What changed in this filing

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Item 1. Financial Statements

2021-08-05 compared with 2021-04-29 · 346 added, 219 removed, 841 unchanged (40% of the section changed)

3 unchanged sentences

in thousands, except per share data)

Quarter Ended March 31,

Quarter Ended June 30,

Passenger ticket revenues $ 22,785 $ 107,022

34 unchanged sentences

Change in defined benefit plans ( 3,088 ) ( 6,278 )

Gain on cash flow derivative hedges 51,476 124,331

Total other comprehensive income 44,899 144,390

Comprehensive Loss ( 1,302,356 ) ( 1,487,458 )

Comprehensive Income attributable to noncontrolling interest — 7,444

Comprehensive Loss attributable to Royal Caribbean Cruises Ltd.

$ ( 1,302,356 ) $ ( 1,494,902 )

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

in thousands, except per share data)

Six Months Ended June 30,

Passenger ticket revenues $ 43,629 $ 1,483,873

Onboard and other revenues 49,299 724,482

Total revenues 92,928 2,208,355

Cruise operating expenses:

Commissions, transportation and other 8,137 345,953

Onboard and other 13,079 145,297

Payroll and related 264,276 574,267

Food 25,668 148,799

Fuel 100,931 273,460

Other operating 296,226 703,463

Total cruise operating expenses 708,317 2,191,239

Marketing, selling and administrative expenses 543,599 697,308

Depreciation and amortization expenses 633,605 644,087

Impairment and credit losses 40,172 1,264,615

Operating Loss ( 1,832,765 ) ( 2,588,894 )

Other income (expense):

Interest income 9,531 10,740

Interest expense, net of interest capitalized ( 577,325 ) ( 311,800 )

Equity investment loss ( 107,959 ) ( 62,245 )

Other income (expense) 29,541 ( 116,684 )

( 646,212 ) ( 479,989 )

Net Loss ( 2,478,977 ) ( 3,068,883 )

Net Income attributable to noncontrolling interest — 14,888

Net Loss attributable to Royal Caribbean Cruises Ltd.

$ ( 2,478,977 ) $ ( 3,083,771 )

Loss per Share:

Basic $ ( 9.96 ) $ ( 14.74 )

Diluted $ ( 9.96 ) $ ( 14.74 )

Weighted-Average Shares Outstanding:

Basic 248,823 209,241

Diluted 248,823 209,241

Comprehensive Loss

Net Loss $ ( 2,478,977 ) $ ( 3,068,883 )

Other comprehensive income (loss):

Foreign currency translation adjustments 6,233 36,627

Change in defined benefit plans 7,375 ( 13,867 )

Gain (loss) on cash flow derivative hedges 61,778 ( 176,274 )

8 unchanged sentences

(in thousands, except share data)

March 31, December 31,

June 30, December 31,

Current assets

Cash and cash equivalents $ 4,250,369 $ 3,684,474

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

Trade and other receivables, net of allowances of $ 4,459 and $ 3,867 at June 30, 2021 and December 31, 2020, respectively

345,055 284,149

6 unchanged sentences

Goodwill 809,435 809,480

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

Other assets, net of allowances of $ 85,369 and $ 81,580 at June 30, 2021 and December 31, 2020, respectively

1,440,882 1,497,380

20 unchanged sentences

Common stock ($ 0.01 par value;

500,000,000 shares authorized;

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

500,000,000 shares authorized, 282,575,446 and 265,198,371 shares issued, June 30, 2021 and December 31, 2020, respectively)

Paid-in capital 7,527,305 5,998,574

1 unchanged sentence

Accumulated other comprehensive loss ( 663,955 ) ( 739,341 )

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

Treasury stock ( 27,882,987 and 27,799,775 common shares at cost, June 30, 2021 and December 31, 2020, respectively)

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

5 unchanged sentences

(unaudited, in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

2 unchanged sentences

Impairment and credit losses 40,172 1,264,615

Net deferred income tax (benefit) expense ( 3,556 ) 253

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

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

Net deferred income tax benefit ( 8,450 ) ( 2,666 )

(Gain) loss on derivative instruments not designated as hedges ( 16,163 ) 84,280

Share-based compensation expense 35,562 8,764

Equity investment loss 107,959 62,245

1 unchanged sentence

Amortization of debt discounts and premiums 56,609 6,668

(Gain) loss on extinguishment of debt ( 3,156 ) 40,335

Currency translation adjustment losses — 69,044

Change in fair value of contingent consideration — ( 44,605 )

