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Item 1. Financial Statements

2024-07-25 compared with 2024-04-25 · 256 added, 159 removed, 644 unchanged (39% of the section changed)

3 unchanged sentences

in millions, except per share data)

Quarter Ended March 31,

Quarter Ended June 30,

Passenger ticket revenues $ 2,887 $ 2,444

14 unchanged sentences

Equity investment income 56 42

Other (expense) income ( 8 ) 5

Other expense ( 3 ) ( 5 )

( 241 ) ( 308 )

Net Income (Loss) 364 ( 48 )

Net Income 858 463

Net Income attributable to noncontrolling interest 4 4

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

Net Income attributable to Royal Caribbean Cruises Ltd.

Earnings per Share:

Basic $ 3.32 $ 1.79

Diluted $ 3.11 $ 1.70

Weighted-Average Shares Outstanding:

Basic 257 256

Diluted 281 282

Comprehensive Income (Loss)

Net Income $ 858 $ 463

Other comprehensive income (loss):

Foreign currency translation adjustments 6 ( 3 )

Change in defined benefit plans ( 12 ) ( 3 )

(Loss) gain on cash flow derivative hedges ( 31 ) 5

Total other comprehensive loss ( 37 ) ( 1 )

Comprehensive Income 821 462

Comprehensive Income attributable to noncontrolling interest 4 4

Comprehensive Income attributable to Royal Caribbean Cruises Ltd.

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

in millions, except per share data)

Six Months Ended June 30,

Passenger ticket revenues $ 5,429 $ 4,340

Onboard and other revenues 2,409 2,068

Total revenues 7,838 6,408

Cruise operating expenses:

Commissions, transportation and other 1,070 919

Onboard and other 437 379

Payroll and related 631 594

Other operating 1,039 876

Total cruise operating expenses 4,209 3,747

Marketing, selling and administrative expenses 1,001 896

Depreciation and amortization expenses 780 721

Operating Income 1,848 1,044

Other income (expense):

Interest income 9 24

Interest expense, net of interest capitalized ( 721 ) ( 714 )

Equity investment income 97 62

Other expense ( 11 ) ( 1 )

( 626 ) ( 629 )

Earnings (Loss) per Share:

Net Income 1,222 415

Net Income attributable to noncontrolling interest 8 4

Net Income attributable to Royal Caribbean Cruises Ltd.

$ 1,214 $ 411

Earnings per Share:

Basic $ 4.72 $ 1.61

4 unchanged sentences

Comprehensive Income (Loss)

Net Income (Loss) $ 364 $ ( 48 )

Net Income $ 1,222 $ 415

Other comprehensive income (loss):

3 unchanged sentences

Total other comprehensive income (loss) 20 ( 37 )

Comprehensive Income (Loss) 421 ( 83 )

Comprehensive Income 1,242 378

Comprehensive Income attributable to noncontrolling interest 8 4

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

Comprehensive Income attributable to Royal Caribbean Cruises Ltd.

$ 1,234 $ 374

3 unchanged sentences

(in millions, except share data)

March 31, December 31,

June 30, December 31,

Current assets

Cash and cash equivalents $ 391 $ 497

Trade and other receivables, net of allowances of $ 9 and $ 7 at March 31, 2024 and December 31, 2023, respectively

Trade and other receivables, net of allowances of $ 8 and $ 7 at June 30, 2024 and December 31, 2023, respectively

Inventories 242 248

5 unchanged sentences

Goodwill 809 809

Other assets, net of allowances of $ 43 at March 31, 2024 and December 31, 2023.

Other assets, net of allowances of $ 42 and $ 43 at June 30, 2024 and December 31, 2023, respectively

Total assets $ 36,974 $ 35,131

18 unchanged sentences

500,000,000 shares authorized;

285,814,489 and 284,672,386 shares issued, March 31, 2024 and December 31, 2023, respectively)

285,863,919 and 284,672,386 shares issued, June 30, 2024 and December 31, 2023, respectively)

Paid-in capital 7,536 7,474

1 unchanged sentence

Accumulated other comprehensive loss ( 654 ) ( 674 )

Treasury stock ( 28,468,430 and 28,248,125 common shares at cost, March 31, 2024 and December 31, 2023, respectively)

Treasury stock ( 28,468,430 and 28,248,125 common shares at cost, June 30, 2024 and December 31, 2023, respectively)

( 2,081 ) ( 2,069 )

7 unchanged sentences

(unaudited, in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Operating Activities

Net Income (Loss) $ 364 $ ( 48 )

Net Income $ 1,222 $ 415

Depreciation and amortization 780 721

Net deferred income tax benefit — ( 11 )

Gain (loss) on derivative instruments not designated as hedges 35 ( 3 )

Net deferred income tax expense (benefit) 5 ( 6 )

Loss (Gain) on derivative instruments not designated as hedges 40 ( 12 )

Share-based compensation expense 83 66

35 unchanged sentences

(unaudited, in millions)

Three Months Ended March 31,

Six Months Ended June 30,

Supplemental Disclosure

6 unchanged sentences

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

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

Balance at April 1, 2024 $ 3 $ 7,496 $ 350 $ ( 617 ) $ ( 2,081 ) $ 174 $ 5,325

Activity related to employee stock plans — 40 — — — — 40

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

Change in defined benefit plans — — — ( 12 ) — — ( 12 )

Foreign currency translation adjustments — — — 6 — — 6

Net Income attributable to noncontrolling interest — — — — — 4 4

Other activity attributable to noncontrolling interest — — — — — ( 4 ) ( 4 )

Net Income attributable to Royal Caribbean Cruises Ltd.

