What changed in this filing

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Item 1. Financial Statements

2022-05-05 compared with 2021-10-29 · 292 added, 560 removed, 637 unchanged (57% of the section changed)

3 unchanged sentences

in thousands, except per share data)

Quarter Ended September 30,

Passenger ticket revenues $ 280,153 $ 3,204

Onboard and other revenues 176,805 ( 36,892 )

Total revenues 456,958 ( 33,688 )

Cruise operating expenses:

Commissions, transportation and other 64,780 ( 3,321 )

Onboard and other 42,703 6,036

Payroll and related 265,974 119,213

Food 48,950 5,640

Fuel 118,127 53,815

Other operating 273,157 127,226

Total cruise operating expenses 813,691 308,609

Marketing, selling and administrative expenses 323,422 246,779

Depreciation and amortization expenses 325,907 317,139

Impairment and credit losses ( 238 ) 89,899

Operating Loss ( 1,005,824 ) ( 996,114 )

Other income (expense):

Interest income 3,786 5,017

Interest expense, net of interest capitalized ( 430,661 ) ( 259,349 )

Equity investment loss ( 29,085 ) ( 78,013 )

Other income (expense) 37,230 ( 10,853 )

( 418,730 ) ( 343,198 )

Net Loss ( 1,424,554 ) ( 1,339,312 )

Net Income attributable to noncontrolling interest — 7,444

Net Loss attributable to Royal Caribbean Cruises Ltd.

$ ( 1,424,554 ) $ ( 1,346,756 )

Loss per Share:

Basic $ ( 5.59 ) $ ( 6.29 )

Diluted $ ( 5.59 ) $ ( 6.29 )

Weighted-Average Shares Outstanding:

Basic 254,713 214,163

Diluted 254,713 214,163

Comprehensive Loss

Net Loss $ ( 1,424,554 ) $ ( 1,339,312 )

Other comprehensive income (loss):

Foreign currency translation adjustments 5,022 19,071

Change in defined benefit plans ( 3,627 ) ( 3,086 )

(Loss) gain on cash flow derivative hedges ( 13,264 ) 66,135

Total other comprehensive (loss) income ( 11,869 ) 82,120

Comprehensive Loss ( 1,436,423 ) ( 1,257,192 )

Comprehensive Income attributable to noncontrolling interest — 7,444

Comprehensive Loss attributable to Royal Caribbean Cruises Ltd.

$ ( 1,436,423 ) $ ( 1,264,636 )

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)

Nine Months Ended September 30,

Quarter Ended March 31,

Passenger ticket revenues $ 651,858 $ 20,844

11 unchanged sentences

Depreciation and amortization expenses 339,467 310,166

Impairment and credit losses 39,934 1,354,514

Impairment and credit losses (recoveries) 173 ( 449 )

Operating Loss ( 859,208 ) ( 809,231 )

3 unchanged sentences

Equity investment loss ( 31,059 ) ( 59,871 )

Other income (expense) 66,771 ( 127,537 )

Other (expense) income ( 2,538 ) 5,033

( 307,934 ) ( 322,491 )

Net Loss $ ( 1,167,142 ) $ ( 1,131,722 )

Net Income attributable to noncontrolling interest — 22,332

Net Loss attributable to Royal Caribbean Cruises Ltd.

$ ( 3,903,531 ) $ ( 4,430,527 )

Loss per Share:

6 unchanged sentences

Net Loss $ ( 1,167,142 ) $ ( 1,131,722 )

Other comprehensive income (loss):

Other comprehensive income:

Foreign currency translation adjustments 7,778 9,722

Change in defined benefit plans 12,597 10,463

Gain (loss) on cash flow derivative hedges 48,514 ( 110,139 )

Total other comprehensive income (loss) 63,517 ( 71,394 )

Gain on cash flow derivative hedges 195,901 10,302

Total other comprehensive income 216,276 30,487

Comprehensive Loss $ ( 950,866 ) $ ( 1,101,235 )

Comprehensive Income attributable to noncontrolling interest — 22,332

Comprehensive Loss attributable to Royal Caribbean Cruises Ltd.

$ ( 3,840,014 ) $ ( 4,501,921 )

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

2 unchanged sentences

(in thousands, except share data)

September 30, December 31,

March 31, December 31,

Current assets

Cash and cash equivalents $ 1,968,504 $ 2,701,770

Trade and other receivables, net of allowances of $ 12,369 and $ 3,867 at September 30, 2021 and December 31, 2020, respectively

Trade and other receivables, net of allowances of $ 6,099 and $ 13,411 at March 31, 2022 and December 31, 2021, respectively

506,160 408,067

6 unchanged sentences

Goodwill 809,435 809,383

Other assets, net of allowances of $ 85,089 and $ 81,580 at September 30, 2021 and December 31, 2020, respectively

Other assets, net of allowances of $ 86,594 and $ 86,781 at March 31, 2022 and December 31, 2021, respectively

1,477,225 1,398,624

3 unchanged sentences

Current portion of long-term debt $ 2,558,463 $ 2,243,131

Commercial paper — 409,319

Current portion of operating lease liabilities 74,234 68,922

14 unchanged sentences

Common stock ($ 0.01 par value;

500,000,000 shares authorized, 282,672,234 and 265,198,371 shares issued, September 30, 2021 and December 31, 2020, respectively)

500,000,000 shares authorized;

282,973,716 and 282,703,246 shares issued, March 31, 2022 and December 31, 2021, respectively)

Paid-in capital 7,267,545 7,557,297

Retained earnings 1,659,244 5,562,775

Retained (deficit) earnings ( 718,609 ) 302,276

Accumulated other comprehensive loss ( 494,609 ) ( 710,885 )

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

Treasury stock ( 28,018,385 and 27,882,987 common shares at cost, March 31, 2022 and December 31, 2021, respectively)

( 2,068,229 ) ( 2,065,959 )

5 unchanged sentences

(unaudited, in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities

1 unchanged sentence

Depreciation and amortization 339,467 310,166

Impairment and credit losses 39,934 1,354,514

Impairment and credit losses (recoveries) 173 ( 449 )

Net deferred income tax benefit ( 3,067 ) ( 3,556 )

(Gain) loss on derivative instruments not designated as hedges ( 11,560 ) 64,541

Loss on derivative instruments not designated as hedges 10,873 491

Share-based compensation expense 22,839 18,834

2 unchanged sentences

Amortization of debt discounts and premiums 3,849 29,304

Loss on extinguishment of debt 138,759 41,109

Currency translation adjustment losses — 69,044

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

Changes in operating assets and liabilities:

(Increase) decrease in trade and other receivables, net ( 225,535 ) 133,769

(Increase) decrease in inventories ( 26,711 ) 19,675

(Increase) decrease in prepaid expenses and other assets ( 123,935 ) 271,315

Increase in trade and other receivables, net ( 32,236 ) ( 72,397 )

Increase in inventories ( 29,242 ) ( 3,708 )

Increase in prepaid expenses and other assets ( 124,394 ) ( 26,118 )

Increase (decrease) in accounts payable 112,426 ( 7,499 )

(Decrease) increase in accrued interest ( 3,685 ) 164,284

Increase (decrease) in accrued interest 11,373 ( 15,726 )

Decrease in accrued expenses and other liabilities ( 130,441 ) ( 134,113 )

Increase (decrease) in customer deposits 1,031,930 ( 1,608,355 )

Dividends received from unconsolidated affiliates — 2,215

Increase in customer deposits 406,534 95,923

Other, net ( 20,259 ) 35,935

13 unchanged sentences

Repayments of debt ( 1,007,632 ) ( 427,978 )

Premium on repayment of debt ( 135,372 ) —

Proceeds from issuance of commercial paper notes — 6,765,816

Repayments of commercial paper notes — ( 414,570 )

Dividends paid — ( 326,421 )

Proceeds from common stock issuances — 1,617,234

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Nine Months Ended September 30,

Other, net ( 10,843 ) ( 2,724 )

2 unchanged sentences

Net (decrease) increase in cash and cash equivalents ( 733,266 ) 1,406,989

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Three Months Ended March 31,

