What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-07-29 compared with 2022-05-05 · 282 added, 190 removed, 739 unchanged (39% of the section changed)

3 unchanged sentences

in thousands, except per share data)

Quarter Ended March 31,

Quarter Ended June 30,

Passenger ticket revenues $ 1,418,203 $ 22,785

17 unchanged sentences

Equity investment loss ( 13,179 ) ( 48,088 )

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

Other income 6,457 24,508

( 302,938 ) ( 323,721 )

11 unchanged sentences

Change in defined benefit plans 15,168 ( 3,088 )

(Loss) gain on cash flow derivative hedges ( 84,493 ) 51,476

Total other comprehensive (loss) income ( 56,643 ) 44,899

Comprehensive Loss $ ( 578,225 ) $ ( 1,302,356 )

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

in thousands, except per share data)

Six Months Ended June 30,

Passenger ticket revenues $ 2,070,061 $ 43,629

Onboard and other revenues 1,173,412 49,299

Total revenues 3,243,473 92,928

Cruise operating expenses:

Commissions, transportation and other 480,202 8,137

Onboard and other 230,009 13,079

Payroll and related 676,759 264,276

Food 255,410 25,668

Fuel 463,659 100,931

Other operating 769,592 296,226

Total cruise operating expenses 2,875,631 708,317

Marketing, selling and administrative expenses 765,455 543,599

Depreciation and amortization expenses 691,009 633,605

Impairment and credit losses (recoveries) ( 10,770 ) 40,172

Operating Loss ( 1,077,852 ) ( 1,832,765 )

Other income (expense):

Interest income 9,812 9,531

Interest expense, net of interest capitalized ( 580,365 ) ( 577,325 )

Equity investment loss ( 44,238 ) ( 107,959 )

Other income 3,919 29,541

( 610,872 ) ( 646,212 )

Net Loss ( 1,688,724 ) ( 2,478,977 )

Loss per Share:

Basic $ ( 6.63 ) $ ( 9.96 )

Diluted $ ( 6.63 ) $ ( 9.96 )

Weighted-Average Shares Outstanding:

Basic 254,893 248,823

Diluted 254,893 248,823

Comprehensive Loss

Net Loss $ ( 1,688,724 ) $ ( 2,478,977 )

Other comprehensive income:

Foreign currency translation adjustments 20,460 6,233

Change in defined benefit plans 27,765 7,375

Gain on cash flow derivative hedges 111,408 61,778

5 unchanged sentences

(in thousands, except share data)

March 31, December 31,

June 30, December 31,

Current assets

Cash and cash equivalents $ 2,102,205 $ 2,701,770

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

Trade and other receivables, net of allowances of $ 7,897 and $ 13,411 at June 30, 2022 and December 31, 2021, respectively

565,014 408,067

6 unchanged sentences

Goodwill 809,298 809,383

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

Other assets, net of allowances of $ 72,648 and $ 86,781 at June 30, 2022 and December 31, 2021, respectively

1,447,175 1,398,624

20 unchanged sentences

500,000,000 shares authorized;

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

283,076,357 and 282,703,246 shares issued, June 30, 2022 and December 31, 2021, respectively)

Paid-in capital 7,254,939 7,557,297

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

(Accumulated deficit) Retained earnings ( 1,240,191 ) 302,276

Accumulated other comprehensive loss ( 551,252 ) ( 710,885 )

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

Treasury stock ( 28,018,385 and 27,882,987 common shares at cost, June 30, 2022 and December 31, 2021, respectively)

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

5 unchanged sentences

(unaudited, in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

3 unchanged sentences

Net deferred income tax benefit ( 9,205 ) ( 8,450 )

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

Loss (gain) on derivative instruments not designated as hedges 87,245 ( 16,163 )

Share-based compensation expense 10,134 35,562

2 unchanged sentences

Amortization of debt discounts and premiums 7,726 56,609

Gain on extinguishment of debt — ( 3,156 )

Changes in operating assets and liabilities:

2 unchanged sentences

Increase in prepaid expenses and other assets ( 168,948 ) ( 75,213 )

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

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

Increase in accounts payable 221,746 38,073

Increase in accrued interest 49,655 17,675

Decrease in accrued expenses and other liabilities ( 32,837 ) ( 123,028 )