— — 854 — — — 854

Balance at June 30, 2024 $ 3 $ 7,536 $ 1,204 $ ( 654 ) $ ( 2,081 ) $ 174 $ 6,182

Common Stock Paid-in Capital (Accumulated Deficit)

Retained Earnings Accumulated Other Comprehensive Loss Treasury Stock Noncontrolling Interest Total Shareholders' Equity

Balance at January 1, 2024 $ 3 $ 7,474 $ ( 10 ) $ ( 674 ) $ ( 2,069 ) 175 $ 4,899

5 unchanged sentences

Net Income attributable to noncontrolling interest — — — — — 8 8

Dividends from noncontrolling interest — — — — — ( 5 ) ( 5 )

Other activity attributable to noncontrolling interest — — — — — ( 9 ) ( 9 )

Net Income attributable to Royal Caribbean Cruises Ltd.

— — 1,214 — — — 1,214

Balance at March 31, 2024 $ 3 $ 7,496 $ 350 $ ( 617 ) $ ( 2,081 ) $ 174 $ 5,325

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

Balance at June 30, 2024 $ 3 $ 7,536 $ 1,204 $ ( 654 ) $ ( 2,081 ) $ 174 $ 6,182

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

ROYAL CARIBBEAN CRUISES LTD.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

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

Balance at April 1, 2023 $ 3 $ 7,351 $ ( 1,755 ) $ ( 679 ) $ ( 2,069 ) $ 174 $ 3,025

Activity related to employee stock plans — 43 — — — — 43

Convertible notes settlement — 12 — 12

Changes related to cash flow derivative hedges — — — 5 — — 5

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

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

Net Income attributable to noncontrolling interest — — — — — 4 4

Net Income attributable to Royal Caribbean Cruises Ltd.

— — 459 — — — 459

Balance at June 30, 2023 $ 3 $ 7,406 $ ( 1,296 ) $ ( 680 ) $ ( 2,069 ) $ 178 $ 3,542

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

Balance at January 1, 2023 $ 3 $ 7,285 $ ( 1,707 ) $ ( 643 ) $ ( 2,068 ) $ — $ 2,870

Activity related to employee stock plans — 64 — — — — 64

Convertible notes settlement — 12 — — — — 12

Changes related to cash flow derivative hedges — — — ( 27 ) — — ( 27 )

3 unchanged sentences

Sale of noncontrolling interest — 45 — — — 174 219

Net Loss — — ( 48 ) — — — ( 48 )

Balance at March 31, 2023 $ 3 $ 7,351 $ ( 1,755 ) $ ( 678 ) $ ( 2,069 ) $ 174 $ 3,026

Net Income attributable to noncontrolling interest — — — — — 4 4

Net Income attributable to Royal Caribbean Cruises Ltd.

— — 411 — — — 411

Balance at June 30, 2023 $ 3 $ 7,406 $ ( 1,296 ) $ ( 680 ) $ ( 2,069 ) $ 178 $ 3,542

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

15 unchanged sentences

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

Together, our Global Brands and our Partner Brands have a combined fleet of 65 ships as of March 31, 2024.

Together, our Global Brands and our Partner Brands have a combined fleet of 68 ships as of June 30, 2024.

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

22 unchanged sentences

This ASU is effective for joint venture entities with a formation date on or after January 1, 2025 on a prospective basis.

Early adoption is permitted, and joint ventures formed prior to the adoption date

may elect to apply the new guidance retrospectively back to their original formation date.

Early adoption is permitted, and joint ventures formed prior to the adoption date may elect to apply the new guidance retrospectively back to their original formation date.

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

22 unchanged sentences

These types 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 $ 242 million and $ 203 million for the quarters ended March 31, 2024 and 2023, respectively.

The amounts of port costs charged to our guests and included within Passenger ticket revenues on a gross basis were $ 266 million and $ 226 million for the quarters ended June 30, 2024 and 2023, respectively, and $ 509 million and $ 430 million for the six months ended June 30, 2024 and 2023, respectively.

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

3 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Revenues by itinerary

1 unchanged sentence

Asia/Pacific 235 169 741 502

Europe 841 841 863 843

Other regions (2) 278 227 600 442

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

For the quarters ended March 31, 2024 and 2023, our guests were sourced from the following areas:

Quarter Ended March 31,

For the quarters and six months ended June 30, 2024 and 2023, our guests were sourced from the following areas:

Quarter Ended June 30,

Passenger ticket revenues:

1 unchanged sentence

All other countries (1) 21 % 24 %

(1) No other individual country's revenue exceeded 10% for the quarters ended March 31, 2024 and 2023.

Six Months Ended June 30,

Passenger ticket revenues:

United States 76 % 76 %

All other countries (1) 24 % 24 %

(1) No other individual country's revenue exceeded 10% for the quarters and six months ended June 30, 2024 and 2023.

