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Item 1. Financial Statements

2021-04-29 compared with 2020-11-04 · 418 added, 786 removed, 642 unchanged (65% of the section changed)

1 unchanged sentence

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

in thousands, except per share data)

Quarter Ended September 30,

Quarter Ended March 31,

Passenger ticket revenues $ 20,844 $ 1,376,851

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Impairment and credit losses ( 449 ) 1,108,118

Operating (Loss) Income ( 996,114 ) 890,792

Other expense:

Operating Loss ( 809,231 ) ( 1,306,407 )

Other income (expense):

Interest income 4,861 5,534

Interest expense, net of interest capitalized ( 272,514 ) ( 92,911 )

Equity investment (loss) income ( 78,013 ) 103,654

Other expense ( 10,853 ) ( 7,668 )

Equity investment loss ( 59,871 ) ( 10,392 )

Other income (expense) 5,033 ( 32,859 )

( 322,491 ) ( 130,628 )

Net (Loss) Income ( 1,339,312 ) 890,365

Net Loss ( 1,131,722 ) ( 1,437,035 )

Net Income attributable to noncontrolling interest — 7,444

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

Net Loss attributable to Royal Caribbean Cruises Ltd.

$ ( 1,131,722 ) $ ( 1,444,479 )

(Loss) Earnings per Share:

Loss per Share:

Basic $ ( 4.66 ) $ ( 6.91 )

3 unchanged sentences

Diluted 243,004 209,097

Comprehensive (Loss) Income

Net (Loss) Income $ ( 1,339,312 ) $ 890,365

Comprehensive Loss

Net Loss $ ( 1,131,722 ) $ ( 1,437,035 )

Other comprehensive income (loss):

3 unchanged sentences

Total other comprehensive income (loss) 30,487 ( 297,904 )

Comprehensive (Loss) Income ( 1,257,192 ) 597,175

Comprehensive Income attributable to noncontrolling interest 7,444 7,125

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

$ ( 1,264,636 ) $ 590,050

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

in thousands, except per share data)

Nine Months Ended September 30,

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

Onboard and other revenues 687,590 2,360,649

Total revenues 2,174,667 8,433,248

Cruise operating expenses:

Commissions, transportation and other 342,632 1,279,010

Onboard and other 151,333 510,255

Payroll and related 693,480 799,094

Food 154,439 436,002

Fuel 327,275 519,772

Other operating 830,689 1,037,113

Total cruise operating expenses 2,499,848 4,581,246

Marketing, selling and administrative expenses 944,087 1,144,546

Depreciation and amortization expenses 961,226 924,180

Impairment and credit losses 1,354,514 —

Operating (Loss) Income ( 3,585,008 ) 1,783,276

Other expense:

Interest income 15,757 21,751

Interest expense, net of interest capitalized ( 571,149 ) ( 313,757 )

Equity investment (loss) income ( 140,258 ) 170,393

Other expense ( 127,537 ) ( 34,537 )

( 823,187 ) ( 156,150 )

Net (Loss) Income ( 4,408,195 ) 1,627,126

Net Income attributable to noncontrolling interest 22,332 21,375

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

$ ( 4,430,527 ) $ 1,605,751

(Loss) Earnings per Share:

Basic $ ( 21.01 ) $ 7.67

Diluted $ ( 21.01 ) $ 7.65

Weighted-Average Shares Outstanding:

Basic 210,894 209,477

Diluted 210,894 210,032

Comprehensive (Loss) Income

Net (Loss) Income $ ( 4,408,195 ) $ 1,627,126

Other comprehensive (loss) income:

Foreign currency translation adjustments 55,698 ( 7,683 )

Change in defined benefit plans ( 16,953 ) ( 22,831 )

Loss on cash flow derivative hedges ( 110,139 ) ( 288,115 )

Total other comprehensive (loss) ( 71,394 ) ( 318,629 )

Comprehensive (Loss) Income ( 4,479,589 ) 1,308,497

Comprehensive Loss ( 1,101,235 ) ( 1,734,939 )

Comprehensive Income attributable to noncontrolling interest — 7,444

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

Comprehensive Loss attributable to Royal Caribbean Cruises Ltd.

$ ( 1,101,235 ) $ ( 1,742,383 )

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(in thousands, except share data)

September 30, December 31,

March 31, December 31,

Current assets

Cash and cash equivalents $ 5,091,463 $ 3,684,474

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

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

Trade and other receivables, net of allowances of $ 4,309 and $ 3,867 at March 31, 2021 and December 31, 2020, respectively

226,740 284,149

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Goodwill 809,459 809,480

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

and December 31, 2019, respectively

Other assets, net of allowances of $ 81,580 and $ 81,580 at March 31, 2021 and December 31, 2020, respectively

1,513,306 1,497,380

Total assets $ 34,347,073 $ 32,465,187

Liabilities, Redeemable Noncontrolling Interest and Shareholders’ Equity

Liabilities and Shareholders’ Equity

Current liabilities

Current portion of debt $ 870,027 $ 1,186,586

Current portion of long-term debt $ 221,299 $ 961,768

Commercial paper — 409,319

10 unchanged sentences

Total liabilities 25,174,691 23,704,518

Commitments and contingencies (Note 10)

Redeemable noncontrolling interest — 569,981

Shareholders’ equity

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500,000,000 shares authorized;

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

282,414,098 and 265,198,371 shares issued, March 31, 2021 and December 31, 2020, respectively)

Paid-in capital 7,513,318 5,998,574

1 unchanged sentence

Accumulated other comprehensive loss ( 708,854 ) ( 739,341 )

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

Treasury stock ( 27,882,987 and 27,799,775 common shares at cost, March 31, 2021 and December 31, 2020, respectively)

( 2,065,959 ) ( 2,063,991 )

Total shareholders’ equity 9,172,382 8,760,669

Total liabilities, redeemable noncontrolling interest and shareholders’ equity $ 31,828,810 $ 30,320,284

Total liabilities and shareholders’ equity $ 34,347,073 $ 32,465,187

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

in thousands)

Nine Months Ended September 30,

(unaudited, in thousands)

Three Months Ended March 31,

Operating Activities

Net (loss) income $ ( 4,408,195 ) $ 1,627,126

Net Loss $ ( 1,131,722 ) $ ( 1,437,035 )

Depreciation and amortization 310,166 324,330

2 unchanged sentences

Loss on derivative instruments not designated as hedges 491 120,765

Share-based compensation expense 29,871 51,256

Equity investment loss (income) 140,258 ( 170,393 )

Share-based compensation expense (income) 18,834 ( 7,428 )

Equity investment loss 59,871 10,392

Amortization of debt issuance costs 35,581 7,795

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

Amortization of debt discounts and premiums 29,304 8,624

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

Currency translation adjustment losses 69,044 —

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

Changes in operating assets and liabilities:

Decrease (increase) in trade and other receivables, net 133,769 ( 36,682 )

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

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

(Increase) decrease in trade and other receivables, net ( 72,397 ) 84,578

Increase in inventories ( 3,708 ) ( 15,598 )

(Increase) decrease in prepaid expenses and other assets ( 26,118 ) 24,476

(Decrease) increase in accounts payable ( 7,499 ) 851,342

Increase in accrued interest 164,284 50,011

(Decrease) increase in accrued interest ( 15,726 ) 44,648

(Decrease) increase in accrued expenses and other liabilities ( 134,113 ) 110,440

(Decrease) increase in customer deposits ( 1,608,355 ) 261,335

Increase (decrease) in customer deposits 95,923 ( 959,555 )