11 unchanged sentences

Net cash used in investing activities ( 2,527,547 ) ( 1,183,675 )

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Six Months Ended June 30,

Financing Activities

6 unchanged sentences

Net cash provided by financing activities 1,979,763 3,018,992

Effect of exchange rate changes on cash 991 ( 192 )

Effect of exchange rate changes on cash and cash equivalents ( 1,574 ) 132

Net (decrease) increase in cash and cash equivalents ( 599,565 ) 565,895

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

10 unchanged sentences

in thousands)

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

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

Balance at April 1, 2022 $ 2,830 $ 7,267,545 $ ( 718,609 ) $ ( 494,609 ) $ ( 2,068,229 ) $ 3,988,928

Activity related to employee stock plans 1 ( 12,606 ) — — — ( 12,605 )

Changes related to cash flow derivative hedges — — — ( 84,493 ) — ( 84,493 )

Change in defined benefit plans — — — 15,168 — 15,168

Foreign currency translation adjustments — — — 12,682 — 12,682

Net Loss — — ( 521,582 ) — — ( 521,582 )

Balance at June 30, 2022 $ 2,831 $ 7,254,939 $ ( 1,240,191 ) $ ( 551,252 ) $ ( 2,068,229 ) $ 3,398,098

Common Stock Paid-in Capital Retained Earnings ( Accumulated 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

6 unchanged sentences

Net Loss — — ( 1,688,724 ) — — ( 1,688,724 )

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

Balance at June 30, 2022 $ 2,831 $ 7,254,939 $ ( 1,240,191 ) $ ( 551,252 ) $ ( 2,068,229 ) $ 3,398,098

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

in thousands)

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

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

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

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

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

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

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

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 1,347,255 ) — — ( 1,347,255 )

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

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

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

5 unchanged sentences

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

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 2,478,977 ) — — ( 2,478,977 )

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

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

15 unchanged sentences

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.

Together, our Global Brands and our Partner Brands have a combined fleet of 63 ships as of June 30, 2022.

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

1 unchanged sentence

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.

Since then, we have steadily increased the number of ships that have returned to service, with our full fleet in service a s of June 30, 2022 .

Our operations incorporate our enhanced health and safety protocols, including vaccination protocols.

Since the start of the pandemic, we have implemented a number of proactive measures to mitigate the financial and operational impacts of COVID-19 and manage our liquidity.

As part of our liquidity management, we rely on the estimation of our future liquidity requirements, which includes numerous assumptions that are subject to various risks and uncertainties.

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

• 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 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.

• Continued cruise operations and expected timing of cash collections for cruise bookings;

• Expected increase in revenue per available passenger cruise day;

• Expected increase in occupancy levels over time until we reach historical occupancy levels;

• Inflationary increase to our operating costs, mostly impacting the expected cost of fuel and food.

As of June 30, 2022, we had liquidity of $ 3.3 billion, including $ 0.5 billion of undrawn revolving credit facility capacity, $ 2.1 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 mostly utilized through a combination of amounts drawn and letters of credit issued under the facilities as of June 30, 2022.

As of June 30, 2022, we were in compliance with our financial covenants and we estimate we will be in compliance for the next twelve months.

In July 2022, w e amended our non-export-credit facilities and export credit facilities plus committed export-credit facilities, and certain credit card processing agreements.

Refer to Note 7 .

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.

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

In June of 2023, approximately $ 3.2 billion of long- term debt will become due.

Accordingly, in addition to our $ 3.3 billion liquidity as of June 30, 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.

Additionally, we will continue to pursue various opportunities to raise additional capital to fund obligations associated with future debt maturities and/or to extend the maturity dates associated with our existing indebtedness or facilities.

Actions to raise capital may include issuances of debt, convertible debt or equity in private or public transactions or entering into new or extended credit facilities.

If the Company is unable to comply with the applicable financial covenants, including maintaining the applicable minimum liquidity requirement, it could have a significant adverse effect on the Company’s business, financial condition and operating results.

Basis for Preparation of Consolidated Financial Statements

18 unchanged sentences

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").

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.

2 unchanged sentences

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.