Cash and cash equivalents at beginning of period 2,701,770 3,684,474

6 unchanged sentences

Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities $ 31,899 $ 26,882

Non-cash Financing Activities

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

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

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

2 unchanged sentences

in thousands)

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

Balance at July 1, 2021 $ 2,826 $ 7,527,305 $ 3,083,798 $ ( 663,955 ) $ ( 2,065,959 ) $ 7,884,015

Activity related to employee stock plans 1 20,045 — — — 20,046

Common stock issuance — ( 140 ) — — — ( 140 )

Changes related to cash flow derivative hedges — — — ( 13,264 ) — ( 13,264 )

Change in defined benefit plans — — — ( 3,627 ) — ( 3,627 )

Foreign currency translation adjustments — — — 5,022 — 5,022

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 1,424,554 ) — — ( 1,424,554 )

Balance at September 30, 2021 $ 2,827 $ 7,547,210 $ 1,659,244 $ ( 675,824 ) $ ( 2,065,959 ) $ 6,467,498

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

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

Balance at January 1, 2022 $ 2,827 $ 7,557,297 $ 302,276 $ ( 710,885 ) $ ( 2,065,959 ) $ 5,085,556

Activity related to employee stock plans 3 17,888 37 — — 17,928

Common stock issuance 170 1,495,837 — — — 1,496,007

Cumulative effect of adoption of Accounting Standards Update 2020-06 — ( 307,640 ) 146,220 — — ( 161,420 )

Changes related to cash flow derivative hedges — — — 195,901 — 195,901

2 unchanged sentences

Purchase of treasury stock — — — — ( 2,270 ) ( 2,270 )

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 3,903,531 ) — — ( 3,903,531 )

Balance at September 30, 2021 $ 2,827 $ 7,547,210 $ 1,659,244 $ ( 675,824 ) $ ( 2,065,959 ) $ 6,467,498

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

in thousands)

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

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

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

Silversea acquisition 52 608,824 608,876

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

Change in defined benefit plans — — — ( 3,086 ) — ( 3,086 )

Foreign currency translation adjustments — — 3 19,071 — 19,074

Net loss attributable to Royal Caribbean Cruises Ltd.

— — ( 1,346,756 ) — — ( 1,346,756 )

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

Net Loss — — ( 1,167,142 ) — — ( 1,167,142 )

Balance at March 31, 2022 $ 2,830 $ 7,267,545 $ ( 718,609 ) $ ( 494,609 ) $ ( 2,068,229 ) $ 3,988,928

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

1 unchanged sentence

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

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

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

Common stock dividends, $ 0.78 per share

— — ( 163,089 ) — — ( 163,089 )

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

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

1 unchanged sentence

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

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

Net loss attributable to Royal Caribbean Cruises Ltd.

— — ( 4,430,527 ) — — ( 4,430,527 )

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

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

Net Loss — — ( 1,131,722 ) — — ( 1,131,722 )

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

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

13 unchanged sentences

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

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

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

Together, our Global Brands and our Partner Brands operate a combined 60 ships as of September 30, 2021.

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

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

Together, our Global Brands and our Partner Brands have a combined fleet of 62 ships as of March 31, 2022.

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

Management's Plan and Liquidity

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.

By the end of September 2021, we operated 38 of our Global and Partner Brand ships, representing 63 % of our fleet, and sailed over 500,000 passengers since we resumed operations.

We expect to operate approximately 80 % of our fleet by December 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.

During 2021, we restarted our global cruise operations in a phased manner, following our voluntary suspension of global cruise operations that commenced in March of 2020 in response to the COVID-19 pandemic.

Since then, we have steadily increased the number of ships that have returned to service.

As of March 31, 2022 , we returned to service 54 of our Global and Partner Brand ships, representing close to 90 % of our worldwide capacity.

Our return to service efforts incorporate our enhanced health and safety protocols, and the requirements of regulatory agencies, which has resulted in reduced guest occupancy, modified itineraries and vaccination protocols.

Uncertainties remain as to the continuing effects COVID-19 will have on our operations, including potential increases in infection rates, new variants, and renewed governmental action to slow the spread of COVID-19, which may lead us to cancel or modify certain of our Global Brands’ cruise sailings.

Additionally, there is uncertainty surrounding consumer behavior and demand for cruising.

The continuing effects of COVID-19 to our guest cruise operations and the increased uncertainty given the current war in Ukraine, including its effect on the price of fuel and food, are collectively having a material negative impact on our business, including our liquidity, financial position and results of operations.

Significant events affecting travel, including COVID-19, typically impact 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 gradual resumption of cruise operations;

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

• 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.

• Expected continued resumption of cruise operations and timing of cash collections for cruise bookings;

• Expected increase in revenue per available passenger cruise day during our continued resumption of cruise operations;

• Expected lower than comparable historical occupancy levels during our continued resumption of cruise operations, increasing over time until we reach historical occupancy levels;

• Expected spend during our continued resumption of cruise operations, including returning our crew members to our vessels and maintaining enhanced health and safety protocols.

There can be no assurance that our assumptions and estimates are accurate due to the uncertainties noted above.

Since the start of the pandemic, 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 September 30, 2021, we had liquidity of $ 4.1 billion, including $ 0.1 billion of undrawn revolving credit facility capacity, $ 3.3 billion in cash and cash equivalents, and a $ 0.7 billion commitment for a 364-day term loan facility available to draw at any time prior to 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 September 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 September 30, 2021, we were in compliance with our financial covenants.

As of March 31, 2022, we had liquidity of $ 3.8 billion, including $ 1.1 billion of undrawn revolving credit facility capacity, $ 2.0 billion in cash and cash equivalents, and a $ 0.7 billion commitment for a 364-day term loan facility available to draw on at any time prior to August 12, 2022.

Our revolving credit facilities were partially utilized through a combination of amounts drawn and letters of credit issued under the facilities as of March 31, 2022.

As of March 31, 2022, we were in compliance with our financial covenants and we estimate we will be in compliance for the next twelve months.

Refer to Note 6.

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.

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

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.

Beyond the next 12 months, in June of 2023, approximately $ 3.2 billion of long- term debt will become due.

Accordingly, in addition to our $ 3.8 billion liquidity as of March 31 2022, in February 2022 we entered into certain agreements with Morgan Stanley & Co., LLC (“MS”) where MS agreed to provide backstop committed financing to refinance, repurchase and/or repay in whole or in part our existing and outstanding 10.875 % Senior Secured Notes due 2023, 9.125 % Senior Priority Guaranteed Notes due 2023 (the "Priority Guaranteed Notes"), and 4.25 % Convertible Notes due 2023.

Pursuant to the agreements, we may, at our sole option, issue and sell to MS (subject to the satisfaction of certain conditions) five-year senior unsecured notes with gross proceeds of up to $ 3.15 billion at any time between April 1, 2023 and June 29, 2023, to refinance the aforementioned notes.

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

Basis for Preparation of Consolidated Financial Statements

11 unchanged sentences

Other Assets for further information regarding our variable interest entities.

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

No material events or other transactions involving Silversea Cruises have occurred from June 30, 2021 through September 30, 2021, that would require further disclosure or adjustment to our consolidated financial statements as of and for the quarter ended September 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.

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, before closing adjustments.

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.

The March 2021 sale of Azamara did 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.

1 unchanged sentence

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.

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

Redeemable Noncontrolling Interest in our Annual Report on Form 10-K for the year ended December 31, 2020 for further information regarding our acquisition of Silversea Cruises' noncontrolling interest.

Prior to October 1, 2021, we consolidated the operating results of Silversea Cruises on a three-month reporting lag to allow for more timely preparation of our consolidated financial statements.

Effective October 1, 2021, we eliminated the three-

month reporting lag to reflect Silversea Cruises' financial position, results of operations and cash flows concurrently and consistently with the fiscal calendar of the Company ("elimination of the Silversea reporting lag").

The elimination of the Silversea reporting lag represents a change in accounting principle which we believe to be preferable because it provides more current information to the users of our financial statements.