Dividends received from unconsolidated affiliates — 1,991

Other, net 35,935 ( 28,407 )

Net cash (used in) provided by operating activities ( 2,906,255 ) 3,107,068

Net cash (used) provided by operating activities ( 809,183 ) 198,710

Investing Activities

4 unchanged sentences

Cash received on loans to unconsolidated affiliates 12,519 5,160

Proceeds from the sale of property and equipment and other assets 175,439 5,256

Other, net 146 ( 1,596 )

7 unchanged sentences

Dividends paid — ( 163,563 )

Proceeds from exercise of common stock options 386 1,452

Proceeds from common stock issuances 1,617,234 —

Other, net ( 2,724 ) ( 16,963 )

Net cash provided by (used in) financing activities 7,469,762 ( 714,909 )

Effect of exchange rate changes on cash ( 1,764 ) ( 937 )

Net increase (decrease) in cash and cash equivalents 2,773,050 ( 11,122 )

Cash and cash equivalents at beginning of period 243,738 287,852

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

Net cash provided by financing activities 3,183,924 4,790,212

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

in thousands)

Nine Months Ended September 30,

(unaudited, in thousands)

Three Months Ended March 31,

Effect of exchange rate changes on cash ( 192 ) ( 672 )

Net increase in cash and cash equivalents 1,406,989 3,647,073

Cash and cash equivalents at beginning of period 3,684,474 243,738

Cash and cash equivalents at end of period $ 5,091,463 $ 3,890,811

Supplemental Disclosure

2 unchanged sentences

Non-cash Investing Activities

Notes receivable issued upon sale of property and equipment $ 53,419 0

Notes receivable issued upon sale of property and equipment and other assets $ 16,000 $ 6,294

Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities $ 26,882 $ 29,022

Non-cash Financing Activities

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

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

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

3 unchanged sentences

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

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

Balance at January 1, 2021 $ 2,652 $ 5,998,574 $ 5,562,775 $ ( 739,341 ) $ ( 2,063,991 ) $ 8,760,669

Activity related to employee stock plans 2 18,638 — — — 18,640

Silversea acquisition 52 608,824 608,876

Common stock issuance 170 1,496,106 — — — 1,496,276

Changes related to cash flow derivative hedges — — — 10,302 — 10,302

1 unchanged sentence

Foreign currency translation adjustments — — — 9,722 — 9,722

Purchase of treasury stock — — — — ( 1,968 ) ( 1,968 )

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 1,131,722 ) — — ( 1,131,722 )

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

Balance at March 31, 2021 $ 2,824 $ 7,513,318 $ 4,431,053 $ ( 708,854 ) $ ( 2,065,959 ) $ 9,172,382

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

1 unchanged sentence

Activity related to employee stock plans 7 ( 20,706 ) — — — ( 20,699 )

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

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

Common stock dividends, $ 0.78 per share

6 unchanged sentences

— — ( 1,444,479 ) — — ( 1,444,479 )

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

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

in thousands)

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

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

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

Common stock dividends, $ 0.78 per share

— — ( 163,357 ) — — ( 163,357 )

Changes related to cash flow derivative hedges — — — ( 265,224 ) — ( 265,224 )

Change in defined benefit plans — — — ( 12,456 ) — ( 12,456 )

Foreign currency translation adjustments — — — ( 15,510 ) — ( 15,510 )

Net Income attributable to Royal Caribbean Cruises Ltd.

— — 883,240 — — 883,240

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

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

Balance at January 1, 2019 $ 2,358 $ 3,420,900 $ 10,263,282 $ ( 627,734 ) $ ( 1,953,345 ) $ 11,105,461

Activity related to employee stock plans 7 45,741 — — ( 5,164 ) 40,584

Common stock dividends, $ 2.18 per share

— — ( 456,260 ) — — ( 456,260 )

Changes related to cash flow derivative hedges — — — ( 288,115 ) — ( 288,115 )

Change in defined benefit plans — — — ( 22,831 ) — ( 22,831 )

Foreign currency translation adjustments — — — ( 7,683 ) — ( 7,683 )

Net Income attributable to Royal Caribbean Cruises Ltd.

— — 1,605,751 — — 1,605,751

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

Balance at March 31, 2020 $ 2,372 $ 3,473,253 $ 9,915,758 $ ( 1,095,617 ) $ ( 2,063,991 ) $ 10,231,775

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

3 unchanged sentences

and, depending on the context, Royal Caribbean Cruises Ltd.’s consolidated subsidiaries and/or affiliates.

The terms “Royal Caribbean International,” “Celebrity Cruises,” “Azamara” and "Silversea Cruises" refer to our wholly owned global cruise brands.

Throughout this report, we also refer to regional brands in which we hold an ownership interest, including “TUI Cruises” and “Hapag-Lloyd Cruises.” However , because these regional brands are unconsolidated investments, our operating results and other disclosures herein do not include these brands unless otherwise specified.

The terms “Royal Caribbean International,” “Celebrity Cruises,” and "Silversea Cruises" refer to our wholly owned global cruise brands.

Throughout this Quarterly Report on Form 10-Q, we also refer to our partner brands in which we hold an ownership interest, including “TUI Cruises” and "Hapag-Lloyd Cruises." However , because these partner brands are unconsolidated investments, our operating results and other disclosures herein do not include these brands unless otherwise specified.

In accordance with cruise vacation industry practice, the term “berths” is determined based on double occupancy per cabin even though many cabins can accommodate three or more passengers.

This report should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2019, including the audited consolidated financial statements and related notes included therein, as updated by our Current Report on Form 8-K dated May 13, 2020.

This Quarterly Report on Form 10-Q should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2020.

This Quarterly Report on Form 10-Q also includes trademarks, trade names and service marks of other companies.

2 unchanged sentences

We are a global cruise company.

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

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

We also own a 50 % joint venture interest in TUI Cruises GmbH ("TUIC"), our 50 %-owned joint venture 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.

Other Assets for further information on the acquisition.

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

On June 22, 2020, Pullmantur S.A, a subsidiary of Pullmantur Holdings S.L.

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

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

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

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

Refer to Note 6.

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

On July 9, 2020, we acquired the 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, 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.

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

We own and operate three global cruise brands:

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

We also own 50 % of TUI Cruises GmbH ("TUIC"), which operates the German brands TUI Cruises and Hapag-Lloyd Cruises (collectively, our "Partner Brands").

We account for our investment in TUIC under the equity method of accounting.

Together, our Global Brands and our Partner Brands operate a combined 59 ships as of March 31, 2021.

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

Effective March 19, 2021, we sold our wholly-owned brand, Azamara Cruises ("Azamara"), including its three -ship fleet and associated intellectual property, to Sycamore Partners for $ 201 million, subject to closing adjustments.

Management's Plan and Liquidity

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

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

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

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

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

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

waters under certain conditions and using a phased approach.

The phases contemplated

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Debt for further information on the debt issuance.

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

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

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

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

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

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

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

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

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

In 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 June 30, 2021, for most of our cruise operations.

We continue to work with the U.S.

Centers for Disease Control and Prevention (“CDC”), other U.S.

regulatory agencies and a panel composed of leading experts in relevant fields, including epidemiology, infectious diseases, public policy and applicable regulations, engineering and general health safety (the "Healthy Sail Panel" or “HSP”) to develop a plan to return to service in consideration of global vaccination efforts.

For cruise ship operations in U.S.

waters, our return to service plan also considers the requirements of the CDC’s Framework for the Conditional Sailing Order (the “Conditional Order”), including recently issued technical instructions under 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 Conditional 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 date the CDC Director rescinds or modifies the Conditional Order based on specific public health or other considerations, or (3) November 1, 2021.