Accordingly, the results of Silversea Cruises from April 1, 2022 through June 30, 2022 and from January 1, 2022 through June 30, 2022 are included in our consolidated statement of comprehensive loss for the quarter ended and six months ended June 30, 2022, respectively.

The results of Silversea Cruises from January 1, 2021 through March 31, 2021 and from October 1, 2020 through March 31, 2021 are included in our consolidated statement of comprehensive loss for the quarter ended and six months ended June 30, 2021, respectively.

Summary of Significant Accounting Policies

Adoption of Accounting Pronouncements

In August 2020, the FASB issued ASU No.

In August 2020, the FASB issued Accounting Standard Update (“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 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 Accounting Standards Codification ("ASC") 815, Derivatives and Hedging ("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.

4 unchanged sentences

Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB") issued Accounting Standard Update (“ASU") No.

In March 2020, the Financial Accounting Standards Board (“FASB") issued ASU No.

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

8 unchanged sentences

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

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

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

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

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

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.

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 236.2 million and $ 3.2 million for the quarters ended June 30, 2022 and 2021, respectively, and $ 313.1 million and $ 4.7 million for the six months ended June 30, 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.

We receive payment before or concurrently with the transfer of these goods and services to cruise passengers 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.

1 unchanged sentence

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Revenues by itinerary

13 unchanged sentences

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

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

Quarter Ended March 31,

For the quarters and six months ended June 30, 2022 and 2021, our guests were sourced from the following areas:

Quarter Ended June 30,

Passenger ticket revenues:

1 unchanged sentence

Singapore 2 % 54 %

All other countries (1) 20 % 2 %

Six Months Ended June 30,

Passenger ticket revenues:

United States 80 % 23 %

Singapore 3 % 61 %

China 1 % 15 %

All other countries (1) 16 % 1 %

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

(1) No other individual country's revenue exceeded 10% for the quarters and six months ended June 30, 2022 and 2021.

Customer Deposits and Contract Liabilities

Our payment terms generally require an upfront deposit to confirm a reservation, with the balance due prior to the cruise.

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

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

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

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.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 1.9 billion and $ 0.8 billion as of June 30, 2022 and December 31, 2021, respectively.

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

As of June 30, 2022, our customer deposit balance includes approximately $ 0.6 billion of unredeemed FCCs.

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 will not be used in future periods and get recognized as breakage.

We will update our breakage analysis as future information is received.

6 unchanged sentences

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

As of March 31, 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.

As of June 30, 2022 and December 31, 2021, our contract assets were $ 118.9 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.

1 unchanged sentence

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.

Prepaid travel advisor commissions were $ 119.4 million as of June 30, 2022 and $ 75.4 million as of December 31, 2021.

(Loss) Per Share

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net (Loss) for basic and diluted loss per share $ ( 521,582 ) $ ( 1,347,255 ) $ ( 1,688,724 ) $ ( 2,478,977 )

5 unchanged sentences

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.

As we had net losses for the quarter and six months ended June 30, 2022 and June 30, 2021, all potential common shares were determined to be antidilutive, resulting in the same basic and diluted net loss per share amounts for these periods.

There were approximately 23,526,181 and 23,597,611 antidilutive shares for the quarters and six months ended June 30, 2022, respectively, compared to 445,000 and 449,000 for the quarters and six months ended June 30, 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.

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 .

Property and Equipment

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 to our operations.

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

This impairment charge was reported within Impairment and credit losses (recoveries) in our consolidated statements of comprehensive loss for the three and six months ended June 30, 2021.

In January 2022 and April 2022, we took delivery of Wonder of the Seas and Celebrity Beyond , respectively.

Refer to Note 7 .

Debt for further information on the financing for Wonder of the Seas and Celebrity Beyond.

In July 2022, we purchased a ship for our Silversea Cruises brand for $ 275.0 million, plus transaction fees.

The ship is expected to enter service during the fourth quarter of 2022.

For information regarding the financing of the ship, refer to Note 7 .

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:

8 unchanged sentences

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

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 June 30, 2022, the net book value of our investment in TUIC was $ 365.0 million, primarily consisting of $ 258.6 million in equity and a loan of € 95.2 million, or approximately $ 99.5 million based on the exchange rate at June 30, 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.