1 unchanged sentence

(Increase) decrease in trade and other receivables, net ( 180,562 ) 94,873

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

(Increase) decrease in inventories ( 17,191 ) 9,511

(Increase) decrease in prepaid expenses and other assets ( 75,213 ) 249,481

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

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

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

Increase in accounts payable 38,073 118,398

Increase in accrued interest 17,675 52,114

Decrease in accrued expenses and other liabilities ( 123,028 ) ( 17,110 )

Increase (decrease) in customer deposits 629,285 ( 1,622,721 )

1 unchanged sentence

Other, net 1,746 ( 28,051 )

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

Net cash used in operating activities ( 1,269,554 ) ( 2,048,823 )

Investing Activities

16 unchanged sentences

Other, net ( 36,125 ) ( 28,284 )

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

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

2 unchanged sentences

(unaudited, in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Net cash provided by financing activities 3,018,992 7,544,206

Effect of exchange rate changes on cash 132 ( 953 )

13 unchanged sentences

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

Balance at April 1, 2021 $ 2,824 $ 7,513,318 $ 4,431,053 $ ( 708,854 ) $ ( 2,065,959 ) $ 9,172,382

Activity related to employee stock plans 2 14,116 — — — 14,118

Common stock issuance — ( 129 ) — — — ( 129 )

Changes related to cash flow derivative hedges — — — 51,476 — 51,476

Change in defined benefit plans — — — ( 3,088 ) — ( 3,088 )

Foreign currency translation adjustments — — — ( 3,489 ) — ( 3,489 )

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 1,347,255 ) — — ( 1,347,255 )

Balance at June 30, 2021 $ 2,826 $ 7,527,305 $ 3,083,798 $ ( 663,955 ) $ ( 2,065,959 ) $ 7,884,015

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

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

7 unchanged sentences

— — ( 2,478,977 ) — — ( 2,478,977 )

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

Balance at June 30, 2021 $ 2,826 $ 7,527,305 $ 3,083,798 $ ( 663,955 ) $ ( 2,065,959 ) $ 7,884,015

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

Activity related to employee stock plans — 18,047 — — — 18,047

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

Changes related to cash flow derivative hedges — — — 124,331 — 124,331

Change in defined benefit plans — — — ( 6,278 ) — ( 6,278 )

Foreign currency translation adjustments — — ( 3 ) 26,337 — 26,334

Net loss attributable to Royal Caribbean Cruises Ltd.

— — ( 1,639,292 ) — — ( 1,639,292 )

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

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

Balance at January 1, 2020 $ 2,365 $ 3,493,959 $ 11,523,326 $ ( 797,713 ) $ ( 2,058,091 ) $ 12,163,846

Activity related to employee stock plans 7 ( 8,559 ) — — — ( 8,552 )

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

Common stock dividends, $ 0.78 per share

6 unchanged sentences

— — ( 3,083,771 ) — — ( 3,083,771 )

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

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

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

15 unchanged sentences

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.

Together, our Global Brands and our Partner Brands operate a combined 60 ships as of June 30, 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

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.

We voluntarily suspended our global cruise operations effective March 2020 in response to the COVID-19 outbreak.

We have restarted our global cruise operations in a phased manner, following the requirements and recommendations of regulatory agencies, with reduced guest occupancy, modified itineraries and enhanced health, safety and vaccination protocols.

Our Global Brands have returned to service from U.S.

ports, and 12 of our ships have sailed or are expected to sail from U.S.

ports by August 31, 2021.

More broadly, a total of 36 of our 60 Global and Partner Brand ships have resumed sailing or have announced their intention to resume sailing by August 31, 2021.

Uncertainties remain as to the specifics, timing and costs of administering and implementing our health and safety measures, some of which may be significant.

Based on our assessment of these requirements and recommendations, 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 cancel or modify certain of our Global Brands’ cruise sailings.

We believe 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 gradual resumption of cruise 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.

• Expected incremental spend for our resumption of cruise operations, including bringing our vessels out of layup status, returning our crew members to our ships and implementing and maintaining of health and safety protocols.

