What changed in this filing

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Item 1. Financial Statements

2023-05-04 compared with 2022-11-03 · 241 added, 482 removed, 588 unchanged (55% of the section changed)

3 unchanged sentences

in thousands, except per share data)

Quarter Ended September 30,

Quarter Ended March 31,

Passenger ticket revenues $ 1,896,516 $ 651,858

11 unchanged sentences

Depreciation and amortization expenses 359,773 339,467

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

Operating Income (Loss) 271,613 ( 859,208 )

Other income (expense):

Other (expense) income:

Interest income 14,808 3,322

1 unchanged sentence

Equity investment income (loss) 20,471 ( 31,059 )

Other income 780 37,230

( 265,457 ) ( 418,730 )

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

Earnings (Loss) per Share:

Basic $ 0.13 $ ( 5.59 )

Diluted $ 0.13 $ ( 5.59 )

Weighted-Average Shares Outstanding:

Basic 255,071 254,713

Diluted 255,378 254,713

Comprehensive Loss

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

Other comprehensive loss:

Foreign currency translation adjustments 11,498 5,022

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

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

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

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

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

in thousands, except per share data)

Nine Months Ended September 30,

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

Onboard and other revenues 2,145,513 226,104

Total revenues 6,236,548 549,886

Cruise operating expenses:

Commissions, transportation and other 964,256 72,917

Onboard and other 450,225 55,782

Payroll and related 981,128 530,250

Food 450,376 74,618

Fuel 779,873 219,058

Other operating 1,206,036 569,383

Total cruise operating expenses 4,831,894 1,522,008

Marketing, selling and administrative expenses 1,138,571 867,021

Depreciation and amortization expenses 1,046,094 959,512

Impairment and credit losses (recoveries) ( 584 ) 39,934

Operating Loss ( 779,427 ) ( 2,838,589 )

Other income (expense) 4,585 ( 2,538 )

Interest income 21,765 13,317

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

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

Other income 4,699 66,771

( 319,523 ) ( 307,934 )

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(in thousands, except share data)

September 30, December 31,

March 31, December 31,

Current assets

Cash and cash equivalents $ 1,226,871 $ 1,935,005

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

Trade and other receivables, net of allowances of $ 10,483 and $ 11,612 at March 31, 2023 and December 31, 2022, respectively

379,177 531,066

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Goodwill 809,258 809,277

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

Other assets, net of allowances of $ 63,102 and $ 71,614 at March 31, 2023 and December 31, 2022, respectively

1,660,090 1,678,074

5 unchanged sentences

Accounts payable 714,837 646,727

Accrued interest 274,022 251,974

Accrued expenses and other liabilities 1,200,590 1,459,957

12 unchanged sentences

500,000,000 shares authorized;

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

283,979,907 and 283,257,102 shares issued, March 31, 2023 and December 31, 2022, respectively)

Paid-in capital 7,351,493 7,284,852

(Accumulated deficit) retained earnings ( 1,207,223 ) 302,276

Accumulated deficit ( 1,755,339 ) ( 1,707,429 )

Accumulated other comprehensive loss ( 677,944 ) ( 643,214 )

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

Treasury stock ( 28,248,125 and 28,018,385 common shares at cost, March 31, 2023 and December 31, 2022, respectively)

( 2,069,432 ) ( 2,068,229 )

Total shareholders’ equity attributable to Royal Caribbean Cruises Ltd.

2,851,618 2,868,812

Noncontrolling Interests 173,803 —

Total shareholders’ equity 3,025,421 2,868,812

4 unchanged sentences

(unaudited, in thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

Operating Activities

1 unchanged sentence

Depreciation and amortization 359,773 339,467

Impairment and credit losses (recoveries) ( 584 ) 39,934

Net deferred income tax benefit ( 11,366 ) ( 3,067 )

Loss (gain) on derivative instruments not designated as hedges 175,686 ( 11,560 )

(Gain) loss on derivative instruments not designated as hedges ( 3,397 ) 10,873

Share-based compensation expense 26,270 22,839

Equity investment (income) loss ( 20,471 ) 31,059

Amortization of debt issuance costs 118,307 94,511

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

Amortization of debt issuance costs, discounts and premiums 30,070 43,190

Loss on extinguishment of debt 13,289 —

Changes in operating assets and liabilities:

Increase in trade and other receivables, net ( 173,555 ) ( 225,535 )

Increase in inventories ( 86,962 ) ( 26,711 )

Decrease (increase) in trade and other receivables, net 122,940 ( 32,236 )

Decrease (increase) in inventories 2,716 ( 29,242 )

Increase in prepaid expenses and other assets ( 78,489 ) ( 124,394 )

Increase in accounts payable 79,249 107,215

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

Increase in accounts payable trade 56,682 112,426

Decrease in accrued expenses and other liabilities ( 258,713 ) ( 119,068 )

1 unchanged sentence

Other, net 15,932 ( 20,086 )

Net cash used in operating activities ( 94,741 ) ( 1,672,769 )

Net cash provided by (used in) operating activities 1,309,918 ( 528,847 )

Investing Activities

2 unchanged sentences

Cash paid on settlement of derivative financial instruments ( 5,658 ) ( 77,853 )

Investments in and loans to unconsolidated affiliates ( 614 ) ( 70,084 )

Cash received on loans to unconsolidated affiliates 5,392 4,444

Proceeds from the sale of property and equipment and other assets 66 175,439

Other, net 12,694 ( 12,296 )

Net cash used in investing activities ( 234,100 ) ( 1,443,141 )

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

Nine Months Ended September 30,

Financing Activities

2 unchanged sentences

Repayments of debt ( 2,663,665 ) ( 1,007,632 )

Premium on repayment of debt — ( 135,372 )

Repayments of commercial paper notes — ( 414,570 )

Proceeds from common stock issuances — 1,621,860

Proceeds from sale of noncontrolling interest 209,320 —

Other, net ( 7,617 ) ( 10,843 )

Net cash provided by financing activities 1,832,900 2,838,559

Net cash (used in) provided by financing activities ( 1,784,175 ) 1,237,731

Effect of exchange rate changes on cash and cash equivalents 223 991

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Non-cash Investing Activities

