitalized ship improvement costs;

the estimated useful lives of ship improvement costs;

the estimated net cost basis of assets replaced;

and management's assessment of the weight-average useful lives and residual values for the Oasis-class ships .

In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment Assessments – Royal Caribbean International & Silversea Cruises Reporting Units Goodwill and Silversea Cruises Indefinite-lived Intangible Asset Trade Name

As described in Notes 2, 5 and 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $809.5 million and the indefinite-lived intangible assets balance was $321.5 million as of December 31, 2020.

The Royal Caribbean International reporting unit goodwill was $296.6 million, the Silversea Cruises reporting unit goodwill was $508.6 million and the Silversea Cruises’ indefinite-lived intangible asset trade name was $318.7 million, respectively, as of December 31, 2020.

Management reviews goodwill and indefinite-lived intangible assets for impairment at the reporting unit level and asset level, respectively, annually or, when events or circumstances dictate, more frequently.

The impairment analysis consists of a comparison of the fair value of the reporting unit or asset with its carrying value.

The impact of COVID-19 on management’s operating plans and projected cash flows resulted in the completion of (i) an interim impairment assessment for the Royal Caribbean International reporting unit as of March 31, 2020 and June 30, 2020, and the Silversea Cruises reporting unit as of March 31, 2020;

and (ii) an interim impairment assessment in respect to the Silversea Cruises trade name as of March 31, 2020.

As a result of management’s interim impairment assessments, management recognized a goodwill impairment charge associated with the Silversea Cruises reporting unit of $576.2 million and an impairment charge of $30.8 million charge for the Silversea Cruises trade name for the quarter ended March 31, 2020.

As of November 30, 2020, management performed the annual goodwill impairment reviews and determined no incremental impairment losses existed at the date of this annual assessment for the Royal Caribbean International reporting unit or the Silversea Cruises reporting unit and trade name.

The fair value of the Silversea Cruises reporting unit was determined by management using a probability-weighted discounted cash flow model in combination with a market based valuation approach for all periods assessed.

The fair value of the Royal Caribbean International reporting unit as of March 31, 2020 was determined using a discounted cash flow model and a probability-weighted discounted cash flow model in combination with a market based valuation approach for the June 30, 2020 and November 30, 2020 assessments.

The principal assumptions used in the discounted cash flow analyses that support the Silversea Cruises and Royal Caribbean International reporting units’ impairment assessments consisted of the timing of management’s return to service;

changes in market conditions;

and port or other restrictions;

forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

and the weighted average cost of capital (i.e., discount rate).

Management estimates the fair value of the intangible assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method for trade names.

The principal assumptions used in the discounted cash flow analyses that support the Silversea Cruises trade name impairment

assessments consisted of forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

the royalty rate;

and the weighted average cost of capital (i.e., discount rate).

The principal considerations for our determination that performing procedures relating to the goodwill impairment assessments of the Royal Caribbean International and Silversea Cruises reporting units and the indefinite-lived intangible asset impairment assessments of the Silversea Cruises trade name is a critical audit matter are (i) the significant judgment by management when determining the fair value estimates;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate, and the discount rate for the goodwill and trade name impairment assessments;

and the royalty rate assumption for the trade name impairment assessments;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of management’s controls relating to ship improvement costs, including the assessment of the capitalization of ship improvement costs, the estimated useful lives and net cost basis of the assets being replaced and management’s reassessment of the estimated useful lives and residual values for the Oasis class ships during 2019.

These procedures also included, among others, for a sample of ship improvement costs, (i) evaluating whether the costs capitalized add value to a ship;

(ii) evaluating the reasonableness of the assigned estimated useful lives;

and (iii) evaluating the reasonableness of the estimated net cost basis of the assets being replaced.

Further, for management’s reassessment of estimated useful life and residual value of the Oasis class of ships, our procedures included (i) evaluating the reasonableness of the 35 year useful life and 10% residual value assigned to the Oasis class ships, considering management’s historical experience with similarly built ships, as well as consideration of anticipated technology and market changes (ii) evaluating the reasonableness of the changes in the estimated useful lives and residual values at the component asset level, (iii) evaluating the feasibility of management’s intended use of the Oasis class of ships, considering 1) historical and projected use patterns 2) consistency of planned refurbishments and maintenance with current program 3) consistency of projected forecasts with past performance and 4) consistency with industry external data.

Professionals with specialized skill and knowledge were used to assist in evaluating the appropriateness of the estimated useful lives of the assets being replaced and the estimated useful life and residual value of the Oasis class of ships.

Table of C ontents

These procedures included testing the effectiveness of controls relating to management’s goodwill and indefinite-lived intangible asset impairment assessments, including controls over the valuation of the Royal Caribbean International & Silversea Cruises reporting units and Silversea Cruises trade name.

These procedures also included, among others, (i) testing management’s process for developing the fair value estimates;

(ii) evaluating the appropriateness of the discounted future cash flow model, market based valuation approach and the relief-from-royalty model;

(iii) testing the completeness and accuracy of underlying data used in the fair value estimates;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

and the discount rate for the goodwill and the trade name impairment assessments and the royalty rate assumption for the Silversea Cruises trade name impairment assessments.

Evaluating management’s assumptions related to forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and the terminal growth rate involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit and trade name;

(ii) the consistency with external market and industry data;

and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of discounted cash flow model, relief-from-royalty and market based valuation approach and the discount rates and royalty rate assumptions.

Certain Ship Impairment Assessments

As described in Notes 2 and 7 to the consolidated financial statements, the Company’s consolidated ships and ship improvements balance was $32.0 billion as of December 31, 2020.

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated undiscounted future cash flows, that the carrying value of these assets may not be fully recoverable.

The impact of COVID-19 on the Company’s expected future operating cash flows and management’s decision to dispose of certain vessels, resulted in management identifying impairment triggers for certain vessels.

Management estimated the recoverability of certain vessels using undiscounted cash flow analyses at interim dates throughout 2020 and again at December 31, 2020.

A number of vessels were found to have net carrying values in excess of their estimated undiscounted future cash flows, and as such, were subject to fair value assessments.

Management determined fair value of the vessels based on intended use of the identified vessels, and as such, management used a combination of discounted cash flows, replacement cost, scrap and residual value techniques to estimate fair value.

Consequently, management recognized $635.5 million of impairment losses during the year ended 2020.

The suspension of operations and the possibility of further suspensions create uncertainty in forecasting undiscounted cash flows, which are used by management to determine if a vessel is at risk of impairment.

Management’s principal assumptions used in the undiscounted cash flows consisted of the timing of management’s return to service;

changes in market conditions;

and port or other restrictions;

forecasted net revenues, primarily the timing of returning to normalized operations, and occupancy rates;

and management’s intended use of the vessel for its remaining useful life.

The principal considerations for our determination that performing procedures relating to certain ship impairment assessments is a critical audit matter are (i) the significant judgment by management in developing the undiscounted cash flow analyses for the ships with triggering events;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions related to forecasted net revenues, primarily the timing of returning to normalized operations, and occupancy rates and management’s intended use of the vessel for its remaining useful life.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s ship impairment assessments, including controls over the analysis of the Company’s ships that were subject to undiscounted cash flow impairment analyses.

These procedures also included, among others, (i) testing management’s process for developing the undiscounted cash flow estimates for certain ships with triggering events;

(ii) evaluating the appropriateness of the undiscounted cash flow methods;

(iii) testing the completeness and accuracy of underlying data used in the analyses;

and (iv) evaluating the significant assumptions used by management related to forecasted net revenues, primarily the timing of returning to normalized operations, and occupancy rates, and management’s intended use of the vessel for its remaining useful life.

Evaluating management’s assumptions involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Company, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit.

Liquidity - Impact of COVID-19

As described in Note 1 to the consolidated financial statements, the Company voluntarily suspended its global cruise operations effective March 13, 2020, and this suspension remains in effect through at least April 30, 2021 for most of its cruise operations.

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

Management has and will continue undertaking several proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses (reduction and furloughing of workforce and laying up of vessels), issuing of debt and shares of our common stock, amending of credit agreements to defer payments and covenant requirements and suspending of dividend payments.

As of December 31, 2020, the Company had liquidity of $4.4 billion, consisting of cash and cash equivalents of $3.7 billion and a $0.7 billion one-year commitment for a 364-day term loan facility .

Based on management’s actions described above, and management’s assumptions regarding the impact of COVID-19 and the suspension of operations, as well as the Company’s present financial condition, management believes the available liquidity will be sufficient to fund the Company’s obligations for at least the next twelve months from the issuance of the consolidated financial statements.

The principal assumptions used by management’s to estimate future liquidity requirements consist of (i) the expected date of return to operations;

(ii) the expected resumption of operations;

(iii) the expected occupancy levels;

and (iv) the expected incremental expenses for the resumption of guest cruise operations for the maintenance of additional public health protocols and complying with additional regulations.

The principal considerations for our determination that performing procedures relating to the impact of COVID-19 on the Company’s liquidity is a critical audit matter are (i) the significant judgment by management when evaluating the uncertainty related to the effects of COVID-19 on the Company’s financial results and liquidity, which impacts the Company’s forecasted financial results and estimated liquidity requirements to satisfy its obligations;

(ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s liquidity assessment to satisfy obligations for at least the next twelve months from the issuance of the consolidated financial statements.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of internal controls relating to management’s assessment of the Company’s liquidity.

These procedures also included, among others, (i) testing management’s process for forecasting financial results and liquidity within one year from the issuance of the consolidated financial statements, (ii) testing the completeness and accuracy of underlying data used in the forecast;

and (iii) evaluation of management’s liquidity assessment and their disclosure in the consolidated financial statements regarding having sufficient liquidity to satisfy its obligations for at least the next twelve months from the issuance of the consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

February 25, 2020

Miami, Florida February 26, 2021

We have served as the Company’s auditor since at least 1989, which includes periods before the Company became subject to SEC reporting requirements.

We have not been able to determine the specific year we began serving as auditor of the Company.

Table of C ontents

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands, except per share data)

Year Ended December 31,

2020 2019 2018

(in thousands, except per share data)

Passenger ticket revenues $ 1,504,569 $ 7,857,057 $ 6,792,716

11 unchanged sentences

Depreciation and amortization expenses 1,279,254 1,245,942 1,033,697

Operating Income 2,082,701 1,894,801 1,744,056

Impairment and credit losses 1,566,380 — —

Operating (Loss) Income ( 4,601,557 ) 2,082,701 1,894,801

Other income (expense):

1 unchanged sentence

Interest expense, net of interest capitalized ( 844,238 ) ( 408,513 ) ( 333,672 )

Equity investment income 230,980 210,756 156,247

Equity investment (loss) income ( 213,286 ) 230,980 210,756

Other (expense) income ( 137,085 ) ( 24,513 ) 11,107

( 1,173,573 ) ( 175,101 ) ( 79,009 )

Net Income 1,907,600 1,815,792 1,625,133

Net (Loss) Income ( 5,775,130 ) 1,907,600 1,815,792

Net Income attributable to noncontrolling interest 22,332 28,713 4,750

Net Income attributable to Royal Caribbean Cruises Ltd.

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

$ ( 5,797,462 ) $ 1,878,887 $ 1,811,042

Earnings per Share:

(Loss) Earnings per Share:

Basic $ ( 27.05 ) $ 8.97 $ 8.60

Diluted $ ( 27.05 ) $ 8.95 $ 8.56

Comprehensive Income (Loss)

Net Income $ 1,907,600 $ 1,815,792 $ 1,625,133

Comprehensive (Loss) Income

Net (Loss) Income $ ( 5,775,130 ) $ 1,907,600 $ 1,815,792

Other comprehensive (loss) income:

1 unchanged sentence

Change in defined benefit plans ( 19,984 ) ( 19,535 ) 7,643

(Loss) gain on cash flow derivative hedges ( 151,313 ) ( 286,861 ) 570,495

Total other comprehensive (loss) income ( 169,979 ) ( 293,469 ) 582,219

Comprehensive Income $ 1,737,621 $ 1,522,323 $ 2,207,352

Gain (loss) on cash flow derivative hedges 38,010 ( 151,313 ) ( 286,861 )

Total other comprehensive income (loss) 58,372 ( 169,979 ) ( 293,469 )

Comprehensive (Loss) Income $ ( 5,716,758 ) $ 1,737,621 $ 1,522,323

Comprehensive Income attributable to noncontrolling interest 22,332 28,713 4,750

Comprehensive Income attributable to Royal Caribbean Cruises Ltd.

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

$ ( 5,739,090 ) $ 1,708,908 $ 1,517,573

1 unchanged sentence

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

Table of C ontents

ROYAL CARIBBEAN CRUISES LTD.

4 unchanged sentences

Cash and cash equivalents $ 3,684,474 $ 243,738

Trade and other receivables, net 305,821 324,507

Trade and other receivables, net of allowances of $ 3,867 and $ 5,635 at December 31, 2020 and December 31, 2019, respectively

284,149 305,821

Inventories 118,703 162,107

5 unchanged sentences

Goodwill 809,480 1,385,644

Other assets 1,617,649 1,611,710

Other assets, net of allowances of $ 81,580 and $ 0 at December 31, 2020 and December 31, 2019, respectively

1,497,380 1,617,649

Total assets $ 32,465,187 $ 30,320,284

37 unchanged sentences

Operating Activities

Net Income $ 1,907,600 $ 1,815,792 $ 1,625,133

Net (Loss) Income $ ( 5,775,130 ) $ 1,907,600 $ 1,815,792

Depreciation and amortization 1,279,254 1,245,942 1,033,697

Impairment losses — 33,651 —

Net deferred income tax expense (benefit) 7,745 ( 2,679 ) 1,730

(Gain) loss on derivative instruments not designated as hedges ( 1,431 ) 61,148 ( 61,704 )

Impairment and credit losses 1,566,380 — 33,651

Net deferred income tax (benefit) expense ( 8,791 ) 7,745 ( 2,679 )

Loss (gain) on derivative instruments not designated as hedges 49,316 ( 1,431 ) 61,148

Share-based compensation expense 39,779 75,930 46,061

Equity investment income ( 230,980 ) ( 210,756 ) ( 156,247 )

Equity investment loss (income) 213,286 ( 230,980 ) ( 210,756 )

Amortization of debt issuance costs 89,442 31,991 41,978

Amortization of commercial paper notes discount 31,263 10,652 —

Loss on extinguishment of debt 6,326 — —

Amortization of debt discounts and premiums 66,776 31,616 11,004

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

Change in fair value of contingent consideration ( 45,126 ) 18,400 —

Gain on sale of property and equipment — — ( 30,902 )

Recognition of deferred currency translation adjustment

loss on sale of assets 69,044 — —

Gain on sale of unconsolidated affiliate — — ( 13,680 )

1 unchanged sentence

Changes in operating assets and liabilities:

Increase in trade and other receivables, net ( 9,898 ) ( 9,573 ) ( 32,043 )

(Increase) decrease in inventories ( 8,533 ) ( 23,849 ) 2,424

Decrease (increase) in trade and other receivables, net 121,055 ( 9,898 ) ( 9,573 )

Decrease (increase) in inventories 27,077 ( 8,533 ) ( 23,849 )

Decrease (increase) in prepaid expenses and other assets 295,876 15,669 ( 71,770 )

Increase in accounts payable 75,281 91,737 36,780

(Decrease) increase in accrued interest ( 4,460 ) 18,773 1,303

Increase in accrued expenses and other liabilities 96,490 42,937 34,215

Increase in customer deposits 280,139 385,990 274,705

(Decrease) increase in accounts payable ( 133,815 ) 75,281 91,737

Increase (decrease) in accrued interest 182,578 ( 4,460 ) 18,773

(Decrease) increase in accrued expenses and other liabilities ( 180,479 ) 96,490 42,937