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 regulatory requirements and recommendations, subsequent changes to and/or enforceability of those requirements and recommendations, our ability to meet the requirements and recommendations, and

whether efforts by countries to contain the disease and its variants will further restrict our ability to resume operations.

We have implemented a number of proactive measures to mitigate the financial and operational impacts of COVID-19, including reduction of capital expenditures and operating expenses, the issuance of debt and shares of our common stock, the amendment of credit agreements to defer payments, the waiver and/or modification of covenant requirements and the suspension of dividend payments.

Additionally, we expect to continue to pursue refinancing opportunities to reduce interest expense and extend maturities.

As of June 30, 2021, we had liquidity of $ 5.0 billion, consisting of cash and cash equivalents of $ 4.3 billion and a $ 0.7 billion 364-day term loan facility commitment available to draw through August 12, 2022.

Our revolving credit facilities were mostly utilized through a combination of amounts drawn and letters of credit issued under the facilities as of June 30, 2021.

During the three months ended March 31, 2021, we 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 June 30, 2021, we were in compliance with our financial covenants.

Refer to Note 7 .

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.

Debt for further information regarding the amendments made to our debt facilities and credit card processing agreements, including related covenants, and for further discussion of our 2021 financing activities.

Based on our assumptions regarding the impact of COVID-19 and our resumption 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

2 unchanged sentences

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

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

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

7 unchanged sentences

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 December 31, 2020 through March 31, 2021.

No material events or other transactions involving Silversea Cruises have occurred from March 31, 2021 through June 30, 2021, with the exception of the full repayment of the Silversea Cruises 7.25 % senior secured notes, in the amount of $ 619.8 million, in addition to payment of the related call premiums, accrued interest and fees in June of 2021, which are reported in our consolidated financial statements as of and for the quarter ended June 30, 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.

The 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

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

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.

15 unchanged sentences

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.

For the six months ended June 30, 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 within Operating Activities .

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.

Also, for the six months ended June 30, 2021, we no longer separately present 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.

4 unchanged sentences

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.

During the quarter and six months ended June 30, 2020, we recognized combined impairment and credit losses of $ 156.5 million and $ 1.3 billion, respectively, which are reported within Impairment and credit losses within our consolidated statements of comprehensive loss.

For the quarter ended June 30, 2020, we recognized impairment losses of $ 64.9 million primarily related to our property and equipment, net and right-of-use assets.

We recognized impairment losses of $ 1.1 billion during the six months ended June 30, 2020 primarily related to goodwill, trademarks and trade names, property and equipment, net and right-of-use assets.

The credit losses of $ 91.6 million and $ 129.7 million recognized during the quarter and six months ended June 30, 2020, respectively, related to our notes receivable.

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

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

During the quarter ended June 30, 2021, we determined that certain construction in progress projects would be reduced in scope or would no longer be completed due to the impact COVID-19 has had on our operations.

This led to an impairment of $ 40.6 million of construction in progress assets previously reported in Property and equipment, net.

This impairment charge was reported within Impairment and Credit Losses in our consolidated statements of comprehensive loss for the three and six months ended June 30, 2021.

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, which may result in additional impairments to these assets in the future.

Revenue Recognition

5 unchanged sentences

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

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.

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 3.2 million for the quarter ended June 30, 2021 compared to no port costs charged for the quarter ended June 30, 2020.

Port costs charged to our guest and included within Passenger ticket revenues were $ 4.7 million and $ 124.5 million for the six months ended June 30, 2021 and 2020, respectively.

Our total revenues also include O nboard and other revenues , which historically have consisted 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.

2 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Revenues by itinerary

11 unchanged sentences

(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, 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 .

1 unchanged sentence

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

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

Quarter Ended March 31,

For the quarters ended June 30, 2021 and 2020, our guests were sourced from the following areas:

Quarter Ended June 30,

Passenger ticket revenues:

Singapore 54 % — %

United States 44 % 61 %

United Kingdom — % 18 %

China — % 11 %

All other countries (1) 2 % 10 %

Six Months Ended June 30,

Passenger ticket revenues:

Singapore 61 % — %

China 15 % 3 %

United States 23 % 67 %

All other countries (1) 1 % 30 %

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

(1) No other individual country's revenue exceeded 10% for the quarters and six months ended June 30, 2021 and 2020.

Customer Deposits and Contract Liabilities

4 unchanged sentences

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.