A change in accounting principle requires retrospective application, if material.

The impact of the elimination of the reporting lag was immaterial to prior periods and was immaterial for our fiscal year ended December 31, 2021.

As a result, we have accounted for this change in accounting principle in our consolidated results for the quarter and year ended December 31, 2021.

Accordingly, the results of Silversea Cruises from January 1, 2022 through March 31, 2022 are included in our consolidated statement of comprehensive loss for the quarter ended March 31, 2022 and the results of Silversea Cruises from October 1, 2020 through December 31, 2020 are included in our consolidated statement of comprehensive loss for the quarter ended March 31, 2021.

Summary of Significant Accounting Policies

Adoption of Accounting Pronouncements

In August 2020, the FASB issued ASU No.

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

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

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

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

The guidance also decreases interest expense due to the reversal of the remaining non-cash convertible debt discount.

On January 1, 2022, we adopted this pronouncement using the modified retrospective approach to recognize our convertible notes as single liability instruments given they do not qualify as derivatives under ASC 815, nor were they issued at a substantial premium.

Accordingly, as of January 1, 2022, we recorded a $ 161.4 million increase to debt, primarily as a result of the reversal of the remaining non-cash convertible debt discount, as well as a reduction of $ 307.6 million to additional paid in capital, which resulted in a cumulative effect on adoption of approximately $ 146.2 million to increase retained earnings.

Recent Accounting Pronouncements

3 unchanged sentences

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

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

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

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

The impact, if any, will be dependent on the terms of any future contract modifications related to a change in reference rate.

In August 2020, the FASB issued ASU No.

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

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

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

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

The guidance is expected to have an impact on our consolidated financial statements given the recent issuance of convertible notes;

however, we are still evaluating the magnitude of the new guidance on our consolidated financial statements.

Reclassifications

For the nine months ended September 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 nine months ended September 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.

Impairments and Credit Losses

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

Refer to Note 1 .

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

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

During the quarter and nine months ended September 30, 2020, we recognized combined impairment and credit losses of $ 89.9 million and $ 1.4 billion, respectively, which are reported within Impairment and credit losses within our consolidated statements of comprehensive loss.

For the quarter ended September 30, 2020, we recognized impairment losses of $ 83.9 million primarily related to our property and equipment, net.

We recognized impairment losses of $ 1.2 billion during the nine months ended September 30, 2020 primarily related to goodwill, trademarks and trade names, property and equipment, net and right-of-use assets.

The credit losses of $ 6.0 million and $ 135.7 million recognized during the quarter and nine months ended September 30, 2020, respectively, related to our notes receivable.

In addition, an impairment charge of $ 39.7 million related to our equity investments was recognized in earnings during the quarter ended March 31, 2020 and is reported within Equity investment loss within our consolidated statements of comprehensive loss for the nine months ended September 30, 2020.

For the quarters ended March 31, 2021 and September 30, 2021, we had no indication of impairment.

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 is reported within

Impairment and Credit Losses in our consolidated statements of comprehensive loss for nine months ended September 30, 2021.

For information regarding our credit losses, refer to Note 6 .

Other Assets.

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

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

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

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

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

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

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 29.3 million for the quarter September 30, 2021 compared to no port costs charged for the quarter ended September 30, 2020.

Port costs charged to our guest and included within Passenger ticket revenues were $ 33.9 million and $ 124.5 million for the nine months ended September 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.

amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 76.9 million and $ 1.5 million for the quarters ended March 31, 2022 and 2021, respectively.

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

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

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

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

Quarter Ended September 30, Nine Months Ended September 30,

2021 2020(6) 2021 2020(6)

Quarter Ended March 31,

Revenues by itinerary

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(1) Includes the United States, Canada, Mexico and the Caribbean.

(2) Includes Southeast Asia (e.g., Singapore, Thailand and the Philippines), East Asia (e.g., China and Japan), South Asia (e.g., India and Pakistan) and Oceania (e.g., Australia and Fiji Islands) regions.

(3) Includes European countries (e.g., Nordics, Germany, France, Italy, Spain and the United Kingdom).

(2) Includes seasonality impacted itineraries primarily in South and Latin American countries.

(3) 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 and third parties.

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

Refer to Note 5 .

Other Assets for more information on our unconsolidated affiliates.

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

The charge is considered immaterial to our financial statements.

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

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

Quarter Ended September 30,

Passenger ticket revenues:

United States 74 % 66 %

United Kingdom 14 % 14 %

All other countries (1) 12 % 20 %

Nine Months Ended September 30,

For the quarters ended March 31, 2022 and 2021, our guests were sourced from the following areas:

Quarter Ended March 31,

Passenger ticket revenues:

United States 84 % — %

United Kingdom 13 % 7 %

Singapore 4 % 69 %

China — % 31 %

All other countries (1) 12 % — %

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

(1) No other individual country's revenue exceeded 10% for the quarters ended March 31, 2022 and 2021.

Customer Deposits and Contract Liabilities

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

The current reduction in demand for cruising due to 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 the COVID-19 pandemic, 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 September 30, 2021, refunds due to customers mostly as a result of booking cancellations were $ 44.6 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 September 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 $ 538.6 million and $ 124.8 million as of September 30, 2021 and December 31, 2020, respectively.

We have provided flexibility to guests with bookings on sailings cancelled due to COVID-19 by allowing guests to receive enhanced future cruise credits (“FCC”) or elect to receive refunds in cash.

As of September 30, 2021, our customer deposit balance includes approximately $ 650.0 million of unredeemed FCCs.

In January 2021, we extended the expiration date of the FCCs until April 2022 for sailings departing on or before December 2022.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 1.2 billion and $ 0.8 billion as of March 31, 2022 and December 31, 2021, respectively.

The COVID-19 pandemic has impacted the predictability of bookings and the associated customer deposits received.

During the onset of the COVID-19 pandemic and subsequent emergence of related variants, we experienced significant cancellations, which led to the issuance of cash refunds to customers or credits for future cruises.

As of March 31, 2022, refunds due to customers were $ 35.2 million compared to $ 38.8 million as of December 31, 2021, and are included within Accounts payable in our consolidated balance sheets.

We have provided flexibility to guests with bookings on sailings cancelled due to COVID-19 by allowing guests to receive future cruise credits (“FCC”) or elect to receive refunds in cash.

As of March 31, 2022, our customer deposit balance includes approximately $ 0.6 billion of unredeemed FCCs.

As of March 31, 2022, the expiration date of the FCCs was extended through December 31, 2022, or one year from the original sailing date, whichever is later.

Given the uncertainty of travel demand caused by COVID-19 and lack of comparable historical experience of FCC redemptions, we are unable to estimate the number of FCCs that may expire unused in future periods and get recognized as breakage.

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

As of September 30, 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 March 31, 2022 and December 31, 2021, our contract assets were $ 95.4 million and $ 52.9 million, respectively, and were included within Other assets in our consolidated balance sheets.

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

Assets Recognized from the Costs to Obtain a Contract with a Customer

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 $ 51.4 million as of September 30, 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 nine months ended September 30, 2021.

Prepaid travel advisor 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 advisor commissions were $ 94.7 million as of March 31, 2022 and $ 75.4 million as of December 31, 2021.

Substantially all of our prepaid travel advisor commissions at December 31, 2021 were expensed and reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive loss for the quarter ended March 31, 2022.

(Loss) Per Share

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

Quarter Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Net (Loss) attributable to Royal Caribbean Cruises Ltd.

for basic and diluted loss per share $ ( 1,424,554 ) $ ( 1,346,756 ) $ ( 3,903,531 ) $ ( 4,430,527 )

Basic and diluted (loss) per share is as follows (in thousands, except per share data):

Quarter Ended March 31,

Net (Loss) for basic and diluted loss per share $ ( 1,167,142 ) $ ( 1,131,722 )

Weighted-average common shares outstanding 254,821 243,004

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Diluted (loss) per share $ ( 4.58 ) $ ( 4.66 )

There were approximately 339,835 and 433,705 antidilutive shares for the quarter and nine months ended September 30, 2021, respectively, compared to 192,981 and 265,606 for the quarter and nine months ended September 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 antidilutive for the quarter and nine months ended September 30, 2021.