On April 28, 2021, the CDC issued a letter to members of the cruising industry communicating that it remains committed to the resumption of cruise ship passenger operations in the U.S.

following the requirements of the Conditional Order by mid-summer 2021.

In the communication, the CDC provided clarifications to its previously issued technical instructions regarding several matters including port operations and COVID-19 testing and vaccination protocols.

We are currently evaluating the impact of these clarifications on the technical instructions.

We expect to re-start the rest of our global cruise operations in a phased manner once we fulfill the requirements of the CDC and other U.S.

regulatory agencies, also with reduced guest occupancy, modified itineraries and enhanced health, safety and vaccination protocols.

Based on our assessment of these requirements, the status of COVID-19 infection and/or vaccination rates in the U.S.

or globally 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 June 30, 2021, for most of our cruise operations.

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

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 include 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 and its variants will further restrict our ability to commence operations.

We have implemented and may continue to pursue a number of proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses (such as reduction and furloughing of workforce and laying up of vessels), the issuance of debt and shares of our common stock, the amendment of credit agreements to defer payments and the waiver and/or modification of covenant requirements and the suspension of dividend payments.

As of March 31, 2021, we had liquidity of $ 5.8 billion, consisting of cash and cash equivalents of $ 5.1 billion and a $ 0.7 billion 364-day term loan facility commitment available to draw through August 12, 2022.

Our revolving credit facilities were fully utilized through a combination of amounts drawn and letters of credit issued under the facilities as of March 31, 2021.

We have extended our $ 1.0 billion unsecured loan due April 2022 and our $ 1.6 billion unsecured revolving credit facility due October 2022 to October 2023 and April 2024, respectively.

As of March 31, 2021, we were in compliance with our financial covenants.

Refer to Note 7.

Debt for further information regarding our debt covenants.

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

We have executed amendments to these agreements, such

that certain covenant and collateral requirements are waived for a period through December 2021.

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

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

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

If we require additional waivers and are not able to obtain them or repay the debt facilities, this would lead to an event of default and potential acceleration of amounts due under all of our outstanding debt and derivative contracts.

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

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

Several of these agreements are currently up for renewal.

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

Debt for further information regarding the amendments made to our debt facilities and credit card processing agreements, including related covenants, during the quarter ended March 31, 2021.

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

Basis for Preparation of Consolidated Financial Statements

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Refer to Note 2 .

Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2019, as updated by our Current Report on Form 8-K dated May 13, 2020, for a discussion of our significant accounting policies.

Summary of Significant Accounting Policies in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our significant accounting policies.

All significant intercompany accounts and transactions are eliminated in consolidation.

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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 July 1, 2020 through September 30, 2020 that would require further disclosure or adjustment to our consolidated financial statements as of and for the quarter ended September 30, 2020, with the exception of our July 2020 acquisition of the noncontrolling interest, which was accounted for in our consolidated financial statements as of September 30, 2020.

No material events or other transactions involving Silversea Cruises have occurred from December 31, 2020 through March 31, 2021.

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.

The March 2021 sale of Azamara does not represent a strategic shift that will have a major effect on our operations and financial results, as we continue to provide similar itineraries to and source passengers from the markets served by the Azamara business.

Therefore, the sale of Azamara did not meet the criteria for discontinued operations reporting.

Effective March 19, 2021, we no longer consolidate Azamara's balance sheet nor recognize its results of operations in our consolidated financial

We recognized an immaterial gain on the sale during the quarter ended March 31, 2021 and have agreed to provide certain transition services to Azamara for a period of time for a fee.

Summary of Significant Accounting Policies

Adoption of Accounting Pronouncements

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

Measurement of Credit Losses on Financial Instruments.

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 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.

Recent Accounting Pronouncements

In January 2020, the FASB issued ASU No.

2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which clarifies the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities.

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

The ASU is effective for annual reporting periods beginning after

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

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

In March 2020, the FASB issued ASU No.

In March 2020, the Financial Accounting Standards Board (“FASB") issued Accounting Standard Update (“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.

The guidance 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.

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 retrospectively or 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.

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

Impairment and Credit Losses

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

Reclassifications

For the three months ended March 31, 2021, 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 three months ended March 31, 2021, 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.

Impairments and Credit Losses

Starting in early 2020, the challenges related to COVID-19 have significantly impacted our expected investments, operating plans and projected cash flows.

Refer to Note 1 .

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

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

Goodwill & Intangible Assets

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

Royal Caribbean International Celebrity Cruises Silversea Cruises Total

Balance at January 1, 2020 $ 299,226 $ 1,632 $ 1,084,786 $ 1,385,644

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 35 — — 35

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

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

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

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

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

2020 as no triggering events were identified.

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

For the quarters ended March 31, 2020 and June 30, 2020, we estimated the fair value of the Royal Caribbean International reporting unit using a probability-weighted discounted cash flow model in combination with a market-based valuation approach.

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

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

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

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

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

As a result of the analysis, we determined that the carrying value of the Silversea Cruises reporting unit exceeded its f air value as of March 31, 2020.

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

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

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

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

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

September 30, 2020

Gross Carrying Value Accumulated Amortization Accumulated Impairment losses Net Carrying Value

Finite-life intangible assets:

Customer relationships $ 97,400 $ 12,446 $ — $ 84,954

Galapagos operating license 47,669 7,274 — 40,395

Other finite-life intangible assets 11,560 11,078 — 482

Total finite-life intangible assets 156,629 30,798 — 125,831

Indefinite-life intangible assets 352,275 — 30,800 321,475

Total intangible assets, net $ 508,904 $ 30,798 $ 30,800 $ 447,306

December 31, 2019

Gross Carrying Value Accumulated Amortization Net Carrying Value

Finite-life intangible assets:

Customer relationships $ 97,400 $ 7,576 $ 89,824

Galapagos operating license 47,669 6,010 41,659

Other finite-life intangible assets 11,560 6,743 4,817

Total finite-life intangible assets 156,629 20,329 136,300

Indefinite-life intangible assets 352,275 — 352,275

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

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

Long-lived Assets

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

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

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

During the quarter ended June 30, 2020, we terminated the agreements chartering Monarch of the Seas, Horizon of the Seas and Sovereign of the Seas to Pullmantur Holdings and agreed to sell the ships to a third party.

Consequently, the ships met accounting criteria to be classified as held for sale which resulted in a further impairment charge of $ 15.2 million during the quarter ended June 30, 2020 to adjust the carrying value of the assets held for sale to their fair value, less cost to sell.

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

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

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

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

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

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

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

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

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

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

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

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

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

Notes Receivable

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

Refer to Note 6.

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

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

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

Credit Loss Allowance

Balance at January 1, 2020 $ 5,635

Loss provision for receivables 172,286

Write-offs ( 97,092 )

Balance at September 30, 2020 $ 80,829

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

Equity Investments

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

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

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

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

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

Refer to Note 6.

Other Assets for information regarding our significant equity investments.

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

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

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

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

Fair Value Measurements and Derivative Instruments.

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

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

As a result of these events, we performed interim impairment evaluations during 2020 on certain assets.

During the quarter ended March 31, 2020, we recognized combined impairment and credit losses of $ 1.1 billion which are reported within Impairment and credit losses within our consolidated statements of comprehensive loss.

The impairment losses of $ 1.1 billion were primarily related to our goodwill, trademarks and trade names, property and equipment, net and right-of-use assets.