At the same time, we have experienced significant cancellations as a result of the COVID-19 pandemic 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 June 30, 2021, refunds due to customers mostly as a result of booking cancellations were $ 107.9 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 June 30, 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 $ 283.7 million and $ 124.8 million as of June 30, 2021 and December 31, 2020, respectively.

Contract Receivables and Contract Assets

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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 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.

As of June 30, 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.

1 unchanged sentence

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 $ 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.

Prepaid travel agent commissions were $ 31.7 million as of June 30, 2021 and $ 1.1 million as of December 31, 2020.

(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,

Quarter Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Net (Loss) attributable to Royal Caribbean Cruises Ltd.

4 unchanged sentences

Diluted (loss) per share $ ( 5.29 ) $ ( 7.83 ) $ ( 9.96 ) $ ( 14.74 )

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.

There were approximately 445,000 and 449,000 antidilutive shares for the quarter and six months ended June 30, 2021, respectively, compared to 421,000 and 662,000 for the quarter and six months ended June 30, 2020, respectively.

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

While the criteria for conversion of the convertible notes has not been met, the shares that would be issued upon conversion of the notes would be anti-dilutive for the quarter and six months ended June 30, 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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Accordingly, we do not consolidate this entity and account for this investment under the equity method of accounting.

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 June 30, 2021, the net book value of our investment in TUIC was $ 488.9 million, primarily consisting of $ 347.1 million in equity and a loan of € 111.0 million, or approximately $ 131.6 million based on the exchange rate at June 30, 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.

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

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.

contributions and conversion of existing receivables.

In June 2021, Hapag-Lloyd Cruises received delivery of the Hanseatic Spirit , a 230 berth luxury expedition cruise vessel.

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 TUI Cruises below 37.55 % through May 2033.

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

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.

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.

TUI Cruises has resumed limited cruises and announced resumption of additional cruise operations in Europe.

Hapag-Lloyd announced their resumption of cruise operation for the third quarter of 2021.

The brands' suspension of operations during the COVID-19 pandemic has resulted in 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, such as the April 2021 issuance of € 300.0 million senior unsecured bonds due in 2026, and the deferral of existing financing, to mitigate the impact of COVID-19 until normal operations resume.

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, and on July 15, 2021 Pullmantur Holdings and certain of its subsidiaries filed for liquidation.

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.

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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 bringing our investment balance to zero .

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.

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.

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

As of June 30, 2021, we had exposure to credit loss in Grand Bahama consisting of a $ 12.7 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.

During the three months 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 first half of 2020.

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

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

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

During the quarter and six months ended June 30, 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 .

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Share of equity (loss) income from investments $ ( 48,088 ) $ ( 51,853 ) $ ( 107,959 ) $ ( 62,245 )

Dividends received (1) $ — $ — $ — $ 1,991

(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

There were no dividends received from TUI Cruises for the quarters and six months ended June 30, 2021 and June 30, 2020 .

As of June 30, 2021 As of December 31, 2020

Total notes receivable due from equity investments $ 144,288 $ 164,596

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2021 2020 2021 2020

Revenues $ 5,913 $ 2,807 $ 11,144 $ 10,218

Expenses $ 1,715 $ 1,364 $ 2,990 $ 2,146

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.

Credit Loss Allowance

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements as of June 30, 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):

The following table summarizes our credit loss allowance related to receivables for the six months ended June 30, 2021 (in thousands):

Credit Loss Allowance

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Write-offs ( 282 )

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.

Ending balance June 30, 2021 $ 89,828

Our credit loss allowance balance as of June 30, 2021, primarily relate 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 Quarter Ended March 31, 2021 Year Ended December 31, 2020

Maturities Through Quarter Ended June 30, 2021 Year Ended December 31, 2020

Fixed rate debt:

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Unsecured UK Commercial paper —

2021 — 409,319

USD unsecured term loan 0.59 % to 3.33 %

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Long-term portion $ 20,078,789 $ 17,957,956

(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.

(1) Interest rates based on outstanding loan balance as of June 30, 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.

Our $ 1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30 %, which interest was 1.45 % as of June 30, 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 1.85 % as of June 30, 2021 and is subject to a facility fee of a maximum of 0.30 %.

(3) At June 30, 2021 and December 31, 2020, the weighted average interest rate for total debt was 5.98 % 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.