Notes receivable issued upon sale of property and equipment and other assets $ — $ 16,000

Purchase of property and equipment included in accounts payable and accrued expenses and other liabilities $ 19,321 $ 31,899

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

Non-cash Financing Activity

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

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

2 unchanged sentences

in thousands)

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

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

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

Changes related to cash flow derivative hedges — — — ( 259,949 ) — ( 259,949 )

Change in defined benefit plans — — — 7,226 — 7,226

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

Net Income — — 32,968 — — 32,968

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

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

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

Balance at January 1, 2023 $ 2,832 $ 7,284,852 $ ( 1,707,429 ) $ ( 643,214 ) $ ( 2,068,229 ) $ — $ 2,868,812

Activity related to employee stock plans 8 21,343 — — — — 21,351

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

Changes related to cash flow derivative hedges — — — ( 31,697 ) — — ( 31,697 )

2 unchanged sentences

Purchase of treasury stock — — — — ( 1,203 ) — ( 1,203 )

Noncontrolling Interest — 45,298 — — — 173,803 219,101

Net Loss — — ( 47,910 ) — — — ( 47,910 )

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

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

in thousands)

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

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

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

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

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

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

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

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 1,424,554 ) — — ( 1,424,554 )

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

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

Balance at March 31, 2023 $ 2,840 $ 7,351,493 $ ( 1,755,339 ) $ ( 677,944 ) $ ( 2,069,432 ) $ 173,803 $ 3,025,421

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

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

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

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

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

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

2 unchanged sentences

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

Net Loss attributable to Royal Caribbean Cruises Ltd.

— — ( 3,903,531 ) — — ( 3,903,531 )

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

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

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

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

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

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

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

Management's Plan and Liquidity

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

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

Effective July 18, 2022, the U.S.

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

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

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

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

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

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

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

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

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

As of September 30, 2022, we had liquidity of $ 3.1 billion, including $ 0.8 billion of undrawn revolving credit facility capacity, $ 1.6 billion in cash and cash equivalents, and a $ 0.7 billion commitment for a 364-day term loan facility available to draw on at any time on or prior to August 11, 2023.

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

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

Together, our Global Brands and our Partner Brands have a combined fleet of 64 ships as of March 31, 2023.

Our ships offer a selection of worldwide itineraries that call on more than 1,000 destinations in over 120 countries on all seven continents.

As a result 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.

During this period of time, we have taken proactive measures to manage our liquidity, including issuing debt and shares of our common stock, amending credit agreements to defer payments, obtaining relevant modification of covenant requirements and waivers, and reducing operating expenses and capital expenditures.

As of March 31, 2023, we had liquidity of $ 3.9 billion, including $ 2.6 billion of undrawn revolving credit facility capacity, and $ 1.2 billion in cash and cash equivalents.

We believe that we have sufficient liquidity to fund our obligations for at least the next twelve months from the issuance of these financial statements.

Refer to Note 6 .

Debt for further information regarding these transactions.

Based on our refinancing actions as well as our present financial condition and the aforementioned assumptions on liquidity, we believe that we have sufficient financial resources to fund our obligations for at least the next twelve months from the issuance of these financial statements.

Additionally, we will continue to pursue various opportunities to raise additional

capital to fund obligations associated with future debt maturities and/or to extend the maturity dates associated with our existing indebtedness or facilities.

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

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

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

Debt for further information regarding refinancing transactions and the applicable financial covenants.

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

Basis for Preparation of Consolidated Financial Statements

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Refer to Note 5 .

Other Assets for further information regarding our variable interest entities.

For affiliates we do not control but over which we have significant influence on financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

Effective March 19, 2021, we sold our wholly-owned brand, Azamara Cruises ("Azamara"), including its three -ship fleet and associated intellectual property, to Sycamore Partners for $ 201 million, before closing adjustments.

The March 2021 sale of Azamara did not represent a strategic shift that will have a major effect on our operations and financial results, as we continue to provide similar itineraries to and source passengers from the markets served by the Azamara business.

Therefore, the sale of Azamara did not meet the criteria for discontinued operations reporting.

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

We recognized an immaterial gain on the sale during the quarter ended March 31, 2021 and have agreed to provide certain transition services to Azamara for a period of time for a fee.

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

Effective October 1, 2021, we eliminated the three- month reporting lag to reflect Silversea Cruises' financial position, results of operations and cash flows concurrently and consistently with the fiscal calendar of the Company ("elimination of the Silversea reporting lag").

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

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

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

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

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

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

Investments and Other Assets for further information regarding our variable interest entities.

For affiliates we do not control but over which we have significant influence on

financial and operating policies, usually evidenced by a direct ownership interest from 20% to 50%, the investment is accounted for using the equity method.

Summary of Significant Accounting Policies

Adoption of Accounting Pronouncements

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

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

The guidance removes certain accounting models which separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative under Accounting Standards Codification ("ASC") 815, Derivatives and Hedging ("ASC 815") or for convertible debt issued at a substantial

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

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

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

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

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

In March 2020, the FASB issued ASU No.

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

Subsequently, in January 2021, the FASB issued ASU No.

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

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

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

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

Recent Accounting Pronouncements

In September 2022, the FASB issued ASU No.

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

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

We adopted ASU No.

2022-04 effective January 1, 2023.

The adoption did not have a material impact to our consolidated financial statements and related disclosures.

Reclassifications

For the quarter ended March 31, 2023, we no longer separately present Accrued interest in our consolidated balance sheets.

As a result, amounts presented in prior periods were reclassified to Accrued expenses and other liabilities to conform to the current year presentation.

For the quarter ended March 31, 2023, we no longer separately present Impairments and Credit losses in our consolidated statements of comprehensive loss.

As a result, amounts presented in prior periods were reclassified to Other Operating to conform to the current year presentation.

For the quarter ended March 31, 2023, we no longer separately present Amortization of debt discounts and premiums;

(Decrease) increase in accrued interest;

and Impairments and Credit losses in our cash flows from Operating Activities within our consolidated statements of cash flows.