(Decrease) increase in customer deposits ( 1,643,560 ) 280,139 385,990

Dividends received from unconsolidated affiliates 2,215 150,177 243,101

Other, net 12,061 28,362 7,371

Net cash provided by operating activities 3,716,366 3,479,139 2,874,566

Net cash (used in) provided by operating activities ( 3,731,653 ) 3,716,366 3,479,139

Investing Activities

9 unchanged sentences

Net cash used in investing activities ( 2,178,566 ) ( 3,091,406 ) ( 4,489,158 )

Financing Activities

Debt proceeds 3,525,564 8,590,740 5,866,966

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

3 unchanged sentences

2020 2019 2018

(in thousands)

Financing Activities

Debt proceeds 13,547,189 3,525,564 8,590,740

Debt issuance costs ( 374,715 ) ( 50,348 ) ( 81,959 )

4 unchanged sentences

Dividends paid ( 326,421 ) ( 602,674 ) ( 527,494 )

Proceeds from exercise of common stock options 1,742 4,264 2,525

Proceeds from common stock issuances 1,431,375 — —

Other, net ( 10,688 ) ( 10,516 ) ( 9,500 )

Net cash (used in) provided by financing activities ( 670,371 ) 1,198,073 ( 2,675,796 )

Net cash provided by (used in) financing activities 9,349,788 ( 670,371 ) 1,198,073

Effect of exchange rate changes on cash 1,167 1,297 ( 20,314 )

Net (decrease) increase in cash and cash equivalents ( 44,114 ) 167,740 ( 12,491 )

Net increase (decrease) in cash and cash equivalents 3,440,736 ( 44,114 ) 167,740

Cash and cash equivalents at beginning of year 243,738 287,852 120,112

7 unchanged sentences

Notes receivable issued upon sale of property and equipment $ 53,419 $ — $ —

Non-Cash Financing Activities

Acquisition of Silversea Cruises non-controlling interest $ 592,313 $ — $ —

Termination of Silversea Cruises contingent consideration obligation $ 16,564 $ — $ —

Common stock issuances pending cash settlement and included in trade receivables $ 121,352 $ — $ —

___________________________________________________________________

5 unchanged sentences

Balances at January 1, 2018 $ 2,352 $ 3,390,117 $ 9,022,405 $ ( 334,265 ) $ ( 1,378,306 ) $ 10,702,303

Cumulative effect of accounting changes — — ( 23,476 ) — — ( 23,476 )

Activity related to employee stock plans 6 30,783 — — — 30,789

4 unchanged sentences

Foreign currency translation adjustments — — — ( 14,251 ) — ( 14,251 )

Purchase of treasury stock — — — — ( 224,998 ) ( 224,998 )

Purchases of treasury stock — — — — ( 575,039 ) ( 575,039 )

Net Income attributable to Royal Caribbean Cruises Ltd.

1 unchanged sentence

Balances at December 31, 2018 2,358 3,420,900 10,263,282 ( 627,734 ) ( 1,953,345 ) 11,105,461

Cumulative effect of accounting changes — — ( 23,476 ) — — ( 23,476 )

Activity related to employee stock plans 7 73,059 — — ( 5,164 ) 67,902

9 unchanged sentences

Activity related to employee stock plans 9 29,750 — — — 29,759

Common stock issuance 226 1,552,500 — — — 1,552,726

Equity component of convertible notes, net of issuance costs — 307,640 — — — 307,640

Acquisition of Silversea non-controlling interest 52 608,825 — — — 608,877

Common stock dividends, $ 0.78 per share

4 unchanged sentences

Purchases of treasury stock — 5,900 — — ( 5,900 ) —

Net Income attributable to Royal Caribbean Cruises Ltd.

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 5,797,462 ) — — ( 5,797,462 )

7 unchanged sentences

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

We also own a 50 % joint venture interest in the German brand TUI Cruises and a 49 % interest in the Spanish brand Pullmantur (collectively, our "Partner Brands").

We also own a 50 % joint venture interest in TUI Cruises GmbH ("TUIC"), that operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands").

On June 30, 2020, TUIC acquired Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG for approximately € 1.2 billion, or $ 1.3 billion as of the purchase date.

Other Assets for further information on the acquisition.

We account for our investments in our Partner Brands under the equity method of accounting.

Together, our Global Brands and our Partner Brands operate a combined 61 ships as of December 31, 2020.

Our ships operate on a selection of worldwide itineraries that call on more than 1,000 destinations on all seven continents.

On July 31, 2018, we acquired a 66.7 % equity stake in Silversea Cruise Holding Ltd.

("Silversea Cruises"), an ultra-luxury and expedition cruise line with nine ships, from Silversea Cruises Group Ltd.

("SCG") for $ 1.02 billion in cash and contingent consideration.

Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations on all seven continents.

In 2020, Pullmantur Holdings S.L.

("Pullmantur Holdings"), in which we own a 49 % non-controlling interest, and certain of its other subsidiaries filed for reorganization in Spain 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 of its scheduled ship operations.

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

Refer to Note 8 .

Business Combination for further information on the Silversea Cruises acquisition.

Other Assets for further information regarding Pullmantur's reorganization filing and its impact to the Company.

On July 9, 2020, we acquired the remaining 33.3 % interest in Silversea Cruises that we did not already own (the "noncontrolling interest") from Heritage Cruise Holding Ltd.

("Heritage").

As a result of the acquisition of the noncontrolling interest, Silversea Cruises is now a wholly owned cruise brand.

As consideration for the noncontrolling interest, we issued to Heritage 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, 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 on July 31, 2018.

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

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

See Note 11 .

Redeemable Noncontrolling Interest for further information regarding our acquisition of the noncontrolling interest.

On January 19, 2021, we announced that we entered into a definitive agreement to sell the Azamara brand, including its three -ship fleet and associated intellectual property to Sycamore Partners in an all-cash carve-out transaction for $ 201.0 million.

The transaction is subject to customary conditions and is expected to close in the first quarter of 2021.

Management's Plan and Liquidity

As part of our response to the COVID-19 pandemic, we voluntarily suspended our global cruise operations effective March 13, 2020 and this suspension remains in effect through at least April 30, 2021, for most of our cruise operations.

We are working with both the U.S.

Center for Disease Control and Prevention (“CDC”) and the Healthy Sail Panel (“HSP”), formed in June 2020 by us and Norwegian Cruise Line Holdings Ltd.

and composed of leading experts in relevant fields, including epidemiology, infectious diseases, public policy and regulation, engineering and general health safety, to prepare and develop a plan to meet the requirements of the CDC’s Framework for the Conditional Sailing Order (the “Conditional Order”).

The Conditional Order permits cruise ship passenger operations in U.S.

waters under certain conditions and following the establishment of certain protocols and procedures, with the order remaining 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.

Many uncertainties remain as to the specifics, timing and costs of administering and implementing the requirements of the Conditional Order, some of which may be significant, as well as the extent of any additional requirements the CDC may issue as it provides further guidance on the requirements of the Conditional Order.

We expect to re-start our global cruise operations in a phased manner once we fulfill the requirements of the Conditional Order, with cruises having reduced guest occupancy, modified itineraries and enhanced health and safety protocols.

Based on our 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 April 30, 2021, for most of our cruise operations.

As such, we believe the suspension of our operations

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

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

As of December 31, 2020, we had liquidity of $ 4.4 billion, consisting of cash and cash equivalents of $ 3.7 billion and a $ 0.7 billion one-year commitment for a 364-day term loan facility.

As of December 31, 2020, our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities.

As of December 31, 2020, financial covenant testing on our amended export-credit and non-export credit facilities, totaling and outstanding principal amount of $ 11.2 billion, and on our credit card processing agreements, was waived through the fourth quarter of 2021 following amendments to the agreements during 2020.

During the first quarter of 2021, we further amended $ 4.9 billion of our non-export credit facilities and $ 6.2 billion of our export credit facilities, and certain credit card processing agreements to extend the waiver of our financial covenants through and including at least the third quarter of 2022.

In addition, during the first quarter of 2021, we amended our export credit facilities to defer an additional $ 0.8 billion of principal payments due under these export facilities between April 2021 and March 2022.

Pursuant to the covenant amendments for the non-export facilities and certain of the credit card processing agreements , we have modified the manner in which such covenants are calculated, temporarily in certain cases and permanently in others, as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023.

The amendments also impose a monthly-tested minimum liquidity covenant of $ 500.0 million for the duration of the waiver period subject to reduction to $ 350.0 million if we raise at least $ 500.0 million of additional capital, which can be satisfied through previously undrawn facilities.

In addition, the amendments place restrictions on paying cash dividends and effectuating share repurchases through at least the end of the third quarter of 2022.

As of December 31, 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 9 .

Debt for further information regarding our debt covenants.

Significant events affecting travel, including COVID-19 and our suspension of operations, 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.

The estimation of our future liquidity requirements includes numerous assumptions that are subject to various risks and uncertainties.

The principal assumptions used to estimate our future liquidity requirements consist of:

• Expected date of return to operations;

• Expected gradual resumption of cruise operations;

• Expected lower than comparable historical occupancy levels during the resumption of cruise operations;

• Expected incremental expenses for the resumption of cruise operations, for the maintenance of additional public health protocols and procedures for additional regulations.

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 these requirements , some of which may be significant, and whether efforts by other countries to contain the disease will further restrict our ability to commence operations.

We have and will continue undertaking several proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses (reduction and furloughing of workforce and laying up of vessels), issuing of debt and shares of our common stock, amending of credit agreements to defer payments and covenant requirements and suspending of dividend payments.

Based on these actions and our assumptions regarding the impact of COVID-19 and our suspension of operations, as well as our present financial condition, we believe that our available liquidity as described above will be sufficient to fund our obligations for at least the next twelve months from the issuance of these financial statements.

Beyond the next 12 months, in April 2022, approximately $ 1.0 billion of long- term debt will need to be refinanced or extended should the commencement of operations be delayed beyond the summer of 2021, in order to maintain the Company's liquidity position.

We are working on refinancing or negotiating extension of the obligation, which we expect to have completed in advance of the April 2022 due date.

There can be no assurances that the Company will be successful in completing the refinancing or extension necessary to meet its obligations beyond twelve months from the issuance of these financial statements on terms acceptable to the Company.

If the Company is unable to maintain the required minimum level of liquidity or negotiate its minimum liquidity requirements, it could have a significant adverse effect on the Company’s business, financial condition and operating result s.

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

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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.

The Company also has agreements with its credit card processors relating to customer deposits received by the Company for future voyages.

These agreements allow the credit card processors to require, under certain circumstances, including breach of the financial covenants, the existence of other material adverse changes, excessive chargebacks, and other triggering events, the Company to maintain a reserve that can be satisfied by posting collateral.

Executed amendments are in place for the majority of these providers, waiving collateral posting and reserve requirements tied to breach of our financial covenants through at least March 31, 2022 or September 30, 2022 depending on the agreement, and as such, we do not anticipate any incremental collateral requirements for the processors covered by these waivers in the next 12 months.

We have approximately $ 75.0 million held in reserve with a processor where the agreement was amended in the first quarter of 2021, such that future proceeds will be withheld in reserve, of which the maximum exposure is approximately $ 200.0 million.

The amount and timing are dependent on future factors that are uncertain, such as the date we return to operations, volume and value of future deposits and whether we transfer our business to other processors.

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.

Basis for Preparation of Consolidated Financial Statements

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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 September 30, 2019 through December 31, 2019 that would require further disclosure or adjustment to our consolidated financial statements as of and for the year ended December 31, 2019.

With the exception of the October 2020 delivery of the Silver Moon which is reported in our consolidated financial statements as of and for the year ended December 31, 2020, no material events or other transactions involving Silversea Cruises have occurred from September 30, 2020 through December 31, 2020.

Refer to Note 7 .

Property and Equipment, and Note 9 .

Debt for further information on the delivery of Silver Moon .

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.

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Inventories consist of provisions, supplies and fuel carried at the lower of cost (weighted-average) or net realizable value.

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

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Property and Equipment

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Improvement costs that we believe add value to our ships are capitalized as additions to the ship, the useful lives of the improvements are estimated and depreciated over the shorter of the improvements' estimated useful lives or that of the associated ship, and the replaced assets are disposed of on a net cost basis.

The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized in Cruise operating expenses .

The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized in

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Cruise operating expenses .

Liquidated damages received from shipyards as a result of the late delivery of a new ship are recorded as reductions to the cost basis of the ship.

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The 35 -year useful life with a 10 % residual value is based on revised estimates of the weighted-average useful life of all major ship components for the Oasis-class ships.

The change in estimate is consistent with our recent investments in and future plans to continue to invest in the upgrade of these ships, resulting in the use of certain ship components longer than originally estimated.

The change in estimate is consistent with our recent investments in and long term future plans to continue to invest in the upgrade of these ships, resulting in the use of certain ship components longer than originally estimated.

In determining the change in estimated useful life and residual value, we utilized quantitative and qualitative analysis, including historical and projected usage patterns, industry benchmarks, planned maintenance programs and projected operational and financial performance of the class.

The change allows us to better match depreciation expense with the periods these assets are expected to be in use.

For the year ended

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December 31, 2019, this change increased operating income and net income by approximately $ 4.6 million and increased earnings per share by $ 0.02 per share on a basic and diluted basis.

We review long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated undiscounted future cash flows, that the carrying amount of these assets may not be fully recoverable.

For the year ended December 31, 2019, this change increased operating income and net income by approximately $ 4.6 million and increased earnings per share by $ 0.02 per share on a basic and diluted basis.

We review long-lived assets for impairment whenever events or changes in circumstances indicate, based on estimated undiscounted future cash flows, that the carrying value of these assets may not be fully recoverable.

For purposes of recognition and measurement of an impairment loss, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

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If estimated future cash flows are less than the carrying value of an asset, an impairment charge is recognized to the extent its carrying value exceeds fair value.

Refer to Note 7.

Property and Equipment for further information on determination of fair value for long-lived assets.

We use the deferral method to account for drydocking costs.

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Deferred drydock costs consist of the costs to drydock the vessel and other costs incurred in connection with the drydock which are necessary to maintain the vessel's Class certification.

Class certification is necessary in order for our cruise ships to be flagged in a specific country, obtain liability insurance and legally operate as passenger cruise ships.

Class certification is necessary in order for our cruise ships to be flagged in a specific country, obtain liability

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insurance and legally operate as passenger cruise ships.

The activities associated with those drydocking costs cannot be performed while the vessel is in service and, as such, are done during a drydock as a planned major maintenance activity.

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We perform a detailed analysis of the various activities performed for each drydock and only defer those costs that are directly related to planned major maintenance activities necessary to maintain Class.

The costs deferred are not otherwise routinely periodically performed to maintain a vessel's designed and intended operating capability.

The costs deferred are related to activities not otherwise routinely periodically performed to maintain a vessel's designed and intended operating capability.

Repairs and maintenance activities are charged to expense as incurred.

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We review goodwill for impairment at the reporting unit level annually or, when events or circumstances dictate, more frequently.

The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely-than-not that a reporting unit's fair value is less than its carrying amount, and if necessary, a two-step goodwill impairment test.

The impairment review for goodwill consists of a qualitative assessment of whether it is more-likely-than-not that a reporting unit's fair value is less than its carrying value, and if necessary, a goodwill impairment test.

Factors to consider when performing the qualitative assessment include general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates.

If the qualitative assessment demonstrates that it is more-likely-than-not that the estimated fair value of the reporting unit exceeds its carrying value, it is not necessary to perform the two-step goodwill impairment test.

We may elect to bypass the qualitative assessment and proceed directly to step one, for any reporting unit, in any period.

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We can resume the qualitative assessment for any reporting unit in any subsequent period.

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

If the fair value of the reporting unit exceeds its carrying value, no further analysis or write-down of goodwill is required.