Basic loss per share is computed by dividing Net Loss by the weighted-average number of common stock outstanding during each period.

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

As we had net losses for the three months ended March 31, 2022 and March 31, 2021, all potential common shares were determined to be antidilutive, resulting in the same basic and diluted net loss per share amounts for both these periods.

There were approximately 23,407,179 and 413,501 antidilutive shares for the quarters ended March 31, 2022 and March 31, 2021, respectively.

Effective January 1, 2022, ASU 2020-06 eliminated the treasury stock method and instead required the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share when the instruments may be settled in cash or shares.

Under the if-converted method, shares related to our convertible notes, to the extent dilutive, are assumed to be converted into common stock at the beginning of the reporting period.

The required use of the if-converted

method did not impact our diluted net loss per share as the Company was in a net loss position.

For further information regarding the adoption of ASU 2020-06, refer to Note 2.

Summary of Significant Accounting Policies .

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

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

In addition, we have determined that we are not the primary beneficiary of TUIC.

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

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

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

As of September 30, 2021, the net book value of our investment in TUIC was $ 449.2 million, primarily consisting of $ 316.6 million in equity and a loan of € 107.0 million, or approximately $ 124.0 million based on the exchange rate at September 30, 2021.

As of March 31, 2022, the net book value of our investment in TUIC was $ 404.0 million, primarily consisting of $ 286.2 million in equity and a loan of € 99.1 million, or approximately $ 110.2 million based on the exchange rate at March 31, 2022.

As of December 31, 2021, the net book value of our investment in TUIC was $ 444.4 million, primarily consisting of $ 322.4 million in equity and a loan of € 103.0 million, or approximately $ 117.2 million based on the exchange rate at December 31, 2021.

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

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

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

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

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.

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 that 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.

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.

TUI Cruises and Hapag-Lloyd Cruises have resumed cruises and announced resumption of additional cruise operations in Europe.

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 and October 2021 issuances of € 300.0 million senior unsecured bonds due in 2026 and € 223.5 million senior unsecured bonds due in 2026, respectively, and the deferral of existing financing, to mitigate the impact of COVID-19 until normal operations resume.

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, 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.

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

We have determined that Grand Bahama Shipyard Ltd.

("Grand Bahama"), a ship repair and maintenance facility in which we have a 40 % noncontrolling interest, is a VIE.

This facility serves cruise and cargo ships, oil and gas tankers and offshore units.

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

During the quarter ended March 31, 2022, we made payments of $ 3.7 million to Grand Bahama for ship repair and maintenance services.

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

Accordingly, we do not consolidate this entity.

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.

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 net accumulated equity method losses against the carrying value of our loans receivable from Grand Bahama.

As of September 30, 2021, we had exposure to credit loss in Grand Bahama consisting of a $ 12.3 million loan.

As of March 31, 2022, we had exposure to credit loss in Grand Bahama consisting of a $ 10.6 million loan.

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

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

During the nine months ended September 30, 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 and nine months ended September 30, 2020.

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

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 no t receive principal and interest payments during the quarter ended March 31, 2022.

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

In addition, we are currently recognizing our share of net accumulated equity method losses against the carrying value of our loan receivable from Grand Bahama.

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

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

During the quarter and nine months ended September 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 .

Fair Value Measurements and Derivative Instruments .

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

Quarter Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

Quarter Ended March 31,

Share of equity (loss) income from investments $ ( 31,059 ) $ ( 59,871 )

Dividends received (1) $ 423 $ —

(1) There were no dividends received from TUI Cruises for the quarters and nine months ended September 30, 2021 and September 30, 2020 .

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

(1) Represents dividends received from our investments accounted for under the equity method of accounting for the quarters ended March 31, 2022 and March 31, 2021 .

As of March 31, 2022 As of December 31, 2021

Total notes receivable due from equity investments $ 123,157 $ 130,587

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

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

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

These bareboat charters were terminated when Pullmantur Holdings filed for reorganization in Spain.

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

Quarter Ended September 30, Nine Months Ended September 30,

2021 2020 2021 2020

We also provide ship management services to TUIC and 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,

Revenues $ 6,372 $ 5,231

Expenses $ 1,826 $ 1,275

Credit Loss Allowance

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements as of September 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 nine months ended September 30, 2021 (in thousands):

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, 2022.

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

Based on these credit loss estimation factors, during the quarter ended March 31, 2022, we recorded a loss provision of $ 0.7 million.

Our credit loss allowance beginning and ending balances as of January 1, 2022 and March 31, 2022 primarily relate to credit losses recognized on notes receivable for the previous sale of our property and equipment of $ 81.6 million and other receivable balances primarily related to loans due from travel advisors of $ 12.6 million.

The following table summarizes our credit loss allowance related to receivables for the three months ended March 31, 2022 (in thousands):

Credit Loss Allowance

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Write-offs ( 8,152 )

Ending balance September 30, 2021 $ 97,458

Our credit loss allowance balance as of September 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.

Ending balance March 31, 2022 $ 92,693

Debt consist of the following (in thousands):

Interest Rate (1)

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

Maturities Through As of March 31, 2022 As of December 31, 2021

Fixed rate debt:

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2022 - 2024 1,909,342 2,899,342

Unsecured UK Commercial paper —

2021 — 409,319

USD unsecured term loan 1.84 % to 4.95 %

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Total debt, net of unamortized debt issuance costs 22,501,976 21,090,340

Less—current portion including commercial paper ( 956,743 ) ( 1,371,087 )

Less—current portion ( 2,558,463 ) ( 2,243,131 )

Long-term portion $ 19,943,513 $ 18,847,209

(1) Interest rates based on outstanding loan balance as of September 30, 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 March 31, 2022 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 1.43 % as of September 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 1.83 % as of September 30, 2021 and is subject to a facility fee of a maximum of 0.30 %.

(3) At September 30, 2021 and December 31, 2020, the weighted average interest rate for total debt was 5.65 % and 6.02 %, respectively.

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

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

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

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

As of September 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.

Our $ 1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30 %, which interest was 1.75 % as of March 31, 2022 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 2.15 % as of March 31, 2022 and is subject to a facility fee of a maximum of 0.30 %.

(3) At March 31, 2022 and December 31, 2021, the weighted average interest rate for total debt was 5.61 % and 5.47 %, respectively.

In January 2022, we took delivery of Wonder of the Seas.

To finance the delivery, we borrowed a total of $ 1.3 billion under a credit agreement novated to us upon delivery of the ship in January 2022, resulting in an unsecured term loan which is 100 % guaranteed by Bpifrance Assurance Export ("BpiFAE"), the official export credit agency ("ECA") of France.

The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 3.18 % per annum.

In January 2022, we issued $ 1.0 billion of senior notes (the "January 2022 Unsecured Notes") due in 2027 for net proceeds of approximately $ 990.0 million.

Interest accrues on the January 2022 Unsecured Notes at a fixed rate of 5.375 % per annum and is payable semi-annually in arrears.

The proceeds from the January 2022 Unsecured Notes will be used to repay principal payments on debt maturing in 2022 (including to pay fees and expenses in connection with such repayments).

Pending such debt maturities, we have temporarily applied the proceeds to repay borrowings under our revolving credit facilities, bringing our undrawn revolving credit facility capacity to $ 1.1 billion as of March 31, 2022.

In February 2022, we entered into certain agreements with MS where MS agreed to provide backstop committed financing to refinance, repurchase and/or repay in whole or in part our existing and outstanding 10.875 % Senior Secured Notes due 2023, Priority Guaranteed Notes and 4.25 % Convertible Notes due 2023.

In April 2022, we took delivery of Celebrity Beyond .

To finance the delivery, we borrowed a total of € 0.7 billion under a credit agreement novated to us upon delivery of the ship in April 2022, resulting in an unsecured term loan which is 100 % guaranteed by BpiFAE.

The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 1.28 % per annum.