The credit losses of $ 38.1 million recognized during the quarter ended March 31, 2020 related to our notes receivable.

In addition, an impairment charge of $ 39.7 million related to our equity investments was recognized in earnings during the quarter ended March 31, 2020 and is reported within Equity investment loss within our consolidated statements of comprehensive loss.

For the quarter ended March 31, 2021, we had no indication of impairment or credit losses.

Revenue Recognition

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

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

Historically, the majority of our revenues when we are operating are derived from passenger cruise contracts which are reported within Passenger ticket revenues in our consolidated statements of comprehensive loss.

Our performance obligation under these contracts is to provide a cruise vacation in exchange for the ticket price.

We satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally range from one to 25 nights.

We satisfy this performance obligation and recognize revenue over the duration of each cruise, which generally range from two to 24 nights.

Passenger ticket revenues include charges to our guests for port costs that vary with passenger head counts.

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

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

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

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 1.5 million and $ 124.5 million for the quarters ended March 31, 2021 and 2020, respectively.

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

We receive payment before or concurrently with the transfer of these goods and services to passengers during a cruise and recognize revenue at the time of transfer over the duration of the related cruise.

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.

Disaggregated Revenues

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

Quarter Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Quarter Ended March 31,

Revenues by itinerary

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(5) Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities.

Amounts also include revenues related to our bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates.

Amounts also include revenues related to our bareboat charter, which was terminated when Pullmantur Holdings filed for reorganization in Spain in 2020, and procurement and management related services we perform on behalf of our unconsolidated affiliates.

Refer to Note 6 .

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

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

Quarter Ended September 30,

Passenger ticket revenues:

United States 66 % 62 %

United Kingdom 14 % 12 %

All other countries (1) 20 % 26 %

Nine Months Ended September 30,

For the quarters ended March 31, 2021 and 2020, our guests were sourced from the following areas:

Quarter Ended March 31,

Passenger ticket revenues:

Singapore 69 % — %

China 31 % — %

United States — % 68 %

All other countries (1) — % 32 %

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

(1) No other individual country's revenue exceeded 10% for the quarter ended March 31, 2020.

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.

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

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

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.

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

The charge is considered immaterial to our financial statements.

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

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

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

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

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

At the same time, we have experienced significant cancellations as a result of our suspension of operations, which has led to issuance of refunds to customers, while the remainder have been rebooked on future cruises or received credits in lieu of cash refunds.

As of March 31, 2021, refunds due to customers mostly as a result of booking cancellations were $ 107.3 million compared to $ 95.8 million as of December 31, 2020.

Due to the uncertainty around the return of demand for cruising, we are unable to estimate the amount of the March 31, 2021 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 $ 503.3 million and $ 124.8 million as of March 31, 2021 and December 31, 2020, respectively.

Contract Receivables and Contract Assets

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

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

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.

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

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

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

As of March 31, 2021 and December 31, 2020, our contract assets were $ 53.7 million and were included within Other assets in our consolidated balance sheets.

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

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

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

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 nine months ended September 30, 2020.

(Loss) Earnings Per Share

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

Quarter Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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

for basic and diluted earnings per share $ ( 1,346,756 ) $ 883,240 ( 4,430,527 ) 1,605,751

Prepaid travel agent commissions were $ 13.6 million as of March 31, 2021 and $ 1.1 million as of December 31, 2020.

Substantially all of our prepaid travel agent commissions at December 31, 2020 were expensed and reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive loss for the quarter ended March 31, 2021.

(Loss) Per Share

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

Quarter Ended March 31,

Net (Loss) attributable to Royal Caribbean Cruises Ltd.

for basic and diluted loss per share $ ( 1,131,722 ) $ ( 1,444,479 )

Weighted-average common shares outstanding 243,004 209,097

Dilutive effect of stock-based awards — 546 — 555

Diluted weighted-average shares outstanding 243,004 209,097

Basic (loss) earnings per share $ ( 6.29 ) $ 4.21 $ ( 21.01 ) $ 7.67

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

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

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

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

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

Basic (loss) per share $ ( 4.66 ) $ ( 6.91 )

Diluted (loss) per share $ ( 4.66 ) $ ( 6.91 )

There were approximately 413,501 and 877,000 antidilutive shares for the quarters ended March 31, 2021 and March 31, 2020, respectively.

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

While no shares of the convertible notes are currently convertible, they would be anti-dilutive for the three months ended March 31, 2021.

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

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We 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.

In addition, 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 is shared between ourselves and TUI AG, our joint venture partner.

All the significant operating and financial decisions of TUIC require the 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.

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.

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

As of March 31, 2021, the net book value of our investment in TUIC was $ 538.8 million, primarily consisting of $ 395.8 million in equity and a loan of € 114.9 million, or approximately $ 135.1 million based on the exchange rate at March 31, 2021.

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.

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.

This loan is 50 % guaranteed by TUI AG, our joint venture partner in TUIC, 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.

During the quarter ended March 31, 2021, we and TUI AG each contributed € 59.5 million, or approximately $ 69.9 million based on the exchange rate at March 31, 2021, of additional equity through a combination of cash contributions and conversion of existing receivables.

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

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.

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

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

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

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

Refer to Note 3.

Impairment and Credit Losses 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 during the quarter ended June 30, 2020, representing deferred currency translation adjustment losses, net of hedging, as we no longer have significant involvement in the Pullmantur operation.

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

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

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

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

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

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

During the quarter ended March 31, 2020, we recorded and subsequently wrote-off loan loss allowances on the facility receivable balance of $ 12.5 million.

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

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

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

Refer to Note 3.

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

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

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

TUI Cruises and Hapag-Lloyd Cruises, our Partner Brands, have been adversely affected by COVID-19, resulting in the suspension of the majority of the brands' cruise operations and a material negative impact to the brands' results of operations and liquidity.

The brands have executed cost containment actions and liquidity measures, including the issuance of new financing and the deferral of existing financing, to mitigate the impact of COVID-19 until normal operations may be resumed.

We have 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 COVID-19 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 we lost our ability to exert significant influence over the entity's activities as a result of the liquidation process.

We have determined that Grand Bahama, a ship repair and maintenance facility in which we have a 40 % noncontrolling interest, is a VIE.

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

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

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

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

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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.

Refer to Note 3.

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

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

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

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

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

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

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

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

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.

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.

As of March 31, 2021, we had exposure to credit loss in Grand Bahama consisting of a $ 8.6 million loan.

Our loan to Grand Bahama matures March 2026 and bears interest at LIBOR plus 3.5 % to 3.75 %, capped at 5.75 %.

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

During the quarter ended March 31, 2021, we received principal and interest payments of $ 8.9 million related to a term loan that had fully matured.

We did not receive principal and interest payments during the quarter ended March 31, 2020.

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

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.

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

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

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

During the quarter ended March 31, 2021, no credit losses were recorded related to these loans.

For further information on the measurements used to estimate the fair value of our equity investments, refer to Note 12 .

Fair Value Measurements and Derivative Instruments .

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

Quarter Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Quarter Ended March 31,

Share of equity (loss) income from investments $ ( 59,871 ) $ ( 10,392 )

Dividends received (1) $ — $ 1,991

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

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

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

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

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

(1) There were no dividends received from TUI Cruises for the quarters ended March 31, 2021 and March 31, 2020 .

As of March 31, 2021 As of December 31, 2020

Total notes receivable due from equity investments $ 143,642 $ 164,596

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

We also provide ship management services to TUIC and bareboat chartered three vessels to Pullmantur Holdings, prior to it filing for reorganization.

