What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-07-29 · 263 added, 214 removed, 807 unchanged (37% of the section changed)

3 unchanged sentences

in thousands, except per share data)

Quarter Ended June 30,

Quarter Ended September 30,

Passenger ticket revenues $ 2,020,974 $ 280,153

12 unchanged sentences

Impairment and credit losses (recoveries) 10,186 ( 238 )

Operating Loss ( 218,644 ) ( 1,023,534 )

Operating Income (Loss) 298,425 ( 1,005,824 )

Other income (expense):

1 unchanged sentence

Interest expense, net of interest capitalized ( 352,187 ) ( 430,661 )

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

Equity investment income (loss) 73,997 ( 29,085 )

Other income 780 37,230

( 265,457 ) ( 418,730 )

Net Loss $ ( 521,582 ) $ ( 1,347,255 )

Loss per Share:

Net Income (Loss) $ 32,968 $ ( 1,424,554 )

Earnings (Loss) per Share:

Basic $ 0.13 $ ( 5.59 )

4 unchanged sentences

Comprehensive Loss

Net Loss $ ( 521,582 ) $ ( 1,347,255 )

Other comprehensive income:

Net Income (Loss) $ 32,968 $ ( 1,424,554 )

Other comprehensive loss:

Foreign currency translation adjustments 11,498 5,022

Change in defined benefit plans 7,226 ( 3,627 )

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

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

Loss on cash flow derivative hedges ( 259,949 ) ( 13,264 )

Total other comprehensive loss ( 241,225 ) ( 11,869 )

Comprehensive Loss $ ( 208,257 ) $ ( 1,436,423 )

3 unchanged sentences

in thousands, except per share data)

Six Months Ended June 30,

Nine Months Ended September 30,

Passenger ticket revenues $ 4,091,035 $ 323,782

16 unchanged sentences

Interest expense, net of interest capitalized ( 932,552 ) ( 1,007,986 )

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

Equity investment income (loss) 29,759 ( 137,044 )

Other income 4,699 66,771

9 unchanged sentences

Net Loss $ ( 1,655,756 ) $ ( 3,903,531 )

Other comprehensive income:

Other comprehensive (loss) income:

Foreign currency translation adjustments 31,958 11,255

Change in defined benefit plans 34,991 3,748

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

Total other comprehensive income 159,633 75,386

(Loss) Gain on cash flow derivative hedges ( 148,541 ) 48,514

Total other comprehensive (loss) income ( 81,592 ) 63,517

Comprehensive Loss $ ( 1,737,348 ) $ ( 3,840,014 )

3 unchanged sentences

(in thousands, except share data)

June 30, December 31,

September 30, December 31,

Current assets

Cash and cash equivalents $ 1,566,213 $ 2,701,770

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

Trade and other receivables, net of allowances of $ 10,542 and $ 13,411 at September 30, 2022 and December 31, 2021, respectively

534,414 408,067

6 unchanged sentences

Goodwill 809,201 809,383

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

Other assets, net of allowances of $ 72,160 and $ 86,781 at September 30, 2022 and December 31, 2021, respectively

1,570,279 1,398,624

20 unchanged sentences

500,000,000 shares authorized;

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

283,198,625 and 282,703,246 shares issued, September 30, 2022 and December 31, 2021, respectively)

Paid-in capital 7,270,521 7,557,297

1 unchanged sentence

Accumulated other comprehensive loss ( 792,477 ) ( 710,885 )

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

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

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

5 unchanged sentences

(unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating Activities

5 unchanged sentences

Share-based compensation expense 24,285 55,435

Equity investment loss 44,238 107,959

Equity investment (income) loss ( 29,759 ) 137,044

Amortization of debt issuance costs 118,307 94,511

Amortization of debt discounts and premiums 11,650 93,517

Gain on extinguishment of debt — ( 3,156 )

Loss on extinguishment of debt 16,449 138,759

Changes in operating assets and liabilities:

3 unchanged sentences

Increase in accounts payable 79,249 107,215

Increase in accrued interest 49,655 17,675

Increase (decrease) in accrued interest 22,053 ( 3,685 )

Decrease in accrued expenses and other liabilities ( 18,973 ) ( 5,911 )

15 unchanged sentences

(unaudited, in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Financing Activities

2 unchanged sentences

Repayments of debt ( 5,135,323 ) ( 2,212,510 )

Premium on repayment of debt — ( 135,372 )

Repayments of commercial paper notes — ( 414,570 )

3 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents ( 2,765 ) ( 704 )

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

Net decrease in cash and cash equivalents ( 1,135,557 ) ( 395,148 )

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 $ 26,026 $ 22,925

Acquisition of property and equipment from assumed debt $ 275,000 $ —

Non-cash Financing Activity

Debt related to acquisition of property and equipment $ 275,000 $ —

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

3 unchanged sentences

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

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

Activity related to employee stock plans 1 15,582 — — — 15,583

2 unchanged sentences

Foreign currency translation adjustments — — — 11,498 — 11,498

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

Net Income — — 32,968 — — 32,968

Balance at September 30, 2022 $ 2,832 $ 7,270,521 $ ( 1,207,223 ) $ ( 792,477 ) $ ( 2,068,229 ) $ 3,205,424

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

7 unchanged sentences

Net Loss — — ( 1,655,756 ) — — ( 1,655,756 )

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

Balance at September 30, 2022 $ 2,832 $ 7,270,521 $ ( 1,207,223 ) $ ( 792,477 ) $ ( 2,068,229 ) $ 3,205,424

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

3 unchanged sentences

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

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

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

5 unchanged sentences

— — ( 1,424,554 ) — — ( 1,424,554 )

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

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

8 unchanged sentences

— — ( 3,903,531 ) — — ( 3,903,531 )

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

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

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 63 ships as of June 30, 2022.

Together, our Global Brands and our Partner Brands have a combined fleet of 64 ships as of September 30, 2022.

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

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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, 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.

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

Effective July 18, 2022, the U.S.

Centers for Disease Control and Prevention ended its COVID-19 Program for Cruise Ships, which has allowed us to modify our health and safety protocols to more closely align with the broader travel industry.

We announced the easing of testing and vaccination protocols for most itineraries on August 23, 2022.

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 to manage our liquidity.

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

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

• 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.

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

• an expected continued moderate increase in revenue per available passenger cruise day;

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

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

As of September 30, 2022, we had liquidity of $ 3.1 billion, including $ 0.8 billion of undrawn revolving credit facility capacity, $ 1.6 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 on or prior to August 11, 2023.

Our revolving credit facilities were utilized through a combination of amounts drawn and letters of credit issued under the facilities as of September 30, 2022.

During the nine months ended September 30, 2022, we entered into various transactions to refinance $ 6.9 billion of 2022 and 2023 debt maturities.

Refer to Note 7.

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.

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.

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.

Debt for further information regarding these transactions.

Based on our refinancing actions as well as our present financial condition and the aforementioned assumptions on liquidity, 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.

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.

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

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.

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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, subject to closing adjustments.

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.

8 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 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.

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

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

Summary of Significant Accounting Policies

Adoption of Accounting Pronouncements

In August 2020, the FASB issued Accounting Standard Update (“ASU") No.

In August 2020, the Financial Accounting Standards Board ("FASB") issued Accounting Standards 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 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.

3 unchanged sentences

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

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

In March 2020, the FASB issued ASU No.

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

2 unchanged sentences

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.

We adopted the new guidance during the quarter ended September 30, 2022.

The impact to our consolidated financial statements, if any, will be dependent on the timing and terms of any future contract modifications related to a change in reference rate.

Recent Accounting Pronouncements

In September 2022, the FASB issued ASU No.

2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50) - Disclosure of Supplier Finance Program Obligations.

This ASU requires that a buyer in a supplier finance program disclose sufficient information about the program to allow a user of financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

This ASU is expected to improve financial reporting by requiring new disclosures about the programs, thereby allowing financial statement users to better consider the effect of the programs on an entity’s working capital, liquidity, and cash flows.

This ASU is effective for fiscal years beginning after December 15, 2022, except for the amendment on roll forward information which is effective for fiscal years beginning after December 15, 2023.

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

Revenue Recognition

5 unchanged sentences

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

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 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.

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 210.2 million and $ 29.3 million for the quarters ended September 30, 2022 and 2021, respectively, and $ 446.3 million and $ 33.9 million for the nine months ended September 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.

3 unchanged sentences

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

Quarter Ended June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

14 unchanged sentences

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

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

Quarter Ended June 30,

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

Quarter Ended September 30,

Passenger ticket revenues:

United States 71 % 74 %

Singapore 2 % 54 %

United Kingdom 11 % 14 %

All other countries (1) 18 % 12 %

Six Months Ended June 30,

Nine Months Ended September 30,

Passenger ticket revenues:

United States 75 % 67 %

United Kingdom 9 % 13 %

Singapore 2 % 13 %

China 1 % 15 %

All other countries (1) 14 % 7 %

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

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

Customer Deposits and Contract Liabilities

3 unchanged sentences

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 $ 1.9 billion and $ 0.8 billion as of June 30, 2022 and December 31, 2021, respectively.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 1.6 billion and $ 0.8 billion as of September 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.

As of September 30, 2022, our customer deposit balance includes approximately $ 0.5 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.

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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 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.

As of September 30, 2022 and December 31, 2021, our contract assets were $ 139.6 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 $ 119.4 million as of June 30, 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 six months ended June 30, 2022.

(Loss) Per Share

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

Quarter Ended June 30, Six Months Ended June 30,

Prepaid travel advisor commissions were $ 78.6 million as of September 30, 2022 and $ 75.4 million as of December 31, 2021.

Earnings (Loss) Per Share

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

Quarter Ended September 30, Nine Months Ended September 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 )

Net Income (Loss) for basic and diluted loss per share $ 32,968 $ ( 1,424,554 ) $ ( 1,655,756 ) $ ( 3,903,531 )

Weighted-average common shares outstanding 255,071 254,713 254,953 250,808

Dilutive effect of stock-based awards 307 — — —

Diluted weighted-average shares outstanding 255,378 254,713 254,953 250,808

Basic (loss) per share $ ( 2.05 ) $ ( 5.29 ) $ ( 6.63 ) $ ( 9.96 )

Diluted (loss) per share $ ( 2.05 ) $ ( 5.29 ) $ ( 6.63 ) $ ( 9.96 )

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 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.

Basic earnings (loss) per share $ 0.13 $ ( 5.59 ) $ ( 6.49 ) $ ( 15.56 )

Diluted earnings (loss) per share $ 0.13 $ ( 5.59 ) $ ( 6.49 ) $ ( 15.56 )

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

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

If we have a net loss for the period, all potential common shares will be considered antidilutive, resulting in the same basic and diluted net loss per share amounts for those periods.

T here were approximately 30,532,145 and 31,085,736 antidilutive shares for the quarter and nine months ended September 30, 2022, respectively, compared to 339,835 and 433,705 for the quarter and nine months ended September 30, 2021, respectively.

Effective Ja nuary 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 for our convertible notes did not impact our diluted net earnings (loss) per share for the quarter and nine months ended September 30, 2022 as the if-converted calculation was antidilutive for these periods.

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

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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.

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

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 September 30, 2022, the net book value of our investment in TUIC was $ 412.9 million, primarily consisting of $ 315.6 million in equity and a loan of € 91.2 million, or approximately $ 89.3 million based on the exchange rate at September 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.

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

During the 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.

During the nine months ended September 30, 2022, we made payments of $ 7.8 million to Grand Bahama for ship repair and maintenance services compared to payments of $ 3.6 million for the nine months ended September 30, 2021, respectively.

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

Accordingly, we do not consolidate this entity.

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

As of September 30, 2022, we had exposure to credit loss in Grand Bahama of $ 8.8 million related to a loan.

The 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 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.

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 no t receive principal and interest payments during the nine months ended September 30, 2022.

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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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

Share of equity income (loss) from investments $ 73,997 $ ( 29,085 ) $ 29,759 $ ( 137,044 )

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

(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

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

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

Total notes receivable due from equity investments $ 99,845 $ 130,587

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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 June 30, Six Months Ended June 30,

Quarter Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Credit Losses

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements for the quarter ended June 30, 2022.

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

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

Credit Loss Allowance

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Write-offs ( 9,024 )

Ending balance June 30, 2022 $ 80,545

Ending balance September 30, 2022 $ 82,702

Debt consists of the following (in thousands):

Interest Rate (1)

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

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

Fixed rate debt:

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Long-term portion $ 19,384,226 $ 18,847,209

(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.

(1) Interest rates based on outstanding loan balance as of September 30, 2022 and, for variable rate debt, include either LIBOR, EURIBOR or Term SOFR 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 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.

Our $ 1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30 % which interest was 4.44 % as of September 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 4.84 % as of September 30, 2022 and is subject to a facility fee of a maximum of 0.30 %.

(3) At September 30, 2022 and December 31, 2021, the weighted average interest rate for total debt was 7.19 % and 5.47 %, respectively.

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

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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 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.

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).

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 June 2023.

Pursuant to the agreements, we are able, at our sole option, to 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.

As of September 30, 2022, the $ 3.15 billion was reduced to $ 2.35 billion after the repurchase of an aggregate principal amount of $ 800 million of the June 2023 Convertible Notes with the proceeds of the 2025 Convertible Notes, as described below.

Additionally, in October 2022, we completed the offering of the

8.25 % senior secured notes due 2029 and 9.25 % senior guaranteed notes due 2029, as a result of which the amount a vailable under the MS backstop facility was reduced to $ 350 million.

The MS backstop facility will continue to be available to refinance the remaining $ 350 million due under the 4.25 % Convertible Notes due June 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.

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.

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.

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

The loan amortizes semi-annually over 13 years starting in July 2024 and bears interest at a floating rate equal to SOFR plus a margin of 1.25 %.

The loan will mature in July 2037.

In August 2022, we issued $ 1.15 billion of convertible senior notes which accrue interest at 6.00 % and mature in August 2025.

Upon conversion election, we may deliver shares of our common stock, cash, or a combination of common stock and cash, at our election.

The initial conversion rate per $1,000 principal amount of the convertible notes is 19.9577 shares of our common stock, which is equivalent to an initial conversion price of approximately $ 50.11 per share, subject to adjustment in certain circumstances.

Prior to May 15, 2025, the convertible notes will be convertible at the option of holders during certain periods, and only under the following circumstances:

• during any calendar quarter commencing after the calendar quarter ending on or after September 30, 2022 (and only during such calendar quarter), if the last reported sale price per share of our common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

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

• if we call the notes for a tax redemption;

• upon the occurrence of specified corporate events.

On or after May 15, 2025 the convertible notes will be convertible at any time until the close of business on the second scheduled trading day immediately preceding their maturity date.

We received gross proceeds from the offering of $ 1.15 billion, which we used to repurchase $ 800 million aggregate principal amount of our 4.25 % convertible senior notes due June 15, 2023 and $ 350 million aggregate principal amount of our 2.875 % convertible senior notes due November 15, 2023 (the "Existing Convertible Notes") in privately negotiated transactions.

The $ 1.15 billion repayment resulted in a total loss on the extinguishment of debt of $ 12.8 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 30,2022.

In August 2022, we issued $ 1.25 billion of senior unsecured notes which accrue interest at 11.625 % and mature in August 2027.

The net proceeds of the offering of $ 1.23 billion were first used to temporarily repay borrowings under our revolving credit facilities.

The proceeds were subsequently used to repay other debt scheduled to mature in 2022, including the $ 650 million 5.25 % unsecured senior notes due November 2022, which resulted in a loss on extinguishment of debt of $ 3.62 million that 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, 2022.

In August 2022, 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 11, 2023.

Once drawn, the loan will bear interest at SOFR plus a margin of 5.75 % and will mature 364 days from funding.

In addition, the facility (if 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.

In September 2022, we amended our $ 0.6 billion unsecured term loan due October 2023.

The amendments, among other things, extend the maturity date of advances under the facilities held by consenting lenders by 12 months to October 2024.

Consenting lenders received a prepayment equal to 10 % of their respective outstanding advances.

Following this amendment, the aggregate outstanding principal balance of advances under the unsecured term loan is $ 501.6 million, with $ 30.0 million maturing in October 2023 and $ 471.6 million maturing in October 2024.

In October 2022, we issued $ 1.0 billion aggregate principal amount of 9.250 % senior guaranteed notes due 2029 and $ 1.0 billion aggregate principal amount of 8.250 % senior secured notes due 2029, both callable in April 2025.

We used the combined net proceeds, of the respective offerings, together with cash on hand, to fund the redemption, including call premiums, fees and expenses, of our outstanding 9.125 % senior guaranteed notes due 2023 and 10.875 % senior secured notes due 2023.

Our export credit facilities and our non-export credit facilities have an outstanding principal amount of approximately $ 12.0 billion as of September 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.

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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.

As of September 30, 2022, our aggregate revolving borrowing capacity was $ 3.2 billion and was utilized through a combination of amounts drawn and letters of credits issued under the facilities.

As of September 30, 2022, $ 0.8 billion remained undrawn.

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.

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These agreements allow the credit card processors to require us, under certain circumstances, to maintain a reserve that can be satisfied by posting collateral.

As of June 30, 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.

As of September 30, 2022, we have posted letters of credit as collateral with our sureties under our revolving credit facilities in the amount of $ 14.2 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 agreement with this processor was further amended in the third quarter of 2021 such that a portion of the proceeds are withheld in reserve.

The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables, is approximately $ 244.5 million.

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.

The amount and timing are dependent on future factors that are uncertain, such as the value of future deposits and any decisions about transferring 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 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.

For the majority of the loans as of September 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.

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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 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)

The following is a schedule of annual maturities on our total debt, net of debt issuance costs of $ 439.5 million, and including finance leases, as of September 30, 2022 for each of the next five years (in thousands):

Year As of September 30, 2022 (1)

Remainder of 2022 589,222

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Thereafter 8,290,959

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

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

(2) In October 2022, we issued $ 2.0 billion of aggregate principal notes due 2029, the proceeds of which were used to repay $ 2.0 billion of 2023 debt maturities.

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 June 30, 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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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 .

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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 was $ 100.9 million and $ 127.0 million as of June 30, 2022 and December 31, 2021, respectively.

The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $ 101.6 million and $ 127.0 million as of September 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.

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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 was $ 274.3 million and $ 283.7 million as of June 30, 2022 and December 31, 2021, respectively.

The total aggregate amount of finance lease liabilities recorded for this ship was $ 269.5 million and $ 283.7 million as of September 30, 2022 and December 31, 2021, respectively.

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

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 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.

Additionally, certain scheduled payments have been deferred and are reflected in Long-term debt in our Consolidated Balance Sheet as of September 30, 2022 and December 31, 2021.

The total aggregate amount of the finance lease liabilities recorded for this ship was $ 8.9 million and $ 24.1 million at September 30, 2022 and December 31, 2021, respectively.

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

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

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

Consolidated Statement of Comprehensive Loss Classification Quarter Ended September 30, 2022 Nine Months Ended September 30, 2022

Operating lease costs Commission, transportation and other $ 26,924 $ 77,646

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Total lease costs $ 49,071 $ 141,884

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

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

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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 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.

During the quarter and nine months ended September 30, 2022, we had $ 12.6 million and $ 32.0 million variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss, respectively.

During the quarter and nine months ended September 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 June 30, 2022 As of December 31, 2021

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

Weighted average of the remaining lease term in years

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

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

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

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

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Financing cash flows from finance leases $ 42,791 $ 15,058

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

As of September 30, 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 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:

As of September 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

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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

Icon of the Seas Meyer Turku Oy 4th Quarter 2023 5,600

Unnamed Meyer Turku Oy 2nd Quarter 2025 5,600

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Total Berths 38,310

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.

In addition, as of September 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 September 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 $ 9.1 billion, of which we had deposited $ 0.7 billion as of such date.

Approximately 54.4 % of the aggregate cost was exposed to fluctuations in the Euro exchange rate at September 30, 2022.

Refer to Note 12 .

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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, 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.

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.

In the Havana Docks Action, the Court granted summary judgement in favor of the plaintiff as to liability in March 2022 with a decision on damages to be made subsequently.

In August 2022, the Court ruled on several determinative issues with respect to the calculation on damages.

On the basis of these rulings, in October 2022, the plaintiff filed a motion for entry of judgment in the amount of approximately $ 110 million plus attorney’s fees.

The Court plans to issue a final judgement in the lawsuit, including a final ruling on damages following

briefing to the Court scheduled to be completed by December 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 inte nd to vigorously defend ourselves against them, including, in the Havana Docks Action, by appealing the Court’s final judgment.

At this time, we have concluded that the likelihood of loss is reasonably possible, and therefore, no liability has been recorded.

The outcome of the 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.

In addition, we are routinely involved in claims typical within the cruise vacation industry.

The majority of these claims are covered by insurance.

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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, during the six months ended June 30, 2022 and 2021, we did no t declare dividends.

Accordingly, during the nine months ended September 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 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

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

Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2022 Accumulated Other Comprehensive Loss for the Nine Months Ended September 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

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Ending balance $ ( 795,014 ) $ ( 21,844 ) $ 24,381 $ ( 792,477 ) $ ( 602,005 ) $ ( 61,794 ) $ ( 12,025 ) $ ( 675,824 )

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):

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and nine months ended September 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 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

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

Comprehensive Loss

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

Fair Value Measurements at September 30, 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 June 30, 2022 and December 31, 2021.

The Company did not use any Level 3 inputs as of September 30, 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 and accrued expenses approximate fair value at June 30, 2022 and December 31, 2021.

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

Fair Value Measurements at September 30, 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 June 30, 2022 and December 31, 2021.

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

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

(4) Consists of interest rate swaps and fuel swaps.

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

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

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

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

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

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

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

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

Fair Value Measurements at September 30, 2022

Description Total Carrying Amount Total Fair Value Level 3 Total Impairment for

the Nine Months ended September 30, 2022 (1)

Long-lived assets — — — 10,186

Total — — — 10,186

(1) Amount is primarily composed of construction in progress assets that were impaired during the three months ended September 30, 2022 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.

Fair Value Measurements at December 31, 2021

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

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

As of September 30, 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 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.

As of September 30, 2022, we had counterparty credit risk exposure under our derivative instruments of $ 38.2 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks.

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

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

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

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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 June 30, 2022 and December 31, 2021, approximately 71.3 % and 65.7 %, respectively, of our debt was effectively fixed-rate debt.

At September 30, 2022 and December 31, 2021, approximately 75.3 % 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.

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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 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

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

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

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

Unsecured senior notes 650,000 November 2022 5.25 % 3.63 % 3.79 %

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

During the quarter ended September 30, 2022, we redeemed our 5.25 % senior unsecured notes due 2022 in full and terminated the related interest rate swap agreements, which resulted in the dedesignation of the fair value hedges and recognition of an immaterial loss representing the fair value hedge carrying amount adjustment on these notes.

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

At September 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 September 30, 2022 (in thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate as of September 30, 2022

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 June 30, 2022.

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

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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 as of June 30, 2022 and December 31, 2021 was $ 2.7 billion and $ 2.9 billion, respectively.

The notional amount of interest rate swap agreements related to outstanding debt as of September 30, 2022 and December 31, 2021 was $ 2.1 billion and $ 2.9 billion, respectively.

Foreign Currency Exchange Rate Risk

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

As of 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.

As of September 30, 2022, the aggregate cost of our ships on order was $ 9.1 billion, of which we had deposited $ 0.7 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.

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

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.

At September 30, 2022 and December 31, 2021, approximately 54.4 % 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 second quarter of 2022, we maintained an average of approximately $ 1.3 billion of these foreign currency forward contracts.

During the third quarter of 2022, we maintained an average of approximately $ 1.2 billion of these foreign currency forward contracts.

These instruments are not designated as hedging instruments.

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.

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.

For the quarters ended September 30, 2022 and 2021, changes in the fair value of the foreign

currency forward contracts resulted in losses of $ 88.4 million and $ 12.9 million, respectively, which offset gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $ 84.0 million and $ 13.2 million, respectively.

For the nine months ended September 30, 2022 and 2021, changes in the fair value of the foreign currency forward contracts resulted in losses of $ 176.3 million and $ 25.9 million, respectively, which offset gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $ 169.7 million and $ 17.9 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.

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of September 30, 2022 and December 31, 2021 was $ 2.4 billion and $ 3.4 billion, respectively.

Non-Derivative Instruments

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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.

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 367.0 million, or approximately $ 359.6 million, as of September 30, 2022.

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

Fuel Price Risk

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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 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.

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 our 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.

For the nine months ended September 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.

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for further discussion on risks related to COVID-19.

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:

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

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

Fuel Swap Agreements

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

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

Designated as hedges:

3 unchanged sentences

Fuel Swap Agreements

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

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

Designated hedges as a % of projected fuel purchases:

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Fuel Swap Agreements

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

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

Not designated as hedges:

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2022(1) 94,382 231,900

(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 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.

(1) As of September 30, 2022, 47,191 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 47,191 metric 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 September 30, 2022, there was $ 9.8 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 June 30, 2022 As of December 31, 2021 Balance Sheet Location As of June 30, 2022 As of December 31, 2021

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

Fair Value Fair Value Fair Value Fair Value

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Non-derivative instrument designated as

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

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

Foreign currency debt Current portion of debt $ 57,211 $ 75,518

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Income on Hedged Item

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

Quarter Ended September 30, 2022 Quarter Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021 Quarter Ended September 30, 2022 Quarter Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Interest rate swaps Interest expense (income), net of interest capitalized $ 966 $ 383 $ ( 3,569 ) $ 148 $ ( 4,417 ) $ 2,100 $ 4,534 $ 7,098

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

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

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

Current portion of debt and Long-term debt $ — $ 655,502 $ — $ 6,428

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Comprehensive Loss on Derivatives

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

Quarter Ended September 30, 2022 Quarter Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Interest rate swaps $ 55,016 $ 1,534 $ 159,132 $ 29,228

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

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

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

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

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

Fair value at June 30, 2022 $ —

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

Fair value at September 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):

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Non-derivative instruments under ASC 815-20 Net

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

Investment Hedging Relationships Quarter Ended September 30, 2022 Quarter Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Foreign Currency Debt $ 22,464 $ 2,585 $ 42,023 $ 5,593

$ 22,464 $ 2,585 $ 42,023 $ 5,593

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.

There was no amount recognized in income (ineffective portion and amount excluded from effectiveness testing) for the quarters and nine months ended September 30, 2022 and September 30, 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 June 30, 2022 Quarter Ended June 30, 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021

Income on Derivatives Quarter Ended September 30, 2022 Quarter Ended September 30, 2021 Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Foreign currency forward contracts Other income (expense) $ ( 88,440 ) $ ( 12,880 ) $ ( 176,322 ) $ ( 25,854 )

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Our current interest rate derivative instruments require us to post collateral if our Standard & Poor’s and Moody’s credit ratings fall below specified levels.

Specifically, under most of our agreements, if on the fifth anniversary of executing a derivative instrument, or on any succeeding fifth-year anniversary, our credit ratings for our senior unsecured debt is rated below BBB- by Standard & Poor’s and Baa3 by Moody’s, then the counterparty will periodically have the right to demand that we post collateral in an amount equal to the difference between (i) the net market value of all derivative transactions with such counterparty that have reached their fifth year anniversary, to the extent negative, and (ii) the applicable minimum call amount.

between (i) the net market value of all derivative transactions with such counterparty that have reached their fifth year anniversary, to the extent negative, and (ii) the applicable minimum call amount.

The amount of collateral required to be posted will change as, and to the extent, our net liability position increases or decreases by more than the applicable minimum call amount.

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

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.

As of September 30, 2022, our senior unsecured debt credit rating was B by Standard & Poor's and B3 by Moody's.

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

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

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