As of March 31, 2022, our aggregate revolving borrowing capacity was $ 3.2 billion and was partially utilized through a combination of amounts drawn and letters of credits issued under the facilities.

Certain of our surety agreements with third party providers for the benefit of certain agencies and associations that provide travel related bonds, allow the sureties to request collateral.

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

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

that can be satisfied by posting collateral.

As of September 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 $ 162.3 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, with modified covenants thereafter, 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 held in reserve until the sailing takes place or the funds are refunded to the customer.

The maximum projected cash exposure with the processor, including amounts currently held and reported in Trade and other receivables , is approximately $ 237.7 million.

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

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, 2022, we have posted letters of credit as collateral with our sureties and credit card processors under our revolving credit facilities in the amount of $ 117.2 million

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to the breach of our financial covenants through at least September 30, 2022, with modified covenants thereafter, 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 $ 293.9 million.

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

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

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

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

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

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

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

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

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

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

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

In addition, the facility, 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.

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 "June Unsecured Notes") for net proceeds of approximately $ 640.6 million.

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

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 June Unsecured Notes.

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

In August 2021, we issued $ 1.0 billion of senior notes due in 2026 (the "August Unsecured Notes") for net proceeds of approximately $ 986.0 million.

Interest accrues on the August Unsecured Notes at a fixed rate of 5.50 % per annum and is payable semi-annually in arrears.

We used the proceeds of the August Unsecured Notes to replenish our capital as a result of the redemption of a portion of the 11.50 % senior secured notes due 2025, in the amount of $ 928.0 million plus accrued interest and call premiums.

The repayment of the 11.50 % senior secured notes due 2025 resulted in a total loss on the extinguishment of debt of $ 141.9 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the quarter and nine months ended September 30, 2021.

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 September 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.

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, and subsequently in the third quarter of 2021, we entered into a letter agreement to extend the waiver period to the end of the fourth quarter of 2022.

These amendments defer $ 1.15 billion of principal payments due between April 2021 and April 2022.

The deferred amounts will be repayable semi-annually over a five-year period starting in April 2022.

Pursuant to these amendments, we have agreed to implement the same liquidity covenant that applies in our non-export credit facilities.

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

Subject to a number of carve outs, these include, but are not limited to, the issuance of dividends, the completion of share repurchases, issuances of debt other than for crisis and recovery purposes, the making of loans and the sale of assets other than at arm’s length.

In the fourth quarter of 2020 and the first quarter of 2021, we entered into amendments to our drawn and undrawn ECA facilities to provide for the issuance of guarantees in satisfaction of existing obligations under these facilities.

Following issuance (which, in the case of the undrawn facilities, will occur once the debt is drawn), the guarantees will be released under certain circumstances as other debt is repaid or refinanced on an unsecured and unguaranteed basis.

In connection with and following the issuance of the guarantees, the guarantor subsidiaries are restricted from issuing additional guarantees in favor of lenders (other than those lenders who are party to the ECA facilities), and certain of the guarantor subsidiaries are restricted from incurring additional debt.

In addition, the ECA facilities will benefit from guarantees to be issued by intermediary parent companies of subsidiaries that take delivery of any new vessels subject to export-credit backed financing.

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

On 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 10.875 % senior secured notes due 2023 and our 11.50 % senior secured notes due 2025 (collectively, "the "Secured Notes") and our Silversea Notes which were fully repaid in June 2021 with proceeds from the $ 650 million June 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 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 September 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.

For the majority of the loans as of March 31, 2022, 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.

We amortize the fees that are paid upfront over the life of the loan.

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, as of September 30, 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 March 31, 2022 for each of the next five years (in thousands):

Remainder of 2022 2,273,401

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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 September 30, 2021 and December 31, 2020.

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, 2022 and December 31, 2021.

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

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The operating lease for Silver Explorer will expire in 2023.

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

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

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

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

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

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.

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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Finance Leases

In June 2019, the Company entered into a new master lease agreement (“Master Lease”) with Miami-Dade County related to the buildings and surrounding land located at its Miami headquarters, which has been classified as a finance lease in accordance with ASC 842, Leases .

In January of 2022, we executed a modification to the Master Lease to extend the expiration of the lease from 2072 to 2074, which continues to include the two five-year options to extend the lease.

We continue to consider the probability of exercising the two five-year options as reasonably certain.

The modification of the Master Lease did not change the classification of the lease.

The total aggregate amount of the finance lease liabilities recorded for this Master Lease are $ 100.3 million and $ 127.0 million as of March 31, 2022 and December 31, 2021, respectively.

Silversea Cruises operates Silver Dawn under a sale-leaseback agreement with a bargain purchase option at the end of the 15-year lease term.

Due to the bargain purchase option at the end of the lease term in 2036, whereby Silversea Cruises is reasonably certain of obtaining ownership of the ship, Silver Dawn is accounted for as a finance lease.

The lease includes other purchase options beginning in year three, none of which are reasonably certain of being exercised at this time.

The total aggregate amount of finance lease liabilities recorded for this ship are $ 279.0 million and $ 283.7 million as of March 31, 2022 and December 31, 2021, respectively.

Silversea Cruises operates the Silver Whisper under a finance lease.

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 September 30, 2021.

The total aggregate amount of the finance lease liabilities recorded for this ship was $ 31.5 million at September 30, 2021 and December 31, 2020.

The finance lease for Silver Whisper will 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 March 31, 2022 and December 31, 2021.

The total aggregate amount of the finance lease liabilities recorded for this ship was $ 16.6 million and $ 24.1 million at March 31, 2022 and December 31, 2021, respectively.

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

The carrying amounts of these ships are reported within Property and equipment, net in our Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021.

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

Consolidated Statement of Comprehensive Loss Classification Quarter Ended September 30, 2021 Nine Months Ended September 30, 2021

Operating lease costs Commission, transportation and other $ 1,626 $ 1,626

Operating lease costs Other operating expenses 5,424 15,365

Operating lease costs Marketing, selling and administrative expenses 5,957 14,468

Financial lease costs:

Amortization of right-of-use-assets Depreciation and amortization expenses 3,790 11,517

Interest on lease liabilities Interest expense, net of interest capitalized 1,095 1,769

Total lease costs $ 17,892 $ 44,745

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

Consolidated Statement of Comprehensive Loss Classification Quarter Ended March 31, 2022 Quarter Ended March 31, 2021

Operating lease costs Commission, transportation and other $ 22,729 $ —

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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 and nine months ended September 30, 2021, we had no variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss.

During the quarter ended March 31, 2022, we had $ 7.5 million variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss.

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

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

Weighted average of the remaining lease term

As of March 31, 2022 As of December 31, 2021

Weighted average of the remaining lease term in years

Operating leases 18.04 18.18

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

Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

Quarter Ended March 31, 2022 Quarter Ended March 31, 2021

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

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Financing cash flows from finance leases $ 17,034 $ 4,305

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

As of March 31, 2022, 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 September 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 September 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 September 30, 2021, we have three ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 2,060 berths.

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

As of September 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

As of March 31, 2022, one Oasis-class ship 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 22,500 berths.

As of March 31, 2022, 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, 2022, we have two ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 1,460 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, 2022, 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 to be delivered Approximate

Royal Caribbean International —

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

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

Utopia of the Seas Chantiers de l'Atlantique 2nd Quarter 2024 5,700

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

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Celebrity Beyond Chantiers de l'Atlantique 2nd Quarter 2022 3,250

Unnamed Chantiers de l'Atlantique 4th Quarter 2023 3,250

Celebrity Ascent Chantiers de l'Atlantique 4th Quarter 2023 3,250

Silversea Cruises

Silver Dawn Fincantieri 4th Quarter 2021 600

Evolution Class:

Unnamed Meyer Werft 2nd Quarter 2023 730

Silver Nova Meyer Werft 2nd Quarter 2023 730

Unnamed Meyer Werft 2nd Quarter 2024 730

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Total Berths 41,560

(1) The revenue impact from Silversea Cruises' new ships will be recognized on a three-month reporting lag from when the ships enter service.

Refer to Note 1.

General for further information.

In addition, as of September 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.