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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.

As of June 30, 2021, our aggregate revolving borrowing capacity was $ 3.2 billion and was mostly 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

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.

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 June 30, 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 $ 164.2 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.

The maximum projected cash exposure with the processor, including amounts currently withheld and reported in Trade and other receivables , is approximately $ 210.6 million.

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

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

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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.

In addition, the facility, once drawn, 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.

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.

We repaid in full £ 300.0 million of Sterling-denominated notes issued under the Joint HM Treasury and Bank of England’s COVID Corporate Financing Facility and a $ 130 million term loan during the first and second quarters of 2021, respectively.

In June 2021, we issued $ 650.0 million of senior unsecured notes due in 2026 (the "Unsecured Notes") for net proceeds of approximately $ 640.6 million.

Interest accrues on the Unsecured Notes at a fixed rate of 4.25 % and is payable semi-annually.

We fully repaid the Silversea Cruises 7.25 % Senior Secured Notes due in 2025 (the "Silversea Notes"), in the amount of $ 619.8 million, with a portion of the proceeds from the Unsecured Notes.

We also funded call premiums, fees and expenses in connection with the redemption of the Silversea Notes with proceeds from the Unsecured Notes.

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 June 30, 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.

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.

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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.

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Under certain of our agreements, the contractual interest rate, facility fee and/or export credit agency fee vary with our debt rating.

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-.

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 our Silversea Notes (which were fully repaid in June 2021 with proceeds from the $ 650 million Unsecured 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.

Except for the term loans we incurred to acquire Celebrity Flora 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.

For the majority of the loans as of June 30, 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.

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.

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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):

The following is a schedule of annual maturities on our total debt net of debt issuance costs, and including finance leases, as of June 30, 2021 for each of the next five years (in thousands):

Remainder of 2021 $ 252,306

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Operating leases

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment and are included within Operating lease right-of-use assets , and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of March 31, 2021 and December 31, 2020.

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

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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.

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

periods for berthing agreements range from one to 20 years.

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

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

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

We consider the possibility of incurring costs associated with the residual value guarantee to be remote.

Also in connection with the Port of Miami terminal lease, we are required to deliver on or before July 18, 2021, cash collateral in an amount equal to the lesser of our residual value guarantee or the aggregate balance of the lenders' terminal construction debt, estimated at $ 181.1 million as of March 31, 2021.

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

In June of 2021, we issued a notice to SMBC Leasing and Finance, Inc (the "Lessor"), exercising our existing option under our operating lease with the Lessor to purchase Terminal A at PortMiami in July 2021 for the pre-agreed purchase price of $ 220.0 million.

We reassessed the classification of the terminal lease as a result of our exercise to purchase the terminal and determined the lease to be a finance lease as of June 30, 2021.

Accordingly, as of June 30, 2021, we remeasured the lease liability and adjusted the related right-of-use asset, based on the pre-agreed purchase price and reported the finance lease liability in Current portion of long-term debt in our Consolidated Balance Sheet.

Upon purchase of the terminal lease in July 2021, the underlying asset was recorded as a leasehold improvement within Property and equipment, net.

Our July 2021 purchase of the Port of Miami terminal eliminated the residual value guarantee and a requirement under the lease to post $ 181.1 million of cash collateral on or before July 18, 2021.

Additionally, we remeasured the ground lease related to the Terminal A lease based on a reassessed lease term resulting from our purchase option exercise.

As of June 30, 2021, we determined that the ground lease should remain as an operating lease with adjustments to the operating lease liability and the related right-of-use asset in our Consolidated Balance Sheet.

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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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.

In May 2021, the finance lease for the Silver Whisper expiring in 2022 was amended to extend its expiration by 12 months and will now expire in 2023, subject to an option to purchase the ship.

Additionally, certain scheduled payments have been deferred and are reflected in Long-term debt in our Consolidated Balance Sheet as of June 30, 2021.

The total aggregate amount of the finance lease liabilities recorded for this ship was $ 31.5 million at June 30, 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 Loss Classification Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

Consolidated Statement of Comprehensive Loss Classification Quarter Ended June 30, 2021 Six Months Ended June 30, 2021

Operating lease costs Other operating expenses $ 4,811 $ 9,941

Operating lease costs Marketing, selling and administrative expenses 2,475 8,510

Financial lease costs:

Amortization of right-of-use-assets Depreciation and amortization expenses 3,983 7,727

Interest on lease liabilities Interest expense, net of interest capitalized 364 674

Total lease costs $ 11,633 $ 26,852

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

Operating lease costs Commission, transportation and other $ 17,875 $ 32,620

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

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.