We also provide ship management services to TUIC and provided management services to Pullmantur Holdings (which filed for reorganization in Spain in June 2020).

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 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):

Quarter Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Quarter Ended March 31,

Revenues $ 5,231 $ 7,411

Expenses $ 1,275 $ 782

Credit Losses

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements for the quarter ended March 31, 2021.

In evaluating the allowance for loan losses, 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.

The following table summarizes our credit loss allowance related to receivables for the three months ended March 31, 2021 (in thousands):

Credit Loss Allowance

Beginning balance January 1, 2021 $ 85,447

Loss provision for receivables 971

Write-offs ( 529 )

Ending balance March 31, 2021 $ 85,889

Our credit loss allowance balance as of March 31, 2021 primarily related to a $ 81.6 million loss provision recognized during 2020 on notes receivable related to a previous sale of property and equipment.

Debt consist of the following (in thousands):

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

Interest Rate (1)

Maturities Through Quarter Ended March 31, 2021 Year Ended December 31, 2020

Fixed rate debt:

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2021 - 2032 3,130,363 3,210,161

Convertible notes 4.25 % 2023 956,760 —

Convertible notes 2.88 % to 4.25 %

2023 1,480,561 1,454,488

Total fixed rate debt 12,471,739 11,024,809

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Unsecured revolving credit facilities (2)

1.49 % to 1.89 %

2022 - 2024 3,004,342 3,289,000

Unsecured UK Commercial paper 2021 — 409,319

USD Commercial paper — — 1,434,180

USD Unsecured term loan 0.74 % - 4.05 %

USD unsecured term loan 0.61 % to 3.31 %

2021 - 2033 4,904,446 4,002,249

Euro Unsecured term loan 1.15 % - 1.58 %

Euro unsecured term loan 1.15 % to 2.25 %

2021 - 2028 708,663 705,064

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Total debt (3)

21,298,938 19,643,806

unamortized debt issuance costs ( 363,263 ) ( 314,763 )

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Long-term portion $ 20,714,376 $ 17,957,956

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

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

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

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

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

In March 2020, we took delivery of Celebrity Apex .

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 March 2020, we borrowed $ 2.2 billion pursuant to a 364 -day senior secured term loan agreement (the "Secured Term Loan").

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

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

The Senior Secured Term Loan would have matured 364

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

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

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) during the nine months ended September 30, 2020.

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

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

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

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

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

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

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 indenture relating to the Senior Secured Notes (the "Senior 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 June 2020, we issued $ 1.0 billion in 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 aggregate principal amount of convertible notes which accrue interest at 4.25 % and mature in 2023.

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

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;

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

• if we call the notes for a tax redemption;

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

We 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.

The amount allocated to Long-term debt represents the difference between the $ 1.15 billion aggregate principal amount of the convertible notes and the amount of the proceeds allocated to the debt component as a debt discount.

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

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

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

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.

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

(in thousands) As of September 30, 2020

Principal 1,150,000

Unamortized debt discount and transaction costs 220,117

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

(in thousands) Nine Months Ended September 30, 2020

Contractual interest expense 15,206

Amortization of debt discount and transaction costs 24,920

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

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

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

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.

(1) Interest rates based on outstanding loan balance as of March 31, 2021 and, for variable rate debt, include either LIBOR or EURIBOR plus the applicable margin.

(2) Includes $ 1.9 billion facility and $ 1.3 billion facility, the vast majority of which is due in 2024.

Our $ 1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30 %, which interest was 1.49 % as of March 31, 2021 and is subject to a facility fee of a maximum of 0.20 %.

Our $1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70 %, which interest was 1.89 % as of March 31, 2021 and is subject to a facility fee of a maximum of 0.30 %.

(3) At March 31, 2021 and December 31, 2020, the weighted average interest rate for total debt was 5.78 % and 6.02 %, respectively.

In March 2021, we amended our $ 1.55 billion unsecured revolving credit facility due October 2022 and our $ 1.0 billion unsecured loan due April 2022.

These amendments, among other things, extend the maturity date or termination date of certain of the advances and commitments, as applicable, under the facilities held by consenting lenders by 18 months and increase the interest rate margin and/or the facility fee, as applicable, with respect to advances and commitments held by such lenders.

Consenting lenders also received a prepayment and commitment reduction equal to 20 % of their respective outstanding advances and commitments.

Following these amendments, the aggregate revolving capacity of the revolving credit facility is approximately $ 1.3 billion, with approximately $ 0.2 billion terminating in October 2022 and approximately $ 1.1 billion terminating in April 2024 and the aggregate principal balance of the term loan is approximately $ 0.9 billion, with approximately $ 0.3 billion maturing in April 2022 and approximately $ 0.6 billion maturing in October 2023.

As of March 31, 2021, our aggregate revolving borrowing capacity was $ 3.2 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 sureties to request collateral.

We also have agreements with our credit card processors relating to customer deposits received by us for future voyages.

These agreements allow the credit card processors to require us, under certain circumstances, to maintain a reserve

that can be satisfied by posting collateral.

As of March 31, 2021, we have posted letters of credit as collateral with our sureties and credit card processors, under our revolving credit facilities in the amount of $ 172.7 million.

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to breach of our financial covenants through at least September 30, 2022, 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 a reserve with a processor where the agreement was amended in the first quarter of 2021, such that proceeds are withheld in reserve, until the sailing takes place or the funds are refunded to the customer.

The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables , is approximately $ 170.6 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.

In March 2021, we took delivery of Odyssey of the Seas .

To finance the purchase, we borrowed $ 994.1 million under a previously committed unsecured term loan which is 95 % guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany.

The loan amortizes semi-annually over 12 years and bears interest at a floating rate equal to LIBOR plus a margin of 0.96 %.

Prior to delivery during the first quarter of 2021, we amended the credit agreement to (i) increase the maximum loan amount under the facility to make available to us a maximum amount equal to the US dollar equivalent of 80 % of the vessel purchase price plus 100 % of the premium payable to Hermes and (ii) defer the payment of all principal payments due between April 2021 and April 2022, which amounts will be repayable semi-annually over a five year period starting in April 2022.

In March 2021, we issued $ 1.50 billion of senior unsecured notes that mature in 2028, for net proceeds of $ 1.48 billion.

Interest on the senior notes accrues at 5.5 % per annum and is payable semi-annually.

In March 2021, we extended our binding commitment for a $ 700.0 million term loan facility by one year .

As amended, we may draw on the facility at any time prior to August 12, 2022.

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

In addition, 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 $ 300.0 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries.

In October 2020, we issued $ 575 million aggregate principal amount of senior convertible notes which accrue interest at 2.875 % and mature in 2023.

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

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

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

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

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

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

• if we call the notes for a tax redemption;

• upon the occurrence of specified corporate events.

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

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

In October 2020, we took delivery of Silver Moon .

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

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

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

Interest on the loan accrues at LIBOR plus 1.50 %.

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

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

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

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

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

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

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

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

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

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

During the quarter ended June 30, 2020, we amended all of our export credit facilities, all of our non-export credit facilities and certain of our credit card processing agreements which contain financial covenants to suspend the testing of these covenants through and including the first quarter of 2021.

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

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

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

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

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

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

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

During the first quarter of 2021, we repaid in full at maturity £ 300.0 million of Sterling-denominated notes issued under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility.

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, the date falling after January 1, 2022 on which we elect to comply with the modified covenants.

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.

As of March 31, 2021, the monthly-tested minimum liquidity covenant was $ 350 million for the duration of the waiver period.

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.

As of March 31, 2021, we had one $ 130.0 million term loan which benefited from a financial covenant waiver through the end of the first quarter of 2021.