In September 2021, we amended the credit agreements for the first and second Evolution-class ships to increase their maximum loan amounts by € 175.6 million on an aggregate basis, or approximately $ 203.5 million based on the exchange rate at September 30, 2021.

The increase in the loan amounts will finance ship design modifications that incorporate innovative sustainability features and additional premium cabins, increasing the capacity for each ship to 730 berths.

At our election, interest on incremental portion of each loan will accrue either (1) at a fixed rate of 4.34 % and 4.38 %, respectively (inclusive of the applicable margin) or (2) at a floating rate equal to LIBOR plus 0.99 % and 1.03 %, respectively.

As of September 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 $ 12.8 billion, of which we had deposited $ 784.8 million as of such date.

Approximately 62.5 % of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, 2021.

We took delivery of Celebrity Beyond in April of 2022.

In addition, as of March 31, 2022, 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, 2022, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $ 10.7 billion, of which we had deposited $ 0.6 billion as of such date.

Approximately 61.8 % of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2022.

Refer to Note 11 .

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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.

In the Havana Docks Action, we and the plaintiff have filed motions for summary judgment, which remain pending, and the trial has been scheduled for February 28, 2022.

The Court dismissed the Port of Santiago Action with prejudice on the basis that the plaintiff lacked standing, and the plaintiff’s appeal of the dismissal is awaiting a decision by the appellate court.

In the Havana Docks Action, on March 21, 2022, the Court granted summary judgement in favor of the plaintiff as to liability, which we have sought permission from the Court to immediately appeal, and a trial on damages has been scheduled for September 2022.

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 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.

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

Given that the outcome of the litigation is inherently unpredictable and subject to significant uncertainties, there can be no assurances that the final outcome of either case will not be material, and we cannot reasonably estimate the potential loss or range of loss, if any, associated with the litigation.

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

The majority of these claims are covered by insurance.

We believe the outcome of such claims, net of expected insurance recoveries, will not have a material adverse impact on our financial condition or results of operations and cash flows.

Some of the contracts that we enter into include indemnification provisions that obligate us to make payments to the counterparty if certain events occur.

These contingencies generally relate to changes in taxes, increased lender capital costs and other similar costs.

The indemnification clauses are often standard contractual terms and are entered into in the normal course of business.

There are no stated or notional amounts included in the indemnification clauses and we are not able to estimate the maximum potential amount of future payments, if any, under these indemnification clauses.

We have not been required to make any payments under such indemnification clauses in the past and, under current circumstances, we do not believe an indemnification in any material amount is probable.

If any person acquires ownership of more than 50 % of our common stock or, subject to certain exceptions, during any 24 -month period, a majority of our board of directors is no longer comprised of individuals who were members of our board of directors on the first day of such period, we may be obligated to prepay indebtedness outstanding under our credit facilities, which we may be unable to replace on similar terms.

Our public debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50 % of our common stock coupled with a ratings downgrade.

Our debt securities also contain change of control provisions that would be triggered by a third-party acquisition of greater than 50 % of our common stock coupled with a ratings downgrade.

If this were to occur, it would have an adverse impact on our liquidity and operations.

Shareholders' Equity

On January 1, 2022, we adopted ASU 2020-06 using the modified retrospective approach to recognize our convertible notes as single liability instruments.

As a result of the adoption of this pronouncement, the cumulative effect to Shareholders' equity was a reduction of $ 161.4 million.

For further information regarding the entry recorded and the adoption of ASU 2020-06, refer to Note 2.

Summary of Significant Accounting Policies .

Common Stock Issued

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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 third quarter of 2021.

Accordingly, during the three months ended March 31, 2021 and 2022, we did no t declare dividends.

Pursuant to amendments made to these agreements during the first quarter of 2021, the restrictions on paying cash dividends and effectuating share repurchases were extended through and including the third quarter of 2022.

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

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

Changes in Accumulated Other Comprehensive Loss

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

Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2021 Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2020

The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 2022 and 2021 (in thousands):

Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2022 Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2021

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 $ ( 450,572 ) $ ( 44,238 ) $ 201 $ ( 494,609 ) $ ( 640,217 ) $ ( 55,079 ) $ ( 13,558 ) $ ( 708,854 )

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and nine months ended September 30, 2021 and 2020 (in thousands):

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters ended March 31, 2022 and 2021 (in thousands):

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

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

Details About Accumulated Other Comprehensive Loss Components Quarter Ended March 31, 2022 Quarter Ended March 31, 2021 Affected Line Item in Statements of

Comprehensive Loss

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( 728 ) ( 743 )

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

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

Total reclassifications for the period $ 27,990 $ ( 11,972 )

During the nine months ended September 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 and $ 34.7 million was released from Accumulated other comprehensive los s during the quarters ended June 30, 2020 and September 30, 2020, respectively.

Fair Value Measurements and Derivative Instruments

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

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

Fair Value Measurements at March 31, 2022 Fair Value Measurements at December 31, 2021

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

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(3) Inputs that are unobservable.

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

The Company did not use any Level 3 inputs as of March 31, 2022 and December 31, 2021.

(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 September 30, 2021 and December 31, 2020.

The carrying amounts of accounts receivable, accounts payable, accrued interest and accrued expenses approximate fair value at March 31, 2022 and December 31, 2021.

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

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

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

Fair Value Measurements at March 31, 2022 Fair Value Measurements at December 31, 2021

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 September 30, 2021 and December 31, 2020.

No Level 3 inputs were used in fair value measurements of Other financial instruments as of March 31, 2022 and December 31, 2021.

(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 September 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.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of March 31, 2022 or December 31, 2021, 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 tables present information about the Company’s nonfinancial instruments recorded at fair value on a nonrecurring basis (in thousands):

Fair Value Measurements at September 30, 2021 Using

Description Total Carrying Amount Total Fair Value Level 3 Total Impairment for the nine months ended September 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

Nonfinancial instruments include items such as goodwill, indefinite-lived intangible assets, long-lived assets, right-of-use assets and equity method investments that are measured at fair value on a nonrecurring basis when events and circumstances indicate the carrying value is not recoverable.

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

Fair Value Measurements at December 31, 2021

Description Total Carrying Amount Total Fair Value Level 3 Total Impairment for the Year Ended December 31, 2021 (1)

Silversea Goodwill (1)

$ 508,578 $ 508,578 $ 508,578 $ 576,208

Indefinite-life intangible asset (2)

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

Long-lived assets — — — 55,213

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

Right-of-use assets (4)

67,265 67,265 67,265 65,909

Equity-method investments (5)

Total — — — 55,213

___________________________________________________________________________________________________

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

The principal assumptions used in the discounted cash flow model were (i) the timing of our return to service, changes in market conditions and port or other restrictions;

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

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

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

To that base we added future years’ cash flows through 2030 assuming multiple revenue and expense scenarios that reflect the impact of different global economic

environments for this period on the Silversea Cruises' reporting unit.

We assigned a probability to each revenue and expense scenario.

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

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

(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 the Silversea Cruises trade name using a discounted cash flow model and the relief-from-roy alty method and used a discount ra te of 13.25 %.

S ignificant inputs in performing the fair value assessment for the trade name were (i) forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, including options, and terminal growth rate;

(ii) the royalty rate of 3.0 %;

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

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

(3) Impairments primarily relate to certain vessels during 2020.

In addition, certain construction in progress projects generated impairments during the quarter ended September 30, 2020 and quarter ended December 31, 2020.

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

For the vessels impaired during the quarter ended June 30, 2020, we estimated the fair value of the vessels using a modified market approach based on the carrying values and orderly liquidation values of the vessels.

For the vessels impaired during the quarter ended December 31, 2020, we estimated the fair value of the three Azamara vessels using a market approach.

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

During the quarter ended September 30, 2020 and quarter ended December 31, 2020, construction in progress assets were impaired due to a reduction in scope or the decision to not complete the projects.

The impairment was calculated based on orderly liquidation values.

The fair value of these assets 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.

We estimated the fair value of the berthing arrangements using estimated projected discounted cash flows and the fair value of the ship operating lease was estimated using a market approach.