Customer Deposits and Contract Liabilities

3 unchanged sentences

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

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 2.9 billion and $ 2.6 billion as of March 31, 2024 and December 31, 2023, respectively.

Customer deposits presented in our consolidated balance sheets include contract liabilities of $ 3.4 billion and $ 2.6 billion as of June 30, 2024 and December 31, 2023, respectively.

During the pandemic we provided flexibility to guests with bookings on sailings that were cancelled by allowing guests to receive future cruise credits (“FCCs”).

As of March 31, 2024, our customer deposit balance includes approximately $ 317 million of unredeemed FCCs.

As of June 30, 2024, our customer deposit balance includes approximately $ 298 million of unredeemed FCCs.

Our FCCs are not refundable and do not have expiration dates.

Based upon our analysis of historical redemption experience, we believe a portion of our FCCs are not probable of being used in future periods.

Based on our current estimates, we recognized an immaterial amount of FCC breakage revenue during the quarter ended March 31, 2024.

Based on our current estimates, we recognized an immaterial amount of FCC breakage revenue during the quarter and six months ended June 30, 2024.

We will continue to monitor changes in redemption behavior and estimate and record revenue associated with breakage when the likelihood of the customer exercising their remaining rights becomes remote.

5 unchanged sentences

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.

As of March 31, 2024, none of our credit card processors required us to maintain a reserve.

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

As of June 30, 2024, none of our credit card processors required us to maintain a reserve.

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

As of March 31, 2024 and December 31, 2023, our contract assets were $ 166 million and $ 167 million, respectively, and were included within Other assets in our consolidated balance sheets.

As of June 30, 2024 and December 31, 2023, our contract assets were $ 164

million and $ 167 million, respectively, and were included within Other assets in our consolidated balance sheets.

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

1 unchanged sentence

Prepaid travel advisor commissions 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 $ 293 million as of March 31, 2024 and $ 257 million as of December 31, 2023.

Prepaid travel advisor commissions and prepaid credit and debit card fees were $ 321 million as of June 30, 2024 and $ 257 million as of December 31, 2023.

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 income (loss).

Earnings (Loss) Per Share

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

Quarter Ended March 31,

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

for basic earnings (loss) per share $ 360 $ ( 48 )

Earnings Per Share

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

Quarter Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Net Income attributable to Royal Caribbean Cruises Ltd.

for basic earnings per share $ 854 $ 459 $ 1,214 $ 411

Add convertible notes interest 19 21 38 4

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

for diluted earnings (loss) per share 379 ( 48 )

Net Income attributable to Royal Caribbean Cruises Ltd.

for diluted earnings per share 873 480 1,252 415

Weighted-average common shares outstanding 257 256 257 256

2 unchanged sentences

Diluted weighted-average shares outstanding 281 282 281 259

Basic earnings (loss) per share $ 1.40 $ ( 0.19 )

Diluted earnings (loss) per share $ 1.35 $ ( 0.19 )

T here were no antidilutive shares for the quarter ended March 31, 2024, compared to 30,994,718 antidilutive shares from our stock-based awards and convertible notes for the quarter ended March 31, 2023 .

Basic earnings per share $ 3.32 $ 1.79 $ 4.72 $ 1.61

Diluted earnings per share $ 3.11 $ 1.70 $ 4.46 $ 1.60

T here were no antidilutive shares from our stock-based awards and convertible notes for the quarters ended June 30, 2024 and 2023.

In addition, there were no antidilutive shares for the six months ended June 30, 2024, and approximately 25,459,641 antidilutive shares for the six months ended June 30, 2023.

Investments and Other Assets

6 unchanged sentences

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 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.

In 2023, we closed on the partnership agreement with iCON Infrastructure Partners VI, L.P.

This partnership owns, develops, and manages 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 sold 80 % of the entity which owns our terminal at PortMiami.

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

All the significant operating and financial decisions of TUIC require the consent of both parties, which we believe creates shared power over TUIC.

All the significant operating and financial decisions of TUIC require the consent of both

parties, which we believe creates shared power over TUIC.

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

As of March 31, 2024, the net book value of our investment in TUIC was $ 678 million, primarily consisting of $ 594 million in equity and a loan of € 67 million, or approximately $ 73 million based on the exchange rate at March 31, 2024.

As of June 30, 2024, the net book value of our investment in TUIC was $ 716 million, primarily consisting of $ 642 million in equity and a loan of € 63 million, or approximately $ 68 million based on the exchange rate at June 30, 2024.

As of December 31, 2023, the net book value of our investment in TUIC was $ 657 million, primarily consisting of $ 566 million in equity and a loan of € 71 million, or approximately $ 79 million based on the exchange rate at December 31, 2023.

9 unchanged sentences

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

During the second half of 2023, we formed a 50 %-owned joint venture with the other 40 % shareholder of Grand Bahama to operate Floating Docks S.

In 2023, we formed a 50 %-owned joint venture with the other 40 % shareholder of Grand Bahama to operate Floating Docks S.

(“Floating Docks”).