This term loan was repaid in full in April of 2021 and was reported in Current portion of long-term debt in our Consolidated Balance Sheet as of March 31, 2021.

During the first quarter of 2021, we also amended $ 6.3 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 defer $ 1.15 billion of principal payments due between April 2021 and April 2022.

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 provide for mandatory prepayment of the deferred amounts upon the taking of certain actions.

Subject to a number of carve outs, these include, but are not limited to, the issuance of dividends, the 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.

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

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.

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+.

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

On February 25, 2021, S&P Global downgraded our senior unsecured rating from B+ to B, which had no financial impact, and downgraded our $ 3.32 billion Senior Secured Notes and Silversea Notes from BB to BB-.

This downgrade had no impact on the terms of the notes.

Except for the term loans we 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.

The term loan incurred to acquire Azamara Pursuit was repaid in full in April of 2021.

For the majority of the loans as of March 31, 2021, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35 % to 5.48 % of the maximum loan amount in consideration for these guarantees.

For one of our loans, we pay to the applicable export credit agency a fee of 2.97 % per annum, based on the outstanding loan balance.

The fee is paid semi-annually over the term of the loan (subject to adjustments based upon our credit ratings).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.

We classify these fees within Amortization of debt issuance costs in our consolidated statements of cash flows.

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 .

The following is a schedule of annual maturities on our total debt net of debt issuance costs, and including finance leases and commercial paper, as of March 31, 2021 for each of the next five years (in thousands):

Remainder of 2021 189,207

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Thereafter 3,177,350

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

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

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

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

Operating leases

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

We recognize lease expense for these leases on a straight-line basis over the lease term.

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

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

Our operating leases include Silver Explorer , operated by Silversea Cruises.

The operating lease for Silver Explorer will expire in 2023.

During the first quarter ended March 31, 2020, we identified that the undiscounted cash flows of certain right-of-use assets, were less than their carrying values.

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

As a result of this determination, we evaluated these assets pursuant to our long-lived asset impairment test, which resulted in an impairment charge of $ 45.9 million to write down these right-of-use assets to their estimated fair values during the quarter ended March 31, 2020.

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

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

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

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

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

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

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

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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 September 30, 2020.

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

During the quarter ended June 30, 2020, we amended our Port of Miami terminal lease to increase the lien basket in line with our debt facilities and obtain a financial covenant waiver to the first quarter of 2021.

This obligation is prepayable at any time without penalty.

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

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

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Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral.

In addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately.

I n addition, we have lease agreements with lease and non-lease components, which are generally accounted for separately.

However, for berthing agreements, we account for the lease and non-lease components as a single lease component.

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.

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 at March 31, 2021 and December 31, 2020.

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

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

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

Consolidated Statement of Comprehensive Loss Classification Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

Operating lease costs Commission, transportation and other $ — $ 14,745

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

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

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

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

During the quarter ended March 31, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss.

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

As of September 30, 2020

Weighted average years of the remaining lease term

As of March 31, 2021 As of December 31, 2020

Weighted average of the remaining lease term

Operating leases 9.9 7.8

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

Nine Months Ended September 30, 2020

Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

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

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Financing cash flows from finance leases $ 4,305 $ 3,823

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

As of March 31, 2021, maturities related to lease liabilities were as follows (in thousands):

Year Operating Leases Finance Leases

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Present value of lease liabilities $ 644,758 $ 209,748

Redeemable Noncontrolling Interest

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

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

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

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

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

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

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

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

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

Beginning balance at July 1, 2020 $ 584,869

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

Acquisition of noncontrolling interest ( 592,313 )

Balance at September 30, 2020 $ —

Beginning balance at January 1, 2020 $ 569,981

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

Acquisition of noncontrolling interest ( 592,313 )

Ending balance September 30, 2020 $ —

Beginning balance at July 1, 2019 $ 556,770

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

Distribution to noncontrolling interest ( 501 )

Ending balance at September 30, 2019 $ 563,394

Beginning balance at January 1, 2019 $ 542,020

Net income attributable to noncontrolling interest, including the contractual accretion of the put options 21,375

Distribution to noncontrolling interest ( 501 )

Ending balance at September 30, 2019 $ 563,394

Commitments and Contingencies

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Our future capital commitments consist primarily of new ship orders.

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

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

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

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

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

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

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

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 $ 1.5 billion based on the exchange rate at September 30, 2020.

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

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 $ 1.6 billion based on the exchange rate at September 30, 2020.

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

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.

Our future capital commitments consist primarily of new ship orders.

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

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

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

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

Ship Shipyard Contractual Delivery Date Approximate

As of March 31, 2021, two Oasis-class ships and three ships of a new generation, known as our Icon-class, are on order for our Royal Caribbean International brand with an aggregate capacity of approximately 28,200 berths.

As of March 31, 2021, we had two Edge-class ships on order for our Celebrity Cruises brand with an aggregate capacity of approximately 6,500 berths.

Additionally, as of March 31, 2021, we have three ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 2,000 berths.

COVID-19 has impacted shipyard operations which have and may continue to result in delays of our previously contracted ship deliveries.

As of March 31, 2021, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship Shipyard Expected Delivery Dates 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

Quantum-class:

Odyssey of the Seas Meyer Werft 4th Quarter 2020 4,200

Unnamed Meyer Turku Oy 2nd Quarter 2022 5,600

Wonder of the Seas Chantiers de l'Atlantique 1st Quarter 2022 5,700

Unnamed Chantiers de l'Atlantique 2nd Quarter 2024 5,700

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 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 Moon (1)

Fincantieri 4th Quarter 2020 550

Silver Dawn Fincantieri 4th Quarter 2021 600

Evolution Class:

Unnamed Meyer Werft 1st Quarter 2022 600

Unnamed Meyer Werft 1st Quarter 2023 600

Unnamed Meyer Werft 2nd Quarter 2023 700

Unnamed Meyer Werft 2nd Quarter 2024 700

TUI Cruises (50% joint venture)

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Hapag-Lloyd Cruises (50% joint venture) —

Hanseatic Spirit Vard

2nd Quarter 2021 230

Hanseatic Spirit Vard Fincantieri 2nd Quarter 2021 230

Total Berths 48,030

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

As of September 30, 2020, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $ 14.1 billion, of which we had deposited $ 770.7 million as of such date.

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

(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 March 31, 2021, 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 March 31, 2021, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $ 12.9 billion, of which we had deposited $ 602.5 million as of such date.

Approximately 70.5 % of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2021.

Refer to Note 12 .

Fair Value Measurements and Derivative Instruments for further information.

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

As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2019, as updated by our Current Report on Form 8-K dated May 13, 2020, two lawsuits were filed against Royal Caribbean Cruises Ltd.

in August 2019 in the U.S.

As previously reported, two lawsuits were filed against us 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 ("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.

trafficked in those properties by embarking and disembarking passengers at these facilities.

The complaints further allege that we trafficked in those properties by embarking and disembarking passengers at these facilities.

The plaintiffs seek all available statutory remedies, including the value of the expropriated property, plus interest, treble damages, attorneys’ fees and costs.

Royal Caribbean Cruises Ltd.

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

This decision may be appealed by the plaintiffs.

We filed our 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.

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

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

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

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

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

We 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 either case will not be material.

As previously disclosed, 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, 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.

In addition, on October 27, 2020, a second complaint was filed by another shareholder against us and these same officers in the District Court alleging the same misrepresentations relating to COVID-19.

On December 23, 2020, these cases were consolidated with a new lead plaintiff, Indiana Public Retirement System.