The fair value of the berthing arrangements was estimated as of March 31, 2020, the date these assets were last impaired.

A significant input in performing the fair value assessments for these assets was our expected passenger headcount.

The fair value of the ship operating lease was estimated as of December 31, 2020, the date this asset was last impaired, and significant inputs in performing the fair value assessment using the market approach for this asset were the expected rate of return and remaining lease payments.

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

A significant input in performing the fair value assessments for these assets was forecaste d operating results for these investments.

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

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

Other Assets .

(1) Amount is primarily composed of construction in progress assets that were impaired during the year ended 2021 due to a reduction in scope or the decision to not complete the projects.

The impairments were calculated based on orderly liquidation values.

The fair value of these assets was estimated as of the date the assets were last impaired.

There were no nonfinancial instruments recorded at fair value as of March 31, 2022.

Master Netting Agreements

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

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

As of March 31, 2022 As of December 31, 2021

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

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

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

As of March 31, 2022 As of December 31, 2021

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

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

As of September 30, 2021, we had counterparty credit risk exposure under our derivative instruments of $ 17.8 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 March 31, 2022, we had counterparty credit risk exposure under our derivative instruments of $ 157.7 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks.

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

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We enter into various forward, swap and option contracts to manage our interest rate exposure and to limit our exposure to fluctuations in foreign currency exchange rates and fuel prices.

These instruments are recorded on the balance sheet at their fair value and the vast majority are designated as hedges.

These instruments are recorded on the balance sheet at their fair value and

the vast majority are designated as hedges.

We also use non-derivative financial instruments designated as hedges of our net investment in our foreign operations and investments.

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Gains and losses on derivatives that are designated as cash flow hedges are recorded as a component of Accumulated other comprehensive loss until the underlying hedged transactions are recognized in earnings.

The foreign currency transaction gain or loss of our non-derivative financial instruments and the changes in the fair value of derivatives designated as hedges of our net investment in foreign operations and investments are recognized as a component of Accumulated other comprehensive loss along with the associated foreign currency translation adjustment of the foreign operation or investment, with the amortization of excluded components affecting earnings.

In certain hedges of our net investment in foreign operations and investments, we exclude forward points from the assessment of hedge effectiveness and we amortize the related amounts directly into earnings.

On an ongoing basis, we assess whether derivatives used in hedging transactions are "highly effective" in offsetting changes in the fair value or cash flow of hedged items.

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

The methodology for assessing hedge effectiveness is applied on a consistent basis for each one of our hedging programs (i.e., interest

rate, foreign currency ship construction, foreign currency net investment and fuel).

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

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

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

At September 30, 2021 and December 31, 2020, approximately 67.5 % and 64.5 %, respectively, of our debt was effectively fixed.

At March 31, 2022 and December 31, 2021, approximately 71.6 % and 65.7 %, respectively, of our debt was effectively fixed-rate debt.

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

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

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

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

LIBOR plus All-in Swap Floating Rate as of September 30, 2021

Oasis of the Seas term loan

$ 17,500 October 2021 5.41 % 3.87 % 4.08 %

At March 31, 2022 and December 31, 2021, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument Swap Notional as of March 31, 2022 (in thousands) Maturity Debt Fixed Rate Swap Floating Rate:

LIBOR plus All-in Swap Floating Rate as of March 31, 2022

Unsecured senior notes 650,000 November 2022 5.25 % 3.63 % 4.14 %

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

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

Debt Instrument Swap Notional as of September 30, 2021 (in thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate

At March 31, 2022 and December 31, 2021, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of March 31, 2022 (in thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate

Celebrity Reflection term loan

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

Amount presented is based on the exchange rate as of September 30, 2021.

Amount presented is based on the exchange rate as of March 31, 2022.

(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 September 30, 2021 and December 31, 2020 was $ 3.1 billion and $ 3.4 billion, respectively.

The notional amount of interest rate swap agreements related to outstanding debt as of March 31, 2022 and December 31, 2021 was $ 2.9 billion.

Foreign Currency Exchange Rate Risk

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

As of September 30, 2021, the aggregate cost of our ships on order was $ 12.8 billion, of which we had deposited $ 784.8 million as of such date.

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

As of March 31, 2022, the aggregate cost of our ships on order was $ 10.7 billion, of which we had deposited $ 618.5 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 and any ships on order by our Partner Brands.

Refer to Note 8 .

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

At September 30, 2021 and December 31, 2020, approximately 62.5 % and 66.3 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

At March 31, 2022 and December 31, 2021, approximately 61.8 % and 59.0 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

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

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

During the third quarter of 2021, we maintained an average of approximately $ 508.8 million of these foreign currency forward contracts.

During the first quarter of 2022, we maintained an average of approximately $ 0.8 billion of these foreign currency forward contracts.

These instruments are not designated as hedging instruments.

For the quarters ended September 30, 2021 and 2020, changes in the fair value of the foreign currency forward contracts resulted in a loss and a gain of $ 12.9 million and $ 4.9 million, respectively.

For the nine months ended September 30, 2021 and 2020, changes in the fair value of the foreign currency forward contracts resulted in a loss of $ 25.9 million and $ 35.3 million, respectively.

For the quarters ended March 31, 2022 and 2021, changes in the fair value of the foreign currency forward contracts resulted in losses of $ 7.0 million and $ 13.5 million, respectively, which offset gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $ 7.2 million and $ 4.4 million, respectively.

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

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

As of September 30, 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 $ 283.9 million based on the exchange rate at September 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 September 30, 2021 and December 31, 2020 was $ 3.0 billion and $ 3.1 billion, respectively.

As of March 31, 2022, we maintained a foreign currency forward contract and designated it as a hedge of a portion of our net investments in TUI Cruises of € 245.0 million, or approximately $ 272.5 million based on the exchange rate at March 31, 2022.

This forward currency contract matured in April 2022.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of March 31, 2022 and December 31, 2021 was $ 2.8 billion and $ 3.4 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 € 93.0 million, or approximately $ 107.8 million, as of September 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.

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 99.0 million, or approximately $ 110.1 million, as of March 31, 2022.

December 31, 2021, we had designated debt as a hedge of our net investments in TUI Cruises of € 97.0 million, or approximately $ 110.3 million.

Fuel Price Risk

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

During the quarter and nine months ended September 30, 2021, we discontinued cash flow hedge accounting on 48.1 thousand and 95.8 thousand metric tons of fuel swap agreements, respectively, maturing in 2021 and 2022, which resulted in the reclassification of a net $ 2.4 million gain and $ 1.9 million loss from Accumulated other comprehensive loss to Other income (expense) , respectively.

During the quarter and nine months ended September 30, 2020, we discontinued cash flow hedge accounting on 0.2 million and 0.5 million metric tons of our fuel swap agreements maturing in 2020 and 2021, respectively, which resulted in the reclassification of net losses of $ 7.9 million and $ 76.3 million in 2020 and 2021, respectively, from Accumulated other

comprehensive loss to Other income (expense) .

Prior suspension of our cruise operations due to the COVID-19 pandemic and our gradual resumption of cruise operations has 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) .

For the quarter ended March 31, 2022, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements.

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 September 30, 2021, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2023.

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

At March 31, 2022, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2023.

As of March 31, 2022 and December 31, 2021, we had the following outstanding fuel swap agreements:

Fuel Swap Agreements

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

As of March 31, 2022 As of December 31, 2021

Designated as hedges:

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2023 249,050 249,050

2023 82,400 82,400

Fuel Swap Agreements

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

As of March 31, 2022 As of December 31, 2021

Designated hedges as a % of projected fuel purchases:

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Fuel Swap Agreements

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

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

Not designated as hedges:

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2022(1) 139,100 231,900

2022 62,750 14,650

As of September 30, 2021, $ 42.9 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.

(1) As of March 31, 2022, 69,550 metric tons relate to fuel swap agreements with discontinued hedge accounting, in which we effectively pay fixed prices and receive floating prices from the counterparty.