During the quarter ended June 30, 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 March 31, 2021 As of December 31, 2020

As of June 30, 2021 As of December 31, 2020

Weighted average of the remaining lease term

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

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

Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

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

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Financing cash flows from finance leases $ 7,935 $ 8,504

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

As of June 30, 2021, maturities related to lease liabilities were as follows (in thousands):

Year Operating Leases Finance Leases

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Our future capital commitments consist primarily of new ship orders.

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.

As of June 30, 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 June 30, 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 June 30, 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:

As of June 30, 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

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

Unnamed Meyer Turku Oy 3rd Quarter 2023 5,600

Icon of the Seas Meyer Turku Oy 3rd Quarter 2023 5,600

Unnamed Meyer Turku Oy 2nd Quarter 2025 5,600

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Unnamed Fincantieri 1st Quarter 2026 4,100

Hapag-Lloyd Cruises (50% joint venture) —

Hanseatic Spirit Vard Fincantieri 2nd Quarter 2021 230

Total Berths 47,800

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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.

In addition, as of June 30, 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 June 30, 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 $ 739.5 million as of such date.

Approximately 70.1 % of the aggregate cost was exposed to fluctuations in the Euro exchange rate at June 30, 2021.

Refer to Note 12 .

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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.

District Court for the Southern District of Florida (the "Court") 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.

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

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.

The trial for the Havana Docks Action has been scheduled for October 25, 2021.

The Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiffs lacked standing;

however, the plaintiffs have appealed the dismissal.

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 either case will not be material.

We believe it is unlikely 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.

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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.

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

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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

The following table presents the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2021 and 2020 (in thousands):

Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 2021 Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 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 $ ( 588,741 ) $ ( 58,167 ) $ ( 17,047 ) $ ( 663,955 ) $ ( 864,803 ) $ ( 59,425 ) $ ( 26,999 ) $ ( 951,227 )

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

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and six months ended June 30, 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

Details About Accumulated Other Comprehensive Loss Components Quarter Ended June 30, 2021 Quarter Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 Affected Line Item in Statements of

Comprehensive Loss

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( 1,547 ) ( 528 ) ( 2,290 ) ( 1,033 )

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

Foreign cumulative translation — ( 34,300 ) — ( 34,300 ) Other operating

Total reclassifications for the period $ ( 9,849 ) $ ( 57,745 ) $ ( 21,821 ) $ ( 80,630 )

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

In connection with the Pullmantur reorganization in 2020, we no longer have significant involvement in the Pullmantur operations and these amounts previously deferred in Accumulated other comprehensive loss were recognized in earnings.

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

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

Fair Value Measurements at June 30, 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 March 31, 2021 and December 31, 2020.

The Company did not use any Level 3 inputs as of June 30, 2021 and December 31, 2020.

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

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Other Financial Instruments

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.

The carrying amounts of accounts receivable, accounts payable, accrued interest, accrued expenses and commercial paper approximate fair value at June 30, 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 March 31, 2021 Using Fair Value Measurements at December 31, 2020 Using

Fair Value Measurements at June 30, 2021 Using Fair Value Measurements at December 31, 2020 Using

Description Total Level 1 (1)

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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.

No Level 3 inputs were used in fair value measurements of Other financial instruments as of June 30, 2021 and December 31, 2020.

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

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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 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.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of June 30, 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):

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

Fair Value Measurements at June 30, 2021 Using

Description Total Carrying Amount Total Fair Value Level 3 Total Impairment for the six months ended June 30, 2021

Long-lived assets(1) — — — $ 40,643

Total — — — $ 40,643

(1) During the quarter ended June 30, 2021, certain 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 was estimated as of June 30, 2021.

Fair Value Measurement at December 31, 2020 Using

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(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 %.

We estimated the fair value of 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;

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

During the quarter ended September 30, 2020 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.

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.

The fair value of these assets was 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.

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

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

As of June 30, 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 March 31, 2021 As of December 31, 2020

As of June 30, 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 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.