On February 25, 2021, the lead plaintiff filed with the District Court a voluntary dismissal of the action without prejudice.

On February 26, 2021, the District Court dismissed the entire action without prejudice based on the request for voluntary dismissal.

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

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Shareholders' Equity

Common Stock Issued

During March 2021, we issued 16.9 million shares of common stock, par value $ 0.01 per share, at a price of $ 91.00 per share.

We received net proceeds of $ 1.5 billion from the sale of our common stock, after deducting the estimated offering expenses payable by us.

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.

Accordingly, we did not declare a dividend during the first quarter of 2021.

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

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

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

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

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

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

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

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

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

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

Changes in Accumulated Other Comprehensive Income (Loss)

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

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

Changes in Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 2021 and 2020 (in thousands):

Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2021 Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2020

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

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Ending balance $ ( 640,217 ) $ ( 55,079 ) $ ( 13,558 ) $ ( 708,854 ) $ ( 989,134 ) $ ( 53,147 ) $ ( 53,336 ) $ ( 1,095,617 )

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

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

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

Comprehensive Income (Loss)

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters ended March 31, 2021 and 2020 (in thousands):

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

Details About Accumulated Other Comprehensive Loss Components Quarter Ended March 31, 2021 Quarter Ended March 31, 2020 Affected Line Item in Statements of

Comprehensive Loss

Gain (loss) on cash flow derivative hedges:

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( 743 ) ( 505 )

Release of net foreign cumulative translation due to sale or liquidation of businesses:

Foreign cumulative translation ( 34,697 ) — ( 69,044 ) — Other expense

Total reclassifications for the period $ ( 11,972 ) $ ( 22,885 )

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

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

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

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

Fair Value Measurements and Derivative Instruments

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

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

Fair Value Measurements at March 31, 2021 Using Fair Value Measurements at December 31, 2020 Using

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

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(3) Inputs that are unobservable.

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

The Company did not use any Level 3 inputs as of March 31, 2021 and December 31, 2020.

(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, term loans and convertible notes.

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

Other Financial Instruments

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

The carrying amounts of accounts receivable, accounts payable, accrued interest, accrued expenses and commercial paper approximate fair value at March 31, 2021 and December 31, 2020.

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

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

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

Fair Value Measurements at March 31, 2021 Using Fair Value Measurements at December 31, 2020 Using

Description Total Level 1 (1)

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$ 196,293 $ — $ 196,293 $ — $ 259,705 $ — $ 259,705 $ —

Contingent consideration (6) — — — — 62,400 — — 62,400

Total Liabilities $ 196,293 $ — $ 196,293 $ — $ 259,705 $ — $ 259,705 $ —

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(3) Inputs that are unobservable.

No Level 3 inputs were used in fair value measurements of Other financial instruments as of March 31, 2021 and December 31, 2020.

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

Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

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

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

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

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

Refer to the "Fair Value of Derivative Instruments" table for breakdown by instrument type.

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 September 30, 2020 or December 31, 2019, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of March 31, 2021 or December 31, 2020, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Nonfinancial Instruments Recorded at Fair Value on a Nonrecurring Basis

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

Fair Value Measurements at September 30, 2020 Using

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

Silversea Cruises Goodwill (1)

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

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318,700 318,700 318,700 30,800

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

Long-lived assets (3)

577,193 577,193 577,193 727,063

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

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

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(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 are projected operating results, weighted-average cost of capital and terminal value.

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

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 Silversea Cruises' reporting unit.

We assigned a probability to each revenue and expense scenario.

We discounted the projected cash flows using rates specific to Silversea Cruises' reporting unit based on its weighted-average cost of capital, which was determined to be 12.75 %.

A significant input in performing the fair value assessment for the Silversea Cruises goodwill was forecasted operating results, which takes into consideration expected ship deliveries, including ship options.

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

(2) We estimated the fair value of our indefinite-life intangible asset using a discounted cash flow model and the relief-from-roy alty method.

For the Silversea Cruises trade name we used a discount ra te of 13.25 %, comparable to the rate used in valuing the Silversea Cruises reporting unit.

S ignificant inputs in performing the fair value assessment for the trade name were the royalty rate of 3.0 % and forecasted net revenues, which takes into consideration expected ship deliveries, including ship options.

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

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

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

For the vessels impaired as of 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.

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.

(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, construction in progress assets were impaired due to a reduction in scope or the decision to not complete the projects.

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 cost approach.

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

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

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.

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The fair value of these equity-method investments was estimated as of March 31, 2020, the date these assets were last impaired.

We believe that our estimates and judgments related to the fair values of goodwill, intangibles and long-lived assets discussed above are reasonable.

A change in the conditions, circumstances or strategy which influence determinations of fair value, may result in the recognition of additional impairment charges.

For further information on our equity method investments, refer to Note 6 .

Other Assets .

Master Netting Agreements

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

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

As of March 31, 2021 As of December 31, 2020

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

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

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

As of March 31, 2021 As of December 31, 2020

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

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

As of March 31, 2021, we had counterparty credit risk exposure under our derivative instruments of $ 4.8 million, 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.

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

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

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

At March 31, 2021 and December 31, 2020, approximately 68.2 % and 64.5 %, respectively, of our debt was effectively fixed.

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

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

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

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

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

At March 31, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument Swap Notional as of March 31, 2021 (in thousands) Maturity Debt Fixed Rate Swap Floating Rate:

LIBOR plus All-in Swap Floating Rate as of March 31, 2021

Oasis of the Seas term loan

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

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

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

At March 31, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of March 31, 2021 (in thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate

Celebrity Reflection term loan

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

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

Amount presented is based on the exchange rate as of March 31, 2021.

(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.

The unsecured term loan for the financing of Odyssey of the Seas was drawn on March 2021.

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

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

The notional amount of interest rate swap agreements related to outstanding debt and our current unfunded financing arrangements as of March 31, 2021 and December 31, 2020 was $ 3.3 billion and $ 3.4 billion, respectively.

Foreign Currency Exchange Rate Risk

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

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

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

As of March 31, 2021, the aggregate cost of our ships on order was $ 12.9 billion, of which we had deposited $ 602.5 million as of such date.

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

Refer to Note 9 .

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

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

At March 31, 2021 and December 31, 2020, approximately 70.5 % and 66.3 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

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

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

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

During the first quarter of 2021, we maintained an average of approximately $ 462.6 million of these foreign currency forward contracts.

These instruments are not designated as hedging instruments.

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

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

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

For the quarters ended March 31, 2021 and 2020, changes in the fair value of the foreign currency forward contracts resulted in losses of $ 13.5 million and $ 52.7 million, respectively.

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

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

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

As of March 31, 2021, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investments primarily in TUI Cruises of € 245.0 million, or approximately $ 288.0 million based on the exchange rate at March 31, 2021.

These forward currency contracts mature in October 2021.

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

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of both March 31, 2021 and December 31, 2020 was $ 2.5 billion and $ 3.1 billion, respectively.

Non-Derivative Instruments

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

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

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 113.0 million, or approximately $ 132.8 million, as of March 31, 2021.

As of December 31, 2020, we had designated debt as a hedge of our net investments in TUI Cruises of € 215.0 million, or approximately $ 263.0 million.

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

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

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

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

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

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

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

During the quarter ended March 31, 2021, we discontinued cash flow hedge accounting on 48 thousand metric tons of our fuel swap agreements maturing in 2021, which resulted in the reclassification of a net $ 4.4 million loss from Accumulated other comprehensive loss to Other income (expense) .