If the fair value of the reporting unit is less than the carrying value of its net assets, the implied fair value of the reporting unit is allocated to all its underlying assets and liabilities, including both recognized and unrecognized tangible and intangible assets, based on their fair value.

If necessary, goodwill is then written down to its implied fair value.

The goodwill impairment analysis consists of a comparison of the fair value of the reporting unit with its carrying value.

We typically estimate the fair value of our reporting units using a probability-weighted discounted cash flow model, which may also include a combination of a market-based valuation approach.

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

The principal assumptions used in the discounted cash flow model for our 2020 impairment assessments were:

(i) the timing of our return to service, changes in market conditions and port or other restrictions;

(ii) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

and (iii) weighted average cost of capital (i.e., discount rate).

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

To that base, we add future years' cash flows based on multiple revenue and expense scenarios reflecting the impact of various return to service management assumptions beyond the base year on the reporting unit.

We discount the projected cash flows using rates specific to the reporting unit based on its weighted-average cost of capital.

If the fair value of the reporting unit exceeds its carrying value, no write-down of goodwill is required.

As amended by ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment , if the fair value of the reporting unit is less than the carrying value of its net assets, an impairment is recognized based on the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

Intangible Assets

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The impairment review for indefinite-life intangible assets can be performed using a qualitative or quantitative impairment assessment.

The quantitative assessment consists of a comparison of the fair value of the indefinite-life intangible

The quantitative assessment consists of a comparison of the fair value of the asset with its carrying value.

We estimate the fair value of these assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method for trademarks and trade names.

The principal assumptions used in the discounted cash flows model for our 2020 impairment assessments were:

(i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

(ii) royalty rate;

and (iii) weighted average cost of capital (i.e., discount rate).

If the carrying value exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

If the fair value exceeds its carrying value, the indefinite-life intangible asset is not considered impaired.

Other intangible assets assigned finite useful lives are amortized on a straight-line basis over their estimated useful lives.

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asset with its carrying amount.

If the carrying amount exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

If the fair value exceeds its carrying amount, the indefinite-life intangible asset is not considered impaired.

Other intangible assets assigned finite useful lives are amortized on a straight-line basis over their estimated useful lives.

Contingencies — Litigation

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For all other hedging programs, we use the long-haul method to assess hedge effectiveness using regression analysis for each hedge relationship.

The methodology for assessing hedge

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effectiveness is applied on a consistent basis for each one of our hedging programs (i.e., interest rate, foreign currency ship construction, foreign currency net investment and fuel).

The methodology for assessing hedge effectiveness is applied on a consistent basis for each one of our hedging programs (i.e., interest rate, foreign currency ship construction, foreign currency net investment and fuel).

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.

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Cash flows from derivative instruments that are designated as fair value or cash flow hedges are classified in the same category as the cash flows from the underlying hedged items.

In the event that hedge accounting is discontinued, cash flows subsequent to the date of discontinuance are classified within investing activities.

In the event that hedge accounting is discontinued, cash flows

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subsequent to the date of discontinuance are classified within investing activities.

Cash flows from derivative instruments not designated as hedging instruments are classified as investing activities.

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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 December 31, 2019, we had no counterparty credit risk exposure under our derivative instruments compared to credit risk exposures of $ 5.6 million on December 31, 2018, which were 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 December 31, 2020, we had $ 26.9 million counterparty credit risk exposure under our derivative instruments 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 December 31, 2019, we had no counterparty credit risk exposure under our derivative instruments.

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

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however, in certain circumstances this option is available to us.

Earnings Per Share

Basic earnings per share is computed by dividing Net Income attributable to Royal Caribbean Cruises Ltd.

(Loss) Earnings Per Share

Basic (loss) earnings per share is computed by dividing Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.

by the weighted-average number of shares of common stock outstanding during each period.

Diluted earnings per share incorporates the incremental shares issuable upon the assumed exercise of stock options and conversion of potentially dilutive securities.

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Diluted (loss) earnings per share incorporates the incremental shares issuable upon the assumed exercise of stock options and conversion of potentially dilutive securities.

Stock-Based Employee Compensation

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Segment Reporting

We control and operate four global cruise brands:

As of December 31, 2020, we controlled and operated four global cruise brands:

Royal Caribbean International, Celebrity Cruises, Azamara and Silversea Cruises.

We also own a 50 % joint venture interest in the German brand TUI Cruises, a 49 % interest in the Spanish brand Pullmantur.

We also own a 50 % joint venture interest in TUIC, that operates the German brands TUI Cruises and Hapag-Lloyd Cruises.

We believe our brands possess the versatility to enter multiple cruise market segments within the cruise vacation industry.

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As a result, our brands have been aggregated as a single reportable segment based on the similarity of their economic characteristics, types of consumers, regulatory environment, maintenance requirements, supporting systems and processes as well as products and services provided.

Our Chairman and Chief Executive Officer has been identified as the chief operating decision-maker and all significant operating decisions including the allocation of resources are based upon the analyses of the Company as one segment.

Our Chairman and Chief Executive

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Officer has been identified as the chief operating decision-maker and all significant operating decisions including the allocation of resources are based upon the analyses of the Company as one segment.

Refer to Note 4 .

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This guidance did not have a material impact to our consolidated statements of comprehensive income (loss), consolidated statements of cash flows and our debt-covenants calculations under our current agreements.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326);

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This ASU, along with subsequent ASUs issued to clarify certain of its provisions, introduces new guidance which makes substantive changes to the accounting model for financial assets subject to credit losses that are measured at amortized cost, as well as certain off-balance sheet credit exposures.

The primary updates include the introduction of a new current expected credit loss (“CECL”) model that is based on expected rather than

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incurred losses.

This ASU and the related amendments will be effective for our annual reporting period beginning January 1, 2020.

We are currently evaluating the impact that the adoption of this guidance will have to our consolidated financial statements.

In January 2017, the FASB issued ASU No.

2017-04, Intangibles - Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test.

Under the new standard, goodwill impairment should be recognized based on the amount by which the carrying amount of a reporting unit exceeds its fair value, but should not exceed the total amount of goodwill allocated to the reporting unit.

This ASU will be effective for our annual reporting period beginning January 1, 2020.

This guidance is not expected to have a material impact to our consolidated financial statements, but may require us to modify our annual or interim goodwill impairment tests.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Topic 350-40), which requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance to determine which implementation costs to capitalize as assets or expense as incurred.

This ASU will be effective for our annual reporting period beginning January 1, 2020 and we expect to elect the prospective adoption method.

The guidance may impact the accounting treatment of our future implementation costs related to cloud computing arrangements.

The updates include the introduction of a new current expected credit loss (“CECL”) model that is based on expected rather than incurred losses.

On January 1, 2020, we adopted these updates using the modified retrospective approach.

The adoption did not have a material impact to our consolidated financial statements.

In January 2020, the FASB issued ASU No.

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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 adopted the guidance during the quarter ended December 31, 2020.

The adoption did not have a material impact to our consolidated financial statements.

Recent Accounting Pronouncements

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848), which provides optional expedients and exceptions to the current guidance on contract modifications and hedging relationships to ease the financial reporting burdens of the expected market transition from LIBOR and other interbank offered rates to alternative reference rates.

Subsequently, in January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848), which presents amendments to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

The guidance in both ASUs was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

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

In August 2020, the FASB issued ASU No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40), which simplifies the accounting for convertible instruments.

The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under ASC 815 or for convertible debt issued at a substantial premium.

The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for it.

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In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

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.

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 extent of the impact of the new guidance on our consolidated financial statements.

Reclassifications

For the year ended December 31, 2019, we separately presented Amortization of commercial paper notes discount in our consolidated statements of cash flows.

As a result, the prior year amortization amount was reclassified within Operating Activities to conform to the current year presentation.

For the year ended December 31, 2020, we separately presented Amortization of debt discounts and premiums , which includes amortization of commercial paper notes discount, in our consolidated statements of cash flows.

As a result, the prior year amortization amounts were reclassified from Other, net within Operating Activities to conform to the current year presentation.

Also for the year ended December 31, 2020, we no longer separately presented Proceeds from exercise of common stock options in our consolidated statements of cash flows.

As a result, the prior year amounts were reclassified to Other, net within Financing Activities to conform to the current year presentation.

Business Combination

On July 31, 2018, we acquired a 66.7 % equity stake in Silversea Cruise Holding Ltd.

On July 31, 2018, we acquired a 66.7 % equity stake ("the 2018 acquisition") in Silversea Cruise Holding Ltd.

("Silversea Cruises"), an ultra-luxury and expedition cruise line, from Heritage Cruise Holding Ltd.

("HCH"), previously known as Silversea Cruises Group Ltd.

Silversea Cruises enhances our presence in the ultra-luxury and expedition markets and provides us with an opportunity to drive long-term capacity growth in these markets.

The purchase price consisted of $ 1.02 billion in cash, net of assumed liabilities, and contingent consideration that can range from zero up to a maximum of approximately 472,000 shares of our common stock, and is payable upon achievement of certain 2019-2020 performance metrics by Silversea Cruises.

The fair value of the contingent consideration at the acquisition date was $ 44.0 million.

Changes to the fair value of the contingent consideration are recorded in our results of operations, if any, in the period of the change.

("Heritage"), previously known as Silversea Cruises Group Ltd.

The purchase price for the 2018 acquisition consisted of $ 1.02 billion in cash, net of assumed liabilities, and contingent consideration due to Heritage for which any obligation was terminated upon our acquisition of the noncontrolling interest in 2020.

The fair value of the contingent consideration at the time of the 2018 acquisition was $ 44.0 million.

Changes to the fair value of the contingent consideration were recorded in our results of operations, if any, in the period of the change prior to its termination.

Refer to Note 18 .

Fair Value Measurements and Derivative Instruments for further information on the valuation of the contingent consideration.

To finance a portion of the purchase price, we drew in full on a $ 700 million unsecured credit agreement and the remainder of the transaction consideration was financed through the use of our revolving credit facilities.

Refer to Note 9.

Debt for further information on the credit agreement.

We have accounted for this transaction under the provisions of ASC 805, Business Combinations .

The purchase price for the Silversea Cruises acquisition was allocated based on estimates of the fair value of assets acquired and liabilities assumed at the acquisition date, with the excess allocated to goodwill.

To finance a portion of the 2018 acquisition purchase price, we drew in full on a $ 700 million unsecured credit agreement and the remainder of the transaction consideration was financed through the use of our revolving credit facilities.

We have accounted for the Silversea Cruises acquisition under the provisions of ASC 805, Business Combinations .

The purchase price for the 2018 acquisition was allocated based on estimates of the fair value of assets acquired and liabilities assumed at the acquisition date, with the excess allocated to goodwill.

Goodwill is not deductible for tax purposes and consisted primarily of the opportunity to expand our cruise operations in strategic growth areas.

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For reporting purposes, we included Silversea Cruises’ results of operations on a three-month reporting lag from October 1, 2018 through September 30, 2019 in our consolidated results of operations for the year ended December 31, 2019 and from the July 31, 2018 date of acquisition through September 30, 2018 in our consolidated results of operations for the year ended December 31, 2018.

We have included Silversea Cruises' balance sheets as of September 30, 2019 and 2018 in our consolidated balance sheets as of December 31, 2019 and 2018, respectively.

Refer to Note 1.

General for further information on this three-month reporting lag.

There were no material measurement period adjustments recorded for the year ended December 31, 2019.

The following table summarizes the purchase price allocation based on estimated fair values of the assets acquired and liabilities assumed related to the Silversea Cruises acquisition as of July 31, 2018.

Our purchase price allocation was final during 2019.

(in thousands) Estimated Fair Value as of Acquisition Date (as Previously Reported) Measurement Period Adjustments (1) Estimated Fair Value as of Acquisition Date (as Adjusted)

Cash and cash equivalents $ 103,865 $ — $ 103,865

Trade and other receivables, net 7,163 — 7,163

Inventories 18,331 — 18,331

Prepaid expenses and other assets(2) 120,496 — 120,496

Derivative financial instruments 2,886 — 2,886

Property and equipment, net(3) 1,114,270 — 1,114,270

Goodwill 1,090,010 ( 5,224 ) 1,084,786

Other assets(4) 498,457 — 498,457

Total assets acquired 2,955,478 ( 5,224 ) 2,950,254

Current portion of long-term debt(5) 26,851 — 26,851

Accounts payable 36,960 — 36,960

Accrued interest 1,773 — 1,773

Accrued expenses and other liabilities 82,531 ( 5,224 ) 77,307

Customer deposits 453,798 — 453,798

Long-term debt(5) 727,935 — 727,935

Other long-term liabilities 23,860 — 23,860

Total liabilities assumed 1,353,708 ( 5,224 ) 1,348,484

Redeemable noncontrolling interest(6) 537,770 — 537,770

Total purchase price $ 1,064,000 $ — $ 1,064,000

(1) As a result of additional information obtained about facts and circumstances that existed as of the acquisition date, we recorded measurement period adjustments during 2019, which resulted in a net decrease to Goodwill of $ 5.2 million.

(2) Amount includes $ 32.0 million of cash held as collateral with credit card processors as of July 31, 2018.

(3) Property and equipment, net includes two ships under capital lease agreements amounting to $ 156.0 million as of July 31, 2018.

The respective capital lease liabilities are reported within Long-term debt .

Refer to Note 9.

Debt for further information on the capital lease financing arrangements.

(4) Amount includes $ 494.6 million of intangible assets.

Refer to Note 6.

Intangible Assets for further information on the intangible assets acquired.

There were no material measurement period adjustments recorded for the year ended December 31, 2019.

On July 9, 2020, we acquired the remaining 33.3 % interest in Silversea Cruises that we did not already own (the "noncontrolling interest") from Heritage.

As a result of the acquisition of the noncontrolling interest, Silversea Cruises is now a wholly owned cruise brand.

As consideration for our acquisition of the noncontrolling interest, we issued to Heritage 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 the 2018 acquisition.

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

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

Refer to Note 11 .

Debt for further information on long-term debt assumed.

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Redeemable Noncontrolling Interest to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information regarding our acquisition of the noncontrolling interest.

For reporting purposes, we included Silversea Cruises’ results of operations on a three-month reporting lag from October 1, 2019 through September 30, 2020 in our consolidated results of operations for the year ended December 31, 2020;

from October 1, 2018 through September 30, 2019 in our consolidated results of operations for the year ended December 31, 2019 and from the July 31, 2018 date of acquisition through September 30, 2018 in our consolidated results of operations for the year ended December 31, 2018.

We have included Silversea Cruises' balance sheets as of September 30, 2020 and 2019 in our consolidated balance sheets as of December 31, 2020 and 2019, respectively.

Refer to Note 1 .

Redeemable Noncontrolling Interest for further information on the redeemable noncontrolling interest recorded.

As of December 31, 2018, intangible assets, net include intangible assets acquired in the Silversea Cruises acquisition, which were recorded at fair value at acquisition date as follows:

Fair Value at Acquisition Date (in thousands) Weighted Average Amortization Period (Years)

Silversea Cruises trade name $ 349,500 Indefinite-life

Customer relationships 97,400 15

Galapagos operating license 36,100 16

Other finite-life intangible assets 11,560 2

Total intangible assets $ 494,560

Similar to our other ship-operating and vessel-owning subsidiaries, Silversea Cruises is currently exempt from U.S.

corporate tax on U.S.

source income from the international operation of ships pursuant to Section 883 of the Internal Revenue Code.

Additionally, the deferred tax liability recognized in connection with the acquisition of Silversea Cruises was not material to our consolidated financial statements and there were no net operating losses recognized as of December 31, 2018.

For the year ended December 31, 2018, Total revenues and Net Income in our consolidated statements of comprehensive income (loss) include $ 130.1 million and $ 3.3 million, respectively, of revenues and net income from Silversea Cruises since the date of acquisition through September 30, 2018.