As a result, amounts presented in prior periods were reclassified to Amortization of debt issuance costs, discounts and premiums;

Decrease in accrued expenses and other liabilities;

and Other, net, respectively, within Operating Activities to conform to the current year presentation.

Additionally, we no longer separately present Proceeds from the sale of property and equipment and other assets in our cash flows from Investing Activities within our consolidated statements of cash flows.

As a result, amounts presented in prior periods were reclassified to Other, net within Investing Activities to conform to the current year presentation.

Revenue Recognition

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

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

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 203.4 million and $ 76.9 million for the quarters ended March 31, 2023 and 2022, respectively.

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

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

Quarter Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Quarter Ended March 31,

Revenues by itinerary

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

(3) Includes revenues primarily related to cancellation fees, vacation protection insurance, pre- and post-cruise tours and fees for operating certain port facilities.

(3) Includes revenues primarily related to cancellation fees, vacation protection insurance, casino operations, pre- and post-cruise tours and fees for operating certain port facilities.

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

Refer to Note 5 .

Other Assets for more information on our unconsolidated affiliates.

Investments and Other Assets for more information on our unconsolidated affiliates.

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

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

Quarter Ended September 30,

Passenger ticket revenues:

United States 71 % 74 %

United Kingdom 11 % 14 %

All other countries (1) 18 % 12 %

Nine Months Ended September 30,

For the quarters ended March 31, 2023 and 2022, our guests were sourced from the following areas:

Quarter Ended March 31,

Passenger ticket revenues:

United States 76 % 84 %

United Kingdom 9 % 13 %

Singapore 2 % 13 %

All other countries (1) 24 % 16 %

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

(1) No other individual country's revenue exceeded 10% for the quarters ended March 31, 2023 and 2022.

Customer Deposits and Contract Liabilities

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

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 1.6 billion and $ 0.8 billion as of September 30, 2022 and December 31, 2021, respectively.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 2.5 billion and $ 1.8 billion as of March 31, 2023 and December 31, 2022, respectively.

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

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

Given the uncertainty of travel demand caused by COVID-19 and lack of comparable historical experience of FCC redemptions, we are unable to estimate the number of FCCs that will not be used in future periods and get recognized as breakage.

As of March 31, 2023, our customer deposit balance includes approximately $ 0.5 billion of unredeemed FCCs.

Given the lack of comparable historical experience of FCC redemptions, as of March 31, 2023 we are unable to estimate the number of FCCs that may not be used in future periods and get recognized as breakage.

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

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As a result, we have outstanding receivables from passenger cruise contracts in those markets.

We also have receivables from credit card merchants for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise voyage.

We also have receivables from credit card merchants for cruise ticket purchases and goods and services sold to guests during cruises that are collected before, during or shortly after the cruise

In addition, we have receivables due from concessionaires onboard our vessels.

These receivables are included within Trade and other receivables, net in our consolidated balance sheets.

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

One of our processors currently holds a portion of our customer deposits in reserve until the sailings take place or the funds are refunded to the customer.

The cash reserve held by the processor was immaterial as of March 31, 2023.

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

As of September 30, 2022 and December 31, 2021, our contract assets were $ 139.6 million and $ 52.9 million, respectively, and were included within Other assets in our consolidated balance sheets.

As of March 31, 2023 and December 31, 2022, our contract assets were $ 167.7 million and $ 167.9 million, respectively, and were included within Other assets in our consolidated balance sheets.

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

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

Prepaid travel advisor commissions are an incremental cost of obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets.

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

Substantially all of our prepaid travel advisor commissions at December 31, 2021 were expensed and reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive loss for the nine months ended September 30, 2022.

Earnings (Loss) Per Share

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

Quarter Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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

Prepaid travel advisor commissions and prepaid credit and debit card fees are an incremental cost of obtaining contracts with customers that we recognize as an asset and include within Prepaid expenses and other assets in our consolidated balance sheets.

Prepaid travel advisor commissions and prepaid credit and debit card fees were $ 244.9 million as of March 31, 2023 and $ 177.5 million as of December 31, 2022.

Our prepaid travel advisor commissions, and prepaid credit and debit card fees are recognized at the time of revenue recognition or at the time of voyage cancellation, and are reported primarily within Commissions, transportation and other in our consolidated statements of comprehensive loss.

Loss Per Share

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

Quarter Ended March 31,

Net loss for basic and diluted loss per share $ ( 47,910 ) $ ( 1,167,142 )

Weighted-average common shares outstanding 255,465 254,821

Dilutive effect of stock-based awards 307 — — —

Diluted weighted-average shares outstanding 255,465 254,821

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

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

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

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

Basic loss per share $ ( 0.19 ) $ ( 4.58 )

Diluted loss per share $ ( 0.19 ) $ ( 4.58 )

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

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

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

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

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

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

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

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

Summary of Significant Accounting Policies .

Property and Equipment

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

Refer to Note 7 .

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

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

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

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

T here were approximately 30,994,718 and 23,407,179 antidilutive shares for the quarters ended March 31, 2023 and March 31, 2022, respectively.

As we had net loss for the quarters ended March 31, 2023 and March 31, 2022, all potential common shares were determined to be antidilutive, resulting in the same basic and diluted net loss per share amounts for the period.

Investments and Other Assets

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

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or (4) have voting rights that are not proportionate to their economic interests and the entity’s activities involve or are conducted on behalf of an investor with a disproportionately small voting interest.

We hold equity interests in ventures related to our cruise operations.

We account for the majority of these investments as either an equity method investment or a controlled subsidiary.

Effective March 31, 2023, we closed on the previously announced partnership agreement with iCON Infrastructure Partners VI, L.P.

This partnership will own, develop, and manage cruise terminal facilities and infrastructure in key ports of call, initially including several development projects in Italy and Spain.

As part of the transaction with iCON we also agreed to sell 80 % of PortMiami.

Refer below to equity method investments and controlled subsidiarie s for further information on the transaction.

In addition, the partnership will pursue additional port infrastructure developments, including future plans to own, develop, and manage an infrastructure project in the U.S.

Virgin Islands.