9 unchanged sentences

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.

During the quarter and six months ended June 30, 2022, we made payments of $ 4.0 million and $ 7.7 million, respectively to Grand Bahama for ship repair and maintenance services compared to payments of $ 2.7 million for the quarter and six months ended June 30, 2021.

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.

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 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.

During the six months ended June 30, 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 six months ended June 30, 2022.

As of June 30, 2022, we had exposure to credit loss in Grand Bahama of $ 10.7 million related to the loan.

The outstanding loan balance is in non-accrual status and is included within 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.

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.

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

Quarter Ended March 31,

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

Quarter Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Share of equity loss from investments $ ( 13,179 ) $ ( 48,088 ) $ ( 44,238 ) $ ( 107,959 )

Dividends received (1) $ 563 $ — $ 986 $ —

(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

(1) Represents dividends received from our investments accounted for under the equity method of accounting for the quarters and six months ended June 30, 2022 and June 30, 2021.

As of June 30, 2022 As of December 31, 2021

Total notes receivable due from equity investments $ 112,812 $ 130,587

4 unchanged sentences

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,

Quarter Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Revenues $ 3,937 $ 5,913 $ 10,309 $ 11,144

1 unchanged sentence

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.

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

Based on these credit loss estimation factors, during the six months ended June 30, 2022, we recorded a net credit loss recovery of $ 10.6 million primarily resulting from cash collections received on a note receivable, in which credit losses were previously recorded.

Our credit loss allowance beginning and ending balances as of January 1, 2022 and June 30, 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 six months ended June 30, 2022 (in thousands):

Credit Loss Allowance

Beginning balance January 1, 2022 $ 100,192

Loss provision for receivables 653

Credit loss recovery, net ( 10,623 )

Write-offs ( 9,024 )

Ending balance March 31, 2022 $ 92,693

Debt consist of the following (in thousands):

Ending balance June 30, 2022 $ 80,545

Debt consists of the following (in thousands):

Interest Rate (1)

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

Maturities Through As of June 30, 2022 As of December 31, 2021

Fixed rate debt:

24 unchanged sentences

Long-term portion $ 17,746,721 $ 18,847,209

(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.

(1) Interest rates based on outstanding loan balance as of June 30, 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 1.75 % 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.

Our $ 1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30 % which interest was 3.09 % as of June 30, 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 3.49 % as of June 30, 2022 and is subject to a facility fee of a maximum of 0.30 %.

(3) At June 30, 2022 and December 31, 2021, the weighted average interest rate for total debt was 6.09 % and 5.47 %, respectively.

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

3 unchanged sentences

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.

The proceeds from the January 2022 Unsecured Notes are being used to repay principal payments on debt maturing in 2022 (including to pay fees and expenses in connection with such repayments) and have been temporarily applied to repay borrowings under our revolving credit facilities.

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.

1 unchanged sentence

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.

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.

In July 2022, we purchased a ship for our Silversea Cruises brand.

To finance the purchase, we borrowed $ 277 million, which is 95 % guaranteed by Euler Hermes Aktiengesellschaft (“Hermes”), the official export credit agency of Germany.

The loan amortizes semi-annually over 15 years and bears interest at a floating rate equal to SOFR plus a margin of 1.25 %.

Principal payments to the lender will commence in July 2024 and the loan will mature in July 2037.

Our export credit facilities and our non-export credit facilities have an outstanding principal amount of approximately $ 13.1 billion as of June 30, 2022.

These facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25 x and limit our net debt-to-capital ratio, and under certain facilities, to maintain a minimum shareholders' equity.

In 2021, we amended our non-export credit facilities and export credit facilities, and certain credit card processing agreements, to extend the waiver of our financial covenants through and including at least the third quarter of 2022, and subsequently in the third quarter of 2021, we entered into a letter agreement to extend the waiver period for our export credit facilities to the end of the fourth quarter of 2022.

Further, in July 2022, we amended our non-export-credit facilities and export credit facilities, and certain credit card processing agreements.

Among other things, the amendments modified 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 2025 and the amount of minimum shareholders' equity required to be maintained through 2025.