As of June 30, 2021, we had counterparty credit risk exposure under our derivative instruments of $ 20.5 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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For our regression analyses, we use an observation period of up to three years , utilizing market data relevant to the hedge horizon of each hedge relationship.

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

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

derivative instrument and the hedged item.

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

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

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

At June 30, 2021 and December 31, 2020, approximately 67.8 % 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 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

At June 30, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument Swap Notional as of June 30, 2021 (in thousands) Maturity Debt Fixed Rate Swap Floating Rate:

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

At June 30, 2021 and December 31, 2020, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of June 30, 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 March 31, 2021.

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

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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 March 31, 2021 and December 31, 2020 was $ 3.3 billion and $ 3.4 billion, respectively.

The notional amount of interest rate swap agreements related to outstanding debt and our current unfunded financing arrangements as of June 30, 2021 and December 31, 2020 was $ 3.2 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 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.

As of June 30, 2021, the aggregate cost of our ships on order was $ 12.9 billion, of which we had deposited $ 739.5 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.

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

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.

At June 30, 2021 and December 31, 2020, approximately 70.1 % 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 first quarter of 2021, we maintained an average of approximately $ 462.6 million of these foreign currency forward contracts.

During the second quarter of 2021, we maintained an average of approximately $ 407.3 million of these foreign currency forward contracts.

These instruments are not designated as hedging instruments.

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.

For the quarters ended June 30, 2021 and 2020, changes in the fair value of the foreign currency forward contracts resulted in a gain of $ 0.5 million and $ 12.5 million, respectively.

For the six months ended June 30, 2021 and 2020, changes in the fair value of the foreign currency forward contracts resulted in a loss of $ 13.0 million and $ 40.1 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 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.

As of June 30, 2021, we maintained foreign currency forward contracts and designated them as hedges of a portion of our net investments in TUI Cruises of € 245.0 million, or approximately $ 290.5 million based on the exchange rate at June 30, 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 both March 31, 2021 and December 31, 2020 was $ 2.5 billion and $ 3.1 billion, respectively.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of both June 30, 2021 and December 31, 2020 was $ 2.2 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 € 113.0 million, or approximately $ 132.8 million, as of March 31, 2021.

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 148.0 million, or approximately $ 175.5 million, as of June 30, 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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For hedged forecasted fuel consumption that remains possible of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will remain in accumulated other comprehensive gain or loss until the underlying hedged transactions are recognized in earnings or the related hedged forecasted fuel consumption is deemed probable of not occurring.

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

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) .

The prior suspension of our cruise operations due to the COVID-19 pandemic and our recent gradual resumption of cruise operations has resulted in reductions to our forecasted fuel purchases.

During the quarter and six months ended June 30, 2020, we discontinued cash flow hedge accounting on 0.1 million and 0.3 million metric tons of our fuel swap agreements maturing in 2020 and 2021, respectively, which resulted in the reclassification of net losses of $ 13.7 million and $ 68.6 million in 2020 and 2021, respectively, from Accumulated other comprehensive loss to Other income (expense) .

During the six months ended June 30, 2021, we discontinued cash flow hedge accounting on 48 thousand metric tons of 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) .

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.

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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:

At June 30, 2021, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2024.

As of June 30, 2021 and December 31, 2020, we had the following outstanding fuel swap agreements:

Fuel Swap Agreements

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

As of June 30, 2021 As of December 31, 2020

Designated as hedges:

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Fuel Swap Agreements

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

As of June 30, 2021 As of December 31, 2020

Designated hedges as a % of projected fuel purchases:

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Fuel Swap Agreements

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

As of June 30, 2021 As of December 31, 2020

Not designated as hedges:

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2022 14,650 14,650

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.

As of June 30, 2021, $ 34.5 million of estimated unrealized gain 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 March 31, 2021 As of December 31, 2020 Balance Sheet Location As of March 31, 2021 As of December 31, 2020

Balance Sheet Location As of June 30, 2021 As of December 31, 2020 Balance Sheet Location As of June 30, 2021 As of December 31, 2020

Fair Value Fair Value Fair Value Fair Value

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Foreign currency forward contracts Derivative financial instruments $ — $ — Derivative financial instruments $ — $ 160

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

Fuel swaps Derivative financial instruments 2,479 834 Derivative financial instruments 2,307 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 March 31, 2021 Quarter Ended March 31, 2020