Floating Docks will construct two floating drydocks, with delivery dates expected in 2025 and 2026, that will be leased to Grand Bahama and allow it to service the entire range of cruise ships in operation and under construction, as well as much of the world’s commercial shipping fleet.

We and our joint venture partner have each guaranteed 50 % of certain installment payments payable by Floating Docks under the drydock and related construction contracts, which are contingent on the achievement of certain construction milestones, bringing our total payment guarantees to $ 59 million as of March 31, 2024.

Our investment in Floating Docks, including loans, is immaterial to our consolidated financial statements as of March 31, 2024.

Our investment in Floating Docks, including loans, is immaterial to our consolidated financial statements as of June 30, 2024.

We have determined that Floating Docks is a VIE.

2 unchanged sentences

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

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.

In 2023, 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.

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.

2 unchanged sentences

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

Quarter Ended March 31,

Quarter Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

Share of equity income from investments $ 56 $ 42 $ 97 $ 62

As of March 31, 2024 As of December 31, 2023

As of June 30, 2024 As of December 31, 2023

Total notes receivable due from equity investments $ 110 $ 105

10 unchanged sentences

Credit Losses

We reviewed our receivables for credit losses in connection with the preparation of our financial statements for the quarter ended March 31, 2024.

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 as of March 31, 2024 and 2023 primarily relates to credit losses recognized on notes receivable for the previous sale of certain property and equipment of $ 43 million and $ 63 million, respectively, which were originated in 2015 and 2020.

We reviewed our receivables for credit losses in connection with the preparation of our financial statements for the quarter ended June 30, 2024.

In evaluating our credit loss 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 as of June 30, 2024 and 2023 primarily relates to credit losses recognized on notes receivable for the previous sale of certain property and equipment of $ 42 million and $ 63 million, respectively, which were originated in 2015 and 2020.

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

Three Months Ended March 31,

Six Months Ended June 30,

Balance, beginning of period $ 49 $ 83

3 unchanged sentences

Debt consists of the following (in millions):

Interest Rate (1)

Maturities Through As of March 31, 2024 As of December 31, 2023

Weighted Average Rate (1)

Maturities Through As of June 30, 2024 As of December 31, 2023

Fixed rate debt:

Unsecured senior notes 3.70 % to 9.25 %

Unsecured senior notes 6.09 %

2026 - 2032 $ 7,899 $ 7,899

1 unchanged sentence

2029 1,000 1,000

Unsecured term loans 1.28 % to 5.89 %

Unsecured term loans

2027 - 2036 8,133 6,569

4 unchanged sentences

Unsecured revolving credit facilities (2)

6.76 % to 7.48 %

2025 - 2028 304 899

USD unsecured term loan 6.05 % to 9.95 %

2024 - 2037 3,555 3,666

Euro unsecured term loan 5.00 % to 6.14 %

USD unsecured term loan

2024 - 2037 2,574 3,666

Euro unsecured term loan 4.95 %

Total variable rate debt 3,149 5,008

6 unchanged sentences

Long-term portion $ 19,785 $ 19,732

(1) Interest rates based on outstanding loan balance as of March 31, 2024, and for variable rate debt include either EURIBOR or Term SOFR plus the applicable margin.

(2) Advances under our unsecured revolving credit facilities accrue interest at Term SOFR plus a 0.10 % credit adjustment spread plus an interest rate margin primarily at 1.33 %.

Based on applicable Term SOFR rates, as of March 31, 2024, the maximum interest rate under the unsecured credit facilities was 6.76 %.

We also pay a facility fee primarily at 0.17 % of the total commitments under such facility.

(3) At March 31, 2024 and December 31, 2023, the weighted average interest rate for total debt was 5.75 % and 6.06 %, respectively .

(1) Weighted average interest rates are based on outstanding loan balance as of June 30, 2024, and for variable rate debt include either EURIBOR or Term SOFR plus the applicable margin.

(2) Advances under our unsecured revolving credit facilities accrue interest at Term SOFR plus a 0.10 % credit adjustment spread plus an interest rate margin of 1.33 %.

Based on applicable Term SOFR rates, as of June 30, 2024, the maximum interest rate under the unsecured credit facilities was 6.77 %.

We also pay a facility fee of 0.17 % of the total commitments under such facility.

(3) At June 30, 2024 and December 31, 2023, the weighted average interest rate for total debt was 5.64 % and 6.06 %, respectively .

Unsecured revolving credit facilities

As of March 31, 2024 our aggregate revolving credit capacity is $ 3.6 billion of which $ 1.8 billion of the commitments are scheduled to mature in October 2026, $ 1.8 billion of the commitments are scheduled to mature in October 2028, and the remaining $ 77 million of commitments are scheduled to mature in April 2025.

As of March 31, 2024, we had undrawn capacity of $ 3.3 billion under our unsecured revolving credit facilities.

As of June 30, 2024 our aggregate revolving credit capacity is $ 3.7 billion of which $ 1.86 billion of the commitments are scheduled to mature in October 2026 and $ 1.86 billion of the commitments are scheduled to mature in October 2028.

As of June 30, 2024, we had undrawn capacity of $ 3.4 billion under our unsecured revolving credit facilities.