During the quarter ended March 31, 2020, we discontinued cash flow hedge accounting on 212 thousand metric tons of our fuel swap agreements maturing in 2020, which resulted in the reclassification of a net $ 54.9 million loss from Accumulated other comprehensive loss to Other income (expense) .

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

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 II, Item 1A.

for further discussion on risks related to COVID-19.

At March 31, 2021, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2024.

As of March 31, 2021 and December 31, 2020, we had the following outstanding fuel swap agreements:

Fuel Swap Agreements

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

As of March 31, 2021 As of December 31, 2020

Designated as hedges:

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2023 82,400 82,400

Fuel Swap Agreements

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

As of March 31, 2021 As of December 31, 2020

Designated hedges as a % of projected fuel purchases:

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2022 25 % 23 %

2022 24 % 19 %

Fuel Swap Agreements

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

As of March 31, 2021 As of December 31, 2020

Not designated as hedges:

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2022 14,650 14,650

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

As of March 31, 2021, $ 8.9 million of estimated unrealized loss associated with our cash flow hedges pertaining to fuel swap agreements is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months.

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

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Asset Derivatives Liability Derivatives

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

Balance Sheet Location As of March 31, 2021 As of December 31, 2020 Balance Sheet Location As of March 31, 2021 As of December 31, 2020

Fair Value Fair Value Fair Value Fair Value

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Interest rate swaps Other assets $ 16,152 $ 17,271 Other long-term liabilities $ 97,981 $ 144,653

Interest rate-swaps Derivative financial instruments 149 261 Derivative financial instruments — —

Foreign currency forward contracts Derivative financial instruments 30,268 63,894 Derivative financial instruments 26,903 13,294

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Foreign currency forward contracts Derivative financial instruments $ 1,201 $ — Derivative financial instruments $ 4,284 $ 160

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

Fuel swaps Derivative financial instruments 1,935 834 Derivative financial instruments 13,076 18,028

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

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

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

Total amounts of income and expense line items presented in the statement of financial performance in which the effects of fair value or cash flow hedges are recorded $ 53,815 $ 317,139 $( 254,332 ) $( 10,853 ) $ 177,677 $ 320,295 $( 96,413 ) $( 7,668 )

The effects of fair value and cash flow hedging:

Gain or (loss) on fair value hedging relationships in Subtopic 815-20

Interest contracts

Hedged items n/a n/a $ 2,379 $ — n/a n/a $( 4,116 ) $ —

Derivatives designated as hedging instruments n/a n/a $ 39 $ — n/a n/a $ 2,920 $ —

Gain or (loss) on cash flow hedging relationships in Subtopic 815-20

Interest contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) into income n/a n/a $( 6,532 ) n/a n/a n/a $( 373 ) n/a

Commodity contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive income (loss) into income $( 5,598 ) n/a n/a $ 536 $ 2,435 n/a n/a $( 472 )

Foreign exchange contracts

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

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

Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

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Non-derivative instrument designated as

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

hedging instrument under ASC 815-20 Balance Sheet Location As of March 31, 2021 As of December 31, 2020

Foreign currency debt Current portion of debt $ — $ 43,696

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$ 132,826 $ 263,031

The effect of derivative instruments qualifying and designated as hedging instruments and the related hedged items in fair value hedges on the consolidated statements of comprehensive income (loss) was as follows (in thousands):

Derivatives and Related Hedged Items under ASC 815-20 Fair Value Hedging Relationships Location of Gain (Loss) Recognized in Income on Derivative and Hedged Item Amount of Gain (Loss)

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Income on Hedged Item

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

Quarter Ended March 31, 2021 Quarter Ended March 31, 2020 Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

Interest rate swaps Interest expense, net of interest capitalized $ ( 552 ) $ 20,430 $ 2,930 $ ( 21,330 )

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

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

As of March 31, 2021 As of December 31, 2020 As of March 31, 2021 As of December 31, 2020

Current portion of debt and Long-term debt $ 662,822 $ 700,331 $ 14,582 $ 17,512

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Accumulated Other

Comprehensive Income (Loss) on Derivative

Comprehensive Loss on Derivatives

Other Comprehensive

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Amount of Gain (Loss) Reclassified from

Accumulated Other Comprehensive Income (Loss) into Income

Accumulated Other Comprehensive Loss into Income

Quarter Ended March 31, 2021 Quarter Ended March 31, 2020 Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

Interest rate swaps $ 43,408 $ ( 52,595 ) Interest expense, net of interest capitalized $ ( 9,509 ) $ ( 3,391 )

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

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

Gain (Loss) Recognized in Income (Net Investment Excluded Components) Three Months Ended March 31, 2021

Net inception fair value at January 1, 2021 $ ( 1,915 )

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

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

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

Amount of gain recognized in income on derivatives for the period ended March 31, 2021 1,637

Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of March 31, 2021 ( 993 )

Fair value at March 31, 2021 $ ( 1,271 )

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

Amount of Gain (Loss) Recognized in Other Comprehensive Income (Loss)

Amount of Gain (Loss) Recognized in Other Comprehensive Loss

Non-derivative instruments under ASC 815-20 Net

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

Investment Hedging Relationships Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

Foreign Currency Debt $ 5,822 $ 7,489

$ 5,822 $ 7,489

There was no amount recognized in income (ineffective portion and amount excluded from effectiveness testing) for the quarters ended March 31, 2021 and March 31, 2020.

The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows (in thousands):

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Gain (Loss) Recognized in

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

Income on Derivatives Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

Foreign currency forward contracts Other income (expense) $ ( 13,498 ) $ ( 52,676 )

Fuel swaps Fuel — — — ( 14 )

Fuel swaps Other income (expense) 12,655 ( 67,206 )

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

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

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

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

As of March 31, 2021, our senior unsecured debt credit rating was B by Standard & Poor's and B2 by Moody's.

As of March 31, 2021, seven of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $ 71.6 million to satisfy our obligations under our interest rate derivative agreements, taking into account any collateral waivers issued by banks.

We believe we have reached the maximum collateral amount that we may need to provide under these agreements in the next twelve months.

Restructuring Charges

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

Centralization of Global Sales and Marketing Structure

During the year ended December 31, 2019, we implemented a strategy related to the restructuring and centralization of our international sales and marketing structure.

Activities related to this strategy focused on moving from a multi-brand sales model to a brand dedicated sales model, which resulted in the consolidation of some of our international offices and personnel reorganization among our sales and marketing teams.

The personnel reorganization resulted in the recognition of a liability for one-time termination benefits during the twelve months ended December 31, 2019.

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.

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

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

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

Incurred Expected

Termination benefits $ 8,389 $ 3,059 $ 3,125 $ 8,323 $ 11,939 $ —

Contract termination costs 338 — — 338 338 —

Other related costs 2,785 7,847 9,001 1,631 10,655 514

Total $ 11,512 $ 10,906 $ 12,126 $ 10,292 $ 22,932 $ 514

Operating Expense Reduction in Workforce

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

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

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

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

In April 2020, we reduced our U.S.

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 during the quarter ended March 31, 2021 as it relates to the April 2020 reduction in our workforce (in thousands):

Beginning balance January 1, 2021 Accruals Payments Ending balance March 31, 2021 Cumulative

Incurred Expected

Termination benefits $ 4,257 $ 3,468 $ — $ 7,725 $ 31,421 $ —

Contract termination costs — — — — — —

Other related costs — — — — — —

Total $ 4,257 $ 3,468 $ — $ 7,725 $ 31,421 $ —

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

What changed 10-Q

Item 1. Financial Statements