The amendments impose a monthly-tested minimum liquidity covenant of $ 350.0 million, which in the case of the non-export credit facilities terminates at the end of the waiver period and in the case of the export credit facilities terminates either in July 2025, or when we pay off all deferred amounts, whichever is earlier.

In addition, the amendments to the non-export credit facilities place restrictions on paying cash dividends and effectuating share repurchases through the end of the third quarter of 2022, while the export credit facility amendments require us to prepay any deferred amounts if we elect to issue dividends or complete share repurchases.

As of June 30, 2022, our aggregate revolving borrowing capacity was $ 3.2 billion and was mostly 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.

1 unchanged sentence

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

As of June 30, 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 $ 111.9 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.

1 unchanged sentence

The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables, is approximately $ 309.6 million.

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

The amount and timing are dependent on future factors that are uncertain, such as the 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.

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 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.

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

2 unchanged sentences

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 March 31, 2022 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 of $ 417.9 million, and including finance leases, as of June 30, 2022 for each of the next five years (in thousands):

Year As of June 30, 2022 (1)

Remainder of 2022 1,579,926

4 unchanged sentences

Thereafter 6,842,201

(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2022.

Operating Leases

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment, and are included within Operating lease right-of-use assets , and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of March 31, 2022 and December 31, 2021.

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

12 unchanged sentences

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 .

Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters, our Silver Dawn , and Silver Whisper ships.

Finance leases are included within Property, and Equipment , net, and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of June 30, 2022 and December 31, 2021.

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 our 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.

1 unchanged sentence

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.

The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $ 100.9 million and $ 127.0 million as of June 30, 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.

1 unchanged sentence

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.

The total aggregate amount of finance lease liabilities recorded for this ship was $ 274.3 million and $ 283.7 million as of June 30, 2022 and December 31, 2021, respectively.

Silversea Cruises operates the Silver Whisper under a finance lease.

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.

Additionally, certain scheduled payments have been deferred and are reflected in Long-term debt in our Consolidated Balance Sheet as of June 30, 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 June 30, 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 March 31, 2022 Quarter Ended March 31, 2021

Consolidated Statement of Comprehensive Loss Classification Quarter Ended June 30, 2022 Six Months Ended June 30, 2022

Operating lease costs Commission, transportation and other $ 27,993 $ 50,722

5 unchanged sentences

Total lease costs $ 49,142 $ 92,811

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

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

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

Financial lease costs:

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

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

Total lease costs $ 11,633 $ 26,852

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

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.

During the quarter and six months ended June 30, 2022, we had $ 11.9 million and $ 19.4 million variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss, respectively.

During the quarter and six months ended June 30, 2021, we had no variable lease costs.

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

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

As of June 30, 2022 As of December 31, 2021

Weighted average of the remaining lease term in years

5 unchanged sentences

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

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

Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

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

2 unchanged sentences

Financing cash flows from finance leases $ 22,455 $ 7,935

As of March 31, 2022, maturities related to lease liabilities were as follows (in thousands):

As of June 30, 2022, maturities related to lease liabilities were as follows (in thousands):

Year Operating Leases Finance Leases

11 unchanged sentences

Our future capital commitments consist primarily of new ship orders.

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:

As of June 30, 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

5 unchanged sentences

Celebrity Cruises —

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

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

8 unchanged sentences

Total Berths 38,310

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.

In addition, as of June 30, 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 June 30, 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 $ 9.4 billion, of which we had deposited $ 0.6 billion as of such date.

Approximately 61.7 % of the aggregate cost was exposed to fluctuations in the Euro exchange rate at June 30, 2022.

Refer to Note 12 .

6 unchanged sentences

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.

In the Havana Docks Action, the Court granted summary judgement in favor of the plaintiff as to liability 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.

21 unchanged sentences

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

Accordingly, during the six months ended June 30, 2022 and 2021, 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.