Debt financing transactions

In March 2024, we issued $ 1.25 billion of senior unsecured notes (the "notes") due in 2032 for net proceeds of approximately $ 1.24 billion.

1 unchanged sentence

The proceeds from this notes issuance, together with cash on hand, were used to redeem all of the outstanding $ 1.25 billion aggregate principal amount of 11.625 % Senior Notes due 2027.

The repayment resulted in a loss on extinguishment of debt of $ 116 million that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the quarter ended March 31, 2024.

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 March 31, 2024, 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.

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

Export credit facilities and agency guarantees

In May 2024, we took delivery of Silver Ray .

To finance the delivery, we borrowed a total of $ 507 million under the committed financing agreement, resulting in an unsecured term loan which is 95 % guaranteed by Euler Hermes.

The unsecured loan amortizes semi-annually over 12 years and bears interest at a fixed rate of 4.33 % per annum.

In June 2024, we took delivery of Utopia of the Seas .

To finance the delivery, we borrowed a total of $ 1.5 billion under the committed financing agreement, resulting in an unsecured term loan which is 100 % guaranteed by BpiFrance Assurance Export.

The unsecured term loan amortizes semi-annually over 12 years and bears interest primarily at a fixed rate of 3.00 % per annum.

During the quarter ended June 30, 2024, we repaid $ 839 million of outstanding deferred amounts under our export credit facilities.

These repayments included both scheduled payments and an early repayment of the amortization deferral obtained on our export credit facilities in 2020 and 2021, which resulted in an immaterial loss on extinguishment of debt that was recognized within Interest expense, net of interest capitalized within our consolidated statements of comprehensive income (loss) for the quarter and six months ended June 30, 2024.

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

For the majority of the loans as of June 30, 2024, 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, discounts and premiums in our consolidated statements of cash flows.

2 unchanged sentences

Debt covenants

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

As of March 31, 2024, our credit facility amendments require us to prepay outstanding deferred amounts of $ 839 million, if we elect to pay dividends or complete share repurchases.

As of March 31, 2024, 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, 2024 for each of the next five years (in millions):

Year As of March 31, 2024 (1)

As of June 30, 2024, we were in compliance with our debt covenants and we estimate we will be in compliance for the next twelve months.

In July 2024, we amended all of our export credit facilities to remove the stockholders' equity covenant, which has eliminated the contractual requirement for us to maintain a minimum level of stockholders' equity.

The following is a schedule of annual maturities on our total debt, including finance leases, as of June 30, 2024 for each of the next five years (in millions):

Year As of June 30, 2024 (1)

Remainder of 2024 $ 694

Thereafter 9,425

(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at March 31, 2024.

(1) Debt denominated in other currencies is calculated based on the applicable exchange rate at June 30, 2024.

Operating Leases

Our operating leases primarily relate to preferred berthing arrangements, real estate, and shipboard equipment which are included within Operating lease right-of-use assets , and Long-term operating lease liabilities with the current portion of the liability included within Current portion of operating lease liabilities in our consolidated balance sheets as of March 31, 2024 and December 31, 2023.

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

1 unchanged sentence

The company's preferred berthing agreement with Miami-Dade County ("County") includes the development plans for the County to finance the construction of a new and improved cruise Terminal G at PortMiami.

The aggregate amount of the operating lease liabilities recorded for this berthing agreement was $ 167 million as of March 31, 2024 and December 31, 2023.

There will be future remeasurements as the County completes several construction milestones throughout the term of the extended lease.

The most significant of which will be for Terminal G, which will include a remeasurement of the operating lease in 2027 or later, when the County satisfies substantial completion, as the minimum lease payments will increase to approximately $ 55 million per year, with expected 3 % annual increases thereafter.

The aggregate amount of the operating lease liabilities recorded for this berthing agreement was $ 167 million as of June 30, 2024 and December 31, 2023.

There will be future remeasurements of the operating lease as the County completes several construction milestones throughout the term of the extended lease, including an expected remeasurement in 2027 or later, when the County satisfies substantial

completion of Terminal G, as the minimum lease payments will increase at such time to approximately $ 55 million per year, with expected 3 % annual increases thereafter.

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

9 unchanged sentences

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

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, 2024 and December 31, 2023.

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 .

2 unchanged sentences

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 $ 105 million and $ 104 million as of March 31, 2024 and December 31, 2023, respectively.

The total aggregate amount of the finance lease liabilities recorded for this Master Lease was $ 105 million and $ 104 million as of June 30, 2024 and December 31, 2023, respectively.

The development of the new campus buildings are expected to be completed in 2026, and the lease components will be recorded within our consolidated financial statements upon commencement.

2 unchanged sentences

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

The aggregate amount of finance lease liabilities recorded for this ship was $ 241 million and $ 246 million as of March 31, 2024 and December 31, 2023, respectively.

The aggregate amount of finance lease liabilities recorded for this ship was $ 236 million and $ 246 million as of June 30, 2024 and December 31, 2023, respectively.

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

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

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended March 31, 2024 Quarter Ended March 31, 2023

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended June 30, 2024 Six Months Ended June 30, 2024

Operating lease costs Commission, transportation and other $ 42 $ 113

5 unchanged sentences

Total lease costs $ 61 $ 150

Consolidated Statement of Comprehensive Income (Loss) Classification Quarter Ended June 30, 2023 Six Months Ended June 30, 2023

Operating lease costs Commission, transportation and other $ 40 $ 95

Operating lease costs Other operating expenses 6 11

Operating lease costs Marketing, selling and administrative expenses 6 11

Financial lease costs:

Amortization of right-of-use-assets Depreciation and amortization expenses 6 12

Interest on lease liabilities Interest expense, net of interest capitalized 7 15

Total lease costs $ 65 $ 144

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

During the quarters ended March 31, 2024, and 2023 we had $ 51 million and $ 38 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively.

During the quarter and six months ended June 30, 2024, we had $ 28 million and $ 79 million of variable lease costs recorded within Commission, transportation and other in our consolidated statement of comprehensive income (loss), respectively, compared to $ 21 million and $ 59 million of variable lease costs recorded within C ommission, transportation and other in our consolidated statement of comprehensive income (loss) during the quarter and six months ended June 30, 2023, respectively.

These variable lease costs are included within the balances presented above.

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

As of March 31, 2024 As of December 31, 2023

As of June 30, 2024 As of December 31, 2023

Weighted average of the remaining lease term in years

5 unchanged sentences

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

Three Months Ended March 31, 2024 Three Months Ended March 31, 2023

Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

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

2 unchanged sentences

Financing cash flows from finance leases $ 13 $ 19

As of March 31, 2024, maturities related to lease liabilities were as follows (in millions):

As of June 30, 2024, maturities related to lease liabilities were as follows (in millions):

Year Operating Leases Finance Leases

7 unchanged sentences

Our future capital commitments consist primarily of new ship orders.

As of March 31, 2024, the dates that the ships on order by our Global and Partner Brands are expected to be delivered, subject to change in the event of construction delays, and their approximate berths are as follows:

As of June 30, 2024, 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 —

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

Star of the Seas Meyer Turku Oy 3rd Quarter 2025 5,600

2 unchanged sentences

Celebrity Xcel Chantiers de l'Atlantique 4th Quarter 2025 3,250

Silversea Cruises —

Evolution-class:

Silver Ray Meyer Werft 2nd Quarter 2024 730

TUI Cruises (50% joint venture) —

Mein Schiff 7 Meyer Turku Oy 2nd Quarter 2024 2,900

Mein Schiff Relax Fincantieri 4th Quarter 2024 4,100

Mein Schiff Relax Fincantieri 1st Quarter 2025 4,100

Unnamed Fincantieri 2nd Quarter 2026 4,100

1 unchanged sentence

In addition, in February 2024, we entered into an agreement with Chantiers de l’Atlantique to build an additional Oasis class ship for delivery in 2028, which is contingent upon completion of certain conditions precedent including financing.

As of March 31, 2024, 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 $ 8.1 billion, of which we had deposited $ 748 million as of such date.

As of June 30, 2024, 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 $ 5.7 billion, of which we had deposited $ 543 million as of such date.

Refer to Note 11 .

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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 (expense) income within our consolidated statements of comprehensive income (loss) related to the Havana Docks Action, including post-judgment interest and related legal defense costs and bonding fees.

During the fourth quarter of 2022, we recorded a charge of approximately $ 130.0 million to Other expense within our consolidated statements of comprehensive income (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.

10 unchanged sentences

Shareholders' Equity

We did not declare any dividends during the quarters ended March 31, 2024 and 2023.

We were previously 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.

We did not declare any dividends during the six months ended June 30, 2024 and 2023.

We were previously restricted under our export credit facilities from paying dividends.

During the quarter ended June 30, 2024, we repaid the principal amounts deferred under our export credit facilities, which eliminated the restriction on dividends and share repurchases.

Refer to Note 6 .

Debt for further information on the transaction.

In July 2024, our Board of Directors declared a dividend of $ 0.40 per share, payable in October 2024.

Changes in Accumulated Other Comprehensive Loss

The following table presents the changes in accumulated other comprehensive loss by component for the quarters ended March 31, 2024 and 2023 (in millions):

Accumulated Other Comprehensive Loss for the Three Months Ended March 31, 2024 Accumulated Other Comprehensive Loss for the Three Months Ended March 31, 2023

The following table presents the changes in accumulated other comprehensive loss by component for the six months ended June 30, 2024 and 2023 (in millions):

Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 2024 Accumulated Other Comprehensive Loss for the Six Months Ended June 30, 2023

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

4 unchanged sentences

Ending balance $ ( 653 ) $ ( 5 ) $ 4 $ ( 654 ) $ ( 665 ) $ ( 8 ) $ ( 7 ) $ ( 680 )

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters ended March 31, 2024 and 2023 (in millions):

The following table presents reclassifications out of accumulated other comprehensive loss for the quarters and six months ended June 30, 2024 and 2023 (in millions):

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

Details About Accumulated Other Comprehensive Loss Components Quarter Ended March 31, 2024 Quarter Ended March 31, 2023 Affected Line Item in Statements of

Details About Accumulated Other Comprehensive Loss Components Quarter Ended June 30, 2024 Quarter Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023 Affected Line Item in Statements of

Comprehensive Income (Loss)

5 unchanged sentences

Fuel swaps 11 ( 12 ) 15 ( 16 ) Fuel

$ 17 $ ( 16 ) $ 29 $ ( 15 )

Fair Value Measurements and Derivative Instruments

1 unchanged sentence

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 millions):

Fair Value Measurements at March 31, 2024 Fair Value Measurements at December 31, 2023

Fair Value Measurements at June 30, 2024 Fair Value Measurements at December 31, 2023

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

15 unchanged sentences

(3) Inputs that are unobservable.

The Company did not use any Level 3 inputs as of March 31, 2024 and December 31, 2023.

The Company did not use any Level 3 inputs as of June 30, 2024 and December 31, 2023.

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

2 unchanged sentences

Other Financial Instruments

The carrying amounts of accounts receivable, accounts payable, accrued interest and accrued expenses approximate fair value as of March 31, 2024 and December 31, 2023.

The carrying amounts of accounts receivable, accounts payable, accrued interest and accrued expenses approximate fair value as of June 30, 2024 and December 31, 2023.

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 millions):

Fair Value Measurements at March 31, 2024 Fair Value Measurements at December 31, 2023

Fair Value Measurements at June 30, 2024 Fair Value Measurements at December 31, 2023

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, 2024 and December 31, 2023.

No Level 1 inputs were used in fair value measurements of other financial instruments as of June 30, 2024 and December 31, 2023.

(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 March 31, 2024 and December 31, 2023.

No Level 3 inputs were used in fair value measurements of other financial instruments as of June 30, 2024 and December 31, 2023.

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

1 unchanged sentence

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

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of March 31, 2024 or December 31, 2023, or that will be realized in the future, and do not include expenses that could be incurred in an actual sale or settlement.

Accordingly, the fair values may not represent actual values of the financial instruments that could have been realized as of June 30, 2024 or December 31, 2023, 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.

There were no material nonfinancial instruments recorded at fair value as of March 31, 2024.

There were no material nonfinancial instruments recorded at fair value as of June 30, 2024 or December 31,2023.

Master Netting Agreements

6 unchanged sentences

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

As of March 31, 2024 As of December 31, 2023

As of June 30, 2024 As of December 31, 2023

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

19 unchanged sentences

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

As of March 31, 2024, we had counterparty credit risk exposure under our derivative instruments of $ 149 million, which was limited to the cost of replacing the contracts in the event of non-performance by the counterparties to the contracts, the majority of which are currently our lending banks.

As of June 30, 2024, we had counterparty credit risk exposure under our derivative instruments of $ 133 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.

32 unchanged sentences

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

At March 31, 2024 and December 31, 2023, approximately 86.3 % and 83.2 %, respectively, of our debt was effectively fixed-rate debt, which is net of our interest rate swap agreements.

At June 30, 2024 and December 31, 2023, approximately 90.7 % and 83.2 %, 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.

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 March 31, 2024 and December 31, 2023, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of March 31, 2024 (in millions) Maturity Debt Floating Rate

All-in Fixed Rate as of March 31, 2024

At June 30, 2024 and December 31, 2023, we maintained interest rate swap agreements on the following floating-rate debt instruments:

Debt Instrument Swap Notional as of June 30, 2024 (in millions) Maturity Debt Floating Rate

All-in Fixed Rate as of June 30, 2024

Celebrity Reflection term loan

13 unchanged sentences

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

Amount presented is based on the exchange rate as of March 31, 2024.

Amount presented is based on the exchange rate as of June 30, 2024.

(2) Interest rate swap agreements hedging the term loan of Odyssey of the Seas include Term SOFR zero-floors, Term SOFR with no floors, and Overnight SOFR.

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

The notional amount of interest rate swap agreements related to outstanding debt as of March 31, 2024 and December 31, 2023 was $ 1.6 billion.

The notional amount of interest rate swap agreements related to outstanding debt as of June 30, 2024 and December 31, 2023 was $ 1.4 billion and $ 1.6 billion, respectively.

Foreign Currency Exchange Rate Risk

2 unchanged sentences

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

As of March 31, 2024, the aggregate cost of our ships on order was $ 8.1 billion, of which we had deposited $ 748 million as of such date.

As of June 30, 2024, the aggregate cost of our ships on order was $ 5.7 billion, of which we had deposited $ 543 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.

1 unchanged sentence

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

At March 31, 2024 and December 31, 2023, approximately 44.1 % and 43.5 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

At June 30, 2024 and December 31, 2023, approximately 44.4 % and 43.5 %, respectively, of the aggregate cost of the ships under construction was exposed to fluctuations in the Euro exchange rate.

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

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

During the first quarter of 2024 and 2023 the average notional amount of foreign currency forward contracts was approximately $ 1.1 billion and $ 1.2 billion, respectively.

During the second quarter of 2024 and 2023 the average notional amount of foreign currency forward contracts was approximately $ 964 million and $ 1.3 billion, respectively.

These instruments are not designated as hedging instruments.

For the quarters ended March 31, 2024 and 2023, changes in the fair value of the foreign currency forward contracts resulted in (losses) gain of $( 35 ) million and $ 4 million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $ 30 million and $( 11 ) million, respectively.