Unconsolidated investments ("equity method investments")

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

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

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

As of March 31, 2023, the net book value of our investment in TUIC was $ 483.9 million, primarily consisting of $ 384.6 million in equity and a loan of € 83.2 million, or approximately $ 90.4 million based on the exchange rate at March 31, 2023.

As of December 31, 2022, the net book value of our investment in TUIC was $ 466.0 million, primarily consisting of $ 361.5 million in equity and a loan of € 87.2 million, or approximately $ 93.0 million based on the exchange rate at December 31, 2022.

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

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

During the quarter ended March 31, 2021, we and TUI AG each contributed € 59.5 million, or approximately $ 69.9 million based on the exchange rate at March 31, 2021, of additional equity through a combination of cash contributions and conversion of existing receivables.

TUIC has various ship construction and financing agreements which include certain restrictions on each of our and TUI AG’s ability to reduce our current ownership interest in TUI Cruises below 37.55 % through May 2033.

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

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

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

Accordingly, we do not consolidate this entity.

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

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

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

During the nine months ended September 30, 2021, we received principal and interest payments of $ 8.9 million related to a term loan that had fully matured.

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

The outstanding loan balance is in non-accrual status and is included within Other assets in our consolidated balance sheets.

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

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

As part of the transaction with iCON, we sold our controlling interest in two Italian entities for an immaterial amount of net proceeds and recognized an immaterial gain on the sale.

At closing, we have determined that the partnership and both Italian entities are VIE's.

These entities in Italy represent development projects to own, develop, and manage cruise terminal facilities in key ports of call.

We have determined that we are not the primary beneficiary for either of these entities as we do not have the power to direct the activities that most significantly impact the economic performance.

Accordingly, we do not consolidate these entities.

For further information on the measurements used to estimate the fair value of our equity method investments, refer to Note 11 .

Fair Value Measurements and Derivative Instruments .

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

Quarter Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Quarter Ended March 31,

Share of equity income (loss) from investments $ 20,471 $ ( 31,059 )

Dividends received (1) $ 802 $ 423

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

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

(1) Represents dividends received from our investments accounted for under the equity method of accounting during the quarters ended March 31, 2023 and March 31, 2022.

The amounts included in the table above are net of tax withholdings.

As of March 31, 2023 As of December 31, 2022

Total notes receivable due from equity investments $ 99,746 $ 101,392

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

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

Quarter Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Revenues $ 3,678 $ 7,835 $ 13,988 $ 18,979

Expenses $ 1,672 $ 1,749 $ 5,189 $ 4,738

Consolidated investments ("controlled subsidiaries")

As part of the transaction with iCON, we sold noncontrolling interest in two controlled subsidiaries, comprised of PortMiami and one entity in Spain.

The majority of the proceeds comes from selling 80 % of PortMiami for $ 208.9 million and

retained a 20 % minority interest.

We have determined PortMiami is a VIE, and we are the primary beneficiary as we have the power to direct the activities that most significantly impact the facility’s economic performance.

Accordingly, we will continue to consolidate this entity.

The cash consideration received, net of transaction costs, was allocated between paid in capital and noncontrolling interest using the net book value of PortMiami as of March 31, 2023, as presented in the statement of shareholders' equity.

Credit Losses

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

We reviewed our notes receivable for credit losses in connection with the preparation of our financial statements for the quarter ended March 31, 2023.

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

Our credit loss allowance beginning and ending balances as of January 1, 2022 and September 30, 2022 primarily relate to credit losses recognized on notes receivable for the previous sale of our property and equipment of $ 81.6 million and other receivable balances primarily related to loans due from travel advisors of $ 12.6 million.

The following table summarizes our credit loss allowance related to receivables for the nine months ended September 30, 2022 (in thousands):

Credit Loss Allowance

Beginning balance January 1, 2022 $ 100,192

Our credit loss allowance beginning and ending balances as of March 31, 2023 and 2022 primarily relate to credit losses recognized on notes receivable for the previous sale of certain property and equipment of $ 81.6 million.

The notes receivable for the previous sale of our property and equipment are related to loans that were originated in 2015 and 2020.

The following table summarizes our credit loss allowance related to receivables (in thousands):

Quarter Ended March 31,

Balance, beginning of period $ 83,227 $ 100,192

Credit loss (recovery), net ( 7,287 ) 653

Write-offs ( 2,355 ) ( 8,152 )

Ending balance September 30, 2022 $ 82,702

Balance, end of period $ 73,585 $ 92,693

Debt consists of the following (in thousands):

Interest Rate (1)

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

Maturities Through As of March 31, 2023 As of December 31, 2022

Fixed rate debt:

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Long-term portion $ 19,404,804 $ 21,303,480

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

(2) Includes $ 1.9 billion facility and $ 1.3 billion facility, the vast majority of which is due in 2024.

Our $ 1.9 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.30 % which interest was 4.44 % as of September 30, 2022 and is subject to a facility fee of a maximum of 0.20 %.

Our $ 1.3 billion facility accrues interest at LIBOR plus a maximum interest rate margin of 1.70 %, which interest was 4.84 % as of September 30, 2022 and is subject to a facility fee of a maximum of 0.30 %.

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

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

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

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

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

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

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

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

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

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

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

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

The MS backstop facility will continue to be available to refinance the remaining $ 350 million due under the 4.25 % Convertible Notes due June 2023.

In April 2022, we took delivery of Celebrity Beyond .

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

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

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

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

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

The loan will mature in July 2037.

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

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

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

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

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

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

• if we call the notes for a tax redemption;

• upon the occurrence of specified corporate events.

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

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

The $ 1.15 billion repayment resulted in a total loss on the extinguishment of debt of $ 12.8 million, which was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the quarter and nine months ended September 30,2022.

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

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

The proceeds were subsequently used to repay other debt scheduled to mature in 2022, including the $ 650 million 5.25 % unsecured senior notes due November 2022, which resulted in a loss on extinguishment of debt of $ 3.62 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive loss for the quarter and nine months ended September 30, 2022.

In August 2022, we extended our binding commitment for a $ 700.0 million term loan facility by one year .

As amended, we may draw on the facility at any time prior to August 11, 2023.