Quarter Ended June 30, 2021 Quarter Ended June 30, 2020

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

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Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income n/a $( 3,855 ) n/a $( 515 ) n/a $( 3,780 ) n/a $( 2,581 )

Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

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 $ 100,931 $ 633,605 $( 567,794 ) $ 29,541 $ 273,460 $ 644,087 $( 301,060 ) $( 116,684 )

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 $ 4,998 — n/a n/a ( 23,234 ) $ —

Derivatives designated as hedging instruments n/a n/a $( 234 ) — n/a n/a $ 23,299 $ —

Gain or (loss) on cash flow hedging relationships in Subtopic 815-20

Interest contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income n/a n/a $( 20,957 ) n/a n/a n/a $( 9,407 ) n/a

Commodity contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income $ 11,282 n/a n/a $( 414 ) $( 26,922 ) n/a n/a $ 2,493

Foreign exchange contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income n/a $( 7,636 ) n/a $( 1,806 ) n/a $( 7,117 ) n/a $( 4,344 )

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

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Non-derivative instrument designated as

hedging instrument under ASC 815-20 Balance Sheet Location As of March 31, 2021 As of December 31, 2020

hedging instrument under ASC 815-20 Balance Sheet Location As of June 30, 2021 As of December 31, 2020

Foreign currency debt Current portion of debt $ 41,038 $ 43,696

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Income on Hedged Item

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

Quarter Ended June 30, 2021 Quarter Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020 Quarter Ended June 30, 2021 Quarter Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

Interest rate swaps Interest expense, net of interest capitalized $ 317 $ 2,870 $ ( 234 ) $ 23,299 $ 2,068 $ ( 1,904 ) $ 4,998 $ ( 23,234 )

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

As of June 30, 2021 As of December 31, 2020 As of June 30, 2021 As of December 31, 2020

Current portion of debt and Long-term debt $ 661,031 $ 700,331 $ 12,514 $ 17,512

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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 $ ( 15,714 ) $ 4,406 $ 27,694 $ ( 48,189 ) Interest expense, net of interest capitalized $ ( 11,448 ) $ ( 6,016 ) $ ( 20,957 ) $ ( 9,407 )

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$ 43,175 $ 101,415 $ 42,247 $ ( 221,571 ) $ ( 8,302 ) $ ( 22,917 ) $ ( 19,531 ) $ ( 45,297 )

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) Three Months Ended March 31, 2021

Gain (Loss) Recognized in Income (Net Investment Excluded Components) Six Months Ended June 30, 2021

Net inception fair value at January 1, 2021 $ ( 1,915 )

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 )

Amount of gain recognized in income on derivatives for the six month period ended June 30, 2021 3,293

Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of June 30, 2021 ( 2,034 )

Fair value at June 30, 2021 $ ( 656 )

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

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Non-derivative instruments under ASC 815-20 Net

Investment Hedging Relationships Quarter Ended March 31, 2021 Quarter Ended March 31, 2020

Investment Hedging Relationships Quarter Ended June 30, 2021 Quarter Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

Foreign Currency Debt $ ( 2,813 ) $ ( 7,541 ) $ 3,009 $ ( 52 )

$ ( 2,813 ) $ ( 7,541 ) $ 3,009 $ ( 52 )

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 March 31, 2021 Quarter Ended March 31, 2020

Income on Derivatives Quarter Ended June 30, 2021 Quarter Ended June 30, 2020 Six Months Ended June 30, 2021 Six Months Ended June 30, 2020

Foreign currency forward contracts Other income (expense) $ 524 $ 12,504 $ ( 12,974 ) $ ( 40,172 )

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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 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.

As of June 30, 2021, our senior unsecured debt credit rating was B by Standard & Poor's and B2 by Moody's.

As of June 30, 2021, seven of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $ 60.9 million to satisfy our obligations under our interest rate derivative agreements, taking into account any collateral waivers issued by banks.

We believe the maximum additional collateral we may need to provide under these agreements in the next twelve months is approximately $ 11.4 million.

Restructuring Charges

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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

The following table summarizes our restructuring costs during the six months ended June 30, 2021 as it relates to the April 2020 reduction in our workforce (in thousands):

Beginning balance January 1, 2021 Accruals Payments Ending balance June 30, 2021 Cumulative

Incurred Expected

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements