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Item 7. Management’s Discussion and Analysis

2023-02-23 compared with 2022-03-01 · 351 added, 418 removed, 281 unchanged (73% of the section changed)

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Cautionary Note Concerning Forward-Looking Statements

The discussion under this caption “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this document, includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

The discussion under this caption “Management's Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Annual Report on Form 10-K, includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

All statements other than statements of historical fact, including statements regarding our expectations for future periods, business and industry prospects or future results of operations or financial position, made in this Annual Report on Form 10-K are forward-looking.

Words such as “anticipate,” “believe,” “considering,” “could,” “driving,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “will” and similar expressions are intended to further identify any of these forward-looking statements.

Words such as “anticipate,” “believe,” “considering,” “could,” “driving,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “will”, "would", and similar expressions are intended to further identify any of these forward-looking statements.

Forward-looking statements reflect management's current expectations, but they are based on judgments and are inherently uncertain.

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Examples of these risks, uncertainties and other factors include, but are not limited to, those discussed in this Annual Report on Form 10-K and, in particular, the risks discussed under the caption "Risk Factors” in Part I, Item 1A herein.

All forward-looking statements made in this Annual Report on Form 10-K speak only as of the date of this document.

All forward-looking statements made in this Annual Report on Form 10-K speak only as of the date of this filing.

Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

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• a discussion of our results of operations for the year ended December 31, 2022 compared to the same period in 2021;

• a discussion of our business outlook, and

• a discussion of our liquidity and capital resources, including our future capital and contractual commitments and potential funding sources.

A discussion of our results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019 is included in Part II.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10 -K for the year ended December 31, 2020 , f iled with the SEC on February 26, 2021 and is incorporated by reference into this Form 10-K.

• a discussion of our liquidity and capital resources, including our future capital and material cash requirements and potential funding sources.

A discussion of our results of operations, and sources and uses of cash for the year ended December 31, 2021 compared to the year ended December 31, 2020 is included in Part II.

Management's Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the year ended December 31, 2021 , filed with the SEC on March 1, 2022 and is incorporated by reference into this Form 10-K.

Critical Accounting Policies and Estimates

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We believe our most critical accounting policies and estimates are as follows:

Liquidity and COVID-19

The effects of COVID-19 have had and continue to have a material negative impact on our operations, financial results and liquidity.

The full extent of the impact will be determined by the length of time COVID-19 influences our industry and our gradual return to service.

Given the ongoing effects of COVID-19 on our operations and global bookings, we have identified the estimation of our future liquidity requirements as a critical accounting policy.

• Expected continued gradual resumption of cruise operations;

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

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

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

The assumptions used to estimate our liquidity requirements are frequently and continuously evaluated because of the unprecedented environment that we are experiencing due to COVID-19.

In addition, the magnitude, duration and speed of the global pandemic continues to be uncertain.

As a result, we have made reasonable estimates and judgments of the impact of COVID-19 on our liquidity within our financial statements and there may be changes to those estimates in future periods.

We have taken and will continue to take actions to improve our liquidity, including:

• Reduction of capital expenditures;

• Reduction of operating expenses in 2020 and 2021 during the suspension of our global cruise operations (including furloughing staff and laying up vessels);

• Amending credit agreements to defer payments and covenant requirements, as well as extend maturity dates;

• Raising capital through debt and stock issuances;

• Suspending dividend payments.

Management's Plan and Liquidity

In the face of the global pandemic impact of COVID-19, we paused our guest cruise operations in March 2020 and began resuming guest cruise operations in 2021, with our full fleet in service by June 2022.

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

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

• Expected timing of cash collections for cruise bookings;

• Expected sustained increase in revenue per available passenger cruise day;

• Expected increase in occupancy levels, reaching historical levels in the spring of 2023;

• Inflationary increases to our operating costs, mostly impacting the expected cost of fuel and food as compared to 2019.

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.

Ship Accounting

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We do not identify and track depreciation by ship component systems, but instead utilize these estimates to determine the net cost basis of assets replaced or refurbished.

Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the shorter of the improvements' estimated useful lives or that

of the associated ship.

Improvement costs that we believe add value to our ships are capitalized as additions to the ship and depreciated over the shorter of the improvements' estimated useful lives or that of the associated ship.

The estimated cost and accumulated depreciation of replaced or refurbished ship components are written off and any resulting losses are recognized within Cruise operating expenses in our Consolidated Statements of Comprehensive Loss.

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The activities associated with those drydocking costs cannot be performed while the vessel is in service and, as such, are done during a drydock as a planned major maintenance activity.

The significant deferred drydock costs consist of hauling and wharfage services provided by the drydock facility, hull inspection and related activities (e.g., scraping, pressure cleaning, bottom painting), maintenance to steering propulsion, thruster equipment and ballast tanks, port services such as tugs, pilotage and line handling, and freight associated with these items.

significant deferred drydock costs consist of hauling and wharfage services provided by the drydock facility, hull inspection and related activities (e.g., scraping, pressure cleaning, bottom painting), maintenance to steering propulsion, thruster equipment and ballast tanks, port services such as tugs, pilotage and line handling, and freight associated with these items.

We perform a detailed analysis of the various activities performed for each drydock and only defer those costs that are directly related to planned major maintenance activities necessary to maintain Class.

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If our ships were estimated to have no residual value, depreciation expense for 2022 would have increased by approximately $307.6 million.

We have evaluated our estimated ship useful lives and projected residual values in light of our current environment and determined that there are no changes to these estimates based on our gradual return to service.

Business Combinations

On July 31, 2018, we acquired a 66.7% equity stake ("the 2018 acquisition") in Silversea Cruises, previously known as Silversea Cruises Holding Ltd., an ultra-luxury and expedition cruise line, from Heritage Cruise Holding Ltd.

("Heritage"), previously known as Silversea Cruises Group Ltd.

The purchase price for the 2018 acquisition consisted of $1.02 billion in cash, net of assumed liabilities, and contingent consideration due to Heritage.

The fair value of the contingent consideration at the time of the 2018 acquisition was $44.0 million.

Changes to the fair value of the contingent consideration were recorded in our results of operations, if any, in the period of the change prior to its termination.

On July 9, 2020, we acquired the remaining 33.3% interest in Silversea Cruises that we did not already own (the "noncontrolling interest") from Heritage.

As a result of the acquisition of the noncontrolling interest, Silversea Cruises is now a wholly owned cruise brand.

Refer to Note 1.

General to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information regarding acquisition of Silversea Cruises' noncontrolling interest.

We account for business combinations in accordance with ASC 805, Business Combinations , by applying the acquisition method of accounting.

The acquisition method of accounting requires that we record the assets acquired and liabilities assumed, and the noncontrolling interest, if any, at their respective fair values at the acquisition date.

Goodwill is recognized as the excess of the purchase price over the fair value of the net assets acquired.

Significant estimates and assumptions are made by management to value such assets and liabilities based on third party valuations such as appraisals or internal valuations based on discounted cash flow analyses or other valuation techniques.

Although we believe that those estimates and assumptions are

reasonable and appropriate, they are inherently uncertain and subject to change.

If during the measurement period (not to exceed one year), additional information is obtained about facts and circumstances that existed as of the acquisition date related to the fair value of the assets acquired and liabilities assumed, we may adjust our estimates to account for subsequent adjustments to the provisional amounts recognized at the acquisition date, resulting in an offsetting adjustment to the goodwill associated with the business acquired.

Our purchase price measurement period for the Silversea Cruises 2018 acquisition was closed during 2019.

Uncertain tax positions and tax-related valuation allowances are initially established in connection with a business combination as of the acquisition date.

Additionally, any contingent consideration is estimated at fair value at the acquisition date.

Liability-classified contingent consideration is remeasured each reporting period, with changes in fair value recognized in earnings until the contingent consideration is settled.

We have evaluated our estimated ship useful lives and projected residual values in light of our current environment and determined that there are no changes to these estimates.

Valuation of Goodwill, Indefinite-Lived Intangible Assets and Long-Lived Assets

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The estimation of fair value utilizing discounted expected future cash flows includes numerous uncertainties which require our significant judgment when making assumptions of expected revenues, operating costs, marketing, selling and administrative expenses, interest rates, ship additions and retirements as well as assumptions regarding the cruise vacation industry's competitive environment and general economic and business conditions, among other factors.

The principal assumptions used in the discounted cash flow model for our 2021 impairment assessments were:

• Forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries, and terminal growth rate;

The principal assumptions used in the discounted cash flow model for our 2022 impairment assessment consisted of:

• Forecasted revenues per available passenger cruise day;

• Occupancy rates from existing and expected ship deliveries;

• Vessel operating expenses;

• Terminal growth rate;

• Weighted average cost of capital (i.e., discount rate).

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2017-04, Intangibles - Goodwill and Other (Topic 350) – Simplifying the Test for Goodwill Impairment , if the fair value of the reporting unit is less than the carrying value of its net assets, an impairment is recognized based on the amount by which the carrying value of a reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to such reporting unit.

Refer to Note 4 .

Goodwill to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information on goodwill.

The impairment review for indefinite-life intangible assets can be performed using a qualitative or quantitative impairment assessment.

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We estimate the fair value of these assets using a discounted cash flow model and various valuation methods depending on the nature of the intangible asset, such as the relief-from-royalty method, for trademarks and trade names.

The principal assumptions used in the discounted cash flow model for our 2021 impairment assessments were:

• Forecasted net revenues, primarily the timing of returning to normalized operations, occupancy rates from existing and expected ship deliveries and terminal growth rate;

The principal assumptions used in the discounted cash flow model for our 2022 impairment assessment consisted of:

• Forecasted revenues per available passenger cruise day;

• Occupancy rates from existing and expected ship deliveries;

• Terminal growth rate;

• Royalty rate;

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Intangible Assets to our consolidated financial statements under Item 8.

Financial Statements and Supplemental Data for further information on indefinite-life intangible assets.

We review our ships and other long-lived assets for impairment whenever events or changes in circumstances indicate, based on recent and projected cash flow performance and remaining useful lives, that the carrying value of these assets may not be fully recoverable.

Financial Statements and Supplementary Data for further information on indefinite-life intangible assets.

We review our ships and other long-lived assets, including right-of-use assets for impairment whenever events or changes in circumstances indicate, based on recent and projected cash flow performance and remaining useful lives, that the carrying value of these assets may not be fully recoverable.

We evaluate asset impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

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Property and Equipment to our consolidated financial statements under Item 8.

Financial Statements and Supplemental Data for further information on determination of fair value for long-lived assets.

Financial Statements and Supplementary Data for further information on determination of fair value for long-lived assets.

We estimate fair value based on quoted market prices in active markets, if available.

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Accordingly, we estimate the fair value of a reporting unit and an indefinite-life intangible asset using an expected present value technique.

As a result of our voluntary suspension of global cruise operations effective March 2020 in response to the COVID-19 outbreak and our gradual resumption of cruise operations during 2021, we performed interim impairment evaluations, in addition to our annual impairment reviews, of certain of our goodwill, indefinite-lived intangible assets and long-lived assets in connection with the preparation of our 2021 and 2020 quarterly and annual financial statements, as further discussed below.

Royal Caribbean International Reporting Unit

We performed interim impairment evaluations of Royal Caribbean International’s goodwill in connection with the preparation of our quarterly financial statements for the periods ended March 31, 2020 and June 30, 2020 due to the significant impact that COVID-19 had on our projected cash flows and triggering events identified in those quarters.The fair value of the Royal Caribbean International reporting unit as of March 31, 2020 was determined using a probability-weighted discounted cash flow model and for June 30, 2020 we used a probability-weighted discounted cash flow model in combination with a market-based valuation approach.

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

We did not perform an interim impairment evaluation of Royal Caribbean International's goodwill subsequent to the quarter ended June 30, 2020 during 2020 or 2021, as no triggering events were identified.

During the fourth quarters of 2021 and 2020, we performed our annual impairment review of goodwill for Royal Caribbean International's reporting unit.

We did not perform qualitative assessments but instead proceeded directly to the goodwill impairment tests.

As of November 30, 2021, the fair value of the Royal Caribbean International reporting unit was determined using a discounted cash flow model in combination with a market-based valuation approach.

As November 30, 2020, we used a probability-weighted discounted cash flow model in combination with a market-based valuation approach.

As a result of the tests, we determined the fair value of the Royal Caribbean International reporting unit exceeded its carrying value by approximately 38% and 14% as of November 30, 2021 and 2020, respectively, resulting in no impairment to Royal Caribbean International's goodwill.

The carrying value of goodwill attributable to our Royal Caribbean reporting unit was $296.5 million and $296.6 million as of December 31, 2021 and 2020, respectively.

During the fourth quarter of 2022, we performed a qualitative assessment of the Royal Caribbean International reporting unit.

Based on our qualitative assessment, we concluded that it was more-likely-than-not that the estimated fair value of the Royal Caribbean International reporting unit exceeded its carrying value and thus, we did not proceed to the two-step goodwill impairment test.

No indicators of impairment exist primarily because the reporting unit's fair value has consistently exceeded its carrying value by a significant margin and forecasts of operating results expected to be generated by the reporting unit appear sufficient to support its carrying value.

As of December 31, 2022, the carrying amount of goodwill attributable to our Royal Caribbean reporting unit was $296.4 million.

We did not perform interim impairment evaluations of Royal Caribbean International's goodwill during 2022 as no triggering events were identified.

Silversea Cruises Reporting Unit

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

As a result of these analyses, we determined that the carrying value of the Silversea Cruises reporting unit exceeded its fair value.

Similarly, we determined that the carrying value of Silversea Cruises’ trade name exceeded its fair value.

Accordingly, upon the completion of the impairment tests, we recognized impairment charges of $576.2 million and $30.8 million for goodwill and the trade name, respectively, during the quarter ended March 31, 2020.

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

We did not perform an interim impairment evaluation of Silversea Cruises's goodwill or trade names subsequent to the quarter ended March 31, 2020 during 2020 or 2021, as no triggering events were identified.

During the fourth quarters of 2022 and 2021, we performed our annual impairment review of Silversea Cruises goodwill.

We did not perform qualitative assessments but instead proceeded directly to the goodwill impairment tests.

As of November 30, 2021, the fair value of the Silversea Cruises reporting unit was determined using a discounted cash flow model in combination with a market-based valuation approach.

As of November 30, 2020, we used a probability-weighted discounted cash flow model in combination with a market-based valuation approach.

As a result of the tests, we determined the fair value

of the Silversea Cruises reporting unit exceeded its carrying value by approximately 35% and 12% as of November 30, 2021 and 2020, respectively, resulting in no impairment to Silversea Cruises' goodwill.

The carrying value of goodwill attributable to our Silversea Cruises reporting unit was $508.6 million as of December 31, 2021 and December 31, 2020.

During the fourth quarters of 2021 and 2020, we performed our annual impairment reviews of Silversea Cruises trade name.

As of November 30, 2022, and November 30, 2021, the fair value of the Silversea Cruises reporting unit was determined using a discounted cash flow model in combination with a market-based valuation approach.

As a result of the tests, we determined the fair value of the Silversea Cruises reporting unit exceeded its carrying value by approximately 26% and 35% as of November 30, 2022 and 2021, respectively, resulting in no impairment to Silversea Cruises' goodwill.

The carrying value of goodwill attributable to our Silversea Cruises reporting unit was $508.6 million as of December 31, 2022 and 2021.

During the fourth quarters of 2022 and 2021, we performed our annual impairment reviews of the Silversea Cruises trade name.

As a result of the quantitative tests, we determined that the fair value of the Silversea Cruises' trade name exceeded its carrying value by approximately 25% and 19%, as of November 30, 2022 and November 30, 2021, respectively, resulting in no impairment to Silversea Cruises' tr ade name.

As of December 31, 2022 and 2021, the carrying value of indefinite-life intangible assets was $321.5 million, which primarily relates to the Silversea Cruises trade name.

Long-lived Assets

Events surrounding the COVID-19 pandemic negatively impacted the expected undiscounted cash flows of certain of our long-lived assets.

We evaluated these assets during the years ended 2021 and 2020 pursuant to our long-lived asset impairment test which resulted in no impairment charges for the year ended December 31, 2021 and $464.2 million of impairment charges during the year ended December 31, 2020 to write down certain ships operated by our Global Brands to their estimated fair values.

The amount also includes impairment charges for ships that our Global Brands disposed of during 2020 as well as the three Azamara ships.

We also recorded impairment charges of $171.3 million during the year ended December 31, 2020 for the three ships that we chartered to Pullmantur Holdings prior to the filing of the Pullmantur reorganization.

During the quarter ended September 30, 2020, we sold the ships to third parties for amounts approximating their carrying values and no further impairment was recorded.

Refer to Note 6.

Property and Equipment and Note 7 .

Other Assets to our consolidated financial statements under Item 8.

Financial Statements and Supplemental Data for further information regarding impairment of the ships and Pullmantur's reorganization.

During the years ended December 31, 2021 and 2020, we also determined that certain construction in progress projects would be reduced in scope or would no longer be completed due to the impact COVID-19 has had on our operations.

This led to impairment charges of construction in progress assets of $51.6 million and $91.5 million during 2021 and 2020, respectively, as reported in Property and equipment, net.

In addition, during the year ended December 31, 2020, we identified that the undiscounted cash flows for certain right-of-use assets were less than their carrying values due to the negative impact of COVID-19.

We evaluated these assets pursuant to our long-lived asset impairment test, resulting in an impairment charge of $65.9 million to write down these assets to their estimated fair values during the year ended December 31, 2020.

For the year ended December 31, 2021, there was no resulting impairment to right-of-use assets.

The combined impairment charge of $55.2 million for the year ended December 31, 2021, related to construction in progress and other long-lived assets, and $1.5 billion for the year ended December 31, 2020, primarily related to our goodwill, trademarks and trade names, vessels, construction in progress, and right-of-use assets, are reported within Impairment and credit losses within our consolidate d statements of comprehensive (loss) income.

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

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

Refer to Risk Factors in Part 1, Item 1A.

for further discussion on risks related to the COVID-19 pandemic.

We did not perform interim impairment evaluations of Silversea Cruises's goodwill or trade names during 2022 and 2021, as no triggering events were identified.

Derivative Instruments

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Fair Value Measurements and Derivative Instruments to our consolidated financial statements under Item 8.

Financial Statements and Supplementary

Data for more information on related authoritative guidance, the Company's hedging programs and derivative financial instruments.

Financial Statements and Supplementary Data for more information on related authoritative guidance, the Company's hedging programs and derivative financial instruments.

On a regular basis, we enter into foreign currency forward contracts, interest rate swaps, fuel swaps and options with third-party institutions in over-the-counter markets.

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We believe it is unlikely that materially different estimates for the fair value of our foreign currency forward contracts, interest rate swaps, fuel swaps and options would be derived from other appropriate valuation models using similar assumptions, inputs or conditions suggested by actual historical experience.

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

During the year ended December 31, 2021, we discontinued cash flow hedge accounting on 0.2 million metric tons of our fuel swap agreements maturing in 2021 and 2022, which resulted in the reclassification of a net $0.7 million loss from Accumulated other comprehensive loss to Other income (expense) .

During the year ended December 31, 2020, we discontinued cash flow hedge accounting on 0.6 million metric tons of our fuel swap agreements maturing in 2020 and 2021, which resulted in the reclassification of a net $104.4 million loss from Accumulated other comprehensive loss to Other income (expense) .

Changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued are currently recognized in Other income (expense) each reporting period through the maturity dates of the fuel swaps.

Future s uspension of our operations or modifications to our itineraries may affect our expected forecasted fuel purchases which could result in further discontinuance of fuel swap cash flow hedge accounting and the reclassification of deferred gains or losses from Accumulated other comprehensive loss into earnings .

Refer to Risk Factors in Part 1, Item 1A.

for further discussion on risks related to the COVID-19 pandemic.

Contingencies—Litigation

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Our revenues are seasonal based on demand for cruises.

Demand is strongest for cruises during the Northern Hemisphere's summer months and holidays.

In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have focused on deployment to the Caribbean, Asia and Australia during that period.

Demand has historically been strongest for cruises during the Northern Hemisphere's summer months and holidays.

In order to mitigate the impact of the winter weather in the Northern Hemisphere and to capitalize on the summer season in the Southern Hemisphere, our brands have historically focused on deployment to the Caribbean, Asia and Australia during that period.

This seasonal trend was disrupted with the voluntary suspension of our global cruise operations effective March 2020 in response to the COVID-19 outbreak.

We resumed our global cruise operations commencing in the second half of 2021, with our full fleet in service by June 2022.

Since our full fleet is in service, we expect to return to seasonal trends

Financial Presentation

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• Onboard and other revenues , which consist primarily of revenues from the sale of goods and/or services onboard our ships not included in passenger ticket prices, cancellation fees, sales of vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities.

Onboard and other revenues also include revenues we receive from independent third party concessionaires that pay us a percentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships, as well as revenues received for our bareboat charter, procurement and management related services we perform on behalf of our unconsolidated affiliates.

Onboard and other revenues also include revenues we receive from independent third party concessionaires that pay us a percentage of their revenues in exchange for the right to provide selected goods and/or services onboard our ships, as well as revenues received for procurement and management related services we perform on behalf of our unconsolidated affiliates.

Cruise Operating Expenses

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As discussed in more detail herein, certain of these metrics are non-GAAP financial measures.

These non-GAAP financial measures are provided along with the related GAAP financial measures as we believe they provide useful information to investors as a supplement to our consolidated financial statements, which are prepared and presented in accordance with GAAP.

accordance with GAAP.

The presentation of non-GAAP financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Adjusted (Loss) Earnings per Share ("Adjusted EPS") represents Adjusted Net (Loss) Income attributable to Royal Caribbean Cruises Ltd.

Adjusted EBITDA is a non-GAAP measure that represents EBITDA (as defined below) excluding certain items that we believe adjusting for is meaningful whe n assessing our profitability on a comparative basis.

For the p eriods presented, these items included (i) other expenses, which includes our loss contingency in connection with the ongoing Havana Docks litigation recorded in 2022;

(ii) impa irment and credit losses;

(iii) restru cturing charges and other initiative expenses;

(iv) equity investment asset impairments;

(v) net insurance recoveries or costs related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas ;

(vi) Pullmantur reorganization settlement;

(vii) the net gain recognized in 2021 in relation to the sale of the Azamara brand;

(viii) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.

and (ix) transaction costs related to the 2018 Silversea Cruises acquisition.

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

to Adjusted EBITDA is provided below under Results of Operations.

Adjusted Loss per Share ("Adjusted EPS") is a non-GAAP measure that represents Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

(as defined below) divided by weighted average shares outstanding or by diluted weighted average shares outstanding, as applicable.

We believe that this non-GAAP measure is meaningful when assessing our performance on a comparative basis.

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

represents net (loss) income less net income attributable to noncontrolling interest excluding certain items that we believe adjusting for is meaningful when assessing our

performance on a comparative basis.

For the periods presented, these items included (i) loss on the extinguishment of debt;

(ii) the amortization of non-cash debt discount on our convertible notes;

(iii) the estimated cash refund expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A.

reorganization;

(iv) impairment and credit losses recognized as a result of the impact of COVID-19;

(v) equity investment asset impairments;

(vi) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas, or for 2019, incidental costs, net of insurance recoveries, related to drydock structure incidents Grand Bahama Shipyard;

(vii) restructuring charges incurred in relation to the reduction in our U.S.

workforce and other initiative expenses, and the reorganization of our international sales and marketing structure in 2019;

(viii) the change in the fair value in the Silversea Cruises contingent consideration, the amortization of the Silversea Cruises intangible assets resulting from our acquisition of a 66.7% interest in Silversea Cruises in 2018, and transaction and integration costs related to the 2018 Silversea Cruises acquisition;

(ix) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.

(previously known as Silversea Cruises Group Ltd.) noncontrolling interest in Silversea Cruises, which noncontrolling interest we acquired on July 9, 2020;

(x) the net gain recognized in the first quarter of 2021 in relation to the sale of the Azamara brand;

(xi) currency translation losses recognized during the second quarter of 2020, in connection with the ships classified as assets held-for-sale that were previously chartered to Pullmantur;

and, (xii) the net loss recognized in the fourth quarter of 2021 related to the elimination of the three-month reporting lag for Silversea Cruises.

A reconciliation of Loss per Share to Adjusted Loss per share is provided below under Results of Operations.

Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

is a non-GAAP measure that represents net loss less net income attributable to noncontrolling interest, excluding certain items that we believe adjusting for is meaningful when assessing our performance on a comparative basis.

For the periods presented, these items included (i) loss on the extinguishment of debt; (ii) the amortization of non-cash debt discount on our convertible notes; (iii) the estimated cash refund expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A.

reorganization; (iv) impairment and credit losses; (v) equity investment asset impairments; (vi) net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas; (vii) restructuring charges and other initiative expenses ; (viii) the amortization of the Silversea Cruises intangible assets resulting from the Silversea Cruises acquisition in 2018;

for 2020, the change in the fair value in the Silversea Cruises contingent consideration;(ix) the noncontrolling interest adjustment to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.

(previously known as Silversea Cruises Group Ltd.) noncontrolling interest in Silversea Cruises, which noncontrolling interest we acquired on July 9, 2020; (x) the net gain recognized in the first quarter of 2021 in relation to the sale of the Azamara brand; (xi) currency translation losses recognized during the second quarter of 2020, in connection with the ships classified as assets held-for-sale that were previously chartered to Pullmantur; (xii) the net loss recognized in the fourth quarter of 2021 related to the elimination of the three-month reporting lag for Silversea Cruises;

and (xiii) loss contingency recorded in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs .

A reconciliation of Net Loss attributable to Royal Caribbean Cruises Ltd.

to Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

is provided below under Results of Operations.

Available Passenger Cruise Days (" APCD ") is our measurement of capacity and represents double occupancy per cabin multiplied by the number of cruise days for the period, which excludes canceled cruise days and cabins not available for sale.

We use this measure to perform capacity and rate analysis to identify our main non-capacity drivers that cause our cruise revenue and expenses to vary.

Occupancy ("Load factor") , in accordance with cruise vacation industry practice, occupancy is calculated by dividing Passenger Cruise Days (as defined below) by APCD.

EBITDA is a non-GAAP measure that represents of Net Income (Loss) attributable to Royal Caribbean Cruises Ltd.

excluding (i) interest income;

(ii) interest expense, net of interest capitalized;

(iii) depreciation and amortization expenses;

and (iv) income tax benefit or expense.

We believe that this non-GAAP measure is meaningful when assessing our operating performance on a comparative basis.

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

to EBITDA is provided below under Results of Operations.

Gross Cruise Costs represent the sum of total cruise operating expenses plus marketing, selling and administrative expenses.

Carbon Intensity is our measurement of carbon dioxide emissions per gross tonne nautical mile (well-to-wake).

Net Cruise Costs and Net C ruise Costs Excluding Fuel are non-GAAP measures that represent Gross Cruise Costs excluding commissions, transportation and other expenses and onboard and other expenses and, in the case of Net Cruise Costs Excluding Fuel, fuel expenses (each of which is described above under the Description of Certain Line Items heading).

In measuring our ability to control costs in a manner that positively impacts net income, we believe changes in Net Cruise Costs and Net Cruise Costs Excluding Fuel to be the most relevant indicators of our performance.

A reconciliation of Gross Cruise

Costs to Net Cruise Costs and Net Cruise Costs Excluding Fuel is provided below under Results of Operations.

For the 2022 period presented, Net Cruise Costs and Net Cruise Costs Excluding Fuel excludes restructuring and other initiative expenses.

Occupancy ("Load factor") , in accordance with cruise vacation industry practice, is calculated by dividing Passenger Cruise Days (as defined below) by APCD.

A percentage in excess of 100% indicates that three or more passengers occupied some cabins.

Passenger Cruise Days represent the number of passengers carried for the period multiplied by the number of days of their respective cruises.

Although discussed in prior periods, we do not disclose or reconcile in this report our Gross Yields, Net Yields, Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs Excluding Fuel, as defined in our Annual Report on Form 10-K for the year ended December 31, 2019.

Although discussed in prior periods, we did not disclose or reconcile in this report our Gross Yields and Net Yields, as defined in our Annual Report on Form 10-K for the year ended December 31, 2019.

Historically, we have utilized these financial metrics to measure relevant rate comparisons to other periods.

However, our 2020 and 2021 reduction in capacity and revenues and the shift in the nature of our running costs, due to the impact of the COVID-19 pandemic on our operations, do not allow for a meaningful analysis and comparison of these metrics and as such these metrics have been excluded from this report.

Recent Developments:

Return to Healthy Sailing

We have 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 outbreak.

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

By the end of December 2021, we operated 50 of our Global and Partner Brand ships, representing over 85% of worldwide capacity, and carried approximately 1.3 million guests since we resumed operations.

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

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

or globally or for other reasons, we may determine it necessary to cancel or modify certain of our Global Brands’ cruise sailings.

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

Business - Regulation for an update on the U.S.

Centers for Disease Control and Prevention's ("CDC") Framework for Conditional Sailing Order.

Continued fleet ramp-up

We experienced service disruptions and cancelled several sailings in the first quarter of 2022 due to the impact from the Omicron variant ("Omicron").

Service disruptions have abated as COVID-19 cases have declined.

Despite these service disruptions and cancellations, the overall trajectory of our return to service remains unchanged.

We expect that by the end of the first quarter of 2022, 53 out of 62 of our Global and Partner Brand ships, including Wonder of the Seas, which was delivered in

January 2022, will have been brought back to service.

Additionally, we expect that the rest of the fleet will return to operations before the summer season.

We expect load factors in the first quarter of 2022 to be lower than initially anticipated due to the Omicron impact on bookings and cancellations, particularly on January sailings.

As such, we anticipate load factors on core itineraries of approximately 60% during the first quarter of 2022, with sequential monthly improvement, and approximately 7.7 million APCDs for the first quarter of 2022.

Core itineraries exclude sailings during the early ramp-up period of up to four weeks and exclude new itineraries implemented during the COVID period.

Additionally, we expect total cash flow from ships in operation in the first quarter to be positive.

Update on Bookings

We experienced a softening in booking volumes and an increase in near-term cancellations as a result of the significant short-term disruptions experienced by the travel industry due to Omicron.

The disruptions intensified during the holiday season and in early January with the spread of the variant.

Load factors for sailings in the first half of 2022 are expected to remain below historical levels, consistent with our return to service schedule, which includes the Omicron impact.

Load factors for sailings in the second half of 2022 continue to be booked within historical ranges, at higher prices with and without FCCs.

We have observed cancellations subside and bookings improve to pre-Omicron levels, and we have adjusted our sales and marketing efforts in anticipation of a delayed and extended WAVE period.

As of December 31, 2021, we had approximately $3.2 billion in customer deposits.

Approximately 32% of the customer deposit balance as of December 31, 2021 is related to FCCs compared to 35% of the customer deposit balance as of September 30, 2021, a positive trend indicating new demand.

Update on Recent Liquidity Actions and Ongoing Uses of Cash

As of December 31, 2021, we had liquidity of approximately $3.5 billion in the form of cash and cash equivalents of $2.7 billion, $0.1 billion of undrawn revolving credit facility capacity, and a $0.7 billion commitment for a 364-day term loan facility available to draw on at any ti me 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 December 31, 2021.

We temporarily applied the net proceeds of the $1.0 billion January 2022 Unsecured Notes to repay borrowings under our revolving credit facilities, bringing our undrawn revolving credit facility capacity to $1.1 billion as of the date of the issuance of this report, from $0.1 billion as of December 31, 2021.

We continue to prioritize and bolster liquidity while taking steps to improve our balance sheet and reduce our interest costs to be well positioned for recovery.

Reduced Operating Expenses

We took significant actions in early 2020 to reduce operating expenses during the suspension of our global cruise operations.

In particular, we:

• significantly reduced ship operating expenses, including crew payroll, food, fuel, insurance and port charges;

• further reduced operating expenses as the Company’s ships were transitioned into various levels of layup with several ships in the fleet transitioning into cold layup;

• significantly reduced marketing and selling expenses;

• reduced and furloughed our workforce, with approximately 23% of our US shoreside employee base being impacted in 2020;

• suspended travel for shoreside employees and instituted a hiring freeze across the organization.

During our ramp up of operations, we have incurred and will continue to incur incremental spend related to bringing ships back to operating status, returning crew members to ships and implementing enhanced health and safety protocols.

We also collected and will continue to collect deposits related to those sailings and for future cruises.

We take into account a number of variables in determining when to bring ships back into service, including deployment opportunities, commercial potential, cost of operations and cash flow.

Capital Expenditures

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

As of December 31, 2021, we anticipate that overall full year capital expenditures, based on our

existing ships on order, will be approximately $3.1 billion for 2022.

This amount does not include any ships on order by our Partner Brands.

We took delivery of Wonder of the Seas during the first quarter of 2022 and expect delivery of Celebrity Beyond during the second quarter of 2022.

For 2023, we have three ship deliveries scheduled:

Icon of the Seas, Celebrity Ascent and Silver Nova .

Debt Maturities, New Financings and Other Liquidity Actions

During the year ended December 31, 2021, we continued to take actions to further improve our liquidity position and manage cash flow.

In particular, we:

• extended the maturity date or termination date, as applicable, of certain of the advances and commitments held by consenting lenders under our $1.0 billion unsecured term loan due April 2022 and our $1.55 billion unsecured revolving credit facility due October 2022, each by 18 months to October 2023 and April 2024, respectively;

• extended the period during which we may draw upon our binding commitment for a $700.0 million 364-day term loan facility by one year, which is now available for draw at any time prior to August 12, 2022;

• issued $1.50 billion of 5.5% senior unsecured notes due in 2028 for net proceeds of approximately $1.48 billion, which were used to repay principal payments on debt maturing or required to be paid in 2021 and 2022, with the remaining for general corporate purposes;

• issued $650.0 million of 4.25% senior unsecured notes due in 2026 for net proceeds of approximately $640.6 million, which were used to fully repay the Silversea Notes, in the amount of $619.8 million, and to pay the related call premiums, accrued interest and fees;

• issued $1.0 billion of 5.50% senior notes due in 2026 for net proceeds of approximately $986.0 million, which were used to replenish our capital as a result of the redemption of a portion of the 11.50% senior secured notes due 2025 in the amount of $928.0 million, and to pay the related premiums and accrued interest;

• amended the credit agreements for the unsecured financings of our first and second Evolution-class ships, increasing their maximum loan amounts by €175.6 million in the aggregate (or approximately $199.7 million based on the exchange rate at December 31, 2021), to finance ship design modifications that incorporate innovative sustainability features and additional premium cabins;

• issued 16.9 million shares of common stock for approximately $1.5 billion;

• amended $4.9 billion of our non-export-credit facilities and certain of our credit card processing agreements to extend the waiver of the financial covenants through and including the third quarter of 2022 and to implement modified covenants for the period starting fourth quarter of 2022 and extending through and including the fourth quarter of 2023;

• amended $6.3 billion of our export-credit facilities to extend the waiver of the financial covenants through and including the fourth quarter of 2022 and defer $1.15 billion of principal payments due between April 2021 and April 2022;

• amended $7.3 billion of outstanding export-credit financing plus committed export-credit facilities to modify financial covenant levels for 2023 and 2024, following the waiver period through and including the fourth quarter of 2022.

Refer to Note 8 .

Debt, Note 10 .

Shareholders' Equity, and Note 17.

Commitments and Contingencies , to our consolidated financial statements under Item 8.

Financial Statements and Supplemental Data for further information on these financing transactions and our debt covenants.

Expected debt maturities for 2022 are $2.2 billion.

We continue to identify and evaluate further actions to enhance our liquidity and support our recovery.

These include and are not limited to further reductions in capital expenditures, operating expenses and administrative costs and additional financings and refinancings.

However, our 2022 and 2021 reduction in capacity and revenues, due to the impact of the COVID-19 pandemic on our operations, do not allow for a meaningful analysis and comparison of these metrics and as such these metrics have been excluded from this report.

For Gross Cruise Costs, Net Cruise Costs, and Net Cruise Costs excluding Fuel we present amounts in constant currency compared to 2019, which is the last year of normalized operations.

Executive Overview

While 2021 proved to be another challenging year for our company and industry, it also marked our successful return to service.

Starting in June, we began our return to cruising with 50 ships back in service by year end, representing more than 85% of our capacity.

We delivered safe and memorable experiences to approximately 1.3 million guests at record guest satisfaction scores.

The out-of-service period in the first half of the year, the costs of returning our ships and crew to operations, the revamping of sales and marketing and the costs to execute on health protocols all had a significant impact on our financial results.

Although we generated a fraction of normal revenue levels in 2021, total revenue per passenger cruise day in the fourth quarter was up 10% compared to record 2019 levels.

The increase was driven by strong onboard revenue performance seen across every revenue stream.

Since resuming operations, our focus has been on the safety and well-being of our guests and crew.

As Delta and Omicron variants started to spread, they created short-term operational challenges as well as an increase in cancellations.

However, our health and safety protocols, including our crew and guest vaccination requirements, proved to be successful as only 0.19% of our guests tested positive for COVID-19.

As infection rates decline and localities lift COVID-19 protocols, we will continue to work closely with health authorities to maintain protocols that promote the health and safety of our guests, crew, and communities we visit.

As part of this commitment, we have opted-in to the CDC’s new voluntary program in the “Highly Vaccinated Ship” category for health and safety protocols.

During 2021, we remained focused on managing costs, improving our balance sheet and preserving liquidity.

We ended the year with approximately $3.5 billion in liquidity, which includes cash and cash equivalents, undrawn revolving credit facility capacity, and a $0.7 billion commitment for a loan facility.

We re-established access to unsecured debt markets and successfully refinanced $2.3 billion of secured or guaranteed high coupon debt, in some instances reducing the coupon by up to 600 basis points.

Given the current environment and anticipated inflationary pressures, we continue to take numerous actions to reshape our cost structure, with a goal of further improving upon our leading pre-COVID margins.

New hardware is a key pillar to supporting our recovery and a driver of quality demand and financial performance.

This past year we successfully took delivery of Celebrity Apex, Odyssey of the Seas and Silver Dawn , all poised to significantly contribute to our yield growth, profitability, and cash generation.

Additionally, we look forward to welcoming two new ships in 2022, Wonder of the Seas and Celebrity Beyond .

We expect to return the full fleet before the summer season of 2022 and load factors to reach pre-COVID levels in the third quarter.

Although Omicron has caused service disruptions, several cancelled sailings and a likely delay in our return to profitability by a few months, we currently expect to be generating net income in the second half of 2022.

As we focus on setting the foundation for a strong recovery and long-term profitable growth, we remain driven to innovate our product and maintain a strong competitive advantage.

We finished the year stronger than we started and continue to manage the challenges related to Omicron, as well as search for further operational opportunities on our journey back to financial health.

2022 was a transitional year filled with numerous accomplishments.

We returned our entire fleet into operations, took delivery of Celebrity Beyond and Wonder of the Seas , and acquired Silver Endeavour .

Additionally, we achieved positive EBITDA and operating cash flow for the year, controlled costs to minimize the impacts of inflation, and saw record shipboard revenues for the year.

Our 2022 Net Loss was $(2.2) billion, or $(8.45) per diluted share, compared to Net Income attributable to Royal Caribbean Cruises Ltd.

of $1.9 billion, or $8.95 per diluted share in 2019, the most recent year of normalized operations.

Adjusted Net Loss for 2022 was $(1.9) billion, or $(7.50) per diluted share, compared to Adjusted Net Income attributable to Royal Caribbean Cruises Ltd.

of $2.0 billion, or $9.54 per diluted share in 2019.

2022 adjusted EBITDA was $711.6 million, compared to adjusted EBITDA of $3.6 billion in 2019.

We started 2022 by operating 51 ships and sailing at 57% load factor in the first quarter of 2022.

We successfully completed the return of our entire fleet into operations during the second quarter and achieved 96% load factors in the third quarter with the Caribbean eclipsing triple digits at close to 105% during the third quarter.

We finished the year sailing at almost 100% load factor in December 2022, with holiday sailings close to 110% during the fourth quarter.

Despite only partially operating for the first half of the year, total revenues were $8.8 billion in 2022, compared to $11.0 billion in 2019.

Load factors for 2022 were 85%, and 96% for the second half of the year.

Additionally, total revenue per passenger cruise day in 2022 was higher than record 2019 levels, driven by strong onboard revenue performance.

Cruise operating expenses increased from $6.1 billion in 2019 to $6.6 billion in 2022.

Gross Cruise Costs per APCD increased 8.2% as-reported and 8.8% in Constant Currency, compared to 2019.

Net Cruise Costs, excluding Fuel, per APCD increased 12.9% as-reported and 13.5% in Constant Currency, compared to 2019.

Our cost-conscious mindset has helped to mitigate the effects of inflation, and we benefited from reduced costs related to health protocols as the year went on.

For the year Net Cruise Costs included $5.97 per APCD of transitory costs related to health protocols, and one-time lagging costs related to fleet ramp up.

2022 also included Galveston terminal construction costs and increased costs associated with CocoCay, which were not present in 2019.

In 2023, we expect our capacity to increase by 14% compared to 2019, despite the reduction in capacity resulting from the divestiture of Azamara and the sale of older ships.

Since 2019 we have welcomed 9 new ships across our five brands, and with the addition of Celebrity Ascent and Silver Nova in 2023 we expect a total of 11 new vessels operating by year end.

These new ships, along with enhanced onboard offerings and continued investment in destinations, are expected to help drive increases in both Net Yields and Total revenues as our capacity expands.

We also plan to continue investing in both more efficient newbuilds and retrofitting our existing fleet with technology to help reach our long-term goals to reduce carbon intensity.

Lastly, we anticipate taking delivery of Icon of the Seas by the end of the year, to begin operating revenue sailings in 2024.

Results of Operations

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and Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

for the year ended December 31, 2021 was $(5.3) billion and $(4.8) billion, or $(20.89) and $(19.19) per share on a diluted basis, respectively, as compared to Net Loss attributable to Royal Caribbean Cruises Ltd.

for the year ended December 31, 2022 was $(2.2) billion and $(1.9) billion, or $(8.45) and $(7.50) per share on a diluted basis, respectively, reflecting our return to full operations, compared to Net Loss attributable to Royal Caribbean Cruises Ltd.

and Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

of $(5.3) billion and $(4.8) billion, or $(20.89) and $(19.19) per share on a diluted basis, respectively, for the year ended December 31, 2021.

• Total revenues, excluding the effect of changes in foreign currency rates, decreased by $686.1 million for the year ended December 31, 2021 compared to the same period in 2020 resulting from a 52.6% decrease in occupancy in 2021 while we gradually returned to service compared to 2020 when the majority of our fleet was operational up through our global suspension in March of 2020.

• The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions, denominated in currencies other than the United States dollar, resulted in an increase in total revenues of $9.5 million for the year ended December 31, 2021 compared to the same period in 2020.

• Total cruise operating expenses, excluding the effect of changes in foreign currency rate, decreased by $114.9 million for the year ended December 31, 2021 compared to the same period in 2020, which reflects the decrease in occupancy mentioned above.

• The effect of changes in foreign currency exchange rates related to our cruise operating expenses, denominated in currencies other than the United States dollar, resulted in an increase in total operating expenses of $7.3 million for the year ended December 31, 2021 compared to the same period in 2020.

• During the year ended December 31, 2021 and 2020, as a result of ongoing impact of the COVID-19 pandemic on our operations and cash flows, we recorded total impairment and credit losses of $82.0 million and $1.6 billion, respectively, related to long-lived assets and credit losses related to our notes receivable, net of recoveries, in 2021, and to goodwill, trademarks and trade names, long-lived assets, including right-of-use assets, and credit losses related to our notes receivable in 2020.

• Effective October 1, 2021, we eliminated the Silversea Cruises three-month reporting lag to be consistent with the fiscal calendar of the Company.

The effect of this change was an increase to net loss of $62.6 million, or a $0.25 per share loss on a basic and diluted basis, and this amount is reported within Other (expense) income in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2021.

• Total revenues, excluding the effect of changes in foreign currency rates, increased by $7.5 billion for the year ended December 31, 2022 as compared to the same period in 2021.

The increase reflects our full return to operations by June 2022 compared to 2021 when the suspension of our global cruise operations was in effect for a substantial portion of our fleet.

APCDs for the year ended December 31, 2022 was 41,197,650 compared to 11,767,441, in the same period in 2021.

• The effect of changes in foreign currency exchange rates related to our passenger ticket and onboard and other revenue transactions, denominated in currencies other than the United States dollar, resulted in a decrease in total revenues of $149.0 million for the year ended December 31, 2022 compared to the same period in 2021.

• Total cruise operating expenses, excluding the effect of changes in foreign currency rate, increased by $4.0 billion for the year ended December 31, 2022 compared to the same period in 2021, which reflects our return to operations in 2022 compared to 2021 when the suspension of our global cruise operations was in effect for the substantial portion of our fleet.

• The effect of changes in foreign currency exchange rates related to our cruise operating expenses, denominated in currencies other than the United States dollar, resulted in a decrease in total operating expenses of $79.5 million for the year ended December 31, 2022 compared to the same period in 2021.

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

To finance the purchases, we borrowed $1.3 billion and €0.7 billion, or approximately $0.7 billion based on the exchange rate at December 31, 2022, respectively, under previously committed unsecured term loans.

Refer to Note 8 .

General to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information on the elimination of the Silversea Cruises reporting lag.

• During the year ended December 31, 2021, we executed and amended various financing arrangements.

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

Wonder of the Seas and Celebrity Beyond entered service in the first and second quarters of 2022, respectively.

• In July 2022, we purchased the Silver Endeavour for our Silversea Cruises brand.

To finance the purchase, we assumed $277 million of debt.

Silver Endeavour entered service in the fourth quarter of 2022.

Refer to Note 8 .

Debt and Note 10 .

Shareholders' Equity , to our consolidated financial statements under Item 8.

Financial Statements and Supplemental Data for further information on our 2021 financing activity.

We reported Net (Loss) Income attributable to Royal Caribbean Cruises Ltd., Adjusted Net (Loss) Income attributable to Royal Caribbean Cruises Ltd., (Loss) Earnings per Share and Adjusted (Loss) Earnings per Share as shown in the following table (in thousands, except per share data):

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

• During the year ended December 31, 2022, we executed and amended various financing arrangements, we refinanced $6.9 billion of 2022 and 2023 maturities, which resulted in a total loss on extinguishment of debt of $93.8 million.

Refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information on our 2022 financing activity.

• During the year ended December 31, 2022, we recorded a loss contingency of $130.0 million inclusive of related legal fees and costs in connection with the ongoing Havana Docks litigation.

Refer to Note 17.

Commitments and Contingencies to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

We reported Net Loss attributable to Royal Caribbean Cruises Ltd., Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd., Loss per Share and Adjusted Loss per Share as shown in the following table (in thousands, except per share data):

Year Ended December 31,

2022 2021 2020

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

$ (5,260,499) $ (5,797,462) $ 1,878,887

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

(4,832,889) (3,924,579) 2,002,847

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

Net Loss attributable to Royal Caribbean Cruises Ltd.

$ (2,155,962) $ (5,260,499) $ (5,797,462)

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

Loss on extinguishment of debt (1) $ 93,810 $ 138,759 $ 41,109

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Equity investment impairment (5) — 31,344 39,735

Oasis of the Seas incident, Grand Bahama's drydock write-off and other incidental expenses (6)

(6,584) (1,938) 35,239

Oasis of the Seas incident (6) — (6,584) (1,938)

Restructuring charges and other initiatives expense (7) 11,625 1,831 51,853

Change in the fair value of contingent consideration and amortization of Silversea Cruises intangible assets related to Silversea Cruises acquisition (8) 6,493 (33,814) 30,675

Amortization of Silversea Cruises intangible assets and change in the fair value of contingent consideration related to Silversea Cruises acquisition (8) 6,493 6,493 (33,814)

Noncontrolling interest adjustment (9) — — 72,331

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Currency translation adjustment losses (11) — — 69,044

Net Loss related to the elimination of the Silversea reporting lag (12) 62,604 — —

Transaction and integration costs related to the Silversea Cruises acquisition (8) — — 2,048

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

Net loss related to the elimination of the Silversea Cruises reporting lag (12) — 62,604 —

Litigation loss contingency (13) 130,033 — —

Adjusted Net Loss attributable to Royal Caribbean Cruises Ltd.

$ (1,913,439) $ (4,832,889) $ (3,924,579)

(Loss) Earnings per Share $ (20.89) $ (27.05) $ 8.97

Adjusted (Loss) Earnings per Share $ (19.19) $ (18.31) $ 9.56

(Loss) Earnings per Share $ (20.89) $ (27.05) $ 8.95

Adjusted (Loss) Earnings per Share $ (19.19) $ (18.31) $ 9.54

Loss per Share $ (8.45) $ (20.89) $ (27.05)

Adjusted Loss per Share $ (7.50) $ (19.19) $ (18.31)

Loss per Share $ (8.45) $ (20.89) $ (27.05)

Adjusted Loss per Share $ (7.50) $ (19.19) $ (18.31)

Weighted-Average Shares Outstanding:

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Diluted 255,011 251,812 214,335

(1) In 2021, represents the net loss on the partial repayment of the 11.50% senior secured notes due 2025, the net gain on the full repayment of the Silversea Notes and the loss on the partial repayment of the $1.55 billion unsecured revolving credit facility.

In 2020, represents the loss on the extinguishment of the $2.2 billion Senior Secured Term Loan.

In 2019, represents the loss on the extinguishment of the $700 million 364-day loan related to the 2018 Silversea Cruises acquisition and the remaining balance of the unsecured term loan originally incurred in 2010 to purchase Allure of the Seas .

(1) Represents net losses related to the early repayment of debt.

For further information regarding the repayment transactions, refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data .

(2) Represents the amortization of non-cash debt discount on our convertible notes.

For further information regarding the adoption of ASU 2020-06 as of January 1, 2022, which impacts the accounting of the non-cash debt discount on convertible notes, refer to Note 2 .

Summary of Significant Accounting Policies to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data .

(3) Represents estimated cash refunds expected to be paid to Pullmantur guests and other expenses incurred as part of the Pullmantur S.A.

reorganization.

(4) In 2021 and 2020, represents asset impairment and credit losses as a result of the impact of COVID-19.

In 2021, amounts are net of the recovery of credit losses recognized in 2020.

(4) Represents asset impairment and credit losses as a result of the impact of COVID-19, with 2022 and 2021 amounts net of the recovery of credit losses previously recognized.

(5) Represents equity investment asset impairment, primarily for our investments in TUI Cruises GmbH in 2021 and Grand Bahama Shipyard in 2020, as a result of the impact of COVID-19.

These amounts are included in Equity investment income (loss) within our consolidated statements of comprehensive income (loss).

(6) In 2021 and 2020, amounts include net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

In 2019, amount includes incidental costs, net of insurance recoveries, of $14.5 million related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas , which were reported primarily within Other operating expenses in our consolidated statements of comprehensive (loss) income for the year ended December 31, 2019;

and $20.7 million regarding the Grand Bahama incident involving one of its drydocks, included in Equity investment income (loss) within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019.

(7) Represents primarily restructuring charges incurred in relation to the reduction in our U.S.

workforce and other initiatives expenses in 2020 and 2021.

Refer to Note 18 .

Restructuring Charges to our consolidated financial statements under item 8.

Financial Statements and Supplementary Data for further information on the restructuring activities.

In 2019, represents primarily the reorganization of our international sales and marketing structure.

(8) Related to the 2018 Silversea Cruises acquisition.

Refer to Note 1 .

General to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for information on the Silversea Cruises acquisition.

workforce and other initiatives expenses.

(8) In 2022 and 2021, represents the amortization of the Silversea Cruises intangible assets resulting from the 2018 Silversea Cruises acquisition.

In 2020, represents the change in the fair value in the Silversea Cruises contingent consideration recorded within Other (expense) income, offset by the amortization of the Silversea Cruises intangible assets.

(9) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest, which noncontrolling interest we acquired on July 9, 2020.

5 unchanged sentences

(12) Represents the net loss related to the elimination of the Silversea Cruises reporting lag.

(13) Represents our loss contingency recorded in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs.

The following table presents operating results as a percentage of total revenues for the last three years:

15 unchanged sentences

Impairment and credit losses — % 5.4 % 70.9 %

Operating (Loss) Income (252.6) % (208.3) % 19.0 %

Operating Loss (8.6) % (252.6) % (208.3) %

Other income (expense):

1 unchanged sentence

Interest expense, net of interest capitalized (15.4) % (84.3) % (38.2) %

Equity investment (loss) income (8.8) % (9.7) % 2.1 %

Other income (expense) 1.3 % (6.2) % (0.2) %

Equity investment income (loss) 0.6 % (8.8) % (9.7) %

Other (expense) income (1.4) % 1.3 % (6.2) %

(15.7) % (90.7) % (53.1) %

Net (Loss) Income (343.3) % (261.5) % 17.4 %

Net Loss (24.4) % (343.3) % (261.5) %

Net Income attributable to noncontrolling interest — % — % 1.0 %

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

Net Loss attributable to Royal Caribbean Cruises Ltd.

(24.4) % (343.3) % (262.5) %

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Financial Statements and Supplementary Data for more information on the three-month reporting lag.

(2) Due to the three-month reporting lag effective through September 30, 2021, we include Silversea Cruises' metrics from October 1, 2019 through September 30, 2020 in the year ended December 31, 2020 and from October 1, 2018 through September 30, 2019 in the year ended December 31, 2019.

(3) For the year ended December, 31, 2021, we include Azamara Cruises' metrics through March 19, 2021, the effective sale date of the brand.

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General to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for more information on the sale of the Azamara Cruises brand.

The Company’s operations are still impacted by COVID-19 and its related variants.

The adverse impact of the COVID-19 pandemic on our revenues, consolidated results of operations, cash flows and financial condition has been and will continue to be material in 2022.

We expect to incur a net loss on both a U.S.

GAAP and adjusted basis for the first quarter and the first half of 2022 and a return to profitability in the second half of 2022.

See Recent Developments:

COVID-19 – Continued Fleet Ramp-Up and Update on Bookings for further indications on our resumption of operations and the booking environment.

Financial Statements and Supplementary

Data for more information on the sale of the Azamara Cruises brand.

For the year ended December 31, 2020, we include Azamara Cruises' metrics for the full year.

EBITDA and Adjusted EBITDA were calculated as follows (in thousands):

Year Ended December 31,

2022 2021 2020

Net Loss attributable to Royal Caribbean Cruises Ltd.

$ (2,155,962) $ (5,260,499) $ (5,797,462)

Interest income (35,857) (16,773) (21,036)

Interest expense, net of interest capitalized 1,364,162 1,291,753 844,238

Depreciation and amortization expenses 1,406,689 1,292,878 1,279,254

Income tax (benefit) expense (1) 4,153 (47,167) (14,990)

EBITDA 583,185 (2,739,808) (3,709,996)

Other expense (2) 116,223 26,883 152,075

Impairment and credit losses 562 82,001 1,566,380

Restructuring charges and other initiatives expense 11,625 1,831 51,853

Equity investment impairment (3) — 31,344 39,735

Oasis of the Seas incident (4) — (6,584) (1,938)

Pullmantur reorganization settlement (5) — 5,242 1,637

Net gain related to the sale of the Azamara brand — (3,371) —

Noncontrolling interest adjustment (6) — — 72,331

Adjusted EBITDA $ 711,595 $ (2,602,462) $ (1,827,923)

(1) Included within Other (expense) income in our consolidated statements of comprehensive loss.

(2) Represents net non-operating income or expense.

For 2022, primarily relates to our loss contingency recorded of approximately $130 million in connection with the ongoing Havana Docks litigation inclusive of related legal fees and costs, as well as amounts related to changes in fair value of fuel swaps for which cash flow hedge accounting was discounted.

For 2021 and 2020, primarily relates to changes in the fair value of fuel swaps for which cash flow hedge accounting was discontinued.

The amounts excludes income tax (benefit) expense, included in the EBITDA calculation above.

(3) Represents equity investment asset impairment, primarily for our investments in TUI Cruises GmbH in 2021 and Grand Bahama Shipyard in 2020, as a result of the impact of COVID-19.

These amounts are included in Equity investment income (loss) within our consolidated statements of comprehensive income (loss).

(4) Represents net insurance recoveries related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas.

(5) Represents expenses other than estimated cash refunds incurred as part of the Pullmantur S.A.

reorganization.

(6) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest, which noncontrolling interest we acquired on July 9, 2020.

EBITDA and Adjusted EBITDA for 2019 were calculated as follows (in thousands, except APCD and per APCD data):

Year Ended December 31,

Net Income attributable to Royal Caribbean Cruises Ltd.

Interest income (26,945)

Interest expense, net of interest capitalized 408,513

Depreciation and amortization expenses 1,245,942

Income tax expense (1) 32,602

EBITDA 3,538,999

Other income (2) (8,089)

Restructuring charges and other initiatives expense 13,707

Oasis of the Seas incident, Grand Bahama's drydock write-off and other incidental expenses (3) 35,239

Transaction and integration costs related to the 2018 Silversea acquisition 2,048

Non-controlling interest adjustment (4) 35,965

Adjusted EBITDA $ 3,617,869

(1) Included within Other income (expense) in our consolidated statements of comprehensive income (loss).

(2) Excludes income tax expense, included in the EBITDA calculation above.

(3) Amount includes incidental costs, net of insurance recoveries of $14.5 million related to the collapse of the drydock structure at the Grand Bahama Shipyard involving Oasis of the Seas , which were reported primarily within Other operating expenses in our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019; and $20.7 million regarding the Grand Bahama incident involving one of its drydocks, included in our equity investment income within our consolidated statements of comprehensive income (loss) for the year ended December 31, 2019.

(4) Adjustment made to exclude the impact of the contractual accretion requirements associated with the put option held by Heritage Cruise Holding Ltd.'s (previously known as Silversea Cruises Group Ltd.) noncontrolling interest, which noncontrolling interest we acquired on July 9, 2020.

Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD):

Year Ended December 31,

2022 2021 2020

Total cruise operating expenses $ 6,614,336 $ 2,657,512 2,765,108

Marketing, selling and administrative expenses 1,582,929 1,370,076 1,199,620

Gross Cruise Costs 8,197,265 4,027,588 3,964,728

Commissions, transportation and other 1,357,008 207,562 344,625

Onboard and other 596,554 116,946 157,213

Net Cruise Costs including other costs 6,243,703 3,703,080 3,462,890

Restructuring charges and other initiatives expense (1) 11,625 1,831 51,853

Net Cruise Costs 6,232,078 3,701,249 3,411,037

Fuel 1,072,567 385,322 371,015

Net Cruise Costs excluding Fuel $ 5,159,511 $ 3,315,927 $ 3,040,022

APCD 41,197,650 11,767,441 8,539,903

Gross Cruise Costs per APCD $ 198.97 $ 342.27 $ 464.26

Net Cruise Costs per APCD $ 151.27 $ 314.53 $ 399.42

Net Cruise Costs excluding Fuel per APCD $ 125.24 $ 281.79 $ 355.98

(1) Included within Marketing, selling and administrative expenses in our consolidated statements of comprehensive loss.

Gross Cruise Costs, Net Cruise Costs and Net Cruise Costs excluding Fuel were calculated as follows (in thousands, except APCD and costs per APCD), on a Constant Currency basis:

Year Ended December 31,

2022 2022 On a Constant Currency Basis 2019

Total cruise operating expenses 6,614,336 $ — $ 6,062,765

Marketing, selling and administrative expenses 1,582,929 — 1,559,253

Gross Cruise Costs 8,197,265 8,247,096 7,622,018

Commissions, transportation and other 1,357,008 — 1,656,297

Onboard and other 596,554 — 639,782

Net Cruise Costs including other costs 6,243,703 — 5,325,939

Restructuring charges and other initiatives expense (1) 11,625 — 13,707

Integration costs related to Silversea Cruises acquisition (1) — — 862

Transaction costs related to Silversea Cruises acquisition (1) — — 1,186

Costs, net of insurance recoveries, related to the Oasis of the Seas incident (2) — — 14,530

Net Cruise Costs 6,232,078 6,262,111 5,295,654

Fuel 1,072,567 — 697,962

Net Cruise Costs excluding Fuel $ 5,159,511 $ 5,189,542 $ 4,597,692

APCD 41,197,650 41,197,650 41,432,451

Gross Cruise Costs per APCD $ 198.97 $ 200.18 $ 183.96

Net Cruise Costs per APCD $ 151.27 $ 152.00 $ 127.81

Net Cruise Costs excluding Fuel per APCD $ 125.24 $ 125.97 $ 110.97

(1) Included within Marketing, selling and administrative expenses in our consolidated statements of comprehensive loss.

(2) Included within Total cruise operating expenses in our consolidated statements of comprehensive loss.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

In this section, references to 2022 refer to the year ended December 31, 2022 and references to 2021 refer to the year ended December 31, 2021.

Total revenues for 2021 decreased $0.7 billion, or 30.6%, to $1.5 billion from $2.2 billion in 2020.

Total revenues increased $7.3 billion, or 477.0%, to $8.8 billion in 2022 from $1.5 billion in 2021.

Passenger ticket revenues comprised 65.5% of our 2022 total revenues.

Passenger ticket revenues decreased by $0.6 billion, or 37.4% from 2020.

The decrease in Passenger ticket reflects a 52.6% decrease in occupancy for the period in 2021 during which we gradually returned to service compared to occupancy during 2020 when we operated the majority of our fleet, up through our global suspension in March of 2020.

The decrease to Passenger ticket revenues was slightly offset by the $5.0 million favorable effect of changes in foreign currency exchange rates related to our revenues in currencies other than the United States dollar.

The remaining 38.6% of 2021 total revenues was comprised of Onboard and other revenues , which decreased $0.1 billion, or 16.1%.

This decrease was primarily due to the 52.6% decrease in occupancy noted above and a decrease in cancellation fees in 2021.

These decreases more than offset a strong onboard revenue per passenger cruise day performance during our gradual resumption of operations in 2021 as well as the favorable effect of changes in foreign currency exchange rates related to our Onboard and other revenues denominated in currencies other than the United States dollar of $4.5 million.

Passenger ticket revenues increased by $4.9 billion, or 515.6% to $5.8 billion in 2022 from $0.9 billion in 2021 and was partially offset by unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $129.8 million.

The remaining 34.5% of total revenues was comprised of Onboard and other revenues , which increased $2.5 billion, or 415.6% to $3.0 billion in 2022 from $591.0 million in 2021 and was partially offset by unfavorable movements in foreign currency exchange rates related to our revenue transactions denominated in currencies other than the United States dollar of $19.2 million .

The increase in total revenues was due to our return of operations, with our full fleet in service by June 2022, compared to 2021 when we began resuming guest cruise operations.

Occupancy in 2022 was 85.1% compared to 49.3% in 2021.

Onboard and other revenues included concession revenues of $331.9 million in 2022 and $72.0 million in 2021.

Cruise Operating Expenses

Total C r uise operating expenses for 2021 decreased $0.1 billion, or 3.9%, to $2.7 billion in 2021 from $2.8 billion in 2020.

The decrease was primarily due to a $137.1 million decrease in Commissions, transportation and other expenses and a $40.3 million decrease in Onboard and other expenses due to the decrease in revenues and occupancy noted above.

The decrease in Cruise operating expenses was partially offset by an increase on Payroll and related expenses of $49.8 million due to our return to service during 2021, and the unfavorable effect of changes in foreign currency exchange rates related to our expense transactions denominated in currencies other than the United States dollar of $7.3 million.

Total C r uise operating expenses increased by $4.0 billion, or 148.9%, to $6.6 billion in 2022 from $2.7 billion in 2021.

The increase in Cruise operating expenses was driven by the return to operations in 2022, with the majority of our fleet in service compared to 2021, when the suspension of our global cruise operations was in effect.

The 2022 operating expenses include the overhead costs associated with bringing our ships back to service and our crew back on board our ships.

Additionally, inflationary pressures have impacted our operating costs, especially in fuel and food expense.

Our cost of fuel (net of the financial impact of fuel swap agreements) for 2 022 increased 43% per metric ton compared to 2021 mainly due to the increase in fuel price.

Marketing, Selling and Administrative Expenses

Marketing, selling and administrative expenses for 2021 increased $170.5 million, or 14.2% to $1.4 billion from $1.2 billion in 2020.

The increase is due to the ramp up of our global sales and marketing efforts in the second half of 2021 as we commenced our resumption of operations.

Marketing, selling and administrative expenses increased $0.2 billion, or 15.5% to $1.6 billion in 2022 from $1.4 billion in 2021.

The increase was due to the ramp up of our global sales and marketing efforts starting in the second half of 2021 as we commenced our resumption of operations.

Additionally, having our full fleet in service as of June 30, 2022 increased overall expenses compared to 2021.

Depreciation and Amortization Expenses

Depreciation and amortization expenses for 2021 increased $13.6 million, or 1.1%, to $1.3 billion.

The increase was primarily due to the addition of Odyssey of the Seas to our fleet in the first quarter of 2021, a full year of depreciation in 2021 for Celebrity Apex, Silver Moon and Silver Origin which were added to our fleet during 2020, and to a lesser extent, the addition of Silver Dawn to our fleet in the fourth quarter of 2021.

The increases in depreciation in 2021 were partially offset by lower depreciation resulting from vessel disposals and asset impairments during 2020 and 2021.

Depreciation and amortization expenses increased $0.1 billion, or 8.8%, to $1.4 billion in 2022 compared to $1.3 billion.

The increase was primarily due to the addition of Wonder of the Seas and Celebrity Beyond to our fleet in January 2022 and April 2022, respectively, and depreciation for Odyssey of the Seas and Silver Dawn, which were delivered in March 2021 and November 2021, respectively.

Impairment and Credit Losses

For the year ended December 31, 2021 and 2020, as a result of the ongoing impact of the COVID-19 pandemic on our operations and cash flows, we recorded total impairment and credit losses of $82.0 million and $1.6 billion, respectively,

primarily related to construction in progress, other long-lived assets and credit loss allowances related to our notes receivable in 2021, and to our goodwill, trademarks and trade names, vessels, construction in progress, right-of-use assets and credit loss allowances related to our notes receivable in 2020.

Impairment and c redit losses for 2022 was $0.6 million compared to $82.0 million in 2021.

The decrease in impairment loss was primarily due to 2021 impairment charges of ce rtain construction in progress projects that were reduced in scope or terminated as a result of COVID-19, which did not recur in 2022.

Other Income (Expense)

Interest expense, net of interest capitalized , increased $447.5 million, or 53.0%, to $1.3 billion in 2021 from $844.2 million in 2020.

The increase was primarily due to new debt issuances in 2021 and 2020, a higher average balance on our revolver debt and a loss on extinguishment of debt of $138.8 million.

Equity investment (loss) improved by $77.8 million, or 36.5%, to a loss of $135.5 million in 2021 from a loss of $213.3 million in 2020 mainly due to decreased losses reported by our equity investments as a result of their return to operations during 2021 and receipt of local government grants by one of our equity investments.

Other income was $20.3 million in 2021 compared to Other expense of $137.1 million in 2020.

The improvement of $157.4 million includes an increase in income of $110.6 million related to the change in the fair value of fuel swap derivative instruments that are not designated under hedge accounting, a one-time $14.4 million tax benefit recognized in 2021, and a $13.8 million decrease in foreign exchange losses from the remeasurement of monetary assets and liabilities denominated in foreign currency compared to 2020.

Additionally in 2020, we recognized a deferred currency translation adjustment loss of $69.0 million related to the Pullmantur brand as we no longer have significant involvement in Pullmantur's operations, which did not recur in 2021, and a $20.0 million expense representing the cash refund expected to be paid to Pullmantur guests as part of the brand's reorganization, compared to a $5.0 million expense in 2021.

The 2021 increases in income were partially offset by a $62.6 million loss recognized in 2021 resulting from the elimination of the Silversea Cruises three-month reporting lag effective October 1, 2021.

Other Comprehensive Income (Loss)

Interest expense, net of interest capitalized , increased $72.4 million, or 5.6%, to $1.4 billion in 2022 from $1.3 billion in 2021.

The increase was primarily due to additional indebtedness associated with new ship deliveries.

Equity investment income for 2022 was $56.7 million compared to Equity investment Loss of $135.5 million in 2021.

The increase in income was primarily due to income from TUI Cruises, one of our equity investments, in 2022 compared to losses in 2021.

Other (expense) income decreased $140.7 million, or 693.5%, to other expense of $120.4 million in 2022 from other income of $20.3 million in 2021.

The decrease was primarily due to a loss contingency of $130.0 million recorded in connection with the ongoing Havana Docks litigation.

Other Comprehensive Income

Other comprehensive income in 2022 was $67.7 million compared to $28.5 million in 2021.

The decrease of $29.9 million in 2021 was primarily due to a decrease in Gain on cash flow derivative hedges in 2021 of $34.0 million.

Gain on cash flow derivative hedges decreased in 2021 primarily due to the reclassification of fuel swap gains from Accumulated Other Comprehensive Loss into the Consolidated Statement of Comprehensive (Loss) Income in 2021, compared to the reclassification of fuel swap losses during 2020.

This decrease was partially offset by a net increase in the fair value of our cash flow derivative hedges, mostly driven by increases in the fair value of our fuel and interest rate swaps in 2021.

Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

A discussion of our results of operations for the year ended December 31, 2020 compared to the year ended December 31, 2019 is included in Part II.

Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2020 , filed with the SEC on February 26, 2021 , and is incorporated by reference into this Form 10-K.

The change was primarily due to Changes in defined benefits plan in 2022 of $48.9 million compared to $8.7 million in 2021.

Future Application of Accounting Standards

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Sources and Uses of Cash

Net cash (used in) operating activities decreased by $1.9 billion to cash used of $1.9 billion for the year ended December 31, 2021, compared to cash used of $3.7 billion for the same period in 2020.

Our gradual resumption of operations in 2021 generated increased guest ticket collections, resulting in an increase of customer deposits of $1.4 billion for the twelve months ended December 31, 2021, compared to a decrease of customer deposits of $1.6 billion during the same period in 2020, during our suspension of global operations.

The increase in customer deposits was offset by increased expenses for our vessels that resumed cruise operations in 2021, including start up costs.

Net cash (used in) operating activities was $3.7 billion in 2020 compared to Net cash provided of $3.7 billion in 2019 reflecting a change of $7.4 billion in 2020.

The 2020 disruptions to our business led to a decrease in collections from our guests as well as an increase of refunds to guests for cancelled sailings during the year ended December 31, 2020 compared to the same period in 2019.

Net cash used in investing activities decreased $33.8 million to cash used of $2.1 billion for the year ended December 31, 2021, compared to cash used of $2.2 billion for the same period in 2020.

The decrease in cash used in investing activities was primarily attributable to an increase in proceeds from the sale of property and equipment and other assets of $148.2 million in 2021 compared to 2020, and a decrease in cash paid on settlement of derivative financial instruments of $87.1 million, partially offset by an increase in capital expenditures of $264.6 million mostly due to our purchase of Terminal A at PortMiami in 2021 .

Net cash used in investing activities decreased $0.9 billion to cash used $2.2 billion in 2020 compared to cash used $3.1 billion in 2019.

The decrease in investing activities was primarily attributable to a decrease in capital expenditures of $1.1 billion.

Net cash provided by (used in) operating activities increased by $2.4 billion to cash provided of $0.5 billion for the year ended December 31, 2022, compared to cash used of $1.9 billion for the same period in 2021.

Our full resumption of operations in 2022 generated an increase in guest ticket and onboard collections for the twelve months ended December 31, 2022, compared to a partial resumption of operations in 2021.

Net cash used in investing activities increased by $843.0 million to cash used of $3.0 billion for the year ended December 31, 2022, compared to cash used of $2.1 billion for the same period in 2021.

The increase in cash used in investing activities was primarily attributable to an increase in capital expenditures of $480.4 million due to the increased cost associated with taking delivery of Wonder of the Seas and Celebrity Beyond in 2022 compared to taking delivery of Odyssey of the Seas and Silver Dawn in 2021, and an increase in cash paid on settlement of derivative financial instruments of $281.7 million in 2022 compared to 2021.

Net cash provided by financing activities was $1.7 billion in 2022 compared to cash provided of $3.0 billion in 2021.

The decrease of $6.3 billion was primarily attributable to higher debt proceeds and issuance of commercial paper notes of $15.8 billion during the twelve months ended December 31, 2020, compared to the same period in 2021, offset by higher debt and commercial paper repayments of $9.0 billion during the twelve months ended December 31, 2020, compared to the same period in 2021.

Additionally, dividends paid of $326.4 million during the twelve months ended December 31, 2020, compared to none during the same period in 2021.

Net cash provided by financing activities was $9.3 billion in 2020 compared to Net cash used of $0.7 billion in 2019.

The change was primarily attributable to an increase in debt proceeds of $10.0 billion in 2020 compared to the same period in 2019, and $1.4 billion in proceeds from common stock issuances in 2020.

These proceeds were partially offset by net repayments of commercial paper of $1.1 billion during the twelve months ended December 31, 2020 compared to net borrowings of commercial paper of $0.6 billion during the same period in 2019.

The decrease of $1.3 billion was primarily attributable to proceeds from common stock issuances of $1.6 billion during the twelve months ended December 31, 2021, compared to none during the same period in 2022, and offset by repayments of commercial paper notes of $414.6 million during the twelve months ended December 31, 2021, compared to none during the same period in 2022.

Future Capital Commitments

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Our future capital commitments consist primarily of new ship orders.

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

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

As of December 31, 2022, we have one Oasis-class ship, and three ships of a new generation, known as our Icon-class, on order for our Royal Caribbean International brand with an aggregate capacity of approximately 22,500 berths.

As of December 31, 2022, we have one Edge-class ship on order for our Celebrity Cruises brand, with a capacity of approximately 3,250 berths.

Additionally, as of December 31, 2022, we have two ships on order for our Silversea Cruises brand with an aggregate capacity of approximately 1,460 berths.

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Business-Operations for further information on our ships on order.

We have committed financing arrangements in place covering 80% of the cost of the ship for the nine ships on order for our Global Brands, almost all of which include sovereign financing guarantees.

We have committed financing arrangements in place covering 80% of the cost of the ship for the seven ships on order for our Global Brands, all of which include sovereign financing guarantees.

Additionally, 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 December 31, 2021, the aggregate cost of our ships on order, not including any ships on order by our Partner Brands, was approximately $12.4 billion, of which we had deposited $800.2 million as of such date.

As of December 31, 2022, the aggregate cost of our ships on order, excluding any ships on order by our Partner Brands, was approximately $9.8 billion, of which we had deposited $832 million.

Approximately 52.3% of the aggregate cost was exposed to fluctuations in the Euro exchange rate at December 31, 2022.

Refer to Note 16.

Measurements and Derivative Instruments and Note 17.

Fair Value Measurements and Derivative Instruments and Note 17.

Commitments and Contingencies to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data .

Decreased demand for cruising as a result of concerns regarding the COVID-19 pandemic had, and is expected to continue to have, a material impact on our cash flows, liquidity and financial position.

In order to preserve liquidity throughout the COVID-19 pandemic, we deferred a significant portion of our planned 2020, 2021 and 2022 capital expenditures.

We have been, and may continue to be, negatively impacted on our cash flows, liquidity and financial position by the COVID-19 pandemic.

In order to preserve liquidity, we deferred a significant portion of our planned 2020, 2021 and 2022 capital expenditures.

As of December 31, 2022, we anticipate overall full year capital expenditures, based on our existing ships on order, will be approximately $4.1 billion for 2023.

These amounts do not include any ships on order by our Partner Brands.

This amount does not include any ships on order by our Partner Brands.

Material Cash Requirements

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Payments due by period

Less than 1-3 3-5 More than

Total 1 year years years 5 years

2023 2024 2025 2026 2027 Thereafter Total

Operating Activities:

Operating lease obligations (1)

$ 1,272,527 $ 101,445 $ 190,048 $ 154,809 $ 826,225

Interest on long-term debt (2)

3,554,212 938,258 1,286,576 688,131 641,247

Interest on debt (1)

$ 1,345,729 $ 1,187,749 $ 1,036,011 $ 780,404 $ 648,639 $ 1,106,447 $ 6,104,979

2 unchanged sentences

2,705,127 1,846,333 1,287,368 1,218,073 — — 7,056,901

Financing Activities:

Debt obligations (5)

20,618,065 2,191,620 9,345,412 4,781,668 4,299,365

Finance lease obligations (6)

472,275 51,511 57,497 44,896 318,371

17,374 8,414 8,960 — —

Total $ 4,050,856 $ 3,034,082 $ 2,323,379 $ 1,998,477 $ 648,639 $ 1,106,447 $ 13,161,880

___________________________________________________________________

(1) We are obligated under noncancelable operating leases primarily for preferred berthing arrangements, real estate and shipboard equipment.

Amounts represent contractual obligations with initial terms in excess of one year.

(1) Long-term debt obligations mature at various dates through fiscal year 2037 and bear interest at fixed and variable rates.

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Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2022.

(3) Amounts primarily represent future commitments with remaining terms in excess of one year to pay for our usage of certain port facilities, marine consumables, services and maintenance contracts.

(2) Amounts are based on contractual installment and delivery dates for our ships on order.

Included in these figures are $7.9 billion in final contractual installments, which have committed financing.

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

Included in these figures are $5.7 billion in final contractual installments, which have committed financing covering 80% of the cost of the ships on order for our Global Brands, almost all of which include sovereign financing guarantees.

Amounts do not include potential obligations which remain subject to cancellation at our sole discretion or any agreements entered for ships on order that remain contingent upon completion of conditions precedent.

(5) Debt denominated in other currencies is calculated based on the applicable exchange rate at December 31, 2021.

In addition, debt obligations presented above are net of debt issuance costs of $363.5 million as of December 31, 2021.

(6) Amounts represent finance lease obligations with initial terms in excess of one year.

(7) Amounts represent fees payable to sovereign guarantors in connection with certain of our export credit debt facilities and facility fees on our revolving credit facilities.

Please refer to Funding Needs and Sources below for discussion on the planned funding of the above material contractual obligations.

Refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for maturities related to debt.

Refer to Note 9 .

Leases to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for maturities related to lease liabilities.

Refer to Funding Needs and Sources below for discussion on the planned funding of the above material contractual obligations.

As a normal part of our business, depending on market conditions, pricing and our overall growth strategy, we continuously consider opportunities to enter into contracts for the building of additional ships.

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We continuously consider potential acquisitions and strategic alliances.

If any of these

were to occur, they would be financed through the incurrence of additional indebtedness, the issuance of additional shares of equity securities or through cash flows from operations.

If any of these were to occur, they would be financed through the incurrence of additional indebtedness, the issuance of additional shares of equity securities or through cash flows from operations.

Off-Balance Sheet Arrangements .

TUI Cruises has entered into various ship construction and credit agreements that include certain restrictions on each of our and TUI AG's ability to reduce our current ownership interest in TUI Cruises below 37.55% through May 2033.

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

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

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

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

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

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

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

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

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

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

These agreements allow the credit card processors to require us, under certain circumstances, including breach of the financial covenants, the existence of other material adverse changes, excessive chargebacks, and other triggering events, to maintain a reserve that can be satisfied by posting collateral.

As of December 31, 2021, we have posted letters of credit as collateral with our sureties and credit card processors under our revolving credit facilities in the amount of $193.3 million.

Executed amendments are in place for the majority of our credit card processors, waiving reserve requirements tied to breach of our financial covenants through at least September 30, 2022, with modified covenants thereafter, and as such, we do not anticipate any incremental collateral requirements for the processors covered by these waivers in the next 12 months.

We have a reserve with a processor where the agreement was amended in the first quarter of 2021, such that proceeds are held in reserve until the sailing takes place or the funds are refunded to the customer.

The maximum projected exposure with the processor, including amounts currently withheld and reported in Trade and other receivables , is approximately $285.0 million.

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

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

Refer to Note 7 .

Other Assets to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for ownership restrictions related to TUI Cruises.

Refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for export credit agency guarantees.

Refer to Note 17.

Commitments and Contingencies to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for other agreements.

As of December 31, 2022, other than the items described above, we are not party to any other off-balance sheet arrangements, including guarantee contracts, retained or contingent interest, certain derivative instruments and variable interest entities, that either have, or are reasonably likely to have, a current or future material effect on our financial position.

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Historically, we relied on a combination of cash flows provided by operations, draw-downs under our available credit facilities, the incurrence of additional debt and/or the refinancing of our existing debt and the issuance of additional shares of equity securities to fund our obligations.

The impact of COVID-19 resulted in our voluntary suspension of global cruise operations from March 2020 up to our gradual resumption of operations primarily in 2021.

COVID-19 resulted in our voluntary suspension of global cruise operations from March 2020 up to our full fleet returning to service during the second quarter of 2022.

The suspension of operations strained our sources of cash flow and liquidity, causing us to take actions resulting in reductions in our operating expenses, reductions in our capital expenses and new financings and other liquidity actions.

The Company continues to identify and evaluate further actions to improve its liquidity.

These include, and are not limited to further reductions in capital expenditures, operating expenses and administrative costs and additional financings.

See further discussion on these liquidity actions at Recent Developments - COVID-19.

The Company continually identifies and evaluates actions to maintain adequate liquidity.

These include, and are not limited to:

further reductions in capital expenditures, operating expenses and administrative costs and additional financings.

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.

We have significant contractual obligations of which our debt service obligations and the capital expenditures associated with our ship purchases represent our largest funding needs.

As of December 31, 2022, we had approximately $7.6 billion of committed financing for our ships on order.

As of December 31, 2021, we had $5.8 billion in contractual obligations due through December 31, 2022, of which approximately $2.2 billion relates to debt maturities, $0.9 billion relates to interest on debt and $2.3 billion relates to progress payments on our ship orders and the final installments payable due upon the delivery of Wonder of the Seas and Celebrity Beyond .

As of December 31, 2021, we had liquidity of $3.5 billion, including $0.1 billion of undrawn revolving credit facility capacity, $2.7 billion in cash and cash equivalents, and a $0.7 billion commitment for a 364-day term loan facility available to draw at any time prior to August 12, 2022.

As of December 31, 2021, our revolving credit facilities were mostly utilized through a combination of amounts drawn and letters of credit issued under the facilities.

We have agreed with certain of our lenders not to pay dividends or engage in stock repurchases.

Thereafter, in the event we declare a dividend or engage in stock repurchases we will need to repay the amounts deferred under our export credit facilities.

As of December 31, 2022, our obligations due through December 31, 2023 primarily consisted of $2.1 billion related to debt maturities, $1.3 billion related to interest on debt and $2.7 billion related to progress payments on our ship orders and, based on expected delivery date, the final installments payable due upon the delivery of Silver Nova, Icon of the Seas, and Celebrity Ascent .

As of December 31, 2022, we had liquidity of $2.9 billion, including cash and cash equivalents of $1.9 billion, $0.3 billion of undrawn revolving credit facility capacity, and a $0.7 billion commitment for a 364-day term loan facility which was terminated in February 2023 in connection with our completion of the $700 million 7.25% Priority Guaranteed Notes offering.

Our revolving credit facilities were partially utilized through a combination of amounts drawn and letters of credit issued under the facilities as of December 31, 2022, which were subsequently amended in January 2023, as described in Note 8 .

Debt to our consolidated financial statements.

We have agreed with certain of our lenders not to pay dividends or engage in stock repurchases unless we repay the remaining principal payments that were deferred under our export credit facilities in 2020 and 2021.

Refer to Note 10 .

Shareholders' Equity to our consolidated financial statements for further information.

Shareholders' Equity to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information.

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

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

Based on our assumptions and estimates and our financial condition, we believe that the liquidity resulting from the actions mentioned above will be sufficient to fund our liquidity requirements over at least the next twelve months.

However, there is no assurance that our assumptions and estimates are accurate due to possible unknown variables related to this unprecedented suspension of our operations and, as such, there is inherent uncertainty in our ability to predict future liquidity requirements.

Based on our assumptions and estimates and our 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.

However, there is no assurance that our assumptions and estimates are accurate as there is inherent uncertainty in our ability to predict future liquidity requirements.

Refer to Note 1 .

General, Management’s Plan and Liquidity, to our consolidated financial statements under Item 8.

Financial Statements for further information.

Beyond the next 12 months, in June of 2023, approximately $3.2 billion of long-term debt will need to be refinanced in order to maintain the Company's liquidity position.

In February 2022, we entered into certain agreements with Morgan Stanley & Co., LLC (“MS”) where MS agrees 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% Priority Guaranteed Notes due 2023, 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.

Financial Statements and Supplementary Data for further information.

Debt Covenants

Both our export credit facilities and our non-export credit facilities contain covenants that require us, among other things, to maintain a fixed charge coverage ratio of at least 1.25x and limit our net debt-to-capital ratio to no more than 62.5%, and under certain facilities, to maintain a minimum level of shareholders' equity.

Our export credit facilities, our non-export credit facilities, and certain of our credit card processing agreements contain covenants that require us, among other things, to maintain a fixed charge coverage ratio, limit our net debt-to-capital ratio, and maintain minimum liquidity, and under certain facilities, to maintain a minimum level of stockholders' equity.

The fixed charge coverage ratio is calculated by dividing net cash from operations for the past four quarters by the sum of dividend payments plus scheduled principal debt payments in excess of any new financings for the past four quarters.

Our minimum net worth and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total shareholders’ equity .

During 2020, we amended all of our export credit facilities, all of our non-export credit facilities and certain of our credit card processing agreements which contain financial covenants to extend the financial covenant waiver through and including the fourth quarter of 2021.

During the first quarter of 2021, we amended $4.9 billion of our non-export credit facilities and $6.3 billion of our export credit facilities, and certain credit card processing agreements, to extend the waiver of our financial covenants through and including at least the third quarter of 2022, and subsequently in the third quarter of 2021, we entered into a letter agreement to extend the waiver period for our export credit facilities to the end of the fourth quarter of 2022.

During the fourth quarter of 2021, we amended $7.3 billion of outstanding export-credit facilites plus committed export-credit facilities to

modify financial covenant levels for 2023 and 2024, following the waiver period through and including the fourth quarter of 2022.

In addition, pursuant to the amendments for the non-export credit facilities, we have modified the manner in which such covenants are calculated, temporarily in certain cases and permanently in others, as well as the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2023.

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

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

As of December 31, 2021, we were in compliance with the applicable minimum liquidity covenant and we estimate that we will be in compliance for at least the next twelve months.

Our minimum stockholders' equity and maximum net debt-to-capital calculations exclude the impact of Accumulated other comprehensive loss on Total stockholders' equity .

In 2021 and 2022, the financial covenant levels were modified for 2023 and 2024.

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

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

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

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

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

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

Accordingly, we did not declare a dividend during the seventh consecutive quarters ending December 31, 2021.

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

Refer to Note 8 .

Debt to our consolidated financial statements under Item 8.

Financial Statements and Supplementary Data for further information regarding debt covenants.

The declaration of dividends shall at all times be subject to the final determination of our board of directors that a dividend is prudent at that time in consideration of the needs of the business.

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

Accordingly, we have not declared a dividend since the first quarter of 2020.

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-K

Item 7. Management’s Discussion and Analysis