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

In addition, the facility (if drawn) will be guaranteed by RCI Holdings LLC, our wholly owned subsidiary that owns the equity interests in subsidiaries that own seven of our vessels.

We have the ability to increase the capacity of the facility by an additional $ 300.0 million from time to time subject to the receipt of additional or increased commitments and the issuance of guarantees from additional subsidiaries.

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

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

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

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

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

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

Our export credit facilities and our non-export credit facilities have an outstanding principal amount of approximately $ 12.0 billion as of September 30, 2022.

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

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

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

Among other things, the amendments modified the levels at which our net debt to capitalization covenant will be tested during the period commencing immediately following the end of the waiver period and continuing through the end of 2025 and the amount of minimum shareholders' equity required to be maintained through 2025.

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

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

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

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

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

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

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

As of September 30, 2022, we have posted letters of credit as collateral with our sureties under our revolving credit facilities in the amount of $ 14.2 million.

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

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

The agreement with this processor was further amended in the third quarter of 2021 such that a portion of the proceeds are withheld in reserve.

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

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

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

(1) Interest rates based on outstanding loans as of March 31, 2023, and for variable rate debt include either LIBOR, EURIBOR or Term SOFR plus the applicable margin.

(2) Advances under our $ 1.9 billion facility accrue interest at Term SOFR plus an interest rate margin ranging from 1.40 % to 2.15 %.

Advances under our $ 1.1 billion facility accrue interest at Term SOFR plus an interest rate margin ranging from 1.80 % to 2.15 %.

Based on applicable Term SOFR rates, as of March 31, 2023, the interest rates under the $ 1.9 billion facility and the $ 1.1 billion facility were 6.20 % and 6.95 %, respectively.

We also pay a facility fee for each facility ranging from 0.20 % to 0.30 % of the total commitments under such facility.

(3) At March 31, 2023 and December 31, 2022, the weighted average interest rate for total debt was 6.35 % and 6.23 %, respectively .

Unsecured revolving credit facilities

In January 2023, we amended and extended the majority of our two unsecured revolving credit facilities.

The amendment extended the maturities of $ 2.3 billion of the $ 3.0 billion aggregate revolving credit capacity by one year to April 2025, with the remainder maturing in April 2024.

Additionally, during the quarter ended March 31, 2023 we repaid $ 2.4 billion under our revolving credit facilities, resulting in an aggregate borrowing capacity of $ 2.6 billion under our unsecured revolving credit facilities as of March 31, 2023.

Our revolving credit facilities were partially utilized through a combination of amounts drawn and letters of credit issued under the facilities as of March 31, 2023.

Debt financing transactions

In February 2023, we issued $ 700 million aggregate principal amount of 7.25 % senior guaranteed notes due January 2030 (" 7.25 % Priority Guaranteed Notes").

Upon closing, we terminated our commitment for the $ 700 million 364 -day term loan facility.

In addition, the remaining $ 350 million backstop committed financing was also terminated upon closing, which resulted in an immaterial loss on extinguishment of debt.

Export credit agency guarantees

Except for the term loans we incurred to acquire Celebrity Flora and Silver Moon, all of our unsecured ship financing term loans are guaranteed by the export credit agency in the respective country in which the ship is constructed.

For the majority of the loans as of September 30, 2022, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35 % to 5.48 % of the maximum loan amount in consideration for these guarantees.

For the majority of the loans as of March 31, 2023, we pay to the applicable export credit agency, depending on the financing agreement, an upfront fee of 2.35 % to 5.48 % of the maximum loan amount in consideration for these guarantees.

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

We classify these fees within Amortization of debt issuance costs in our consolidated statements of cash flows.

We classify these fees within Amortization of debt issuance costs, discounts and premiums in our consolidated statements of cash flows.

Prior to the loan being drawn, we present these fees within Other assets in our consolidated balance sheets.

Once the loan is drawn, such fees are classified as a discount to the related loan, or contra-liability account, within Current portion of long-term debt or long-term debt .

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

Year As of September 30, 2022 (1)

Debt covenants

Our export credit facilities and our non-export credit facilities have an outstanding principal amount of approximately $ 9.4 billion as of March 31, 2023.

These facilities, as well as 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, maintain minimum liquidity, and under certain facilities, to maintain a minimum stockholders' equity.

As of March 31, 2023, we were in compliance with our debt covenants and we estimate we will be in compliance for the next twelve months.

The following is a schedule of annual maturities on our total debt, including finance leases, as of March 31, 2023 for each of the next five years (in thousands):

Year As of March 31, 2023 (1)

Remainder of 2023 $ 1,806,425

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Thereafter 7,866,645

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

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

(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2023.

Operating Leases

Our operating leases primarily relate to preferred berthing arrangements, real estate and shipboard equipment, and are included within Operating lease right-of-use assets , and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of September 30, 2022 and December 31, 2021.

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

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Our operating leases include Silver Explorer , operated by Silversea Cruises.

The operating lease for Silver Explorer will expire in 2023.

The operating lease for Silver Explorer will expire in August 2023.

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

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As most of our leases do not provide an implicit rate, we use our incremental borrowing rate in determining the present value of lease payments.

We estimate our incremental borrowing rates based on LIBOR and U.S.

We estimate our incremental borrowing rates based on Term SOFR and U.S.

Treasury note rates corresponding to lease terms increased by the Company’s credit risk spread and reduced by the estimated impact of collateral.

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Finance Leases

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

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

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

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

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

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

The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $ 101.6 million and $ 127.0 million as of September 30, 2022 and December 31, 2021, respectively.

Our finance leases primarily relate to buildings and surrounding land located at our Miami headquarters and our lease for the Silver Dawn ship.

Finance leases are included within Property and Equipment , net and Long-term debt with the current portion of the liability included within Current portion of long-term debt in our consolidated balance sheets as of March 31, 2023 and December 31, 2022.

During the quarter ended March 31, 2023 we executed the bargain purchase option for the Silver Whisper.

The Company's master lease agreement (“Master Lease”) with Miami-Dade County related to the buildings and surrounding land located at our Miami headquarters is classified as a finance lease in accordance with ASC 842, Leases .