Changes in Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 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

The following table presents the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2022 and 2021 (in thousands):

Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 2022 Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 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

4 unchanged sentences

Ending balance $ ( 535,065 ) $ ( 29,070 ) $ 12,883 $ ( 551,252 ) $ ( 588,741 ) $ ( 58,167 ) $ ( 17,047 ) $ ( 663,955 )

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

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and six months ended June 30, 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 March 31, 2022 Quarter Ended March 31, 2021 Affected Line Item in Statements of

Details About Accumulated Other Comprehensive Loss Components Quarter Ended June 30, 2022 Quarter Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Affected Line Item in Statements of

Comprehensive Loss

13 unchanged sentences

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

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

Fair Value Measurements at June 30, 2022 Fair Value Measurements at December 31, 2021

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

13 unchanged sentences

(3) Inputs that are unobservable.

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

The Company did not use any Level 3 inputs as of June 30, 2022 and December 31, 2021.

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

2 unchanged sentences

Other Financial Instruments

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

The carrying amounts of accounts receivable, accounts payable, accrued interest and accrued expenses approximate fair value at June 30, 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 March 31, 2022 Fair Value Measurements at December 31, 2021

Fair Value Measurements at June 30, 2022 Fair Value Measurements at December 31, 2021

Description Total Level 1 (1)

13 unchanged sentences

(3) Inputs that are unobservable.

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

No Level 3 inputs were used in fair value measurements of Other financial instruments as of June 30, 2022 and December 31, 2021.

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

3 unchanged sentences

The reported fair values are based on a variety of factors and assumptions.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of March 31, 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.

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

8 unchanged sentences

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.

There were no nonfinancial instruments recorded at fair value as of June 30, 2022.

Master Netting Agreements

6 unchanged sentences

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

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

As of June 30, 2022 As of December 31, 2021

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

9 unchanged sentences

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

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

As of June 30, 2022 As of December 31, 2021

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

10 unchanged sentences

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

As of March 31, 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.

As of June 30, 2022, we had counterparty credit risk exposure under our derivative instruments of $ 144.3 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.

33 unchanged sentences

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

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

At June 30, 2022 and December 31, 2021, approximately 71.3 % 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.

1 unchanged sentence

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

At March 31, 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

At June 30, 2022 and December 31, 2021, we maintained interest rate swap agreements on the following fixed-rate debt instruments:

Debt Instrument Swap Notional as of June 30, 2022 (in thousands) Maturity Debt Fixed Rate Swap Floating Rate:

LIBOR plus All-in Swap Floating Rate as of June 30, 2022

Unsecured senior notes 650,000 November 2022 5.25 % 3.63 % 5.04 %

These interest rate swap agreements are accounted for as fair value hedges.

Market risk associated with our long-term floating-rate debt is the potential increase in interest expense from an increase in interest rates.

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

At March 31, 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

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

At June 30, 2022 and December 31, 2021, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of June 30, 2022 (in thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate

Celebrity Reflection term loan

13 unchanged sentences

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

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

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

2 unchanged sentences

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

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.

The notional amount of interest rate swap agreements related to outstanding debt as of June 30, 2022 and December 31, 2021 was $ 2.7 billion and $ 2.9 billion, respectively.

Foreign Currency Exchange Rate Risk

2 unchanged sentences

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

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.

As of June 30, 2022, the aggregate cost of our ships on order was $ 9.4 billion, of which we had deposited $ 0.6 billion 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.

1 unchanged sentence

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

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.

At June 30, 2022 and December 31, 2021, approximately 61.7 % 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 first quarter of 2022, we maintained an average of approximately $ 0.8 billion of these foreign currency forward contracts.

During the second quarter of 2022, we maintained an average of approximately $ 1.3 billion of these foreign currency forward contracts.

These instruments are not designated as hedging instruments.

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.

For the quarters ended June 30, 2022 and 2021, changes in the fair value of the foreign currency forward contracts resulted in a (loss) gain of $( 80.9 ) million and $ 0.5 million, respectively, which offset gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $ 78.6 million and $ 0.3 million, respectively.

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

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

As of March 31, 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.

For the six months ended June 30, 2022 and 2021, changes in the fair value of the foreign currency forward contracts resulted in losses of $ 87.9 million and $ 13.0 million, respectively, which offset gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $ 85.8 million and $ 4.7 million, respectively.

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

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of June 30, 2022 and December 31, 2021 was $ 2.0 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 € 99.0 million, or approximately $ 110.1 million, as of March 31, 2022.