For the year ended December 31, 2018, our results of operations also include transaction-related costs of $ 31.8 million, which were included primarily within Marketing, selling and administrative expenses in our consolidated statements of comprehensive income (loss).

Pro-forma financial results relating to the Silversea Cruises acquisition are not presented, as this acquisition was not material to our consolidated results of operations.

General for further information on this three-month reporting lag.

Revenue Recognition

Revenues are measured based on consideration specified in our contracts with customers and are recognized as the related performance obligations are satisfied.

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The majority of our revenues are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive income (loss).

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As a practical expedient, we have omitted disclosures on our remaining performance obligations as the duration of our contracts with customers is less than a year.

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Disaggregated Revenues

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(1) No other individual country's revenue exceeded 10% for the years ended December 31, 2020, 2019 and 2018.

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Customer Deposits and Contract Liabilities

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Deposits received on sales of passenger cruises are initially recorded as Customer deposits in our consolidated balance sheets and subsequently recognized as passenger ticket revenues during the duration of the cruise.

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.

We consider customer deposits to be a contract liability once 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.

Customer deposits as of December 31, 2019, 2018 and 2017 included contract liabilities of $ 1.7 billion, $ 1.9 billion and $ 1.4 billion, respectively.

Substantially all of our contract liabilities as of the years ended December 31, 2018 and 2017 were recognized and reported within Total revenues in our consolidated statements of comprehensive income (loss) for the years ended December 31, 2019 and 2018, respectively.

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.

The current reduction in demand for cruising due to the COVID-19 pandemic has resulted in an unprecedented low level of advance bookings and the associated customer deposits received.

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 December 31, 2020, refunds due to customers mostly as a result of booking cancellations were $ 95.8 million compared to $ 9.8 million as of December 31, 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 our return to sailing and the future demand for cruising, we are unable to estimate the amount of the December 31, 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 2021.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 124.8 million and $ 1.7 billion as of December 31, 2020 and December 31, 2019, respectively.

Contract Receivables and Contract Assets

Although we generally require full payment from our customers prior to their cruise, we grant credit terms to a relatively small portion of our revenue sourced in select markets outside of the United States.

As a result, we have

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outstanding receivables from passenger cruise contracts in those markets.

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.

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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 December 31, 2019, 2018, and 2017, our contract assets were $ 55.5 million, $ 57.8 million and $ 60.1 million, respectively, and were included within Other assets in our consolidated balance sheets.

As of December 31, 2020 and 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 were $ 1.1 million and $ 163.2 million as of December 31, 2020 and 2019, respectively.

Substantially all of our prepaid travel agent commissions at December 31, 2018 and December 31, 2017 were expensed and reported within Commissions, transportation and other in our consolidated statements of comprehensive income (loss) for the years ended December 31, 2019 and 2018, respectively.

The carrying amount of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and Silversea Cruises reporting units and the changes in such balances during the years ended December 31, 2019 and 2018 were as follows (in thousands):

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 year ended December 31, 2020.

The impact of COVID-19 on our operating plans and projected cash flows resulted in the completion of interim impairment assessments in respect of certain reporting units as of March 31, 2020 and June 30, 2020, in addition to our annual goodwill impairment assessment performed as of November 30, 2020.

Refer to Note 1.

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

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 in those periods.

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.

In respect to the Silversea Cruises reporting unit, we determined the carrying value of the reporting unit

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

exceeded its fair value as of March 31, 2020.

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

We did not perform interim impairment evaluations of Silversea Cruises' reporting unit during the quarters ended June 30, 2020 and September 30, 2020 as no triggering events were identified.

As of November 30, 2020, we performed our annual goodwill impairment reviews and determined no incremental impairment losses existed at the date of this annual assessment.

We determined the fair value of the Royal Caribbean International and Silversea Cruises reporting units exceeded their carrying values by approximately 14 % and 12 % respectively at the date of this annual assessment.

The suspension of operations, as further discussed in Note 1.

General , and possibility of further suspensions create uncertainty in forecasting operating cash flows.

For the Silversea reporting unit a probability-weighted discounted cash flow model in combination with a market based valuation approach was used for all periods assessed.

This requires the use of assumptions that are subject to risk and uncertainties.

The principal assumptions used in the discounted cash flow analyses that support our Royal Caribbean International and Silversea Cruises reporting unit impairment assessments consisted of:

• The timing of our return to service, changes in market conditions and port or other restrictions;

• Forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

• Weighted average cost of capital (i.e., discount rate).

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 impairments to these assets in the future.

The carrying value of goodwill attributable to our Royal Caribbean International, Celebrity Cruises and Silversea Cruises reporting units and the changes in such balances during the years ended December 31, 2020 and 2019 were as follows (in thousands):

Royal Caribbean International Celebrity Cruises Silversea Cruises Total

Balance at December 31, 2018 $ 286,711 $ 1,632 $ 1,090,010 $ 1,378,353

Goodwill attributable to the acquisition of Silversea Cruises (1) 1,090,010 1,090,010

Silversea Goodwill adjustment (1) — — ( 5,224 ) ( 5,224 )

Goodwill attributable to the purchase of photo operation onboard our ships (2) 12,518 — — 12,518

Foreign currency translation adjustment ( 3 ) — — ( 3 )

Balance at December 31, 2019 299,226 1,632 1,084,786 1,385,644

Silversea Goodwill adjustment — — ( 5,224 ) ( 5,224 )

Goodwill attributable to the purchase of photo operations onboard our ships (2) 12,518 — — 12,518

Impairment charge — — ( 576,208 ) ( 576,208 )

Transfer of goodwill attributable to the 2019 purchase of photo operations onboard our ships ( 2,694 ) 2,694 — —

Foreign currency translation adjustment 44 — — 44

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___________________________________________________________________

(1) In 2018, we purchased Silversea Cruises.

(1) In 2018, we acquired a 66.7 % equity stake in Silversea Cruises.

Our controlling interest purchase price allocation was final during 2019.

In 2020, we acquired the remaining 33.3 % minority interest, making Silversea Cruises a wholly owned brand.

Refer to Note 1 .

Business Combination for further information.

(2) In 2019, we purchased the photo operations onboard our ships from our previous concessionaire.

General, Note 3.

Business Combination, and Note 11 .

Redeemable Noncontrolling Interest for further information.

(2) In 2019, we purchased the photo operations onboard our ships from our former concessionaire.

The acquisition was accounted for as a business purchase combination using the purchase method of accounting which requires the use of fair value measurements.

The business combination, including purchase transaction and assets acquired, was immaterial to our consolidated financial statements.

During the fourth quarter of 2019, we performed a qualitative assessment of whether it was more-likely-than-not that our Royal Caribbean International reporting unit's fair value was less than its carrying amount before applying the two-step goodwill impairment test.

The qualitative analysis included assessing the impact of certain factors such as general economic conditions, limitations on accessing capital, changes in forecasted operating results, changes in fuel prices and fluctuations in foreign exchange rates.

Based on our qualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the Royal Caribbean International reporting unit exceeded its carrying value and thus, we did not proceed to the two-step goodwill impairment test.

No indicators of impairment exist primarily because the reporting unit's fair value has consistently exceeded its carrying value by a significant margin and forecasts of operating results generated by the reporting unit appear sufficient to

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

support its carrying value.

As a result of our assessment, we did no t record an impairment of goodwill for the year ended December 31, 2019.

During the fourth quarter of 2019, we also performed a qualitative assessment of whether it was more-likely-than-not that our Silversea Cruises reporting unit's fair value was less than its carrying amount before applying the two-step goodwill impairment test.

Based on our qualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the Silversea Cruises reporting unit exceeded its carrying value and thus, we did not proceed to the two-step goodwill impairment test.

No indicators of impairment exist primarily because forecasted operating results of the reporting unit appear sufficient to support its carrying value.

As a result of our assessment, we did no t record an impairment of goodwill for the year ended December 31, 2019.

For the years ended December 31, 2018 and 2017, we did no t record an impairment of goodwill for our reporting units.

Intangible Assets

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 December 31, 2019 (in thousands, except weighted average amortization period):

The impact of COVID-19 on our operating plans and projected cash flows resulted in the completion of an interim impairment assessment for the Silversea Cruises trade name as of March 31, 2020, in addition to our annual indefinite-lived intangible asset impairment assessment performed as of November 30, 2020.

Refer to Note 1.

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

As a result of our evaluation, we determined the carrying value of the Silversea Cruises trade name exceeded its fair value as of March 31, 2020.

Accordingly, we recognized an impairment charge of $ 30.8 million for the quarter ended March 31, 2020.

We did not perform interim impairment evaluations of Silversea Cruises' trade name during the quarters ended June 30, 2020 and September 30, 2020 as no triggering events were identified.

As of November 30, 2020, we performed our annual trade name impairment review and determined no incremental impairment losses existed at the date of this annual assessment.

We determined the fair value of the Silversea Cruises trade name exceeded its carrying value by approximately 3 % at the date of this annual assessment.

In addition, further suspension beyond 2021 or changes to our planned ship deliveries could adversely impact our expected occupancy rates and may result in additional impairment charges of the Silversea Cruises trade name in the future.

The suspension of operations, as further discussed in Note 1.

General , and possibility of further suspensions create uncertainty in forecasting operating cash flows.

The determination of our trade name fair values using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method, require the use of assumptions that are subject to risk and uncertainties.

The principal assumptions used in the discounted cash flow analyses that support the Silversea Cruises trade name impairment assessments consisted of:

• Forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

• Royalty rate;

• Weighted average cost of capital (i.e., discount rate).

The following is a summary of our intangible assets as of December 31, 2020 (in thousands, except weighted average amortization period), with Silversea Cruises' trade name representing approximately $ 318.7 million of the indefinite-lived intangible asset balance:

As of December 31, 2020

Remaining Weighted Average Amortization Period (Years) Gross Carrying Value Accumulated Amortization Net Carrying Value

Remaining Weighted Average Amortization Period (Years) Gross Carrying Value Accumulated Amortization Accumulated Impairment Losses Net Carrying Value

Finite-life intangible assets:

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Indefinite-life intangible assets (1)

352,275 — 30,800 321,475

Total intangible assets, net $ 508,904 $ 33,250 $ 30,800 $ 444,854

(1) Primarily relates to the Silversea Cruises trade name.

The following is a summary of our intangible assets as of December 31, 2019 (in thousands, except weighted average amortization period):

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The following is a summary of our intangible assets as of December 31, 2018 (in thousands, except weighted average amortization period):

As of December 31, 2019

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Indefinite-life intangible assets (1)

352,275 — 352,275

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

(1) Primarily relates to the Silversea Cruises trade name.

The estimated future amortization for finite-life intangible assets for each of the next five years is as follows (in thousands):

2020 $ 12,995

Property and Equipment

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We capitalized interest costs of $ 59.1 million, $ 56.5 million and $ 49.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

During 2019, we took delivery of Spectrum of the Seas and Celebrity Flora.

During 2018, we completed our purchase of Azamara Pursuit and took delivery of Symphony of the Seas and Celebrity Edge.

During 2020, we took delivery of Celebrity Apex , Silver Origin and Silver Moon.

Refer to Note 9 .

Debt for further information.

Debt for further information on the financings for Celebrity Apex and Silver Moon .

The October 2020 Silversea Cruises delivery and related financing for the Silver Moon was reported in our consolidated financial statements as of and for the year ended December 31, 2020, regardless of the three month reporting lag for Silversea Cruises, due to the materiality of the transaction.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Upon our acquisition of Silversea Cruises, we added nine ships to our fleet, two of which are under capital lease agreements and one under an operating lease.

As of December 31, 2019, Silversea Cruises operates eight ships as the operating lease for Silver Discover was terminated during 2019.

During the first quarter 2020, we determined that the lease for Silver Explorer , operated by Silversea Cruises and previously classified as a finance lease, was an operating lease based on modification of the terms of the lease.

Accordingly, Silver Explorer is included within Operating lease right-of use assets , Current portion of operating lease liabilities , and Long term lease liabilities in our consolidated balance sheets.

Refer to Note 10 .

Business Combination for further information on the Silversea Cruises acquisition and Note 9.

Debt for further information on the capital leases.

During 2017, we sold our three aircraft and 6 % of our ownership stake in Wamos Air, S.A.

(formerly known as Pullmantur Air, S.A.) to Wamos Air, S.A.

In connection with the sale transaction, we extended two loans to Wamos Air, S.A.

totaling € 17.3 million.

During the year ended December 31, 2019, we received principal and interest payments of € 5.4 million resulting in full repayment of one of the loans.

As of December 31, 2019, a receivable of € 9.9 million, or approximately $ 11.1 million, based on the exchange rate at December 31, 2019, was outstanding related to the principal amount of the remaining loan.

The remaining loan accrues interest at 5.25 % per annum, amortizes through maturity of July 2021, and is secured by first priority security interests over the aircraft engines and shares sold in connection with the transaction.

The sale resulted in an immaterial gain that was recognized in earnings during the year ended December 31, 2017.

Post-sale, we retained a 13 % interest in Wamos Air, S.A.

During 2017, we sold Legend of the Seas to an affiliate of TUI AG, our joint venture partner in TUI Cruises.

The sale resulted in a gain of $ 30.9 million and was reported within Other operating within Cruise operating expenses in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2017.

In January of 2020, Zenith was sold to a third party for approximately its net book value.

Zenith was previously bareboat chartered to Pullmantur Holdings S.L.

Leases for further information.

During 2019, we took delivery of Spectrum of the Seas and Celebrity Flora.

Refer to Note 9 .

Debt for further information.

During 2019 Silversea Cruises terminated the operating lease for Silver Discover.

Long-lived Assets impairments

We review our long-lived assets for impairment whenever events or circumstances indicate potential impairment losses exist.

The impact of COVID-19 on our expected future operating cash flows, as well as decisions to dispose of certain vessels, resulted in the identification of impairment triggers for certain vessels.

Refer to Note 1.

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

We estimated the recoverability of certain vessels using undiscounted cash flow analyses at interim dates throughout 2020 and again at December 31,2020.

A number of vessels were found to have net carrying values in excess of their estimated undiscounted future cash flows and, as such, were subject to fair value assessments.

Fair value was determined based on our intended use of the identified vessels and, as such, we used a combination of discounted cash flows, replacement cost, scrap and residual value techniques to estimate fair value.

Differences between the estimated fair values and the net carrying values were recorded as an impairment charge within the period the loss was identified.

Consequently, we recorded $ 635.5 million of impairment losses during the year ended 2020.

Included in this amount are $ 171.3 million impairment losses recorded for the three ships that we chartered to Pullmantur Holdings, prior to its filing for reorganization.

Refer to Note 8 .

Other Assets for further information regarding Pullmantur's reorganization.

During the quarter ended September 30, 2020, we sold the ships previously chartered to Pullmantur Holdings to third parties for amounts approximating their carrying values and no further impairment was recorded.

Also included in the $ 635.5 million impairment loss for the year ended December 31, 2020, is a $ 166.8 million impairment charge for the three Azamara ships to be included in the sale of the Azamara brand that is expected to close in the first quarter of 2021.

The suspension of operations, as discussed in Note 1.

General , and the possibility of further suspensions create uncertainty in forecasting undiscounted cash flows, which are used to determine if a vessel is at risk of impairment and in estimating the fair value of our ships.

Our principal assumptions used in our undiscounted cash flows consisted of:

• The timing of our return to service, changes in market conditions and port or other restrictions;

• Forecasted net revenues, primarily the timing of returning to normalized operations, and occupancy rates;

• Intended use of the vessel for the remaining useful life.

During the year ended December 31, 2020, we also determined that certain construction in progress projects would be reduced in scope or would no longer be completed as a result of our capital cost containment measures in response to the COVID-19 impact on our liquidity.

This led to an impairment charge of $ 91.5 million of construction in progress assets.

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

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 (1) cannot directly or indirectly make decisions about the entity's activities through their voting rights or similar rights;

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or (4) have voting rights that are not proportionate to their economic interests and the entity's activities involve or are conducted on behalf of an investor with a disproportionately small voting interest.