The Master Lease includes two five-year options to extend the lease which we are reasonably certain to exercise.

The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $ 56.0 million and $ 55.5 million as of March 31, 2023 and December 31, 2022, respectively.

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

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

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

The total aggregate amount of finance lease liabilities recorded for this ship was $ 260.1 million and $ 264.8 million as of March 31, 2023 and December 31, 2022, respectively.

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

Silversea Cruises operates the Silver Whisper under a finance lease.

The finance lease for Silver Whisper will expire in 2023, subject to an option to purchase the ship.

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

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

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

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

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

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

Operating lease costs Other operating expenses 5,545 16,540

Operating lease costs Marketing, selling and administrative expenses 4,545 14,191

Financial lease costs:

Amortization of right-of-use-assets Depreciation and amortization expenses 6,115 18,311

Interest on lease liabilities Interest expense, net of interest capitalized 5,942 15,196

Total lease costs $ 49,071 $ 141,884

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

Consolidated Statement of Comprehensive Loss Classification Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

Operating lease costs Commission, transportation and other $ 55,101 $ 22,729

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

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

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

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

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

During the quarters ended March 31, 2023, and 2022 we had $ 37.7 million and $ 7.5 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive loss, respectively.

The w eighted average of the remaining lease terms and weighted average discount rates are as follows:

As of March 31, 2023 As of December 31, 2022

Weighted average of the remaining lease term in years

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

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

Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

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

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Financing cash flows from finance leases $ 13,988 $ 17,034

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

As of March 31, 2023, maturities related to lease liabilities were as follows (in thousands):

Year Operating Leases Finance Leases

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Our future capital commitments consist primarily of new ship orders.

As of September 30, 2022, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship Shipyard Expected to be delivered Approximate

As of March 31, 2023, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

Ship Shipyard Expected delivery Approximate

Royal Caribbean International —

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Silver Nova Meyer Werft 2nd Quarter 2023 730

Unnamed Meyer Werft 2nd Quarter 2024 730

Silver Ray Meyer Werft 2nd Quarter 2024 730

TUI Cruises (50% joint venture) —

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Total Berths 38,310

In addition, as of September 30, 2022, we have an agreement in place with Chantiers de l'Atlantique to build an additional Edge-class ship for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

As of September 30, 2022, the aggregate cost of our ships on order presented in the table above, excluding any ships on order by our Partner Brands, was approximately $ 9.1 billion, of which we had deposited $ 0.7 billion as of such date.

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

In addition, as of March 31, 2023, we have an agreement in place with Chantiers de l'Atlantique to build an additional Edge-class ship, estimated for delivery in 2025, which is contingent upon completion of conditions precedent and financing.

As of March 31, 2023, the aggregate cost of our ships on order presented in the table above, not including any ships on order by our Partner Brands, was approximately $ 10.2 billion, of which we had deposited $ 0.9 billion as of such date.

Approximately 49.2 % of the aggregate cost was exposed to fluctuations in the Euro exchange rate at March 31, 2023.

Refer to Note 11 .

Fair Value Measurements and Derivative Instruments for further information.

As previously reported, two lawsuits were filed against us in August 2019 in the U.S.

As previously reported, a lawsuit was filed against us in August 2019 in the U.S.

District Court for the Southern District of Florida (the "Court") under Title III of the Cuban Liberty and Democratic Solidarity Act, also known as the Helms-Burton Act.

The complaint filed by Havana Docks Corporation ("Havana Docks Action") alleges it holds an interest in the Havana Cruise Port Terminal, and the complaint filed by Javier Garcia-Bengochea (the "Port of Santiago Action") alleges that he holds an interest in the Port of Santiago, Cuba, both of which were expropriated by the Cuban government.

The complaints further allege that we trafficked in those properties by embarking and disembarking passengers at these facilities.

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

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

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

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

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

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

briefing to the Court scheduled to be completed by December 2022.

We believe we have meritorious defenses to the claims alleged in both the Havana Docks Action and the Port of Santiago Action, and we inte nd to vigorously defend ourselves against them, including, in the Havana Docks Action, by appealing the Court’s final judgment.

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

The outcome of the litigation is inherently unpredictable and subject to significant uncertainties, and there can be no assurances that the final outcome of either case will not be material.

The complaint filed by Havana Docks Corporation alleges it holds an interest in the Havana Cruise Port Terminal, which was expropriated by the Cuban government.

The complaint further alleges that we trafficked in the terminal by embarking and disembarking passengers at these facilities.

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

The Court entered final judgment in December 2022 in favor of the plaintiff and awarded damages and attorneys' fees to the plaintiff in the aggregate amount of approximately $ 112 million.

We have appealed the judgment to the United States Court of Appeals for the 11th Circuit and the plaintiff has cross-appealed with regards to the interest calculation used for purposes of determining damages.

We believe we have meritorious grounds for and intend to vigorously pursue our appeal.

During the fourth quarter of 2022, we recorded a charge of approximately $ 130.0 million to Other income (expense) within our consolidated statements of comprehensive loss related to the Havana Docks Action, including post-judgment interest and related legal defense costs and bonding fees.

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

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

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

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

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

Shareholders' Equity

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

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

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

Summary of Significant Accounting Policies .

Common Stock Issued

During March 2021, we issued 16.9 million shares of common stock, par value $ 0.01 per share, at a price of $ 91.00 per share.

We received net proceeds of $ 1.5 billion from the sale of our common stock, after deducting the estimated offering expenses payable by us.

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

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

We did not declare any dividends during the quarters ended March 31, 2023 and March 31, 2022.

During the first quarter of 2022, we were restricted under certain of our credit facilities from paying dividends while waivers to the financial covenants within such facilities were in effect.

While the waivers have now expired, in the event we declare a dividend, we will need to repay the principal amounts deferred under our export credit facilities.

Noncontrolling Interests

Effective March 31, 2023, we closed the previously announced partnership with iCON.

We sold 80 % of PortMiami for $ 208.9 million and retained a 20 % minority interest.

The cash consideration received, net of transaction costs, was allocated between paid in capital and noncontrolling interest in the accompanying consolidated statement of shareholders' equity as of March 31, 2023.

Refer to Note 5 .

Investments and Other Assets for further information on the transaction.

The Net Loss attributable to noncontrolling interest was immaterial during the quarters ended March 31, 2023 and March 31, 2022.

Changes in Accumulated Other Comprehensive Loss

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

Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2022 Accumulated Other Comprehensive Loss for the Nine Months Ended September 30, 2021

The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 2023 and 2022 (in thousands):

Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2023 Accumulated Other Comprehensive Loss for the Quarter Ended March 31, 2022

Changes related to cash flow derivative hedges Changes in defined benefit plans Foreign currency translation adjustments Accumulated other comprehensive loss Changes related to cash flow derivative hedges Changes in defined benefit plans Foreign currency translation adjustments Accumulated other comprehensive loss

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Ending balance $ ( 669,708 ) $ ( 4,408 ) $ ( 3,828 ) $ ( 677,944 ) $ ( 450,572 ) $ ( 44,238 ) $ 201 $ ( 494,609 )

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and nine months ended September 30, 2022 and 2021 (in thousands):

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters ended March 31, 2023 and 2022 (in thousands):

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

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

Details About Accumulated Other Comprehensive Loss Components Quarter Ended March 31, 2023 Quarter Ended March 31, 2022 Affected Line Item in Statements of

Comprehensive Loss

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Fuel swaps ( 3,664 ) 44,804 Fuel

34,482 ( 5,230 ) 130,480 ( 24,762 )

Amortization of defined benefit plans:

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

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

Fair Value Measurements at March 31, 2023 Fair Value Measurements at December 31, 2022

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

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Total Liabilities $ 21,123,218 $ 21,909,938 $ — $ 21,909,938 $ — $ 23,039,859 $ 22,856,306 $ — $ 22,856,306 $ —

(1) Inputs based on quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access.

(1) Inputs based on quoted prices (unadjusted) in active markets for identical assets that we have the ability to access.

Valuation of these items does not entail a significant amount of judgment.

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(3) Inputs that are unobservable.

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

The Company did not use any Level 3 inputs as of March 31, 2023 and December 31, 2022.

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

(5) Consists of unsecured revolving credit facilities, senior notes, term loans and convertible notes.

These amounts do not include our finance lease obligations or commercial paper.

These amounts do not include our finance lease obligations.

Other Financial Instruments

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

The carrying amounts of accounts receivable, accounts payable, accrued interest and accrued expenses approximate fair value at March 31, 2023 and December 31, 2022.

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

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

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

Fair Value Measurements at March 31, 2023 Fair Value Measurements at December 31, 2022

Description Total Level 1 (1)

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Valuation of these items does not entail a significant amount of judgment.

No Level 1 inputs were used in fair value measurements of other financial instruments as of March 31, 2023 and December 31, 2022.

(2) Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

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(3) Inputs that are unobservable.

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

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

No Level 3 inputs were used in fair value measurements of other financial instruments as of March 31, 2023 and December 31, 2022.

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

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

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

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

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

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

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of September 30, 2022 or December 31, 2021, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of March 31, 2023 or December 31, 2022, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Nonfinancial Instruments Recorded at Fair Value on a Nonrecurring Basis

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

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

Fair Value Measurements at September 30, 2022

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

the Nine Months ended September 30, 2022 (1)

Long-lived assets — — — 10,186

Total — — — 10,186

(1) Amount is primarily composed of construction in progress assets that were impaired during the three months ended September 30, 2022 due to a reduction in scope or the decision to not complete the projects.

The impairments were calculated based on orderly liquidation values.

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

Fair Value Measurements at December 31, 2021

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

Long-lived assets — — — 55,213

Total — — — 55,213

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

The impairments were calculated based on orderly liquidation values.

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

There were no nonfinancial instruments recorded at fair value as of March 31, 2023.

Master Netting Agreements

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

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

As of March 31, 2023 As of December 31, 2022

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

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

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

As of March 31, 2023 As of December 31, 2022

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

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

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

As of March 31, 2023, we had counterparty credit risk exposure under our derivative instruments of $ 88.5 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks.

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

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

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

For our regression analyses, we use an observation period of

up to three years , utilizing market data relevant to the hedge horizon of each hedge relationship.

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

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

At September 30, 2022 and December 31, 2021, approximately 75.3 % and 65.7 %, respectively, of our debt was effectively fixed-rate debt.

At March 31, 2023 and December 31, 2022, approximately 84 % and 75 %, respectively, of our debt was effectively fixed-rate debt, which is net of our interest rate swap agreements.

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

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

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

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

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

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

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

At March 31, 2023 and December 31, 2022 , there were no interest rate swap agreements for fixed-rate debt instruments.

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

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

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

At March 31, 2023 and December 31, 2022, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of March 31, 2023 (in thousands) Maturity Debt Floating Rate All-in Swap Fixed Rate as of March 31, 2023

Celebrity Reflection term loan

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191,667 October 2032 LIBOR plus 0.96 % 2.84 %

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

Amount presented is based on the exchange rate as of September 30, 2022.

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

Amount presented is based on the exchange rate as of March 31, 2023.

(2) Interest rate swap agreements hedging the term loan of Odyssey of the Seas include LIBOR zero-floors matching the debt LIBOR zero-floor.

The effective dates of the $ 402.5 million and $ 191.7 million interest rate swap agreements are October 2020 and October 2022, respectively.

The unsecured term loan for the financing of Odyssey of the Seas was drawn on March 2021.

Amount presented is based on the exchange rate as of March 31, 2023.

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

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

The notional amount of interest rate swap agreements related to outstanding debt as of March 31, 2023 and December 31, 2022 was $ 1.9 billion, respectively.

Foreign Currency Exchange Rate Risk

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

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

As of March 31, 2023, the aggregate cost of our ships on order was $ 10.2 billion, of which we had deposited $ 922.5 million as of such date.

These amounts do not include any ships placed on order that are contingent upon completion of conditions precedent and/or financing and any ships on order by our Partner Brands.