The remaining 69,550 tons relate to fuel swap agreements that were not designated as hedges since inception, in which we effectively pay floating prices and receive fixed prices from the counterparty.

As of March 31, 2022, there was $ 145.6 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 when compared to $ 23.8 million of estimated unrealized net gain at December 31, 2021.

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

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Asset Derivatives Liability Derivatives

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

Balance Sheet Location As of March 31, 2022 As of December 31, 2021 Balance Sheet Location As of March 31, 2022 As of December 31, 2021

Fair Value Fair Value Fair Value Fair Value

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

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

Fuel swaps Derivative financial instruments 16,831 8,430 Derivative financial instruments 16,682 3,264

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(1) Accounting Standard Codification 815-20 “ Derivatives and Hedging.

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

Quarter Ended September 30, 2021 Quarter Ended September 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)

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 $ 118,127 $ 325,907 $( 426,875 ) $ 37,230 $ 53,815 $ 317,139 $( 254,332 ) $( 10,853 )

The effects of fair value and cash flow hedging:

Gain or (loss) on fair value hedging relationships in Subtopic 815-20

Interest contracts

Hedged items n/a n/a $ 2,100 $ — n/a n/a $ 2,379 $ —

Derivatives designated as hedging instruments n/a n/a $ 383 $ — n/a n/a $ 39 $ —

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 $( 11,418 ) n/a n/a n/a $( 6,532 ) n/a

Commodity contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income $ 10,600 n/a n/a $( 2 ) $( 5,598 ) n/a n/a $ 536

Foreign exchange contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income n/a $( 3,905 ) n/a $( 505 ) n/a $( 3,782 ) n/a $( 1,511 )

Nine Months Ended September 30, 2021 Nine Months Ended September 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 $ 219,058 $ 959,512 $( 994,669 ) $ 66,771 $ 327,275 $ 961,226 $( 555,392 ) $( 127,537 )

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 $ 7,098 — n/a n/a $( 20,855 ) $ —

Derivatives designated as hedging instruments n/a n/a $ 148 — n/a n/a $ 23,338 $ —

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 $( 32,375 ) n/a n/a n/a $( 15,939 ) n/a

Commodity contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income $ 21,882 n/a n/a $( 416 ) $( 32,520 ) n/a n/a $ 3,029

Foreign exchange contracts

Amount of gain or (loss) reclassified from accumulated other comprehensive loss into income n/a $( 11,541 ) n/a $( 2,311 ) n/a $( 10,899 ) n/a $( 5,855 )

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 September 30, 2021 As of December 31, 2020

hedging instrument under ASC 815-20 Balance Sheet Location As of March 31, 2022 As of December 31, 2021

Foreign currency debt Current portion of debt $ 64,938 $ 75,518

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Income on Hedged Item

Quarter Ended September 30, 2021 Quarter Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020 Quarter Ended September 30, 2021 Quarter Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

Interest rate swaps Interest expense, net of interest capitalized $ 383 $ 39 $ 148 $ 23,338 $ 2,100 $ 2,379 $ 7,098 $ ( 20,855 )

e fair value and line item caption of derivative instruments recorded within our consolidated balance sheets for the cumulative basis adjustment for fair value hedges were as follows (in thousands):

Quarter Ended March 31, 2022 Quarter Ended March 31, 2021 Quarter Ended March 31, 2022 Quarter Ended March 31, 2021

Interest rate swaps Interest expense (income), net of interest capitalized $ ( 3,365 ) $ ( 552 ) $ 6,024 $ 2,930

$ ( 3,365 ) $ ( 552 ) $ 6,024 $ 2,930

The fair value and line item caption of derivative instruments recorded within our consolidated balance sheets for the cumulative basis adjustment for fair value hedges were as follows (in thousands):

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

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

As of March 31, 2022 As of December 31, 2021 As of March 31, 2022 As of December 31, 2021

Current portion of debt and Long-term debt $ 649,755 $ 655,502 $ 404 $ 6,428

$ 649,755 $ 655,502 $ 404 $ 6,428

The effect of derivative instruments qualifying and designated as cash flow hedging instruments on the consolidated financial statements was as follows (in thousands):

under ASC 815-20 Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in

Derivatives under ASC 815-20 Cash Flow Hedging Relationships Amount of Gain (Loss) Recognized in

Accumulated Other

Comprehensive Loss on Derivatives

Other Comprehensive

Loss into Income

Amount of Gain (Loss) Reclassified from

Accumulated Other Comprehensive Loss into Income

Interest rate swaps $ 1,534 $ ( 42,488 ) $ 29,228 $ ( 90,677 ) Interest expense, net of interest capitalized $ ( 11,418 ) $ ( 6,532 ) $ ( 32,376 ) $ ( 15,939 )

Foreign currency forward contracts ( 48,221 ) 96,821 ( 150,376 ) 39,161 Depreciation and amortization expenses ( 3,905 ) ( 3,782 ) ( 11,541 ) ( 10,899 )

Foreign currency forward contracts — — — — Other income (expense) ( 505 ) ( 1,511 ) ( 2,311 ) ( 5,855 )

Fuel swaps — — — — Other income (expense) ( 2 ) 536 ( 416 ) 3,029

Fuel swaps 28,193 ( 5,085 ) 144,900 ( 120,807 ) Fuel 10,600 ( 5,598 ) 21,882 ( 32,520 )

Quarter Ended March 31, 2022 Quarter Ended March 31, 2021

Interest rate swaps $ 74,865 $ 43,408

Foreign currency forward contracts ( 40,062 ) ( 99,581 )

Fuel swaps 189,816 55,246

$ 224,619 $ ( 927 )

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 loss (in thousands):

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

Gain (Loss) Recognized in Income (Net Investment Excluded Components) Three Months Ended March 31, 2022

Net inception fair value at January 1, 2022 $ ( 554 )

Amount of gain recognized in income on derivatives for the nine month period ended September 30, 2021 4,966

Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of September 30, 2021 ( 3,141 )

Fair value at September 30, 2021 $ ( 90 )

Amount of gain recognized in income on derivatives for the period ended March 31, 2022 577

Amount of gain (loss) remaining to be amortized in accumulated other comprehensive loss, as of March 31, 2022 ( 39 )

Fair value at March 31, 2022 $ ( 16 )

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 September 30, 2021 Quarter Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

Investment Hedging Relationships Quarter Ended March 31, 2022 Quarter Ended March 31, 2021

Foreign Currency Debt $ 2,745 $ 5,822

$ 2,745 $ 5,822

There was no amount recognized in income (ineffective portion and amount excluded from effectiveness testing) for the quarters ended March 31, 2022 and March 31, 2021.

The effect of derivatives not designated as hedging instruments on the consolidated financial statements was as follows (in thousands):

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Gain (Loss) Recognized in

Income on Derivatives Quarter Ended September 30, 2021 Quarter Ended September 30, 2020 Nine Months Ended September 30, 2021 Nine Months Ended September 30, 2020

Income on Derivatives Quarter Ended March 31, 2022 Quarter Ended March 31, 2021

Foreign currency forward contracts Other income (expense) $ ( 6,985 ) $ ( 13,498 )

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

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

As of September 30, 2021, seven of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $ 65.6 million to satisfy our obligations under our interest rate derivative agreements, taking into account any collateral waivers issued by banks.

As of March 31, 2022, our senior unsecured debt credit rating was B by Standard & Poor's and B2 by Moody's.

As of March 31, 2022, six of our interest rate derivative hedges had a term of at least five years requiring us to post collateral of $ 16.7 million to satisfy our obligations under our interest rate derivative agreements, taking into account collateral waivers issued by certain banks.

We expect that we will not need to provide additional collateral under these agreements in the next twelve months.

Restructuring Charges

In April 2020, we reduced our U.S.

shoreside workforce by approximately 23 % through permanent layoffs.

We incurred severance costs of $ 28.0 million during the year ended December 31, 2020.

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

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

Incurred Expected

Termination benefits $ 4,257 $ 643 $ 4,311 $ 589 $ 28,596 $ —

Total $ 4,257 $ 643 $ 4,311 $ 589 $ 28,596 $ —

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