We have determined that TUI Cruises GmbH, our 50 %-owned joint venture, which operates the brand TUI Cruises, is a VIE.

As of December 31, 2019, the net book value of our investment in TUI Cruises 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 December 31, 2018, the net book value of our investment in TUI Cruises was $ 578.1 million, primarily consisting of $ 403.0 million in equity and a loan of € 150.6 million, or approximately $ 172.2 million, based on the exchange rate at December 31, 2018.

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.

This loan is 50 % guaranteed by TUI AG, our joint venture partner in TUI Cruises, and is secured by a first priority mortgage on the ship.

Refer to Note 7.

Property and Equipment for further information.

The majority of these amounts were included within Other assets in our consolidated balance sheets.

In addition, we and TUI AG have each guaranteed the repayment by TUI Cruises of 50 % of a bank loan.

As of December 31, 2019, the outstanding principal amount of the loan was € 26.4 million, or approximately $ 29.7 million, based on the exchange rate at December 31, 2019.

The loan amortizes quarterly and is currently secured by a first mortgage on Mein Schiff Herz .

Based on current facts and circumstances, we do not believe potential obligations under our guarantee of this bank loan are probable.

In addition to our guarantee of the bank loan, TUI Cruises has various ship construction and financing agreements which include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55 % through May 2031.

Our investment amount, outstanding term loan and the potential obligations under the bank loan guarantee are substantially our maximum exposure to loss in connection with our investment in TUI Cruises.

We have determined that we are not the primary beneficiary of TUI Cruises.

We believe that the power to direct the activities that most

We have determined that TUI Cruises GmbH ("TUIC"), our 50 %-owned joint venture, which operates the brands TUI Cruises and Hapag-Lloyd Cruises, is a VIE.

We have determined that we are not the primary beneficiary of TUIC.

We believe that the power to direct the activities that most significantly impact TUIC’s economic performance are shared between ourselves and TUI AG, our joint venture partner.

All the significant operating and financial decisions of TUIC require the

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significantly impact TUI Cruises’ economic performance are shared between ourselves and TUI AG.

All the significant operating and financial decisions of TUI Cruises require the consent of both parties, which we believe creates shared power over TUI Cruises.

consent of both parties, which we believe creates shared power over TUIC.

Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.

In March 2009, we sold Celebrity Galaxy to TUI Cruises for € 224.4 million, or $ 290.9 million, to serve as the original Mein Schiff 1 .

Due to the related party nature of this transaction, the gain on the sale of the ship of $ 35.9 million was deferred and being recognized over the remaining life of the ship which was estimated to be 23 years.

On June 30, 2020, TUIC acquired Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG for approximately € 1.2 billion, or approximately $ 1.3 billion as of the purchase date.

Hapag-Lloyd Cruises operates two luxury liners and two smaller expedition ships.

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 December 31, 2020, the net book value of our investment in TUIC was $ 538.4 million, primarily consisting of $ 387.5 million in equity and a loan of € 118.9 million, or approximately $ 145.5 million, based on the exchange rate at December 31, 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.

This loan is 50 % guaranteed by TUI AG and is secured by a first priority mortgage on the ship.

The majority of these amounts were included within Other assets in our consolidated balance sheets.

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

Our investment amount and outstanding term loan are substantially our maximum exposure to loss in connection with our investment in TUIC.

In March 2009, we sold Celebrity Galaxy to TUI Cruises for € 224.4 million, or $ 290.9 million as of the sale date, to serve as the original Mein Schiff 1 .

Due to the related party nature of this transaction, the gain on the sale of the ship of $ 35.9 million was deferred and was being recognized over the remaining life of the ship which was estimated to be 23 years.

In April 2018, TUI Cruises sold the original Mein Schiff 1 and as a result we accelerated the recognition of the remaining balance of the deferred gain, which was $ 21.8 million.

This amount is included within Other income (expense) in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2018.

On February 7, 2020, TUI Cruises entered into an agreement to acquire Hapag-Lloyd Cruises, a luxury and expedition brand for German-speaking guests, from TUI AG.

Hapag-Lloyd Cruises operates two luxury liners and three smaller expedition ships.

The transaction is subject to regulatory approval and customary closing conditions.

We have determined that Pullmantur Holdings S.L.

("Pullmantur Holdings"), which operates the Pullmantur brand and in which we have a 49 % noncontrolling interest and Springwater Capital LLC has a 51 % interest, is a VIE for which we are not the primary beneficiary, as we do not have the power to direct the activities that most significantly impact the entity's economic performance.

Accordingly, we do not consolidate this entity and we account for this investment under the equity method of accounting.

As of December 31, 2019 and December 31, 2018, our maximum exposure to loss in Pullmantur Holdings was $ 49.7 million and $ 58.5 million, respectively, consisting of loans and other receivables.

These amounts were included within Trade and other receivables, net and Other assets in our consolidated balance sheets.

We have 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 December 31, 2019.

Proceeds of the facility, which were available to be drawn through December 31, 2018 accrue interest at an interest rate of 6.5 % per annum, are payable through 2022.

An affiliate of Springwater Capital LLC, has guaranteed repayment of 51 % of the outstanding amounts under the facility.

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.

As of December 31, 2018, € 14.0 million, or approximately $ 16.0 million, based on the exchange rate at December 31, 2018, was outstanding under this facility.

We determined that Pullmantur Holdings, in which we have a 49 % noncontrolling interest and Springwater Capital LLC has a 51 % interest, is a VIE for which we are not the primary beneficiary as we do not have the power to direct the activities that most significantly impact the entity's economic performance.

In 2020, Pullmantur Holdings and certain of its subsidiaries filed for reorganization under the terms of the Spanish insolvency laws due to the negative impact of the COVID-19 pandemic on the companies.

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

Refer to Note 7.

Property and Equipment for further discussion on the impact of the ships' sale on our consolidated financial statements.

In addition, we recognized a loss of $ 69.0 million within Other expense in our consolidated statements of comprehensive (loss) income, during the quarter ended June 30, 2020 representing deferred currency translation adjustment losses, net of hedging, as we no longer had significant involvement in the Pullmantur operation.

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.

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.

As of December 31, 2020, we did not have any exposure to credit loss in Pullmantur Holdings.

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

These amounts were included within Trade and other receivable s, net and Other assets in our consolidated balance sheets.

We have determined that Grand Bahama Shipyard Ltd.

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

During the years ended December 31, 2019 and 2018, we made payments of $ 45.7 million and $ 44.7 million, respectively, to Grand Bahama for ship repair and maintenance services.

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.

Accordingly, we do not consolidate this entity and we account for this investment under the equity method of accounting.

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.

As of December 31, 2018, the net book value of our investment in Grand Bahama was approximately $ 56.1 million, consisting of $ 41.4 million in equity and loans of $ 14.6 million.

These amounts represent our maximum exposure to loss related to our investment in Grand Bahama.

During the years ended December 31, 2020 and 2019, we made payments of $ 0.2 million.

and $ 45.7 million, respectively, to Grand Bahama for ship repair and maintenance services.

We have determined

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

Accordingly, we do not consolidate this entity.

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

During the quarter ended March 31, 2020, we performed an impairment evaluation on our investment in Grand Bahama.

As a result of the evaluation, we did not deem our investment balance to be recoverable and recorded an impairment charge of $ 30.1 million bringing our investment balance to zero .

The impairment assessment and the resulting charge on our equity method investment in Grand Bahama were determined based on management’s estimates and projections.

We are currently recognizing our share of equity method losses against the carrying value of our loans receivable from Grand Bahama.

For further information on the measurements used to estimate the fair value of our equity investments, refer to Note 18.

Fair Value Measurements and Derivative Instruments.

As of December 31, 2020, we had exposure to credit loss in Grand Bahama consisting of $ 19.1 million in loans.

Our loans to Grand Bahama mature between December 2020 and March 2026 and bear interest at LIBOR plus 2.0 % 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.

During the years ended December 31, 2019 and 2018, we received principal and interest payments of $ 8.6 million and $ 16.4 million, respectively.

We did not receive principal and interest payments during the year ended December 31, 2020.

During the year ended December 31, 2019, we received principal and interest payments of $ 8.6 million.

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

The loans are currently accruing interest under the effective yield method.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We monitor credit risk associated with the loan through our participation on Grand Bahama's board of directors along with our review of Grand Bahama's financial statements and projected cash flows.

Based on this review, we believe the risk of loss associated with the outstanding loan is not probable as of December 31, 2019.

We monitor credit risk associated with the loans through our participation on Grand Bahama’s board of directors along with our review of Grand Bahama’s financial statements and projected cash flows.

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.

During the year ended December 31, 2020, no credit losses were recorded related to these loans.

In April 2019, Grand Bahama experienced an incident involving one of its drydocks where Oasis of the Seas was undergoing maintenance.

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Grand Bahama's management is working with its insurance underwriter to determine coverage under their existing policies.

In March 2018, we and Ctrip.com International Ltd.

("Ctrip") announced the decision to end the Skysea Holding International Ltd.

("Skysea Holding") venture in which we have a 36 % ownership interest.

As a result, we reviewed the recoverability of our investment in Skysea Holding and determined that our investment, debt facility and other receivables due from the brand were impaired and recognized an impairment charge of $ 23.3 million which was included within Other (expense) income in our consolidated statement of comprehensive income (loss) for the year ended December 31, 2018.

The charge reflected a full impairment of our investment in SkySea Holding and other receivables due to us and reduced the debt facility and related accrued interest due to us to Skysea Holdings to its net realizable value.

In December 2018, the Golden Era, the ship operated by SkySea Cruises, and a wholly-owned subsidiary of Skysea Holdings, was sold to an affiliate of TUI AG.

Proceeds from the sale were distributed to Ctrip and us, which eliminated our net receivable balance due from Skysea Holding, resulting in no further impairment charges.

As of December 31, 2019, we do not have any exposures to loss related to our investment in Skysea Holding.

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

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2020 2019 2018

Share of equity income from investments $ 230,980 $ 210,756 $ 156,247

Share of equity (loss) income from investments $ ( 213,286 ) $ 230,980 $ 210,756

Dividends received (1)

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(2) Included within Other assets in our consolidated balance sheets.

We also provide ship management services to TUI Cruises GmbH, Pullmantur Holdings and Skysea Holding (which ceased cruising operations in September 2018).

Additionally, we bareboat charter to Pullmantur Holdings the vessels currently operated by its brands, which were retained by us following the sale of our 51 % interest in Pullmantur Holdings.

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

We also provide ship management services to TUI Cruises GmbH and provided management services to Pullmantur Holdings (which filed for reorganization in Spain in June 2020) and Skysea Holding (which ceased cruising operations in September 2018).

Additionally, we bareboat chartered to Pullmantur Holdings the vessels previously operated by its brands, which were retained by us following the sale of our 51 % interest in Pullmantur Holdings.

These bareboat charters were

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

terminated when Pullmantur Holdings filed for reorganization in Spain.

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

Year ended December 31,

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Net income $ ( 319,686 ) $ 478,792 $ 476,192

Credit Losses

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements.

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, during the year ended December 31, 2020, we recorded a loss provision of $ 187.1 million primarily on notes receivable of approximately $ 81.6 million related to our previous sales of property and equipment to third parties and on receivables of approximately $ 103.5 million mostly related to loans and other receivables due from Pullmantur Holdings.

We also wrote-off a credit loss allowance amount of $ 107.3 million during 2020, primarily due to loans and other receivables related to Pullmantur Holdings.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes our credit loss allowance related to receivables for the year ended December 31, 2020 (in thousands):

Credit Loss Allowance

Balance at January 1, 2020 $ 5,635

Loss provision for receivables 187,128

Write-offs ( 107,316 )

Balance at December 31, 2020 $ 85,447

Our credit loss allowance balance for the year ended December 31, 2020 primarily related to a $ 81.6 million loss provision recognized during 2020 on notes receivable related to our previous sale of property and equipment mostly to third parties.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Debt consists of the following (in thousands):

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Fixed rate debt:

Senior notes 2.65% to 7.50% 2020 - 2028 $ 1,746,280 $ 1,724,194

Unsecured senior notes 2.65 % - 9.13 %

2020 - 2028 $ 2,464,994 $ 1,746,280

Secured senior notes 7.25 % - 11.50 %

Unsecured term loans 2.53% to 5.41% 2021 - 2030 2,806,774 2,148,351

2023 - 2025 3,895,166 662,398

Unsecured term loans 2.53 % - 5.41 %

2021 - 2032 3,210,161 2,806,774

Convertible notes 2.88 % - 4.25 %

2023 1,454,488 —

Total fixed rate debt 11,024,809 5,215,452

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1.45 % 2022 - 2024 3,289,000 165,000

Commercial paper 2.19 % 2019 1,434,180 775,488

USD unsecured term loan 2.31% to 5.64% 2019 - 2028 3,519,853 4,005,848

Euro unsecured term loan 1.15% to 1.58% 2021 - 2028 676,740 734,176

Unsecured UK Commercial paper 2021 409,319 —

USD Commercial paper — % — — 1,434,180

USD unsecured term loan 0.74 % - 4.05 %

2020- 2028 4,002,249 3,519,853

Euro unsecured term loan 1.15 % - 1.58 %

2021 - 2028 705,064 676,740

Total variable rate debt 8,405,632 5,795,773

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(1) Interest rates based on outstanding loan balance as of December 31, 2020 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

(2) Includes $ 1.7 billion facility due in 2024 and $ 1.2 billion facility due in 2022, each of which accrue interest at LIBOR plus 1.00 %, currently 2.91 %, and are subject to a facility fee of 0.125 %.

(2) Includes $ 1.9 billion facility due in 2024 and $ 1.6 billion facility due in 2022, each of which accrue interest at LIBOR plus 1.30 %, which interest rate was 1.54 %, as of December 31, 2020 and each is subject to a facility fee of 0.20 %.

(3) At December 31, 2020 and 2019, the weighted average interest rate for total debt was 6.02 % 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 December 31, 2020, our aggregate revolving borrowing capacity was $ 3.5 billion and was fully utilized through a combination of amounts drawn and letters of credit issued under the facilities.

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.

As of December 31, 2020, we have posted collateral in the amount of approximately $ 91 million.

In March 2020, we took delivery of Celebrity Apex .

To finance the purchase, we borrowed $ 722.2 million under a previously committed unsecured term loan which is 100 % guaranteed by BpiFrance Assurance Export, the official export credit agency of France.

The loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.23 % per annum.

In the second quarter of 2020 and the first quarter of 2021, we amended the agreement to defer the payment of all principal payments due between April 2020 and March 2022.

The deferred amounts will be repayable starting in 2022 over a five year period.

In March 2020, we borrowed $ 2.2 billion pursuant to a 364 -day senior secured term loan agreement.

In May 2020, this 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 Secured Notes (as described below) issued in May 2020.

This secured term loan would have matured 364 days after funding and 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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

We would have also been required to pay a duration fee in an amount equal to 0.25 % of the aggregate loan principal amount every 60 days.

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 $ 41.1 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss).

In May 2020, we issued $ 3.32 billion of senior secured notes (the "Secured Notes") for net proceeds of approximately $ 3.2 billion.

We repaid the $ 2.35 billion, 364 -day senior secured term loan in its entirety with a portion of the proceeds of the Secured Notes.

$ 1.0 billion of the notes accrue interest at 10.875 % and mature in 2023 (the "2023 Secured Notes").

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

The 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 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 , the collateral account established pursuant to the indenture governing the Secured Notes (the "Secured Notes Indenture") , mortgages on the 28 vessels owned by such subsidiaries, and an assignment of insurance and earnings in respect of such vessels, 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 March 1, 2023, we may, at our option, redeem some or all of the 2023 Secured Notes at 100 % of the principal amount thereof plus accrued and unpaid interest plus the applicable “make-whole premium” described in the Secured Notes Indenture.