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

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of March 31, 2024 and December 31, 2023 was $ 2.9 billion.

For the quarters ended June 30, 2024 and 2023, changes in the fair value of the foreign currency forward contracts resulted in immaterial (losses) gains, which were offset by the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods.

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

For the six months ended June 30, 2024 and 2023, changes in the fair value of the foreign currency forward contracts resulted in (losses) gains of $( 40 ) million and $ 12 million, respectively, which offset gains (losses) arising from the remeasurement of monetary assets and liabilities denominated in foreign currencies in those same periods of $ 34 million and $( 27 ) million, respectively.

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

The notional amount of outstanding foreign exchange contracts, excluding the forward contracts entered into to minimize remeasurement volatility, as of June 30, 2024 and December 31, 2023 was $ 2.1 billion and $ 2.9 billion, respectively.

Non-Derivative Instruments

1 unchanged sentence

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 € 659 million, or approximately $ 712 million, as of March 31, 2024.

We had designated debt as a hedge of our net investments primarily in TUI Cruises of € 731 million, or approximately $ 783 million, as of June 30, 2024.

As of December 31, 2023, we had designated debt as a hedge of our net investments primarily in TUI Cruises of € 648 million, or approximately $ 716 million.

3 unchanged sentences

Our fuel swap agreements are generally accounted for as cash flow hedges.

In the case that our hedged forecasted fuel consumption is not probable of occurring, hedge accounting will be discontinued and the related accumulated other comprehensive gain or loss will be reclassified to Other (expense) income immediately.

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.

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

For the quarters ended March 31, 2024 and March 31, 2023, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements.

At March 31, 2024, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2026.

As of March 31, 2024 and December 31, 2023, 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 expense for each reporting period through the maturity dates of the fuel swaps.

For the quarters ended June 30, 2024 and June 30, 2023, we did not discontinue cash flow hedge accounting on any of our fuel swap agreements.

At June 30, 2024, we have hedged the variability in future cash flows for certain forecasted fuel transactions occurring through 2026.

As of June 30, 2024 and December 31, 2023, we had the following outstanding fuel swap agreements:

Fuel Swap Agreements

As of March 31, 2024 As of December 31, 2023

As of June 30, 2024 As of December 31, 2023

Designated as hedges:

4 unchanged sentences

Fuel Swap Agreements

As of March 31, 2024 As of December 31, 2023

As of June 30, 2024 As of December 31, 2023

Designated hedges as a % of projected fuel purchases:

2 unchanged sentences

2026 24 % 3 %

As of March 31, 2024, there was $ 39 million of estimated unrealized net gain 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 $ 21 million of estimated unrealized net loss at December 31, 2023.

As of June 30, 2024, there was $ 36 million of estimated unrealized net gain 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 $ 21 million of estimated unrealized net loss at December 31, 2023.

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

2 unchanged sentences

Asset Derivatives Liability Derivatives

Balance Sheet Location As of March 31, 2024 As of December 31, 2023 Balance Sheet Location As of March 31, 2024 As of December 31, 2023

Balance Sheet Location As of June 30, 2024 As of December 31, 2023 Balance Sheet Location As of June 30, 2024 As of December 31, 2023

Fair Value Fair Value Fair Value Fair Value

11 unchanged sentences

Non-derivative instrument designated as

hedging instrument under ASC 815-20 Balance Sheet Location As of March 31, 2024 As of December 31, 2023

hedging instrument under ASC 815-20 Balance Sheet Location As of June 30, 2024 As of December 31, 2023

Foreign currency debt Current portion of long-term debt $ 63 $ 65

4 unchanged sentences

Comprehensive Loss on Derivatives

Quarter Ended March 31, 2024 Quarter Ended March 31, 2023

Quarter Ended June 30, 2024 Quarter Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Interest rate swaps $ 8 $ 23 $ 29 $ 11

5 unchanged sentences

Non-derivative instruments under ASC 815-20 Net

Investment Hedging Relationships Quarter Ended March 31, 2024 Quarter Ended March 31, 2023

Investment Hedging Relationships Quarter Ended June 30, 2024 Quarter Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Foreign Currency Debt $ 6 $ ( 2 ) $ 22 $ ( 11 )

$ 6 $ ( 2 ) $ 22 $ ( 11 )

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

3 unchanged sentences

Gain (Loss) Recognized in

Income on Derivatives Quarter Ended March 31, 2024 Quarter Ended March 31, 2023

Income on Derivatives Quarter Ended June 30, 2024 Quarter Ended June 30, 2023 Six Months Ended June 30, 2024 Six Months Ended June 30, 2023

Foreign currency forward contracts Other (expense) income $ ( 5 ) $ 8 $ ( 40 ) $ 12

$ ( 5 ) $ 8 $ ( 40 ) $ 12

Credit Related Contingent Features

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 March 31, 2024, our senior unsecured debt credit rating was BB+ by Standard & Poor's and Ba2 by Moody's.

As of March 31, 2024, five of our ship debt interest rate derivative hedges had reached their fifth-year anniversary;

As of June 30, 2024, our senior unsecured debt credit rating was BB+ by Standard & Poor's and Ba2 by Moody's.

As of June 30, 2024, six of our ship debt 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