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

At September 30, 2022 and December 31, 2021, approximately 54.4 % and 59.0 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

At March 31, 2023 and December 31, 2022, approximately 49.2 % and 52.3 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

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

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

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

During the first quarter of 2023 and 2022 the average notional amount of foreign currency forward contracts was approximately $ 1.2 billion and $ 0.8 billion, respectively.

These instruments are not designated as hedging instruments.

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

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

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

For the quarters ended March 31, 2023 and 2022, changes in the fair value of the foreign currency forward contracts resulted in gains (losses) of $ 4.1 million and $( 7.0 ) million, respectively, which offset (losses) gains arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $( 11.1 ) million and $ 7.2 million, respectively.

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

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

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of March 31, 2023 and December 31, 2022 was $ 3.3 billion and $ 2.9 billion, respectively.

Non-Derivative Instruments

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

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

We address the exposure of our investments in foreign operations by denominating a portion of our debt in our subsidiaries’ and investments’ functional currencies and designating it as a hedge of these subsidiaries and investments.

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

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 446.9 million, or approximately $ 485.5 million, as of March 31, 2023.

As of December 31, 2022, we had designated debt as a hedge of our net investments primarily in TUI Cruises of € 433.0 million, or approximately $ 461.9 million.

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For hedged forecasted fuel consumption that remains possible of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will remain in accumulated other comprehensive gain or loss until the underlying hedged transactions are recognized in earnings or the related hedged forecasted fuel consumption is deemed probable of not occurring.

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

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

For the nine months ended September 30, 2022, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements.

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

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 II, Item 1A.

for further discussion on risks related to COVID-19.

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

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

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

For the quarter ended March 31, 2023 and March 31, 2022, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements.

At March 31, 2023, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2024.

As of March 31, 2023 and December 31, 2022, we had the following outstanding fuel swap agreements:

Fuel Swap Agreements

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

As of March 31, 2023 As of December 31, 2022

Designated as hedges:

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Fuel Swap Agreements

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

As of March 31, 2023 As of December 31, 2022

Designated hedges as a % of projected fuel purchases:

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2024 10 % — %

Fuel Swap Agreements

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

Not designated as hedges:

(metric tons)

2022(1) 94,382 231,900

(1) As of September 30, 2022, 47,191 metric tons relate to fuel swap agreements with discontinued hedge accounting, in which we effectively pay fixed prices and receive floating prices from the counterparty.

The remaining 47,191 metric tons relate to fuel swap agreements that were not designated as hedges since inception, in which we effectively pay floating prices and receive fixed prices from the counterparty.

As of September 30, 2022, there was $ 9.8 million of estimated unrealized gain associated with our cash flow hedges pertaining to fuel swap agreements is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months when compared to $ 23.8 million of estimated unrealized net gain at December 31, 2021.

As of March 31, 2023, there was $ 34.1 million of estimated unrealized net loss associated with our cash flow hedges pertaining to fuel swap agreements that is expected to be reclassified to earnings from Accumulated other comprehensive loss within the next twelve months when compared to $ 7.9 million of estimated unrealized net loss at December 31, 2022.

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

2 unchanged sentences

Asset Derivatives Liability Derivatives

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

Balance Sheet Location As of March 31, 2023 As of December 31, 2022 Balance Sheet Location As of March 31, 2023 As of December 31, 2022

Fair Value Fair Value Fair Value Fair Value

1 unchanged sentence

Interest rate swaps Other assets $ 94,170 $ 115,049 Other long-term liabilities $ — $ —

Interest rate-swaps Derivative financial instruments 6,478 Derivative financial instruments — —

Foreign currency forward contracts Derivative financial instruments 23,602 18,892 Derivative financial instruments 69,290 84,953

3 unchanged sentences

Total derivatives designated as hedging instruments under 815-20 $ 168,737 $ 203,802 $ 135,485 $ 135,609

Derivatives not designated as hedging instruments under ASC 815-20

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

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

Fuel swaps Derivative financial instruments 9,621 8,430 Derivative financial instruments 11,459 3,264

Fuel swaps Other Assets — 102 Other long-term liabilities — 1,211

Total derivatives not designated as hedging instruments under 815-20 9,621 8,532 11,459 4,475

Total derivatives $ 189,150 $ 69,808 $ 312,358 $ 200,541

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

2 unchanged sentences

Non-derivative instrument designated as

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

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

hedging instrument under ASC 815-20 Balance Sheet Location As of March 31, 2023 As of December 31, 2022

Foreign currency debt Current portion of long-term debt $ 62,282 $ 62,282

Foreign currency debt Long-term debt 423,230 399,577

6 unchanged sentences

Income on Hedged Item

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

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

$ 966 $ 383 $ ( 3,569 ) $ 148 $ ( 4,417 ) $ 2,100 $ 4,534 $ 7,098

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

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

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

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

Quarter Ended March 31, 2023 Quarter Ended March 31, 2022 Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

Interest rate swaps Interest expense, net of interest capitalized $ — $ ( 3,365 ) $ — $ 6,024

$ — $ ( 3,365 ) $ — $ 6,024

3 unchanged sentences

Comprehensive Loss on Derivatives

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

Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

Interest rate swaps $ ( 10,620 ) $ 74,865

2 unchanged sentences

$ ( 30,279 ) $ 224,619

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

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

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

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

Fair value at September 30, 2022 $ —

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

Amount of Gain (Loss) Recognized in Other Comprehensive Loss

Amount of (Loss) Gain Recognized in Other Comprehensive Loss

Non-derivative instruments under ASC 815-20 Net

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

Investment Hedging Relationships Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

Foreign Currency Debt $ ( 8,980 ) $ 2,745

$ ( 8,980 ) $ 2,745

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

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

3 unchanged sentences

Gain (Loss) Recognized in

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

Income on Derivatives Quarter Ended March 31, 2023 Quarter Ended March 31, 2022

Foreign currency forward contracts Other income (expense) $ 4,118 $ ( 6,985 )

3 unchanged sentences

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

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

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

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

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

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

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

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

As of March 31, 2023, our senior unsecured debt credit rating was B by Standard & Poor's and B3 by Moody's.

As of March 31, 2023, five of our interest rate derivative hedges had reached their fifth-year anniversary;

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

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

What changed 10-Q

Item 1. Financial Statements