On or after March 1, 2023, we may, at our option, redeem some or all of the 2023 Secured Notes at a redemption price equal to 100 % of the principal amount of the 2023 Secured Notes to be redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

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.

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.

In addition, on or prior to June 1, 2022, we may, at our option, redeem up to 40 % of the 2025 Secured Notes with the proceeds from certain equity offerings at the redemption price listed in the Secured Notes Indenture.

In addition, we may redeem all, but not part, of the Secured Notes upon the occurrence of specified tax events set forth in the Secured Notes Indenture.

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

The notes are fully and unconditionally guaranteed by RCI Holdings LLC, which owns 100 % of the equity interests in certain of our wholly-owned vessel-owning subsidiaries.

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

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

Prior to March 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 September 30, 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;

• 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 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.

Holders of the convertible notes may require us, 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.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We allocated $ 907.9 million of the convertible notes' proceeds, net of debt issue costs, to Long-term debt and $ 209.0 million to Paid-in-capital on our Consolidated Balance Sheet.

We recognized the equity component by ascribing the difference between the proceeds and the fair value of the convertible notes' 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.

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

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.

We incurred total debt issue costs of $ 33.1 million on the issuance of the debt and allocated $ 6.2 million to Paid-in-capital .

Debt issuance costs attributable to debt will be amortized to interest expense over the term of the convertible notes.

In October 2020, we issued $ 575 million of senior convertible notes which accrue interest at 2.875 % and mature in 2023.

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

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 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.

We allocated $ 463.0 million of the convertible notes' proceeds, net of debt issue costs, to Long-term debt and $ 101.9 million to Paid-in-capital on our Consolidated Balance Sheet.

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

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.

We incurred total debt issue costs of $ 10.1 million on the issuance of the debt and allocated $ 1.8 million to Paid-in-capital .

Debt issuance costs attributable to debt will be amortized to interest expense over the term of the convertible notes.

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

(in thousands) As of December 31, 2020

Principal $ 1,725,000

Unamortized debt discount and transaction costs 312,117

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

(in thousands) As of December 31, 2020

Contractual interest expense $ 30,832

Amortization of debt discount and transaction costs 52,518

In June 2020, RCL Cruises Ltd., our subsidiary that operates and manages our business in the United Kingdom, established a commercial paper facility for the purpose of issuing short-term, unsecured Sterling-denominated notes that are eligible 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.

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

As of December 31, 2020, we had £ 300.0 million, or approximately $ 409.9 million, based on the exchange rate at December 31, 2020, of commercial paper notes outstanding under this program.

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 took delivery of Silver Moon .

To finance the purchase, Silversea Cruise Holding Ltd., our wholly owned subsidiary, 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 currently accrues at LIBOR plus 2.00 %.

The financing to purchase Silver Moon is reflected in our Consolidated Balance Sheet for the year ended December 31, 2020.

During 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 4 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.

During the first quarter of 2021, we further amended our export-credit backed ship debt facilities and deferred an additional $ 0.8 billion of principal payments due under these export facilities between April 2021 and March 2022.

The new amounts being deferred are scheduled to be repaid over a five year period starting in April 2022.

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 December 31, 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 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 $ 11.2 billion as of December 31, 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 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, with the exception of a $ 130.0 million term loan due 2023, to

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

During the first quarter of 2021, we amended $ 4.9 billion of our non-export credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022 or, if earlier, that date falling after January 1, 2022 on which we elect to comply with the modified covenants.

In addition, pursuant to the amendments, we have modified the manner in which such covenants are calculated (temporarily in certain cases and permanently in others) as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023.

The amendments also increase the monthly-tested minimum liquidity covenant to $ 500 million for the duration of the waiver period (subject to reduction to $ 350 million if we raise at least $ 500 million of additional capital).

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

Pursuant to these amendments, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.

During the first quarter of 2021, we also amended $ 6.2 billion of our export credit facilities to extend the waiver of the financial covenants through and including at least the end of the third quarter of 2022.

These amendments also allow for the deferral of up to $ 1.1 billion of principal payments due between April 2021 and April 2022 subject to the satisfaction of various conditions precedent.

As of February 19, 2021, the conditions precedent have been satisfied for 13 of the 15 amended facilities, which will allow us to defer $ 0.8 billion of amortization payments due during this period.

There can be no assurances that the conditions precedent will be met for the remaining two facilities.

The deferred amounts will be repayable semi-annually over a five-year period starting in April 2022.

Pursuant to these amendments, we have agreed to implement the same liquidity covenant that applies in our non-export credit facilities.

The amendments also provide for mandatory prepayment of the deferred amounts upon the taking of certain actions.

Subject to a number of carveouts, these include, but are not limited to, issuance of dividends, completion of share repurchases, issuances of debt other than for crisis and recovery purposes, the making of loans and the sale of assets other than at arm’s length

In the fourth quarter of 2020 and the first quarter of 2021, we entered into amendments to our drawn and undrawn ECA facilities to provide for the issuance of guarantees in satisfaction of existing obligations under these facilities.

Following issuance (which, in the case of the undrawn facilities, will occur once the debt is drawn), the guarantees will be released under certain circumstances as other debt is repaid or refinanced on an unsecured and unguaranteed basis.

In connection with and following the issuance of the guarantees, the guarantor subsidiaries are restricted from issuing additional guarantees in favor of lenders (other than those lenders who are party to the ECA facilities), and certain of the guarantor subsidiaries are restricted from incurring additional debt.

In addition, the ECA facilities will benefit from guarantees to be issued by intermediary parent companies of subsidiaries that take delivery of any new vessels subject to export-credit backed financing.

For information related to the covenants in our Port of Miami Terminal "A" operating lease agreement, refer to Note 10 .

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

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 February 25, 2021, S&P Global further downgraded our senior unsecured rating from B+ to B.

In April 2019, we amended our $ 1.4 billion unsecured revolving credit facility due in 2020 to extend the termination date through April 2024, increase the facility size to $ 1.7 billion and reduce pricing.

The interest rate and facility fee vary with our senior debt rating and are currently set at LIBOR plus 1.0 % per annum and 0.125 % per annum, respectively.

The interest rate and facility fee vary with our senior debt rating set at LIBOR plus 1.0 % per annum and 0.125 % per annum, respectively.

These amendments did not result in the extinguishment of debt.

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In April 2019, we entered into and drew in full on an unsecured three-year term loan agreement in the amount of $ 1.0 billion.

The loan accrues interest at a floating rate of LIBOR plus an applicable margin, which varies with our senior debt rating, and is currently 1.075 % per annum.

The loan accrues interest at a floating rate of LIBOR plus an applicable margin, which varies with our senior debt rating set at 1.075 % per annum.

Proceeds of this loan were used to repay the $ 700 million 364-day loan due July 2019 related to the acquisition of Silversea Cruises and the remaining balance of the unsecured term loan originally incurred in 2010 to purchase Allure of the Seas.

2 unchanged sentences

To finance the purchase, we borrowed $ 908.0 million under a previously committed unsecured term loan which is 95 % guaranteed by Euler Hermes Aktiengesellschaft, the official export credit agency of Germany.

The loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.45 % per annum.

The loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.45 % per

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

In the second quarter of 2020 and the first quarter of 2021, we amended the agreement to defer the payment of all principal payments due between April 2020 and March 2022.

The deferred amounts will be repayable starting in 2022 over a five year period.

In May 2019, we took delivery of Celebrity Flora .

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As of December 31, 2019 we had $ 1.4 billion of commercial paper notes outstanding with a weighted average interest rate of 2.19 % and a weighted average maturity of approximately 21 days.

As of December 31, 2018 we had $ 777.0 million of commercial paper notes outstanding with a weighted average interest rate of 3.19 % and a weighted average maturity of approximately 23 days.

Except for Celebrity Flora , 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.

In consideration for these guarantees, depending on the financing arrangement, we pay to the applicable export credit agency (1) a fee of 0.77 % per annum based on the outstanding loan balance semi-annually over the term of the loan (subject to adjustment 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 .

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

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

The unsecured senior notes and senior debentures are not redeemable prior to maturity, except that certain series may be redeemed upon the payment of a make-whole premium.

Finance Leases

Silversea Cruises operates two ships, the Silver Whisper and Silver Explorer, under finance leases .

The finance lease for the Silver Whisper will expire in 2022, subject to an option to purchase the ship, and the finance lease for the Silver Explorer will expire in 2021, subject to an option to extend the lease for up to an additional six years.

The total aggregate amount of the finance lease liabilities recorded for these ships at the acquisition date was $ 82.8 million.

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

Refer to Note 3.

Business Combination for further information regarding the assets acquired and liabilities assumed in the Silversea Cruises acquisition.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Following is a schedule of annual maturities on our total debt net of debt issuance costs, and including capital leases and commercial paper, as of December 31, 2019 for each of the next five years (in thousands):

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

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 December 31, 2020 for each of the next five years (in thousands):

2021 $ 1,371,087

2022 4,143,884

2023 4,433,261

2024 2,862,486

2025 3,480,961

Thereafter 3,037,364

Operating leases

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 sheet as of December 31, 2020.

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We recognize lease expense for these leases on a straight-line basis over the lease term.

Refer to Note 2.

Summary of Significant Accounting Policies, for further information on the adoption of ASC 842.

Finance leases 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.

Our finance leases include two ships, Silver Whisper and Silver Explorer, operated by Silversea Cruises.

The finance lease for Silver Whisper will expire in 2022, subject to an option to purchase the ship, and the finance lease for Silver Explorer will expire in 2021, subject to an option to extend the lease for up to an additional 6 years.

During the first quarter of 2020, we determined that the lease for Silver Explorer , operated by Silversea Cruises and previously classified as a finance lease, was an operating lease based on modification of the terms of the lease.

The operating lease for Silver Explorer will expire in 2023.

In June 2019, the Company entered into a new master lease agreement (“Master Lease”) with Miami-Dade County relating to the buildings and surrounding land located at its Miami headquarters, which are classified as finance leases in accordance with ASC 842.

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

Additionally, we do have a residual value guarantee associated with our lease of a terminal at PortMiami in Miami, Florida 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 December 31, 2020.

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

During the second quarter of 2020, we amended our Port of Miami terminal lease to increase the lien basket in line with our debt facilities.

We further amended this lease in the first quarter of 2021 to and obtain a financial covenant waiver through the third quarter of 2022.

This obligation is prepayable at any time without penalty.

As of December 31, 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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However, for berthing agreements, we account for the lease and non-lease components as a single lease component.

Additionally, we bareboat charter to Pullmantur Holdings the vessels currently operated by its brands, which were retained by us following the sale of our 51 % interest in Pullmantur Holdings in 2016.

We account for the

bareboat charters of these vessels as operating leases for which we are the lessor.

The remaining payments and term of these leases are immaterial to our consolidated financial statements.

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, at which time we terminated these bareboat charters.

Other Assets for further discussion of Pullmantur Holdings.

We accounted for the bareboat charters of these vessels as operating leases for which we were the lessor.

Finance Leases

Silversea Cruises operates the Silver Whisper , under a finance lease.

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 December 31, 2020 and December 31, 2019, respectively.

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

Supplemental balance sheet information for leases was as follows (in thousands):

As of December 31, 2019

As of December 31, 2020 As of December 31, 2019

Lease assets:

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

Consolidated Statement of Comprehensive Income (Loss) Classification Twelve Months Ended December 31, 2019

Consolidated Statement of Comprehensive Income (Loss) Classification Year ended December 31, 2020 Year ended December 31, 2019

Operating lease costs Commission, transportation and other $ 38,349 $ 76,226

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

As of December 31, 2019

As of December 31, 2020 As of December 31, 2019

Weighted average of the remaining lease term

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

Twelve Months Ended December 31, 2019

Year ended December 31, 2020 Year ended December 31, 2019

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

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Thereafter 383,974

Total expense for operating leases, under ASC 840, primarily for offices, warehouses and motor vehicles amounted to $ 32.2 million and $ 29.3 million for the years ended December 31, 2018 and 2017, respectively.

Total expense for operating leases, primarily for offices, warehouses and motor vehicles amounted to $ 32.2 million for the year ended December 31, 2018.

In July 2016, we executed an agreement with Miami Dade County (“MDC”), which was simultaneously assigned to Sumitomo Banking Corporation (“SMBC”), to lease land from MDC and construct a new cruise terminal of approximately 170,000 square feet at PortMiami in Miami, Florida, which was completed during the fourth quarter of 2018 and serves as a homeport.

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We determined that the lease arrangement between SMBC and us should be accounted for as an operating lease.

Right-of-use assets impairments

During the year ended December 31, 2020, we identified that the undiscounted cash flows for certain right-of-use assets were less than their carrying values due to the negative impact of COVID-19.

We evaluated these assets pursuant to our long-lived asset impairment test, resulting in an impairment charge of $ 65.9 million to write down these assets to their estimated fair values during the year ended December 31, 2020.

Redeemable Noncontrolling Interest

In connection with the acquisition of Silversea Cruises, we recorded a redeemable noncontrolling interest of $ 537.8 million due to the put options held by HCH.

The put options may require us to purchase HCH's remaining interest, or 33.3 % of Silversea Cruises, upon the occurrence or nonoccurrence of certain future events that are not solely within our control.

As of December 31, 2019, HCH'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 interests in our consolidated statements of comprehensive income (loss).

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 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 acquisition.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On July 9, 2020, we acquired the remaining 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.

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 as 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 redeemable noncontrolling interest as of December 31, 2020 (in thousands):

Balance as of January 1, 2019 $ 542,020

Additions (Silversea Cruises acqusition) 537,770

Net income attributable to noncontrolling interest, including the contractual accretion of the put options 28,713

Other ( 500 )

Distribution to noncontrolling interest ( 752 )

Balance at December 31, 2019 $ 569,981

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

Distribution to noncontrolling interest ( 752 )

Acquisition of noncontrolling interest ( 592,313 )

Balance at December 31, 2020 $ —

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Shareholders' Equity

Common Stock Issued

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.

During December 2020, we issued 13.0 million shares of common stock, par value $ 0.01 per share, at an average price of $ 76.65 per share.

We received net proceeds of $ 994.6 million after deducting the underwriters’ discount and the estimated offering expenses payable by us.

Of the total proceeds, $ 868.6 million was received as of December 31, 2020 and the remainder was received in January of 2021.

Dividends Declared

During the fourth and third quarters of 2019, we declared a cash dividend on our common stock of $ 0.78 per share which was paid in the first quarter of 2020 and fourth quarter of 2019, respectively.

During 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 the second and third quarters of 2019, respectively.

During the fourth and third quarters of 2018, we declared a cash dividend on our common stock of $ 0.70 per share which was paid in the first quarter of 2019 and fourth quarter of 2018, respectively.

During the first and second quarters of 2018, we declared a cash dividend on our common stock of $ 0.60 per share which was paid in the second and third quarters of 2018, respectively.

During the first quarter of 2018, we also paid a cash dividend on our common stock of $ 0.60 per share which was declared during the fourth quarter of 2017.

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

Pursuant to amendments made to these agreements during the first quarter of 2021, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.

During the fourth and third quarters of 2019, we declared a cash dividend on our common stock of $ 0.78 per share which was paid in the first quarter of 2020 and fourth quarter of 2019, respectively.

During 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 the second and third quarters of 2019, respectively.

During the first quarter of 2017, we also paid a cash dividend on our common stock of $ 0.48 per share which was declared during the fourth quarter of 2016.

Common Stock Repurchase Program

In May 2018, our board of directors authorized a 24 -month common stock repurchase program for up to $ 1.0 billion.

The timing and number of shares to be repurchased will depend on a variety of factors, including price and market conditions.

Repurchases under the program may be made at management's discretion from time to time on the open market or through privately negotiated transactions.