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

We 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 € 315.0 million, or approximately $ 329.3 million, as of June 30, 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.

6 unchanged sentences

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.

During the six months ended June 30, 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 six months ended June 30, 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.

2 unchanged sentences

for further discussion on risks related to COVID-19.

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:

At June 30, 2022, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2023.

As of June 30, 2022 and December 31, 2021, we had the following outstanding fuel swap agreements:

Fuel Swap Agreements

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

As of June 30, 2022 As of December 31, 2021

Designated as hedges:

3 unchanged sentences

Fuel Swap Agreements

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

As of June 30, 2022 As of December 31, 2021

Designated hedges as a % of projected fuel purchases:

2 unchanged sentences

Fuel Swap Agreements

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

As of June 30, 2022 As of December 31, 2021

Not designated as hedges:

1 unchanged sentence

2022(1) 110,500 231,900

(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.

(1) As of June 30, 2022, 55,250 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 55,250 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.

As of June 30, 2022, there was $ 149.9 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 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.

2 unchanged sentences

Asset Derivatives Liability Derivatives

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

Balance Sheet Location As of June 30, 2022 As of December 31, 2021 Balance Sheet Location As of June 30, 2022 As of December 31, 2021

Fair Value Fair Value Fair Value Fair Value

14 unchanged sentences

Total derivatives $ 261,057 $ 69,808 $ 148,335 $ 200,541

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

(1) Subtopic 815-20 “ Hedging-General ” under ASC 815.

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):

1 unchanged sentence

Non-derivative instrument designated as

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

hedging instrument under ASC 815-20 Balance Sheet Location As of June 30, 2022 As of December 31, 2021

Foreign currency debt Current portion of debt $ 61,041 $ 75,518

7 unchanged sentences

Income on Hedged Item

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

Quarter Ended June 30, 2022 Quarter Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Quarter Ended June 30, 2022 Quarter Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Interest rate swaps Interest expense (income), net of interest capitalized $ ( 1,170 ) $ 317 $ ( 4,535 ) $ ( 234 ) $ 2,927 $ 2,068 $ 8,951 $ 4,998

2 unchanged sentences

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

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

As of June 30, 2022 As of December 31, 2021 As of June 30, 2022 As of December 31, 2021

Current portion of debt and Long-term debt $ 647,106 $ 655,502 $ ( 2,523 ) $ 6,428

4 unchanged sentences

Comprehensive Loss on Derivatives

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

Quarter Ended June 30, 2022 Quarter Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Interest rate swaps $ 29,251 $ ( 15,714 ) $ 104,116 $ 27,694

3 unchanged sentences

The table below represents amounts excluded from the assessment of effectiveness for our net investment hedging instruments for which the difference between changes in fair value and periodic amortization is recorded in accumulated other comprehensive income (loss) (in thousands):

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

Gain (Loss) Recognized in Income (Net Investment Excluded Components) Six Months Ended June 30, 2022

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

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 )

Amount of gain recognized in income on derivatives for the period ended June 30, 2022 554

Fair value at June 30, 2022 $ —

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

1 unchanged sentence

Non-derivative instruments under ASC 815-20 Net

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

Investment Hedging Relationships Quarter Ended June 30, 2022 Quarter Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Foreign Currency Debt $ 16,814 $ ( 2,813 ) $ 19,559 $ 3,009

$ 16,814 $ ( 2,813 ) $ 19,559 $ 3,009

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.

There was no amount recognized in income (ineffective portion and amount excluded from effectiveness testing) for the quarters and six months ended June 30, 2022 and June 30, 2021.

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

3 unchanged sentences

Gain (Loss) Recognized in

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

Income on Derivatives Quarter Ended June 30, 2022 Quarter Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Foreign currency forward contracts Other income (expense) $ ( 80,897 ) $ 524 $ ( 87,882 ) $ ( 12,974 )

6 unchanged sentences

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

As of March 31, 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.

As of June 30, 2022, our senior unsecured debt credit rating was B by Standard & Poor's and B2 by Moody's.

As of June 30, 2022, six of our interest rate derivative hedges had reached their fifth-year anniversary;

however, our net market value for these derivative hedges are in a net asset position, accordingly, we were not required to post any collateral as of such date.

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

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