During the quarter ended on June 30, 2020, the 24 -month common stock repurchase program authorized by our board of directors on May 9, 2018 had expired.

In connection with our debt covenant waivers, we agreed with our lenders not to engage

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Effective in the first quarter of 2021, the agreement with our lenders to suspend stock repurchases is extended through the third quarter of 2022.

During the year ended December 31, 2019, we repurchased 0.9 million shares of our common stock under this program, for a total of $ 99.6 million, in open market transactions that were recorded within Treasury stock in our consolidated balance sheets.

As of December 31, 2019, we have $ 600.0 million that remains available for future stock repurchase transactions under our Board authorized program.

Stock-Based Employee Compensation

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In 2020, we issued a target number of 245,417 performance share units, which will vest approximately three years following the award issue date.

The performance payout of these grants will be based on return on our invested capital ("ROIC") and

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

earnings per share (“EPS”) for the year ended December 31, 2021, as may be adjusted by the Talent and Compensation Committee of our board of directors in early 2022 for events that are outside of management's control.

The performance payout of these grants will be based on return on our invested capital ("ROIC") and earnings per share ("EPS") for the year ended December 31, 2022, as may be adjusted by the Talent and Compensation Committee of our board of directors in early 2023 for events that are outside of management's control.

Beginning in 2016, our senior officers meeting certain minimum age and service criteria receive their long-term incentive awards through a combination of restricted stock awards and restricted stock units.

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Each restricted stock award is issued in an amount equal to 200 % of the target number of shares underlying the award based upon the fair market value of our common stock on the date the award is issued.

Dividends accrue (but do not get paid) on the restricted stock awards during the vesting period, with the accrued amounts to be paid out following vesting only on the number of shares underlying the award which actually vest based on satisfaction of the performance criteria.

Declared dividends accrue (but do not get paid) on the restricted stock awards during the vesting period, with the accrued amounts to be paid out following vesting only on the number of shares underlying the award which actually vest based on satisfaction of the performance criteria.

The actual number of shares that vest (not to exceed 200 % of the shares) will be determined based upon the Company's achievement of a specified performance target range.

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For shoreside eligible employees, awards were issued as equity-settled restricted stock units.

As of December 31, 2020, these awards have fully vested.

We also provide an Employee Stock Purchase Plan ("ESPP") to facilitate the purchase by employees of up to 1,300,000 shares of common stock in the aggregate.

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During the years ended December 31, 2020, 2019 and 2018, 184,936 , 91,586 and 74,100 shares of our common stock were purchased under the ESPP at a weighted-average price of $ 48.08 , $ 98.20 and $ 97.50 , respectively.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Total compensation expense recognized for employee stock-based compensation for the years ended December 31, 2020, 2019 and 2018 was as follows (in thousands):

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We did not issue any stock options during the years ended December 31, 2020, 2019 and 2018.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Stock option activity and information about stock options outstanding are summarized in the following table:

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Outstanding at January 1, 2020 64,987 $ 41.22 0.87 $ 5,990

Granted — — — —

Exercised ( 15,340 ) $ 25.18 — —

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We estimate the fair value of each performance share when the grant is authorized and the related service period has commenced.

We remeasure the fair value of our performance shares in each subsequent reporting period until the grant date has occurred, which is the date when the performance conditions are satisfied.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the fair value of our performance shares in each subsequent reporting period until the grant date has occurred, which is the date when the performance conditions are satisfied.

We recognize compensation cost over the vesting period based on the probability of the service and performance conditions being achieved adjusted for each subsequent fair value measurement until the grant date.

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Performance share units activity is summarized in the following table:

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Performance Share Units Activity Number of

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Vested ( 137,948 ) 95.04

Canceled ( 11,899 ) 66.93

Non-vested share units as of December 31, 2020 575,432 116.83

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Earnings Per Share

(Loss) Earnings Per Share

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

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2020 2019 2018

Net Income attributable to Royal Caribbean Cruises Ltd.

for basic and diluted earnings per share $ 1,878,887 $ 1,811,042 $ 1,625,133

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

for basic and diluted (loss) earnings per share $ ( 5,797,462 ) $ 1,878,887 $ 1,811,042

Weighted-average common shares outstanding 214,335 209,405 210,570

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Diluted weighted-average shares outstanding 214,335 209,930 211,554

Basic earnings per share $ 8.97 $ 8.60 $ 7.57

Diluted earnings per share $ 8.95 $ 8.56 $ 7.53

There were no antidilutive shares for the years ended December 31, 2019 , 2018 and 2017.

Basic (loss) earnings per share $ ( 27.05 ) $ 8.97 $ 8.60

Diluted (loss) earnings per share $ ( 27.05 ) $ 8.95 $ 8.56

There were approximately 282,118 antidilutive shares for the year ended December 31, 2020, compared to no antidilutive shares for the years ended December 31, 2019 and 2018.

Since the Company expects to settle in cash the principal outstanding under our 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 year ended December 31, 2020.

Retirement Plan

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Income from activities not considered qualifying activities, which we do not consider significant, remains subject to United-Kingdom corporate income tax.

Income tax expense for items not qualifying under Section 883, tonnage tax and income taxes for the remainder of our subsidiaries was approximately $ 32.6 million, $ 20.9 million and $ 18.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, and was recorded within Other income (expense) .

For the year ended December 31, 2020, we had an income tax benefit of approximately $ 15 million primarily driven by items not qualifying under Section 883.

For the years ended December 31, 2019 and 2018, income tax expense was $ 32.6 million and $ 20.9 million, respectively, for items not qualifying under Section 883, tonnage tax and income taxes for the remainder of our subsidiaries.

Income taxes are recorded within Other income (expense) .

In addition, all interest expense and penalties related to income tax liabilities are classified as income tax expense within Other income (expense) .

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Where we do expect to incur income taxes on future distributions of undistributed earnings, we have provided for deferred taxes, which we do not consider significant to our operations.

As of December 31, 2019, the Company had deferred tax assets, for foreign net operating losses (“NOLs”) of $ 25.1 million.

We have provided a full valuation allowance for these NOLs.

As of December 31, 2020, the Company had deferred tax assets for U.S.

and foreign net operating losses (“NOLs”) of approximately $ 41.2 million.

We have provided a valuation allowance for approximately $ 28.6 million of these NOLs.

$ 18.3 million of the NOLs are subject to expire between 2021 and 2030.

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The following table presents reclassifications out of accumulated other comprehensive loss for the years ended December 31, 2020, 2019 and 2018 (in thousands):

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

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

Details about Accumulated Other Comprehensive Loss Components Year Ended December 31, 2020 Year Ended December 31, 2019 Year Ended December 31, 2018 Affected Line Item in Statements of Comprehensive Income (Loss)

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Foreign currency forward contracts ( 7,315 ) ( 5,080 ) 12,855 Other income (expense)

Foreign currency forward contracts — — — Other indirect operating expenses

Foreign currency collar options — — ( 2,408 ) Depreciation and amortization expenses

Fuel swaps 3,549 ( 1,292 ) ( 1,580 ) Other income (expense)

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Actuarial loss ( 2,067 ) ( 779 ) ( 1,487 ) Payroll and related

Prior service costs — — — Payroll and related

( 2,067 ) ( 779 ) ( 1,487 )

Release of foreign cumulative translation due to sale or liquidation of businesses:

Foreign cumulative translation ( 69,044 ) — — Other operating

Total reclassifications for the period $ ( 150,230 ) $ 4,426 $ ( 12,620 )

During the year ended December 31, 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.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fair Value Measurements and Derivative Instruments

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The valuation model also takes into account the creditworthiness of the Company.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(3) Inputs that are unobservable.

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(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.

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

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

Fair Value Measurements on a Nonrecurring Basis

During 2018, we announced that Skysea Holding would cease cruising operations by the end of 2018.

As a result, we did not deem our investment balance to be recoverable and estimated the fair value of our investment to be zero.

For further information on our Skysea Holding investment and impairment, refer to Note 8.

Other Assets.

Other Financial Instruments

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Valuation of these items does not entail a significant amount of judgment.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(2) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

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Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

(6) The contingent consideration related to the Silversea Cruises acquisition is 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 terminated 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.

Refer to Note 1 .

Business Combination for further information on the Silversea Cruises acquisition.

For the twelve months ended December 31, 2019, we recorded a contingent consideration expense of $ 18.4 million within Other (expense) income in our consolidated statements of comprehensive income (loss).

General, Note 3.

Business Combination, and Note 11 .

Redeemable Noncontrolling Interest for further information on the Silversea Cruises acquisitions.

For the twelve months ended December 31, 2020, we recorded income for the change in fair value of the contingent consideration of $ 45.1 million within Other (expense) income in our consolidated statements of comprehensive income (loss).

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 December 31, 2019 or

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of December 31, 2020 or 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 Measurement at December 31, 2020 Using

Description Total Carrying Amount Total Fair Value Level 3 Total Impairment for the year ended December 31, 2020

Silversea Goodwill(1) 508,578 508,578 508,578 576,208

Indefinite-life intangible asset(2) 318,700 318,700 318,700 30,800

Long-lived assets(3) 577,193 577,193 577,193 727,063

Right-of-use assets(4) 67,265 67,265 67,265 65,909

Equity-method investments(5) — — — 39,735

Total 1,471,736 1,471,736 1,471,736 1,439,715

___________________________________________________________________________________________________

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

The principal assumptions used in the discounted cash flow model were (i) the timing of our return to service, changes in market conditions and port or other restrictions;

(ii) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

and (iii) weighted average cost of capital (i.e., discount rate).

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 the Silversea Cruises' reporting unit.

We assigned a probability to each revenue and expense scenario.

We discounted the projected cash flows using rates specific to the Silversea Cruises' reporting unit based on its weighted-average cost of capital, which was determined to be 12.75 %.

The fair value of Silversea Cruises’ goodwill was estimated as of March 31, 2020, the date the asset was last impaired.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2018, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

(2) Amount represents the Silversea Cruises trade name which makes up the majority of our indefinite-life intangible assets, totaling $ 321.5 million.

We estimated the fair value of our the Silversea Cruises trade name using a discounted cash flow model and the relief-from-roy alty method and used a discount ra te of 13.25 %.

S ignificant inputs in performing the fair value assessment for the trade name were (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

(ii) the royalty rate of 3.0 %;

and (iii) weighted average cost of capital (i.e., discount rate).

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

(3) Impairments primarily relate to certain vessels during 2020.

In addition, certain construction in progress projects generated impairments during the quarter ended September 30, 2020 and quarter ended December 31, 2020.

For the vessels impaired during the quarter ended 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.

For the vessels impaired during the quarter ended June 30, 2020, we estimated the fair value of the vessels using a modified market approach based on the carrying values and orderly liquidation values of the vessels.

For the vessels impaired during the quarter ended December 31, 2020, we estimated the fair value of the three Azamara vessels using a market approach.

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 and quarter ended December 31, 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.

The fair value of these assets were estimated as of the date the asset was last impaired.

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

We estimated the fair value of the berthing arrangements using estimated projected discounted cash flows and the fair value of the ship operating lease was estimated using a market approach.

The fair value of the berthing arrangements was estimated as of March 31, 2020, the date these assets were last impaired.

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 December 31, 2020, the date this asset was last impaired, and significant inputs in performing the fair value assessment using the market approach for this asset were the 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.

A significant input in performing the fair value assessments for these assets was forecaste d operating results for these investments.

The fair value of these equity-method investments was estimated as of March 31, 2020, the date these assets were last impaired.

For further information on our equity method investments, refer to Note 8 .

Other Assets.

Master Netting Agreements

We have master International Swaps and Derivatives Association (“ISDA”) agreements in place with our derivative instrument counterparties.

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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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Total $ 108,539 $ ( 80,743 ) $ — $ 27,796 $ 39,994 $ ( 39,994 ) $ — $ —

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table presents information about the Company’s offsetting of financial liabilities under master netting agreements with derivative counterparties (in thousands):

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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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Total $ ( 259,705 ) $ 80,743 $ 57,273 $ ( 121,689 ) $ ( 257,728 ) $ 39,994 $ — $ ( 217,734 )

Concentrations of Credit Risk

We monitor our credit risk associated with financial and other institutions with which we conduct significant business and, to minimize these risks, we select counterparties with credit risks acceptable to us and we seek to limit our exposure to an individual counterparty.

As of December 31, 2020, we had counterparty credit risk exposure under our derivative instruments of $ 26.9 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.

In addition, we have established guidelines we follow regarding credit ratings and instrument maturities to maintain safety and liquidity.

We do not normally require collateral or other security to support credit relationships;

however, in certain circumstances this option is available to us.

Derivative Instruments

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Although certain of our derivative financial instruments do not qualify or are not accounted for under hedge accounting, our objective is not to hold or issue derivative financial instruments for trading or other speculative purposes.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices.

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The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment, with the amortization of excluded components affecting earnings.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items.

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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 December 31, 2019 and 2018, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Debt Instrument Swap Notional as of December 31, 2020 (In thousands) Maturity Debt Fixed Rate Swap Floating Rate:

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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 December 31, 2019 and 2018, we maintained interest rate swap agreements on the following floating-rate debt instruments:

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

Debt Instrument Swap Notional as of December 31, 2020 (In thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate

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460,000 October 2032 LIBOR plus 0.95 % 3.20 %

Odyssey of the Seas term loan (2)

191,667 October 2032 LIBOR plus 0.95 % 2.83 %

___________________________________________________________________

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

Amount presented is based on the exchange rate as of December 31, 2020.

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

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

The effective dates of the $ 460.0 million and $ 191.7 million interest rate swap agreements are October 2020 and October 2022, respectively.

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 is a delay in the ship delivery.

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

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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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

currencies of our foreign subsidiaries.

During the year ended December 31, 2020, we maintained an average of approximately $ 364.0 million of these foreign currency forward contracts.

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Our fuel swap agreements are generally accounted for as cash flow hedges.

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 and our 2020 and expected 2021 ship disposals resulted in reductions to our forecasted fuel purchases.

As of December 31, 2020, we discontinued cash flow hedge accounting on 0.6 million metric tons of our fuel swap agreements maturing in 2020 and 2021, which resulted in the reclassification of a net $ 104.4 million loss from Accumulated other comprehensive loss to Other expense during the year ended December 31, 2020.

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.

Future s uspension of our operations or modifications to our itineraries may affect our expected forecasted fuel purchases which could result in further discontinuance of fuel swap cash flow hedge accounting and the reclassification of deferred gains or losses from Accumulated other comprehensive loss into earnings .

Refer to Risk Factors in Part 1, Item 1A.

for further discussion on risks related to the COVID-19 pandemic.

At December 31, 2020, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2023.

As of December 31, 2019 and 2018, we had the following outstanding fuel swap agreements as hedges of our fuel exposure:

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

Fuel Swap Agreements

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(metric tons)

Designated as hedges:

2021 385,050 488,900

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2023 82,400 82,400

Fuel Swap Agreements

As of December 31, 2020 As of December 31, 2019

Designated hedges as a % of projected fuel purchases:

2021 40 % 30 %

2022 23 % 19 %

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Fuel Swap Agreements

As of December 31, 2020 As of December 31, 2019

Projected fuel purchases for year:

2020 54 % 54 %

(metric tons)

Not designated as hedges:

2021 229,850 —

2022 14,650 —

At December 31, 2019 there was no material estimated unrealized net loss associated with our cash flow hedges pertaining to fuel swap agreements to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months when compared to $ 26.8 million at December 31, 2018.

At December 31, 2020 there was $ 13.1 million of estimated unrealized net loss associated with our cash flow hedges pertaining to fuel swap agreements to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months when compared to none at December 31, 2019.

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets were as follows (in thousands):

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Interest rate swaps Other assets $ 17,271 $ 11 Other long-term liabilities $ 144,653 $ 64,168

Interest rate swaps Derivative financial instruments 261 — Derivative Financial Instruments — —

Foreign currency forward contracts

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Interest rate swaps Interest expense (income), net of interest capitalized $ 23,819 $ 16,607 $ ( 8,854 ) $ ( 18,813 ) $ ( 23,464 ) $ 4,673

Interest rate swaps Other income (expense) — — ( 3,139 ) — — 6,065

$ 23,819 $ 16,607 $ ( 8,854 ) $ ( 18,813 ) $ ( 23,464 ) $ 4,673

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Credit Related Contingent Features

Our current interest rate derivative instruments may require us to post collateral if our Standard & Poor's and Moody's credit ratings are below specified levels.

Generally, if on the fifth anniversary of executing a derivative instrument or on any succeeding fifth-year anniversary our credit ratings for our senior unsecured debt were to be rated below BBB- by Standard & Poor's and Baa3 by Moody's, then the counterparty may periodically demand that we post collateral in an amount equal to the difference between (i) the net market value of all derivative transactions with such counterparty that have reached their fifth year anniversary, to the extent negative, and (ii) the applicable minimum call amount.

The amount of collateral required to be posted following such event will change as, and to the extent, our net liability position increases or decreases by more than the applicable minimum call amount.

Our current interest rate derivative instruments require us to post collateral if our Standard & Poor’s and Moody’s credit ratings fall below specified levels.

Specifically, under most of our agreements, if on the fifth anniversary of executing a derivative instrument, or on any succeeding fifth-year anniversary, our credit ratings for our senior unsecured debt is rated below BBB- by Standard & Poor’s and Baa3 by Moody’s, then the counterparty will periodically have the right to demand that we post collateral in an amount equal to the difference between (i) the net market value of all derivative transactions with such counterparty that have reached their fifth year anniversary, to the extent negative, and (ii) the applicable minimum call amount.

The amount of collateral required to be posted will change as, and to the extent, our net liability position increases or decreases by more than the applicable minimum call amount.

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.

At December 31, 2019, five of our interest rate derivative instruments had reached their fifth anniversary;

however, our senior unsecured debt credit rating was Baa2 by Moody's and BBB- by Standard & Poor's and, accordingly, we were not required to post any collateral as of such date.

As of December 31, 2020, our senior unsecured debt credit rating was B+ by Standard & Poor's and B2 by Moody's.

As of December 31, 2020, seven of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $ 57.3 million to satisfy our obligations under our interest rate derivative agreements, taking into account collateral waivers issued by certain banks.

On February 25, 2021, Standard & Poor's further downgraded our senior unsecured debt credit rating from B+ to B.

We believe the maximum additional collateral we may need to provide under these agreements in the next twelve months is approximately $ 33.3 million.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Commitments and Contingencies

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Our future capital commitments consist primarily of new ship orders.

As of December 31, 2019, we had one Quantum-class ship, two Oasis-class ships and three ships of a new generation, known as our Icon-class, on order

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

for our Royal Caribbean International brand with an aggregate capacity of approximately 32,400 berths.

As of December 31, 2019, we had three Edge-class ships on order for our Celebrity brand with an aggregate capacity of approximately 9,400 berths.

Additionally as of December 31, 2019, we had five ships on order with an aggregate capacity of approximately 2,400 berths for our Silversea Cruises brand.

As of December 31, 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 December 31, 2020, we had two Edge-class ships on order for our Celebrity brand with an aggregate capacity of approximately 6,500 berths.

Additionally as of December 31, 2020, we had three ships on order with an aggregate capacity of approximately 1,750 berths for our Silversea Cruises brand.

The following provides further information on recent developments with respect to our ship orders.

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 $ 430.1 million and $ 439.2 million, respectively, based on the exchange rate at December 31, 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.

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

In December 2019, we entered into a credit agreement for the unsecured financing of the sixth Oasis-class ship for up to 80 % of the ship’s contract price through a facility to be guaranteed 100 % by BpiFrance Assurance Export, the official export credit agency of France.

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 $ 1.6 billion based on the exchange rate at December 31, 2020.

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

Interest on the loan will accrue at a fixed rate of 3.00 % (inclusive of margin).

The sixth Oasis-class ship will have a capacity of approximately 5,700 berths.

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 $ 1.7 billion based on the exchange rate at December 31, 2020.

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

Approximately 60 % of the loan will accrue interest at a fixed rate of 3.29 %.

The balance of the loan will accrue interest at a floating rate of LIBOR plus 0.85 %.

The third Icon-class ship will have a capacity of approximately 5,600 berths.

During 2017, we entered into credit agreements for the unsecured financing of the two Icon-class ships for up to 80 % of each ship’s contract price.

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

The first and second Icon-class ships will each have a capacity of approximately 5,600 berths and are expected to enter service in the second quarters of 2022 and 2024, respectively.

The first and second Icon-class ships will each have a capacity of approximately 5,600 berths.

During 2017, we entered into credit agreements for the unsecured financing of the third and fourth Edge-class ships and the fifth Oasis-class ship for up to 80 % of each ship’s contract price through facilities to be guaranteed 100 % by Bpifrance Assurance Export, the official export credit agency of France.

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The loans will amortize semi-annually and will mature 12 years following delivery of each ship.

Interest on the loans will accrue at a fixed rate of 1.28 % for the third Edge-class ship and at a fixed rate of 3.18 % for both, the fourth Edge-class ship and the fifth Oasis-class ship.

The third and fourth Edge-class ships, each of which will have a capacity of approximately 3,250 , are expected to enter service in the fourth quarters of 2021 and 2022, respectively.

The fifth Oasis-class ship will have a capacity of approximately 5,700 berths and is expected to enter service in the second quarter of 2021.

During 2016, we entered into credit agreements for the unsecured financing of our first two Edge-class ships for up to 80 % of each ship’s contract price through facilities to be guaranteed 100 % by Bpifrance Assurance Export, the official export credit agency of France.

Celebrity Edge , the first Edge-class ship for our Celebrity Cruises brand, entered service in December 2018.

For further information on the financing agreement for this ship, refer to Note 9.

The second Edge-class ship will have a capacity of approximately 2,900 berths and is expected to enter service in the first quarter of 2020.

Under the financing arrangement for the second Edge-class ship, we have the right, but not the obligation, to satisfy the obligations to be incurred upon delivery and acceptance of the vessel 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 for the second Edge-class ship delivery is not to exceed the United States dollar equivalent of € 627.1 million, or approximately $ 704.0 million, respectively, based on the exchange rate at December 31, 2019.

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

Interest on the loan will accrue at a fixed rate of 3.23 %.

During 2015, we entered into a credit agreement for the unsecured financing of the fifth Quantum-class ship for up to 80 % of the ship’s contract price, through a facility to be guaranteed 95 % by Euler Hermes, official export credit agency of Germany.

Hermes has agreed to guarantee to the lender payment of 95 % of the financing.

The ship will have a capacity of approximately 4,200 berths and is expected to enter service in the fourth quarter of 2020.

This credit agreement makes available to us an unsecured term loan in an amount up to the United States dollar equivalent of € 777.5 million, or approximately $ 872.7 million, based on the exchange rate at December 31, 2019.

Interest on the loans will accrue at a fixed rate of 1.28 % for the third Edge-class ship and at a fixed rate of 3.18 % for both, the fourth Edge-class ship and

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the fifth Oasis-class ship.

The third and fourth Edge-class ships, each of which will have a capacity of approximately 3,250 berths.

The fifth Oasis-class ship will have a capacity of approximately 5,700 berths.

During 2015, we entered into a credit agreement for the unsecured financing of Odyssey of the Seas for up to 80 % of the ship’s contract price, through a facility to be guaranteed 95 % by Euler Hermes, official export credit agency of Germany.

Hermes has agreed to guarantee to the lender payment of 95 % of the financing.

The ship will have a capacity of approximately 4,200 berths.

This credit agreement makes available to us an unsecured term loan in an amount up to the United States dollar equivalent of € 777.5 million, or approximately $ 951.2 million, based on the exchange rate at December 31, 2020.

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

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Our future capital commitments consist primarily of new ship orders.

As of December 31, 2019, our Global Brands have the following ships on order:

Ship Shipyard Expected to Enter

Service Approximate

As of December 31, 2020, our Global and Partner Brands have the following ships on order.

COVID-19 has impacted shipyard operations which have and may continue to result in delays of our previously contracted ship deliveries.

As of December 31, 2020, the expected dates that the ships on order are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship Shipyard Expected to be delivered Approximate

Royal Caribbean International —

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

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

Wonder of the Seas Chantiers de l’Atlantique 1st Quarter 2022 5,700

Unnamed Chantiers de l’Atlantique 2nd Quarter 2024 5,700

Quantum-class:

Odyssey of the Seas Meyer Werft 4th Quarter 2020 4,200

Unnamed Meyer Turku Oy 2nd Quarter 2022 5,600

Odyssey of the Seas Meyer Werft 1st Quarter 2021 4,200

Unnamed Meyer Turku Oy 3rd Quarter 2023 5,600

Unnamed Meyer Turku Oy 2nd Quarter 2025 5,600

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Celebrity Cruises —

Celebrity Apex Chantiers de l’Atlantique 2nd Quarter 2020 2,900

Celebrity Beyond Chantiers de l’Atlantique 4th Quarter 2021 3,250

Celebrity Beyond Chantiers de l’Atlantique 2nd Quarter 2022 3,250

Unnamed Chantiers de l’Atlantique 4th Quarter 2023 3,250

Silversea Cruises — (1)

Silver Origin De Hoop 3rd Quarter 2020 100

Silver Moon Fincantieri 3rd Quarter 2020 550

Silver Dawn Fincantieri 3rd Quarter 2021 550

Silver Dawn Fincantieri 4th Quarter 2021 550

Evolution-class:

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Unnamed Fincantieri 1st Quarter 2026 4,100

Hapag-Lloyd Cruises (50% joint venture) —

Hanseatic Spirit Vard Fincantieri

2nd Quarter 2021 230

Total Berths 51,980

(1) The revenue impact from Silversea Cruises' new ships will be recognized on a three month reporting lag from the "Expected to Enter Service" dates above.

Refer to Note 1.

General to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

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.

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 $ 394.7 million and $ 403.0 million, respectively, based on the exchange rate at December 31, 2019.

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

The first and second Evolution-class ships will each have a capacity of approximately 600 berths and are scheduled for delivery in the first quarters of 2022 and 2023, respectively.

In December 2019, we entered into a credit agreement for the unsecured financing of the sixth Oasis-class ship for up to 80 % of the ship’s contract price through a facility to be guaranteed 100 % by Bpifrance Assurance Export, the official export credit agency of France.

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 December 31, 2019.

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

Interest on the loan will accrue at a fixed rate of 3.00 % (inclusive of margin).

The sixth Oasis-class ship will have a capacity of approximately 5,700 berths and is scheduled for delivery in the fall of 2023.

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.

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 December 31, 2019.

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

Approximately 60 % of the loan will accrue interest at a fixed rate of 3.29 %.

The balance of the loan will accrue interest at a floating rate of LIBOR plus 0.85 %.

The third Icon-class ship will have a capacity of approximately 5,600 berths and is scheduled for delivery in the second quarter of 2025.

(1) The revenue impact from Silversea Cruises' new ships will be recognized on a three month reporting lag from when the ships enter service.

Refer to Note 1 .

General for further information.

In addition, as of December 31, 2020, we have an agreement in place with Chantiers de l’Atlantique to build an additional Edge-class ship for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

As of December 31, 2020, the aggregate cost of our ships on order, not including any ships on order by our Partner Brands and the Silversea Cruises ships that remain contingent upon final documentation and financing, was approximately $ 14.2 billion, of which we had deposited $ 684.8 million as of such date.

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Fair Value Measurements and Derivative Instruments for further information.

In addition, as of December 31, 2019, 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.

On August 27, 2019, two lawsuits were filed against Royal Caribbean Cruises Ltd.

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

in August 2019 in the U.S.

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 on October 4, 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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

a material adverse impact to our financial condition, results of operations or cash flows.

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

This decision has been 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.

We are routinely involved in other claims typical within the travel and tourism industry.

As previously reported, on October 7, 2020, a shareholder filed a putative class action complaint against us, and three officers, Richard Fain, Jason Liberty and Michael Bayley, in the United States District Court for the Southern District of Florida (the "Court"), 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.

As previously disclosed, on October 27, 2020, a second complaint was filed by another shareholder against us and these same officers in the Court 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.

On December 23, 2020, these cases were consolidated with a new lead plaintiff, Indiana Public Retirement System.

We cannot predict the duration or outcome of this lawsuit at this time, although management believes the claims are without merit.

Depending on how this case progresses, it 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, this action could have a material adverse effect on our business, financial condition, results of operations and liquidity.

On February 25, 2021, the lead plaintiff filed with the Court a voluntary dismissal of the action without prejudice.

We are routinely involved in other claims, regulatory investigations and inquiries, and consumer complaints, including those related to COVID-19, that are typical within the travel and tourism industry.

The majority of these claims are covered by insurance.

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

ROYAL CARIBBEAN CRUISES LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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

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Restructuring Charges

For the year ended December 31, 2019, we incurred restructuring charges of $ 12.0 million in connection with our international sales and marketing strategy.

For the year ended December 31, 2018 and 2017, we did no t incur restructuring charges.

Centralization of Global Sales and Marketing Structure

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We also incurred contract termination costs related to the closure of some of our international offices and other related costs consisting of legal and consulting fees to implement this initiative.

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).

In 2020, we expect to incur additional immaterial costs as it relates to the restructuring activities of this strategy.

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 December 31, 2020, we incurred $ 22.7 million restructuring costs as it relates to the restructuring activities of this strategy.

The following table summarizes our restructuring exit costs (in thousands):

January 1, 2019 Accruals Payments Ending Balance December 31, 2019 Cumulative

Beginning Balance January 1, 2020 Accruals Payments Ending Balance December 31, 2020 Cumulative Charges Incurred

Termination benefits $ 8,389 $ 2,711 $ 3,192 $ 7,908 $ 11,591

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Total $ 11,512 $ 10,700 $ 12,665 $ 9,547 $ 22,726

Operating Expense Reduction in Workforce

In April 2020, we reduced our US shoreside workforce by approximately 23 % through permanent layoffs.

We incurred severance costs of $ 28.0 million during the year ended December 31, 2020.

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 December 31, 2020 Cumulative Charges Incurred

Termination benefits $ — $ 27,953 $ 23,696 $ 4,257 $ 27,953

Total $ — $ 27,953 $ 23,696 $ 4,257 $ 27,953

Quarterly Selected Financial Data (Unaudited)

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$ 2,032,750 $ 2,439,767 $ 175,605 $ 2,806,631 $ ( 33,688 ) $ 3,186,850 $ 34,138 $ 2,517,413

Operating income $ 318,831 $ 274,146 $ 573,653 $ 456,895 $ 890,792 $ 799,733 $ 299,425 $ 364,027

Net Income attributable to Royal Caribbean Cruises Ltd.

Operating (Loss) income $ ( 1,306,407 ) $ 318,831 $ ( 1,282,487 ) $ 573,653 $ ( 996,114 ) $ 890,792 $ ( 1,016,549 ) $ 299,425

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

$ ( 1,444,479 ) $ 249,681 $ ( 1,639,292 ) $ 472,830 $ ( 1,346,756 ) $ 883,240 $ ( 1,366,935 ) $ 273,136

Earnings per share

(Loss) Earnings per share

Basic $ ( 6.91 ) $ 1.19 $ ( 7.83 ) $ 2.26 $ ( 6.29 ) $ 4.21 $ ( 6.09 ) $ 1.31

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Demand is strongest for cruises during the Northern Hemisphere's summer months and holidays.

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

The charge is offsetting cancellation and other revenue recognized during the quarter ended September 30, 2020 and was considered immaterial to our financial statements.

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-K

Item 9A. Controls and Procedures